Annual report 2012

Transcription

Annual report 2012

st
Annual Report 2012
131st year
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—Index
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—Annual Report 2012
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11
—Chairman's letter
15
—Financial and share
performance information
38
—Acquisition of Banco CAM
41
—Group businesses
73
—Excellence
83
—Risk management
97
—Board of Directors and
Senior Management Team
100
—Report of the Audit
and Control Committee
115
—Report on directors’
remuneration
124
—Corporate social
responsibility
131
—Statutory information
—Directors’ statement
of responsibility
—Auditor’s report
—Annual accounts
—Report of the directors
307
—Banco Sabadell group contact details
Banco Sabadell Annual Report 2012
—The Banco Sabadell Group
in 2012 – financial highlights
Index
7
5
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—The
Banco
Sabadell
Group
in 2012 –
financial
highlights
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€'000
Financial highlights
2012
2011
% 12/11
Shareholders' equity
9,119,542
6,276,160
45.3
161,547,085
100,437,380
60.8
115,392,391
73,635,342
56.7
117,283,275
74,922,073
56.5
110,996,102
78,119,863
42.1
80,179,388
53,353,959
50.3
8,584,848
8,024,185
7.0
11,022,021
8,784,677
25.5
131,654,630
96,061,962
37.1
Net interest income
1,867,988
1,537,263
21.5
Gross income
2,958,446
2,506,722
18.0
Profit before impairment and other provisions
1,289,896
1,230,710
4.8
81,891
231,902
(64.7)
1,898
1,382
15,596
10,675
Total assets
Gross loans and advances to customers
The Banco Sabadell Group
ex reverse repos
Total on-balance sheet deposits
and issued securities
Customer deposits ex repos
Assets held in mutual funds
Assets held in pension funds
and insurance policies sold
Deposits and assets under management
€'000
Income and earnings performance
Net attributable profit
Resources
Number of branches
Number of employees
8
%
Ratios
2012
2011
ROA (Net profit / average total assets)
0.07
0.24
ROE (Net attributable profit / average shareholders' equity)
1.01
3.82
51.10
47.32
Core capital
10.42
9.01
Tier I
10.42
9.94
BIS Ratio
11.39
10.95
9.33
5.95
17,589,940
3,522,700
13.88
4.54
2,959,555,017
1,391,048,717
236,774
127,310
1.975
2.934
0.03
0.17
0.03
0.15
Profitability and efficiency ratios
BIS capital ratios
The Banco Sabadell Group
Cost:income (General administrative expenses / gross income)
Risk management
Loan loss ratio*
Loan loss and real estate impairment provisions (€'000)
Loan loss coverage ratio – overall**
* The ratio shown for 2012 does not include assets covered by the asset protection scheme (APS).
** Shows impairment provision coverage for the loan and real estate portfolios combined.
Number of shares
Number of shareholders
Quoted share price (€)
Attributable earnings per share (€)
Share data
Attributable earnings per share allowing for effect of
mandatorily convertible bonds (€)
9
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—Chairman's letter
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Dear Shareholder,
Chairman's letter
12
Banco Sabadell ended the year 2012, the 131st in its history, showing good income growth,
improved business margins and a substantially stronger liquidity position, having reinforced
its core capital and exceeded the levels of capital required to pass the stress tests carried
out on the Spanish financial sector. All of this was achieved despite an operating environment
characterised by continuing financial market turmoil, weak economic activity and, in Spain, a
financial industry undergoing a process of radical reform and root-and-branch restructuring.
In the first half of the year, the eurozone sovereign debt crisis had a particularly severe impact
on Spain and the fragmentation of capital markets highlighted the difficulties of the euro. The
action taken by the European authorities to tackle the crisis from the middle of the year onwards
brought about an improvement in the funding position of the systemic countries on the European
periphery. In particular, Europe decided to take more resolute steps towards economic, fiscal and
financial integration, while the European Central Bank launched a new programme of sovereign
bond purchases, thus effectively making itself a lender of last resort to the treasuries of the euro
zone’s more solvent countries.
On the economic front, global activity in 2012 was characterized by weakness in the eurozone
and particularly in Spain, although economies in the rest of the world moved in a more positive
direction. The Spanish economy struggled under the prevailing difficult financial conditions and
activity was further constrained by a tight fiscal policy and private sector deleveraging, causing
the economy to go into reverse again after having grown slightly in 2011.
In late June the Spanish authorities asked for external financial assistance for the banking
sector. In line with the promises made to obtain the assistance, the country’s financial sector has
been undergoing a major programme of reform and large-scale restructuring and recapitalization
under the supervision of the Spanish authorities and according to guidelines laid down by the
European Commission, the European Central Bank and the IMF.
Key conditions for restoring Spain’s banks to financial health were that banks should set
aside large amounts of provisions to cover their real estate assets and that, following an in-depth
external assessment, some banks would be recapitalized from public funds and their troubled
assets transferred to an asset management company (to be known as SAREB) whose capital
would largely be funded by the state through the Fund for Orderly Bank Restructuring (FROB).
Despite the difficulties facing the sector, Banco Sabadell was given a clean bill of health in
the stress tests carried out on the whole of the Spanish banking industry in 2012, being classed
among the most solvent of the systemic banks making up the Spanish financial system.
Our core capital was greatly strengthened during the year, with share capital increasing by
€3,092 million. Actions such as the exchange of Banco Sabadell preferred securities for ordinary
shares in January, the exchange of Banco CAM preferred and subordinated securities for Banco
Sabadell ordinary shares in June and July, and the capital-raising rights issue in March, brought
the core capital ratio up to 10.4%, and this at a time when we were absorbing the Banco CAM
balance-sheet.
Our liquidity position improved substantially in the course of the year thanks in large measure
to a high inflow of new customer accounts, allowing us to generate a positive funding gap of more
than €15,000 million in 2012 on the back of the demand for investment products.
Energetic balance-sheet management, careful setting of interest spreads and a strong
performance in winning new business made it possible to end the year with net interest income
up 21.5% and gross operating income up 18% on the year before. Profit before impairment
provisions was €1,289.9 million, a year-on-year increase of 4.8% with Banco CAM administrative
expenses included; on a like-for-like basis, however, recurring costs for 2012 were down 5.9% on
the year before.
Banco Sabadell’s net profit for the year 2012 was €81.9 million after setting aside in balancesheet strengthening and asset impairment provisions totalling €2,540.6 million — 142.2% more
than the previous year.
Once again Banco Sabadell was able to report a remarkable achievement in new customer
acquisition. With enrolments reaching 8,000 a week, the number of individual customers rose by
18.2% and business customers by 31.4% compared with the previous year.
Josep Oliu Creus
Chairman
Chairman's letter
After a year in which default rates in the banking system continued to rise, Banco Sabadell
ended 2012 with a loan loss ratio that remained below the industry average; the gap with respect to
the ratio for the banking industry as a whole has increased by a factor of 2.6 over the last two years.
The year 2012 saw the successful completion of merger and integration processes for four
entities: Banco CAM, Banco Urquijo and Banco Guipuzcoano in Spain, and Lydian Private Bank in
the USA. Once again the Banco Sabadell group demonstrated its proven ability to carry out such
processes alongside its ordinary activities without any impact on operating efficiency or service
quality, or disruption to the conduct of business.
The integration of Banco CAM was of particular significance in bringing about a transformative
leap for Banco Sabadell and positioning us as Spain’s fourth largest privately-owned banking
group. Total group assets increased by more than 60% and the group’s customer base doubled
to more than 5.5 million. The actions we have put in hand to ensure a successful relaunch of the
branch network under the new SabadellCAM brand name, and our determination to win back the
trust of customers of the former Banco CAM as soon as possible, have been key factors in kickstarting a recovery in deposits and restoring market shares to their historic levels.
By the end of the year we had brought the integration of Banco CAM operations and systems
to a successful conclusion and thus fulfilled our ambitious work schedule to the letter.
With Banco Urquijo and Banco Guipuzcoano now merged into the organization we were able,
first, to position the SabadellUrquijo brand as the name to watch in private banking in Spain
and, second, to increase our potential for growth in the northern part of the country under the
SabadellGuipuzcoano banner.
In the USA we continued to make progress in growing our retail banking operation in Miami,
Florida: Sabadell United Bank. We completed the integration of Lydian Private Bank’s operations
and systems into those of Sabadell United Bank, strengthening its position and making it the
seventh largest local bank by deposits. We also opened a representative office in New York which
is proving to be a useful complement to our Miami-based operation.
This year we set up an Asset Management division, a special unit tasked with managing the
group’s real estate and doubtful assets. By so doing we put ourselves a step ahead of the rest of
the industry and became pioneers in creating a dedicated operating unit to respond effectively to
the needs generated by the real estate crisis.
Finally, in the last part of the year, we came to an agreement with Banco Mare Nostrum (BMN)
to purchase its branch banking business in Catalonia and Aragón; we hope to bring this to a
conclusion in the course of 2013.
This annual report contains accurate and detailed information on major developments
during year 2012 and on how the group has performed in the current highly complex economic
and financial environment. The data provided here reflects the soundness and the growth of
our ordinary operations and evidences the group’s capacity to generate positive results despite
the enormous efforts made to increase provisions while continuing to boost liquidity and add
strength to our balance-sheet.
This year Banco Sabadell prepared the ground for a progressive return to reasonable levels
of profitability after several years of setting aside very large amounts in provisioning expenses to
face the consequences of the economic crisis.
We laid the foundations for the Bank’s future development by absorbing organizations that
were unable to remain competitive on their own; they will now provide the group with a regional
foothold for business expansion in the coming years.
The professionalism of the Banco Sabadell group and the expertise it has shown in
managing the crisis give us reason to be optimistic about prospects for getting our earnings
back to normal levels.
13
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—Financial
and share
performance
information
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—Macroeconomic Environment
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Financial and share
The sovereign debt crisis in the eurozone worsened in the first half
of the year, with particularly virulent effects on countries like Spain
and Italy. The prevailing complex environment was reflected in an
increasingly fragmented capital market, highlighting the difficulties
of the single European currency. This coincided with a social and
political situation in Greece that continued to be especially critical,
giving rise to a significant risk to have to finally leave the euro. Two
general elections were required before the country was able to
establish a government, and Greece became the first developed
country since the Second World War to restructure its sovereign
debt, forcing private creditors to take a debt haircut.
—Yield on 10-year government bonds (%)
—Spain
—Italy
8
7
6
5
4
Jan 12
Apr 12
Jul 12
Oct 12
Dec 12
Source: Bloomberg.
The actions taken in response to the crisis by the European
authorities halfway through the year brought about a considerable
improvement in the situation, producing an incipient reversal
in the disintegration of the eurozone capital market and some
improvement in the funding position of the systemic countries
on the European periphery. Moreover, fears of a possible exit
by Greece were gradually allayed by the European authorities’
determination to keep the country within the single currency.
—Foreign portfolio investment in Spain (€Bn.)
16
20
10
0
-10
-20
-30
Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12
Source: Bank of Spain.
Financial and share
In Europe the decision was taken to move more resolutely towards
European integration. A road map was produced setting out the
basic building blocks of financial union, with proposals for greater
economic and fiscal integration being left for implementation in
2013. The first step in building this financial framework will be to
establish a single banking supervisor which will make it possible
for the European Stability Mechanism (ESM) to recapitalize the
banks directly, thus breaking the link between financial risk and
sovereign risk.
On the fiscal front, another significant aspect was a certain
shift in the European stance on fiscal consolidation. In particular,
more importance was given to measures to correct fiscal
imbalances, and less on commitments to numerical targets, given
that these were being affected by the difficult economic conditions
then prevailing.
Meanwhile, the European Central Bank (ECB) decided to
implement a new programme of bond purchases (outright
monetary transactions, OMT), linked to requests to the ESM by
countries in difficulty for a programme of financial assistance.
The bond purchases must consist mainly of short-dated
government bonds and will not be subject to any quantitative
limits. This decision brought about a fundamental change in the
sovereign debt crisis. By taking this step, the ECB was practically
guaranteeing that no systemic eurozone country would be frozen
out of the primary market for government debt, provided that the
conditionality attaching to the provision of financial assistance by
the ESF was fulfilled.
In late June the Spanish authorities made a request for external
financial assistance for the banking sector as part of their efforts
to restructure and recapitalize the country’s banks. The amount
of financial assistance could be as much as €100 billion and the
conditions on which it would be provided included: (i) determining
the capital requirements of each institution: (ii) recapitalizing,
restructuring and/or resolving the less viable banks; and (iii)
transferring the impaired assets of banks requiring government
support to an asset management company (known as SAREB).
Despite a more benign financial environment in the second half
of the year the global economy remained weak all through 2012,
especially in the eurozone and most particularly in countries on the
European periphery, with countries like Spain and Italy suffering the
consequences of tight credit conditions. In Spain, fiscal tightening
and private sector deleveraging also affected economic activity.
In the United States the economic environment was affected by
uncertainties caused by the difficulty in reaching an agreement over
the fiscal cliff. In Japan, the conflict with China over the Sendaku
islands deepened the economic gloom. The emerging economies
provided yet another headwind to global growth, with contagion from
other countries adding to the effects of domestic tightening in the
main economies as they strove for more balanced growth.
17
—Spanish GDP (change y.o.y. %)
5,5
4,0
2,5
1,0
-0,5
-2,0
-3,5
-5,0
2007
2008
2009
2010
2011
2012
Financial and share
Source: Spanish National Statistical Institute (INE).
Against this background, the monetary policies of the world’s main
central banks remained highly accommodative, with large amounts
of liquidity being injected into the economy. In the USA, the Federal
Reserve continued its programme of asset purchases and took
a decision to make the setting of interest rates dependent on
numerical threshold levels of unemployment and inflation. The
ECB, in addition to its new bond purchasing programme (OMT)
and its second three-year funding operation, continued to provide
full allotment in its refinancing operations, relaxed its rating
requirements for collateral and reduced its key rate to historically
low levels (0.75%). This highly accommodative monetary policy and
the prevailing risk-adverse conditions ensured that government
bond yields in the core eurozone countries remained close to zero
in the second half of the year, and even entered negative territory
in some cases. The Bank of Japan expanded its unorthodox
monetary programmes, especially by increasing purchases of
government bonds. It also established an inflation target. Finally,
the Bank of England increased its holdings of assets acquired
under its programme of asset purchases and introduced further
unconventional measures (such as providing liquidity to banks
linked to their lending to the private sector).
—ECB Balance sheet (€Tn.)
—Asset purchase programme
—Longer-term refinancing operations
—Main refinancing operations
—Other Assets
3,5
18
3,0
2,5
2,0
1,5
1,0
0,5
0,0
2008
Source: Bloomberg.
2009
2010
2011
2012
Financial and share
In the long-term public debt markets US and German bond yields
remained at historically low levels thanks to their status as refuges
for the huge amounts of cash circulating in the market. Spanish
and Italian government debt remained under pressure throughout
the first half of the year, reaching levels which threatened to exclude
Spain and Italy (especially the former) from obtaining funding from
the capital markets,. The second half of the year, however, saw a
substantial improvement, especially after the ECB took a more
prominent role in addressing the sovereign debt crisis. Yields on
the debt of other peripheral countries ended the year at levels
considerably below those prevailing at the beginning of the year.
Ireland benefited from expectations of possible restructuring as
a result of the government’s bail-out plan for the financial system,
which would ease pressure on the public accounts in that country.
Greek debt found support in factors such as the reduced likelihood
of the country exiting the eurozone, the offer of more generous
bail-out terms, and the relative success of its debt repurchasing
programme. Finally, Portuguese debt benefited from Europe’s
support for its policy of fiscal tightening and subsequent easing.
On the currency markets the euro fell against the dollar on
uncertainties over the single currency. As the year progressed,
measures taken to address European instability and the Fed’s
decision to take further unconventional measures helped the euro
to regain lost ground and to finish the year higher against the dollar.
During the year the yen suffered two major bouts of weakness. The
currency fell between February and March in response to the Bank
of Japan’s more accommodating monetary stance, while in the final
part of the year it was undermined by worsening macroeconomic
data in Japan and the new government’s interventionist approach.
Equity markets in the USA and most of the main eurozone
countries registered positive returns at the end of the year despite
the reverses suffered by European stocks in the second quarter
as a result of renewed financial instability in the region. Over the
year as a whole, the Euro Stoxx 50 index rose by 13.8%, while the
Spanish IBEX fell by 4.7%. In the USA, the S&P 500 index managed
to end the year with an 11.4% rise in euro terms.
—
—Share performance
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Banco Sabadell's inclusion in the "zero group" of banks judged
most solvent in the stress tests conducted by consultancy Oliver
Wyman and the positive market reaction to the take-over of Banco
CAM were key factors driving an improved performance by Banco
Sabadell's share price.
In 2012 the share price was dragged down by the weak economic
environment and fears over the position of Spain's financial system,
especially in the early months of the year. Despite the challenging
conditions facing the sector, however, Banco Sabadell's capitalraising exercise in March was very well received by the market. The
acquisition of Banco CAM was viewed in a very positive light and
enabled Banco Sabadell to consolidate its position as Spain's fourth
largest privately-owned banking group, increase its market share and
secure a more evenly balanced presence in the country.
19
From June onwards a number of factors helped Banco
Sabadell's share price to break away from the trend by its Spanish
industry peers. The published results of independent audits
carried out on the banking sector, plus the strengthening of Banco
Sabadell’s provisioning and the confirmation of its position as one
of the most solvent banks in the industry were all key contributors
to a stronger share price. This strength was particularly evident
in the months of June and August, when the share price rose
by 20% and 48% respectively. In the latter part of the year the
improved outlook for Spain and the positive assessment of Banco
Sabadell's heads of terms agreement with BMN to take over its
operations in Catalonia and Aragon provided further support for
the share price relative to its domestic market peers.
Financial and share
—Comparative share performance
—Banco Sabadell
—IBEX 35
—Comparable Spanish banks*
—DJ STOXX 600
120
100
80
60
40
20
31/12/11
31/03/12
30/06/12
30/09/12
31/12/12
* Includes CaixaBank, Banco Popular, Banesto, Bankinter and Bankia.
With the share price at €1.975 at the close of the year Banco
Sabadell's market capitalization at 31 December was €5,845
million, making it Spain's fourth largest privately owned banking
group by market value as well as on most other financial
measures.
—Monthly share price movements – 2012
Month
20
January
February
March
April
May
June
July
August
September
October
November
December
€
€
€
Shares
Closing
price
Maximum
Minimum
Average daily
trading volume
2.819
2.430
2.042
1.784
1.321
1.533
1.550
2.300
2.090
1.878
2.146
1.975
2.980
2.910
2.560
2.059
1.801
1.650
1.586
2.300
2.250
2.154
2.160
2.230
2.570
2.263
1.968
1.709
1.288
1.269
1.185
1.392
2.008
1.846
1.749
1.944
9,212,886
7,259,352
16,650,207
11,629,645
11,731,454
10,614,895
7,335,147
11,527,230
9,028,514
3,704,619
4,351,933
7,457,834
The Bank's dividend payments in 2012 included a final dividend for
the year 2011, payable in shares from the Bank's holding of treasury
shares at a rate of €0.05 per share.
In addition, the Bank will ask the Annual General Meeting to
approve the payment of an interim dividend for the year 2012 of
€0.01 per share and a final dividend equivalent to €0.02 per share,
payable in shares from the Bank's holding of treasury shares.
—Earnings per share and book value per share 2010-2012
€Mn.
€
€Mn.
€
Number of
shares
Net attributable
profit
Net attributable
earnings per share
Shareholders'
equity
Book value
per share
1,264
1,457
1,391
1,584
2,960
3,184
380
380
232
232
82
82
0.32
0.28
0.17
0.15
0.03
0.03
5,978
5,978
6,276
6,276
9,120
9,120
4.73
4.10
4.51
3.96
3.08
2.86
(1) Includes the dilution effect of 100,010,000 and 93,600,000 additional shares resulting from issues of convertible bonds.
At 31 December 2012 the share price stood at €1.975 and the
share to book ratio was 0.69.
Banco Sabadell’s capital-raising actions in 2012 included three
new share issues in the months of January, March and July.
Early in December 2011 a decision was taken to make a
buyback offer to the holders of preferred securities issued by
different Banco Sabadell group undertakings and sold to private
individual investors. The preferred securities were to be exchanged
for ordinary shares of Banco Sabadell. The process was completed
on 3 January 2012 with the offer securing a 93.8% acceptance
rate, a clear sign of its popularity among the small investors who
were the main holders of the preferred securities. The result
was to increase the share capital of the Bank by the issue of
223,179,763 new shares (representing 13.83% of its ordinary
share capital). The offer was carried out for the dual purpose of
giving holders of preferred securities the opportunity to liquidate
their holdings and replace them with Banco Sabadell ordinary
shares, while at the same time reinforcing the structure of the
Bank’s capital overall.
An Extraordinary General Meeting of the Company was called
by the Board of Directors of Banco Sabadell to take place on 23
February 2012. The Meeting approved an increase in capital to
be paid in cash, subject to a right of preferential subscription
and to the possibility of the issue not being fully subscribed;
it authorized the Board of Directors to carry out the increase
in capital on any terms it considered expedient, except as
specifically determined by the Meeting.
The subscription period for taking up shares offered in the
increase in capital came to an end on 23 March 2012. The overall
nominal amount of the increase was €85,469,329.13 and the
overall effective amount was €902,556,116.88. The increase
was effected by the issue and allotment of 683,754,633 ordinary
shares, each with a nominal value of €0.125, of the same class
and series as those then in issue.
Financial and share
2010
2010 (1)
2011
2011(2)
2012
2012 (3)
Mn.
21
Financial and share
22
The main purpose of the increase in capital was to strengthen
the Bank’s core capital (i.e. capital and reserves). Although the
Bank's capital resources were compliant with existing capital
adequacy requirements, the increase in capital enabled Banco
Sabadell to strengthen its share capital base and provided it with
additional high-quality capital resources should there ever be a
need to meet stricter capital requirements.
On 26 March trading in the new shares formally commenced
on the Barcelona, Madrid and Valencia stock exchanges via the
Spanish stock exchange’s electronic trading system [mercado
continuo].
At a meeting of the Board of Directors on 13 June 2012 the
Board, in the exercise of powers granted to it by a resolution of
the Annual General Meeting of 31 May 2012, made a decision
to increase the share capital of the Bank by issuing new shares
payable in cash; no right of preferential subscription would apply
to the issue, which was subject to the possibility of not being
fully subscribed. The issue was directed exclusively to all holders
of certain Banco CAM group issues of preferred securities and
subordinated debt willing to accept a public offer for sale of
existing shares, or subscribe for new shares, in Banco Sabadell.
At the end of the offer acceptance period on 27 July 2012
(which achieved a 95.7% acceptance rate), the total number
of shares of the Bank to be issued and sold as a result of the
application by holders of the preferred securities of a cash sum
equivalent to 100% of the nominal value of the repurchased
preferred shares, was 678,194,488 (of which 22,000,000 were
treasury shares and 656,194,488 were new shares representing
22.21% of the ordinary share capital of the Bank resulting from
the offer). These new shares were admitted to trading on the stock
exchange's electronic trading system on 13 August 2012.
On the conclusion, on 20 July 2012, of the third period for
the voluntary conversion of mandatorily convertible subordinated
notes issue I/2009, at a meeting of the Board of Directors on 26
July 2012 the Board took a decision to increase the capital of the
Bank by issuing 693,247 new shares to provide funds for voluntary
conversions of the 2,898 subordinated notes comprising issue
I/2009. The new shares were admitted to trading on the electronic
trading system on 13 August 2012.
By 9 November 2012, the end of the second period for the
voluntary conversion of mandatorily convertible subordinated notes
Issue I/2010, issued to be offered in exchange for shares in Banco
Guipuzcoano, S.A. as part of a take-over offer by Banco Sabadell,
applications to convert had been received from a total of 814
noteholders holding 3,925,686 notes which, under the terms of the
issue, were equivalent in value to a total of 4,684,169 shares.
On 14 August 2012 the new shares were admitted to trading
on the Barcelona, Madrid and Valencia stock exchanges via the
electronic trading system [mercado continuo].
At the end of 2012 the number of Banco Sabadell ordinary
shares outstanding as a result of these capital-raising operations
was €2,959.55 million. Of the Bank’s overall shareholder base,
private investors accounted for 70.8% of the share capital, with
institutional investors holding the remaining 29.2%.
—Analysis of shareholdings at 31 December 2012
Number of shares
Number of shares
% of total share capital
From 1 to 12.000
From 12.001 to 120.000
From 120.001 to 240.000
From 240.001 to 1.200.000
From 1.200.001 to 18.000.000
More than 18.000.000
200,148
34,816
1,103
599
102
6
540,817,671
986,021,040
182,409,015
274,803,312
379,854,407
595,649,572
18.27
33.32
6.16
9.29
12.83
20.13
Total
236,774
2,959,555,017
100.00
Number of shares
% of total share capital
From 1 to 12.000
From 12.001 to 120.000
From 120.001 to 240.000
From 240.001 to 1.200.000
From 1.200.001 to 18.000.000
More than 18.000.000
117,172
9,255
491
318
66
8
196,191,482
287,787,225
81,696,265
149,718,911
238,411,006
437,253,828
14.10
20.69
5.87
10.76
17.14
31.43
Total
127,310
1,391,058,717
100.00
—Analysis of shareholdings at 31 December 2011
Number of shares
Financial and share
Banco Sabadell has a Shareholder Relations Desk and an
Investor Relations Department whose functions are to provide
detailed information on the performance of the group and respond
to enquiries, suggestions and views of existing or potential
shareholders, whether private or institutional, on any aspect
related to the Bank and its performance.
23
—
—Financial review
—
—
—
—The acquisition of Banco CAM has substantially
increased business volumes
—
—
Financial and share
€'000
Assets
2012
2011
% 12/11
Cash and deposits with central banks
Assets held for trading. derivatives and other financial assets
Financial assets available for sale
Loans and receivables
Loans and advances to credit institutions
Loans and advances to customers (net)
Debt securities
Equity investments in unconsolidated companies
Tangible assets
Intangible assets
Other assetst
2,483,590
7,182,995
24,060,464
110,732,517
5,233,243
105,102,361
396,913
746,336
2,635,038
1,165,072
12,541,073
1,290,678
2,273,131
13,268,170
76,282,944
3,628,914
72,654,030
0
696,934
1,106,881
1,022,161
4,496,481
92.4
216.0
81.3
45.2
44.2
44.7
–
7.1
138.1
14.0
178.9
Total assets
161,547,085
100,437,380
60.8
2012
2011
% 12/11
Liabilities held for trading and derivatives
Financial liabilities at amortized cost
Deposits from central banks
Deposits from credit institutions
Deposits from other creditors
Debt certificates including bonds
Subordinated liabilities
Other financial liabilities
Liabilities under insurance contracts
Provisions
Other liabilities
2,473,447
144,984,600
23,888,640
9,779,956
82,464,410
25,326,170
1,166,707
2,358,717
2,038,815
1,370,326
1,419,125
2,011,411
91,586,490
4,040,717
8,128,791
58,444,050
17,643,095
1,859,370
1,470,467
173,348
350,203
381,784
23.0
58.3
491.2
20.3
41.3
43.5
(37.3)
60.4
–
291.3
271.7
Total liabilities
152,286,313
94,503,236
61.1
2012
2011
% 12/11
Valuation adjustments
Non-controlling interests
9,119,542
(317,945)
459,175
6,276,160
(389,228)
47,212
45.3
(18.3)
–
Total equity
9,260,772
5,934,144
56.1
161,547,085
100,437,380
60.8
2012
2011
% 12/11
Contingent exposures
Contingent commitments
9,015,469
13,523,884
8,347,022
11,657,865
8.0
16.0
Total
22,539,353
20,004,887
12.7
Liabilities
Equity
24
Total liabilities and equity
Off-balance sheet items
Capital management
—
—Our core capital ratio rose to 10.4% after capital
increases totalling €3,092 million in 2012
—
—
In 2012 Banco Sabadell continued the active capital management
the strategy pursued in earlier years and achieved very satisfactory
levels of solvency, as its end-of-year capital ratios show.
€'000
2011
% 12/11
369,944
7,838,177
798,089
51,078
(1,206,783)
173,881
5,171,378
814,620
53,239
(1,151,809)
112.8
51.6
(2.0)
(4.1)
4.8
7,850,505
5,061,309
55.1
10.42
(5,413)
9.01
520,711
–
7,845,092
5,582,020
40.5
10.42
9.94
731,549
567,164
0.97
1.01
Capital base
8,576,641
6,149,184
39.5
BIS Ratio (%)
Minimum capital requirement
11.39
6,025,145
10.95
4,493,377
34.1
Capital surplus
2,551,496
1,655,807
54.1
75,314,313
56,167,208
34.1
Capital
Reserves
Convertible bonds
Deductions
Core capital
Core capital ratio (%)
Preferred shares and deductions
Primary capital
Tier capital ratio (%)
Secondary capital
Tier II capital ratio (%)
29.0
Memorandum item
Risk-weighted assets (RWA)
2012
Financial and share
—BIS capital ratios
Actions taken in 2012 to increase solvency included:
— An exchange of Banco Sabadell preferred securities for Banco
Sabadell shares in January, accepted in respect of 93.8% of
the securities and enabling the Bank to increase its share
capital by €785 million.
— A rights issue in March 2012 that resulted in an increase in
the Bank's capital by €903 million.
— An exchange of Banco CAM preferred securities and
subordinated debt for Banco Sabadell shares in the months of
June and July, accepted in respect of 95.7% of the securities
and generating an increase in capital of €1,404 million.
25
Active management of the balance sheet in terms of both
capital adequacy and risk exposure ensured that the surplus of
available capital resources over minimum capital requirements
was maintained. The Bank's capital position and its management
of that position are viewed positively by the market.
Balance sheet management
Financial and share
—
—A good inflow of new deposits and an active ALM policy
have substantially improved our liquidity position
—A major injection of capital has strengthened our
balance sheet
—
On 1 June 2012 Banco Sabadell completed the acquisition of
100% of the shares of Banco CAM. A few months later, on 5
December, the merger of Banco CAM by absorption into Banco
Sabadell was officially registered, although the effective date of the
merger for accounting purposes was 1 June 2012. The changes
in the group's financial data for the year 2012 compared with
2011 therefore reflect the wide-ranging impact of the integration of
Banco CAM data during the year.
At the end of 2012 the assets of the Banco Sabadell group
totalled €161,547.1 million, rising by €61,109.7 million compared
with total group assets at 31 December 2011. The annual
increase in percentage terms was 60.8%.
Gross loans and advances to customers excluding reverse
repos totalled €115,392.4 million at 31 December 2012, up from
€73,635.3 million at the close of 2011, a 56.7 % increase. Of the
various components of gross loans and advances, the "secured
loans" category showed the strongest growth, increasing by
€20,865.7 million (up 55.0%).
—Gross loans and advances to customers
(ex reverse repos) (€Mn.)
115,392
73,635
26
2011
2012
—Loans and advances
to customers – net
31.12.2011
—Loans and advances
to customers – net
31.12.2012
1 Overdrafts and sundry
accounts
2 Mortgage loans
and credit
3 Other secured loans
and receivables
4 Commercial loans
5 Other loans
6 Other receivables
7 Finance leases
7
3%
49%
5%
8%
23%
8%
4%
1 Overdrafts and sundry
accounts
2 Mortgage loans
and credit
3 Other secured loans
and receivables
4 Commercial loans
5 Other loans
6 Other receivables
7 Finance leases
7
1
3%
58%
3%
5%
23%
6%
2%
1
Financial and share
6
6
5
5
2
2
4
4
3
3
€'000
2011
% 12/11
58,776,532
4,424,246
27,091,766
25,099,847
37,910,786
5,454,772
20,889,437
9,380,347
55.0
(18.9)
29.7
167.6
115,392,391
73,635,342
56.7
1,890,884
1,286,731
47.0
Loans and advances to customers – gross
117,283,275
74,922,073
56.5
Provisions for bad and doubtful debts and country risk
(12,180,914)
(2,268,043)
437.1
Loans and advances to customers – net
105,102,361
72,654,030
44.7
20,176,753
17,222,663
2,954,090
19,338,123
16,442,337
2,895,786
10,150,163
6,834,319
3,315,844
10,019,153
6,705,180
3,313,973
98.8
152.0
(10.9)
93.0
145.2
(12.6)
Secured loans
Commercial loans
Other loans and receivables
Other loans
ex reverse repos
Reverse repos
Memorandum item: total securitized assets
Of which: Securitized mortgage assets
Other securitized assets
Of which: Securitization issues after 01,01,2004
Of which: Securitized mortgage assets
The loan loss ratio (bad and doubtful loans as a proportion of total
qualifying loans and advances) at the close of 2012 stood at
9.3% — a figure from which assets subject to the Banco CAM
Asset Protection Scheme were excluded. The ratio was again
below the average for the Spanish financial sector as a whole.
2012
27
€'000
(1)
Total non-performing exposures
Total credit risk exposure(1)(2)
2012
2011
% 12/11
10,286,332
110,278,647
4,876,554
81,982,364
110.9
34.5
9.33
5.95
17,589,940
3,522,700
13.88
4.54
Loan loss ratio (%)(1)
Loan and real estate impairment provisions
(3)
Loan loss and real estate coverage ratio (%)
399.3
(1) Figures and percentage variations for 2012 do not include assets covered by the Asset Protection Scheme (APS).
(2) Includes contingent liabilities.
(3) Shows impairment provision coverage for the loan and real estate portfolios combined.
Financial and share
In 2012 the Banco Sabadell group saw the value of its investment
portfolio increase by 78.8% compared with the previous year to
reach a year-end total of €25,713.8 million.
Banco Sabadell's portfolio of fixed-income investments is held,
first, as part of its arrangements for macro-hedging the group's
on-balance sheet interest rate risk; second, as a source of interest
returns to boost net interest income, subject always to complying
strictly with the established limits for interest rate risk; and third,
as part of a treasury management strategy of investing cash
surpluses in the securities markets.
The Bank ensures that the credit quality of overall asset positions
held in its fixed-income portfolio is of the highest order and that it
invests in assets with the highest ratings awarded by rating agencies.
€'000
2012
2011
%12/11
Government securities
Treasury bills
Other government securities
Fixed-income securities
Doubtful assets
14,586,324
819,444
13,766,880
8,905,360
44,370
7,939,504
1,175,162
6,764,342
4,348,994
8,281
83.7
(30.3)
103.5
104.8
435.8
Total fixed-income securities
23,536,054
12,296,779
91.4
Shares and equity investments
Credit institutions
Other private sector issuers
Equity investments in unconsolidated companies
78,397
1,352,963
746,336
117,301
1,271,865
696,934
(33.2)
6.4
7.1
Total shares and equity investments
2,177,696
2,086,100
4.4
25,713,750
14,382,879
78.8
Total Investment portfolio
28
Customer funds on the liability side of the balance sheet at the
end of the year stood at €110,996.1 million, up from €78,119.9
million at the end of 2011 (a 42.1% increase).
Customer deposits grew by 41.1%. Time deposits did
particularly well, reaching a year-end total of €53,526.1 million
(up 63.1%). Demand deposits (current accounts plus savings
accounts) showed an overall increase of 44.5%.
Debt securities and other negotiable instruments together with
subordinated liabilities totalled €26,492.9 million, up from the
previous year’s figure of €19,502.5 million, a 35.8% increase.
€'000
2011
% 12/11
Current accounts
Savings accounts
Time deposits
Repurchase agreements
Accrued expenses and deferred income
Adjustments due to hedging derivatives
19,251,171
7,833,472
53,526,063
1,466,003
564,214
(176,513)
15,365,426
3,374,545
32,819,805
6,297,269
505,230
81,775
25.3
132.1
63.1
(76.7)
11.7
–
Customer deposits
82,464,410
58,444,050
41.1
Debt securities and other negotiable instruments
25,326,170
17,643,095
43.5
1,166,707
1,859,370
(37.3)
2,038,815
173,348
–
110,996,102
78,119,863
42.1
Total on-balance sheet deposits and issued securities
—Customer deposits*
31.12.2011
—Customer deposits*
31.12.2012
1 Current accounts
2 Savings accounts
3 Time deposits
4 Repurchase agreements
27%
6%
56%
11%
1 Current accounts
2 Savings accounts
3 Time deposits
4 Repurchase agreements
Financial and share
2012
23%
10%
65%
2%
4
4
1
1
2
2
3
3
* Before time period and hedging adjustments.
The value of assets in collective investment schemes (CIS’s)
at the end of the year was €8,584.8 million, up 7.0% on the
corresponding figure for 2011.
€'000
2012
2011
% 12/11
Managed collective investment schemes (CIS's)
Equity funds
Balanced funds
Fixed-income funds
Guaranteed funds
Real estate funds
Open-end investment companies (OEICs)
Mutual funds and OEICs distributed by the group
6,997,311
327,388
425,964
1,613,871
2,376,623
990,610
1,262,855
1,587,537
6,737,188
339,122
434,449
1,658,223
2,035,260
1,000,706
1,269,428
1,286,997
3.9
(3.5)
(2.0)
(2.7)
16.8
(1.0)
(0.5)
23.4
Collective investment schemes
8,584,848
8,024,185
7.0
Individual
Company
Group
2,250,102
1,435,039
23,727
1,767,125
1,067,101
24,073
27.3
34.5
(1.4)
Pension funds
3,708,868
2,858,299
29.8
12,293,716
10,882,484
13.0
Total CIS's and pension funds
29
Assets held in pension funds distributed by the group amounted
to €3,708.9 million, while insurance policies sold and liabilities
under insurance contracts increased to €9,352.0 million, a rise of
53.3% on the previous year.
Overall, customer deposits and assets under management
amounted to €131,654.6 million at the close of the year compared
with €96,062.0 million the year before, a 37.1% increase.
€'000
Financial and share
2012
2011
% 12/11
2,102,538
73,058,219
6,915,952
564,214
(176,513)
25,326,170
1,166,707
8,584,848
3,708,868
9,351,968
1,051,659
2,983,741
49,161,785
5,711,519
505,230
81,775
17,643,095
1,859,370
8,024,185
2,858,299
6,099,726
1,133,237
(29.5)
48.6
21.1
11.7
–
43.5
(37.3)
7.0
29.8
53.3
(7.2)
131,654,630
96,061,962
37.1
2012
2011
% 12/11
Capital
Reserves
Other equity instruments
Less: Own securities
Net attributable profit
Less: Dividend and similar payments
369,944
7,895,312
798,089
(25,694)
81,891
0
173,881
5,299,712
814,620
(174,439)
231,902
(69,516)
112.8
49.0
(2.0)
(85.3)
(64.7)
(100.0)
9,119,542
6,276,160
45.3
(317,945)
(389,228)
(18.3)
459,175
47,212
–
9,260,772
5,934,144
56.1
Creditors – general government
Creditors – resident sector
Creditors – non-resident sector
Accrued expenses and deferred income
Adjustments due to hedging derivatives
Debt securities and other negotiable instruments
Collective investment schemes
Pension funds
Insurance policies sold and liabilities under insurance contracts
Wealth management
Total customer deposits and assets under management
€'000
Total equity
Liquidity management and funding
30
The group's funding policy continued to focus on attracting deposits
and other customer accounts through the branch network. This
strategy was of particular relevance in an operating environment
where the capital markets remained closed for a considerable part of
the year 2012 as the sovereign debt crisis became more acute and
spreads on Spanish government debt over the German Bund climbed
to unprecedented heights, causing widespread uncertainty among
investors in Spain's financial sector. However, the determination of
the European Central Bank (ECB) to ensure the survival of the euro
and its September announcement that it would support any eurozone
country that needed supporting, combined with the publication by
the Bank of Spain, in September, of the results of stress tests carried
out as part of the process of recapitalizing and restructuring of the
Spanish banking industry, caused confidence to return to the capital
markets. The last quarter of the year saw some stabilization of debt
issuance and a tentative reopening of the markets.
As far as its wholesale market funding activities were
concerned Banco Sabadell, like the rest of the banking sector, saw
its ratings downgraded by the three major rating agencies, very
largely in response to lower sovereign credit ratings on Spain.
In another development, the Bank completed arrangements
to have its debt rated by the DBRS credit rating agency, and on 31
December 2012 it gave notice that it would not be renewing its
contract with Fitch Ratings as a setter of credit ratings for the group.
—Ratings awarded to Banco Sabadell debt securities
Rating
agency
Standard & Poor's
Short-term
debt
Mortgage
covered bonds
Public sector
covered bonds
A (low)
Ba1
R-1 (low)
NP
A3
A3
BB
B
Other
Negative outlook
Negative outlook
Financial strength D
Negative outlook
The group has a number of short- and long-term funding
programmes in place, giving it a suitable diversity of funding
sources and an appropriate diversity of products, maturities
and investors. Its short-term funding arrangements include a
Spanish commercial paper ("pagaré") issuance programme with
an upper limit of €5,000 million and a Euro Commercial Paper
(ECP) programme with a nominal value of up to €3,500 million.
The commercial paper programme is aimed primarily at domestic
investors and the amount outstanding under the programme
increased during the year, mainly through sales to unqualified
investors. The balance outstanding at 31 December was €3,222
million. The group's ECP programme, aimed at global qualified
investors, saw a modest increase from December 2011, when
there had been no issues outstanding under the ECP programme.
The balance at 31 December 2012 was €37 million.
As part of its longer-term funding, in 2012 Banco Sabadell
issued bonds totalling €3,845 million under its nonparticipating
securities issuance programme, designed for qualified and nonqualified investors. It also made two public issues of 3-year and
2-year mortgage covered bonds (cédulas hipotecarias) for total
amounts of €1,200 and €500 million, respectively; two issues
of covered bonds underwritten by the European Investment Bank
(EIB) for a total of €295 million with terms of between eight and ten
years, and five issues of straight bonds aimed at the general public
for a total of €1,850 million, with terms of between 12 months and
two years.
In addition to these sources of funds, the Bank holds
a reserve of liquid assets —cash and assets realizable in
the short-term— which would enable it to face any liquidity
contingency. In the course of 2012 Banco Sabadell continued
to strengthen its liquid asset base by generating a positive
funding gap between deposits and loans —more than €15,000
million in 2012— via its branch network, and also by adding new
eligible loans totalling more than €4,150 million to the assets
pledged as collateral under its liquidity facility with the Bank
of Spain. This was made possible, first, by the more relaxed
admissibility criteria for assets eligible as collateral in monetary
policy operations approved by the Bank of Spain on 9 February;
Financial and share
DBRS
Moody’s
Long-term
debt
31
Financial and share
32
and, second, by the arrangement of a €1,916.1 million loan
to the fund set up by the Spanish government for the purpose
of regularizing payments to suppliers of local and regional
governments. At 31 December Banco Sabadell's eligible liquid
asset base comprised more than €17,500 million in cash and
cash equivalents.
At 31 December Banco Sabadell's net position with the ECB
totalled €23,650 million as a result of the ECB's 3-year liquidity
auctions of 22 December 2011 and 1 March 2012, in which
Banco Sabadell and Banco CAM participated and were allotted
amounts of €4,000 and €7,500 million and €6,000 and €6,150
million respectively.
Banco Sabadell's liquidity management policy seeks to ensure
that its lending can be financed at a reasonable cost and within
a reasonable time so that liquidity risk is kept to a minimum. Its
standard liquidity management procedures are as follows:
—Each year a funding plan is drawn up based on the funding
needs identified for each business unit and the amount to be
raised on the capital markets, spread over a range of long- and
short-term funding programmes.
—Regular checks are made to see that the funding plan is being
adhered to and any deviations from the plan are identified for
each business unit and the funding plan updated accordingly.
—The Bank's short-term commitments, treasury position and
future projections are reviewed periodically to ensure that the
Bank has sufficient liquidity to meet its financing needs in the
long and short term.
—Banco Sabadell regularly updates its liquidity contingency
plan to ensure that it has sufficient liquid assets available to
respond effectively to any liquidity stress scenario that could
arise. At the same time it assesses the quality of its portfolio
of liquid assets by studying the sensitivity of these assets to
different ratings downgrade scenarios.
Profit performance in 2012
Despite the challenging economic and financial conditions, the
Banco Sabadell group ended the year 2012 with a net attributable
profit of €81.9 million after net provisions for loan defaults,
securities revaluations and real estate writedowns amounting
to €2,540.6 million. In the year 2011, when the group's net
attributable profit was €231.9 million, net provisions were
significantly lower at €1,048.9 million.
—
—A dynamic ALM policy and solid growth in customer
numbers are driving income generation
—Exceptional profits of €2,541 million allocated
in 2012 to boost provisions
—
Financial and share
At the close of 2012, net interest income totalled €1,868.0
million, rising by 21.5% on the previous year's figure. The inflow
of income from Banco CAM after June 2012, together with careful
management of interest spreads and an increased contribution from
the group's fixed-income investments helped to offset the negative
effect of the higher cost of borrowing on the capital markets.
Dividends received amounted to €9.9 million, up 12.7%
on 2011's figure of €8.8 million. Profits of equity-accounted
undertakings, on the other hand, were down on the previous year,
partly as a result of the sale of a number of equity holdings (Banco
del Bajío, for example) that had been returning good results.
Net fee and commission income was €628.7 million,
increasing by €55.1 million (up 9.6%) on the year. Income
categories showing particularly good growth were credit card fees,
current account charges and charges for other services.
Net income from trading in 2012 was €546.2 million. Key
contributors to this result included profits of €270.3 million
on disposals of fixed-income assets available for sale, €166.3
million on buybacks of asset-backed securities and redemptions
of securities issued by the group, and €132.2 from trading in
securities. In 2011 net income from trading had included profits
of €139.0 from securities trading and €87.1 million on a debt-forequity swap offer in the first quarter of the year (the issue and sale
of 126 million Banco Sabadell shares as part of an offer to buy
back preferred securities and subordinated debt at a discount).
Other operating income and expenses showed a net outflow
of €142.5 million compared with a net inflow of €8.2 million the
previous year. A major expenditure item in 2012 was the group's
€220.3 million contribution to the Bank Deposit Guarantee Fund,
a far higher amount than the €29.8 million paid to the Fund in the
previous year.
Operating expenses for 2012 were €1,511.6 million, of which
€22.2 million were non-recurring. Recurring costs in 2012 were
down 5.9% on a like-for-like basis compared with 2011. The cost:
income ratio with non-recurring costs excluded was 50.3% at the
close of the year.
The resulting operating profit (before impairment and other
provisions) for the year was €1,289.9 million, up 4.8% on the
previous year.
Net provisions for loan losses totalled €1,405.7 million,
a sharp rise on the 2011 figure of €512.4 million. Additional
provisions of €1,134.9 million were also set aside to cover
impairment losses on real estate and financial assets.
Gains realized on asset disposals during the year totalled
€15.4 million. This included the profit from the sale of the Bank's
shareholding in Banco del Bajío. Profits on asset disposals in
2011, at €5.7 million, were considerably lower.
The group's income statement for 2012 includes an income
item of €933.3 million in negative goodwill arising on the
acquisition of Banco CAM.
After deducting income tax and the share of profits attributable
to non-controlling interests, this leaves a net attributable group
profit for the year of €81.9 million, down from €231.9 million in
2011. At the close of 2012 the Tier capital and core capital ratios
stood at 10.4%, both ratios having increased from their year-end
levels in 2011 (9.9% and 9.0% respectively).
33
€'000
2012
% S/ATM
2011
% S/ATM
12/11%
4,735,621
(2,867,633)
3.43
(2.07)
3,394,082
(1,856,819)
3.52
(1.93)
39.5
54.4
1,867,988
1.35
1,537,263
1.60
21.5
9,865
(11,735)
628,689
546,236
59,881
(142,478)
0.01
(0.01)
0.45
0.40
0.04
(0.10)
8,752
37,650
573,593
271,246
69,999
8,219
0.01
0.04
0.60
0.28
0.07
0.01
12.7
–
9.6
101.4
(14.5)
–
2,958,446
2.14
2,506,722
2.60
18.0
Personnel expenses
Other general administrative expenses
Depreciation and amortization
(996,546)
(515,079)
(156,925)
(0.72)
(0.37)
(0.11)
(742,600)
(402,491)
(130,921)
(0.77)
(0.42)
(0.14)
34.2
28.0
19.9
Profit before impairment and other provisions
1,289,896
0.93
1,230,710
1.28
4.8
(2,540,629)
15,407
933,306
(1.84)
0.01
0.68
(1,048,916)
5,672
0
(1.09)
0.01
0.00
142.2
171.6
–
0
398,055
0.00
0.29
0
48,406
0.00
0.05
–
–
Consolidated profit for the year
96,035
0.07
235,872
0.24
(59.3)
Attributable to non-controlling interests
14,144
3,970
256.3
Net attributable profit
81,891
231,902
(64.7)
Interest and similar income
Interest expense and similar charges
Net interest income
Returns on equity instruments
Net income from equity-accounted undertakings
Fees and commissions (net)
Income from trading (net)
Foreign exchange differences (net)
Other operating income and expense
Gross income
Financial and share
Loan loss and other provisions
Profit on disposal of assets
Negative goodwill
Profit from discontinued operations
(net of tax)
Income tax
Net interest income
34
Net interest income for the year 2012 totalled €1,868.0 million,
up by 21.5% on the figure for 2011. The increase was due very
largely to the merger of Banco CAM from June 2012. Average
loans and advances to customers were up 29.6% while average
customer deposits also grew, rising by 24.7%.
Interest receivable on loans and advances to customers was
up from 4.05% in 2011 to 4.11% in 2012, an increase of 6 basis
points. On the other hand, capital market funding costs rose by
139 basis points; this was due mainly to the impact of deferred
fair value adjustments to the values of securities acquired as a
result of the take-over of Banco CAM. The cost of deposits and
other customer funds increased by just 2 basis points from 2.04%
in 2011 to 2.06% in 2012.
Interest spreads showed an improvement despite a climate of
falling interest rates, with 3-month Euribor averaging 0.6% over the
year compared with 1.4% in 2011. Skilful management of deposit
and lending rates helped to offset this decline in interest rates, with
the result that interest spreads moved up 4 basis points, rising from
2.01% in 2011 to 2.05% in 2012. However, net interest income
diminished as a proportion of average total assets, falling from
1.6% in 2011 to 1.4% in 2012. This fall was a consequence of the
integration of Banco CAM data, which included a higher proportion of
non-performing assets.
€'000
Cash. central banks
and other credit institutions
Loans and advances to customers
Fixed-income investments
Equity investments
Tangible and intangible assets
Other assets
Total capital employed
Total funds
2012
Rate
Income/
expense
Average
Amount
2011
Rate
Income/
expense
4,568,908
90,942,333
21,293,577
2,093,708
2,803,977
16,532,236
1.20
4.11
3.55
–
–
1.14
54,773
3,736,363
755,683
0
0
188,802
2,441,323
70,162,479
13,143,326
2,090,937
2,025,523
6,433,921
1.60
4.05
3.31
–
–
1.22
38,955
2,841,394
435,211
0
0
78,522
138,234,739
3.42
4,735,621
96,297,509
3.52
3,394,082
24,986,726
61,200,950
29,724,584
5,261,783
9,797,288
7,263,408
(1.44)
(2.06)
(3.73)
(1.13)
(0.82)
–
(359,055)
(1,260,409)
(1,108,684)
(59,380)
(80,105)
0
7,386,781
49,068,198
22,785,085
5,313,818
5,772,118
5,971,509
(2.41)
(2.04)
(2.34)
(1.48)
(1.18)
–
(177,704)
(999,142)
(533,081)
(78,796)
(68,096)
0
138,234,739
(2.07)
(2,867,633)
96,297,509
(1.93)
(1,856,819)
1.35
1,867,988
1.60
1,537,263
Net interest income
Financial and share
Credit institutions
Capital market
Other liabilities
Average
amount
Net fee and commission income reached a year-end total of
€628.7 million, up 9.6% on the figure for 2011. This growth was to
a large extent due to the integration of Banco CAM data from June
2012 onwards.
Service-related fees and commissions were up 19.5%, with
credit card fees, payment order fees and other customer service
charges all showing good growth. Fees and commissions related
to loan and guarantee risks were also up on the year before, with
a 10.6% rise that was helped by similar upward shifts in loanrelated charges and in fees chargeable on avals and other bank
guarantees. Management fees on mutual funds and commissions
on sales of pension funds and insurance were down 14.1% overall
on the year, reflecting general market trends over the period.
€'000
2012
2011
% 12/11
Lending-related fees
Avals and other guarantees
Paid to other banks
114,301
96,582
(4,592)
103,105
87,160
(3,693)
10.9
10.8
24.3
Fees and commissions on loans and guarantees
206,291
186,572
10.6
96,925
44,109
56,491
49,417
72,839
69,165
38,525
70,895
34,730
54,205
40.1
14.5
(20.3)
42.3
34.4
319,781
267,520
19.5
66,413
36,204
73,812
45,689
(10.0)
(20.8)
Fees and commissions related to mutual funds. pension funds and insurance
102,617
119,501
(14.1)
Total net fees and commissions
628,689
573,593
9.6
Payment cards
Money transfers
Securities
Current account charges
Other ratings
Fees and commissions for service
Mutual funds
Commissions on sales of pension funds and insurance
35
General administrative expenses
Financial and share
Administrative expenses for the year 2012 were €1,511.6 million,
an increase of 32.0% on the previous year which reflected the
integration of administrative expenses for Banco CAM from June
2012 onwards. Of this €1,511.6 million, €22.2 million were
non-recurring expenses. Recurring expenses in 2012 were down
5.9% on a like-for-like basis compared with the previous year. In
particular, the various measures put in hand as part of the group's
operating efficiency programme, both in branch-level administrative
processes and other areas, resulted in a reduction of 3.9% in likefor-like personnel expenses. Other recurring administrative costs,
again on a like-for-like basis, showed an even better result, falling by
9.3% compared with the figure for 2011.
€'000
2012
2011
% 12/11
Wages and salaries
Social welfare costs
Other staff-related costs
(748,944)
(156,349)
(91,253)
(538,109)
(113,017)
(91,474)
39.2
38.3
(0.2)
Personnel expenses
(996,546)
(742,600)
34.2
IT and systems
Communications
Advertising
Premises. fittings and equipment
Printed material and office supplies
Taxes
Other expenses
(66,875)
(27,323)
(48,261)
(152,873)
(6,862)
(73,212)
(139,673)
(58,007)
(20,277)
(35,585)
(111,763)
(7,013)
(61,962)
(107,884)
15.3
34.7
35.6
36.8
(2.2)
18.2
29.5
Other administrative expenses
(515,079)
(402,491)
28.0
(1,511,625)
(1,145,091)
32.0
2012
2011
% 12/11
Loan impairment provisions
Real estate
Investments in associated undertakings
Financial investments available for sale (equity securities)
Other net provisions and impairment charges
(1,405,685)
(821,080)
(235,233)
(50,565)
(28,066)
(512,362)
(351,039)
0
(118,198)
(67,317)
174.4
133.9
–
(57.2)
(58.3)
Total net provisions and impairment charges
(2,540,629)
(1,048,916)
142.2
Total general administrative expenses
Net provisions and impairment charges
During the year the group allocated €2,541 million against profits to
strengthen the loan and other impairment provisions on its balance
sheet.
€'000
36
—
—
—
—
—
—
—
—
—
—Acquisition
of Banco CAM
—
—
—
—
—
—
—
Banco Sabadell then gave an undertaking, as part of the
approval process, to carry out an integration plan drawn up by
FROB officials. This would involve the closure of 450 branches of
the combined undertaking and staff reductions of approximately
2,200 by 31 December 2013.
In December 2012 Banco CAM, S.A.U. was formally merged by
absorption into Banco de Sabadell; in the same month the process
of business systems integration was completed and the new
SabadellCAM brand was launched.
The SabadellCAM branches have been merged seamlessly with
the rest of the group. The results of the SabadellCAM campaign
in the last quarter of 2012 to generate new business were better
than expected, winning a total of 7,335 new customers and
securing €1,286 million in deposits and other funds.
The Banco CAM acquisition represented a transformative leap
for Banco Sabadell. It enabled the Bank to contemplate a future
that assures it of a place among Spain’s top banking groups, and
this at a crucial time when Spain’s financial system was subjected
to stress and under intense pressure to consolidate.
—
—The integration of Banco CAM operations and
systems – one of 2012's major achievements
—
—
Acquisition of Banco CAM
On 7 December 2011 Banco Sabadell made a successful bid for
Banco CAM in a competitive bidding process organized by the Fund
for Orderly Bank Restructuring (Spanish initials: FROB) following
the reorganization of the Caja de Ahorros del Mediterráneo (CAM).
The take-over deal was agreed on financial terms that
included risk limitation provisions. It had a strategic impact as it
substantially extended the Bank’s existing franchise in Alicante,
Murcia, Valencia and the Balearic Islands.
The take-over arrangements were drawn up according to
parameters that were set out in the bidding conditions. A contract
containing a promise to carry out a sale and purchase of shares
was concluded by the FROB, the Deposit Guarantee Fund (Spanish
initials: FGD) and Banco Sabadell; and a protocol on the provision
of financial assistance for a restructuring of Banco CAM was
signed by Banco CAM, Banco Sabadell, the FROB and the FGD.
Once all required permissions had been obtained and the
Banco CAM restructuring plan had been approved by the European
Commission, the FGD increased its capital by €2,449 million in
addition to the €2,800 million it had already disbursed and Banco
Sabadell was then able to purchase 100% of the shares of Banco
CAM for the price of one euro.
As a result of the acquisition an Asset Protection Scheme (APS)
came into effect, as agreed in the protocol on financial assistance
for the restructuring of Banco CAM, with retroactive effect as from
31 July 2011. Under the APS, for a specified portfolio of assets
with a gross value of €24,660 million, the FGD would underwrite
80% of all losses on the portfolio for a period of ten years, once all
provisions made in respect of those assets had been absorbed.
39
—
—
—
—
—
—
—
—
—
—Group
businesses
—
—
—
—
—
—
—
Group businesses
Banco Sabadell is at the head of Spain's fourth largest privately
owned banking group. The group offers a full range of banking
and financial services through its different financial institutions,
brands, subsidiaries and associates. The group's development
objectives are strongly focused on profitable growth and the
generation of shareholder value through a strategy of business
diversification based on high returns, efficiency and quality of
service together with a conservative risk profile, while maintaining
high standards of ethics and professional conduct combined with
sensitivity to stakeholders' interests.
The Bank has a business model that fosters long-term customer
relationships through constant efforts to promote customer loyalty
and by adopting an initiative-based, proactive approach. The Bank
offers a comprehensive range of products and services, competent,
highly qualified personnel, an IT platform with ample capacity to
support future growth and a relentless focus on quality. The group
has four main areas of business: Commercial Banking; Corporate
Banking and Global Businesses; Markets and Private Banking, and
BS America. It has seven regional divisions with full responsibility for
their areas, and several business-focused support teams.
Commercial Banking
42
Commercial Banking is the largest of the group's business lines. It
focuses on providing financial products and services to large and
medium-sized businesses, SMEs, retailers and sole proprietors,
professional groupings and other personal customers. Its high
degree of market specialization ensures that customers receive a
personalized service of the highest quality tailored to their needs,
whether from expert staff throughout its extensive branch network
or via other channels that support the customer relationship and
give access to remote banking services.
SabadellAtlántico, the group's flagship brand, operates in most
of the country’s regions except those served by other group brands,
namely: Asturias and León, an area served by the group's Banco
Herrero brand; the Basque Country, Navarre and La Rioja, where
the group is represented chiefly through its SabadellGuipuzcoano
network; and the Valencia and Murcia regions, once dominated
by the former Banco CAM, where the group’s brand is now
SabadellCAM. Its SabadellSolbank brand has the primary aim
of meeting the needs of Spanish-resident foreigners from other
European countries. It does this through a chain of specialist
branches operating only in the Canary Islands, the Balearic Islands
and the country's southern and south-eastern mainland coastal
areas. Finally, ActivoBank is there to serve customers who prefer to
do their banking exclusively by telephone or online.
Corporate Banking and Global Businesses
Corporate Banking and Global Businesses offers a range of
products and services to large corporates and financial institutions
in Spain and abroad. Its activities embrace corporate banking,
structured finance, corporate finance, development capital,
international trade and consumer finance.
Banco Sabadell's Markets and Private Banking division is made up
of several departments, namely SabadellUrquijo Banca Privada;
Investment, Products and Research; Treasury and Capital Markets;
Securities and custodian services; and Bancassurance. With a
service offering that includes research into investment alternatives,
market trading, active wealth management and custodian services,
the division covers all aspects of the investment process that are
regarded as critical by clients who rely on the Bank to manage their
savings.
Markets and Private Banking is well equipped to offer high
value products and services designed to secure the best possible
returns for customers, thanks to optimized investment and
investment management processes that depend on disciplined
analysis and professionalism of a high order.
Constant changes in the regulatory environment are a key
focus of attention for Markets and Private Banking, especially the
rules on investor protection and market transparency introduced
as a result of the European Financial Markets Directive (MiFID).
The Bank has a design and approval process for products and
services which ensures that the full range of offerings available
Markets and Private Banking
Group businesses
The Bank’s major clients are served by a team of expert
managers working from its offices in Madrid, Barcelona, London,
Paris and Miami. The group's business model in serving these
clients is based on a comprehensive offering of specialized
financing services and solutions, ranging from cash management
to more sophisticated, tailor-made solutions in such areas as
financing, treasury services and corporate finance.
In the area of structured finance Banco Sabadell has a team
that operates from offices in Madrid, Barcelona, the Basque
country, Miami and New York and has more than 20 years'
experience in originating and structuring deals, whether in the area
of corporate finance or project finance.
Sabadell Corporate Finance is a group subsidiary that
specializes in advising on mergers and acquisitions. It advises
corporate transactions such as company sales and acquisitions,
mergers and MBOs, assists companies in finding new or
replacement partners and provides independent value appraisals.
Banco Sabadell's development capital business focuses on
two main areas: taking temporary equity positions in non-financial
companies; and medium-term investments in energy projects, with
the accent on renewable forms of energy.
In its international business the Bank aims to be present
in the markets that are of most interest to companies actively
engaging in foreign trade. It does this by having a network of
foreign branches, subsidiaries and associates to support its
customers' operations in other countries; it also maintains
working arrangements with more than 2,800 correspondent
banks all over the world, thus providing customers with a further
assurance of genuinely global coverage.
Sabadell Fincom is a group subsidiary specializing in consumer
finance. Its principal business is providing point-of-sale finance for
the leasing or purchase of cars, computer equipment, domestic
appliances, health care accessories and other products.
43
to customers more than meets their requirements in terms
of quality, returns and appropriateness to market conditions.
Moreover, the constant updating of procedures for investment risk
classification and customer risk profile assessment, coupled with
continuously evolving investment advice and monitoring tools and
methodologies, ensure a high degree of consistency across all
phases of the investment process.
BS America
Group businesses
The BS America operation comprises a number of business units,
associated undertakings and representative offices which together
provide financial services in the corporate banking, private banking
and commercial banking fields. The business is managed from
Miami, where Banco Sabadell has a full-service international
branch which has been in operation since 1993. In the course of
2012 the Bank opened a branch in New York which handles a large
part of the group's structured finance business.
During the year 2012 Banco Sabadell continued to pursue its
aim of consolidating its domestic banking operation in the state
of Florida through its subsidiary Sabadell United Bank. In June it
completed the work of integrating the IT systems of bank branches
acquired as a result of its acquisition of Lydian Private Bank, thus
further strengthening its local banking business in Florida. In the
same month it acquired the assets and liabilities of Banco CAM's
branch in Miami, which were then integrated with those of its
international full-service branch in that city. The Bank thus concluded
its fourth and fifth corporate actions in the state of Florida within a
five-year period that had already seen the acquisition of TransAtlantic
Bank in 2007, the take-over of BBVA's private banking business in
2008 and the purchase of Mellon United National Bank in 2010.
Banco Sabadell retained its interest in Banco BHD, a highly
regarded institution in the Dominican Republic. Its also maintains
representative offices in Mexico, Venezuela, Brazil and the
Dominican Republic for the convenience of customers in the
Americas region.
—
—Commercial Banking in 2012
—
—
44
In 2012, despite a highly complex operating environment, a major
promotional effort aimed at attracting new customers and deposits
through a strong local branch presence resulted in increased
market shares for the Bank.
—
—A year of achievement in new customer acquisition
—
—
Net interest income attributable to Commercial Banking totalled
€1,531.3 million in 2012, with pre-tax profits reaching €151.7
million. The ROE was 3.1% and the cost:income ratio was 60.9%.
Loans and advances totalled €91,975 million and customer funds
under management stood at €69,514 million.
€'000
Change
y,o,y, (%)
Net interest income
Other income
1,531,259
450,652
(90,640)
1,279,557
372,335
26,570
19.7
21.0
-
Gross income
1,891,271
1,678,462
12.7
(1,151,999)
(883,867)
30.3
739,272
794,595
(7.0)
(587,574)
(352,364)
66.8
151,698
442,231
(65.7)
3.1
60.9
10.9
74.1
12.2
52.7
6.6
48.0
Business volumes (€Mn,)
Loans and advances
Customer accounts
Securities
91,975
69,514
7,898
53,203
41,600
5,469
72.9
67.1
44.4
Other information
Employees
Branches in Spain
10,924
1,839
7,259
1,322
50.5
39.1
Operating expenses
Operating profit (loss)
Impairment losses
Profit (loss) before tax
Ratios (%)
ROE
Cost:income ratio
Loan loss ratio
Loan loss coverage ratio
* Figures for 2012 include performance data for Banco CAM from June onwards.
Market segments
2011
Group businesses
2012*
Companies, businesses, government and local authorities
A key aspect of the work of the Bank's branches in 2012, as
envisaged in the group's current 3-year strategic plan, was the
ongoing campaign to win new customers. During the year 72,981
companies were added as new customers of Banco Sabadell, a
number that was 31.4% up on the previous year's figure. In the
third quarter the SME and large corporate business segments saw
their shares in the division’s overall total reach unprecedented
heights, rising by 8.1% for both customer groups. Especially
noteworthy was the large corporate segment’s share in the total,
which rose to 70.6%, a clear sign of the added value afforded by
the possession of a network of dedicated business branches
which at the end of the year consisted of 71 branches covering
every part the country.
In the business customer segment, acquisition levels were
highly significant and increased the share of this customer group
by 6.5% compared with the previous year. A key element in new
business generation was the "Expansión Negocios" account,
a specially targeted product that was launched in 2010 and
45
Group businesses
46
remains fully competitive in terms of both services and cost and
is consequently highly effective as a marketing aid. To make
the management of this large number of new customers more
cost-effective, a customer education programme was put in hand
with the aim of helping customers to develop their multi-channel
abilities and thus enabling them to have more of their commonest
banking needs serviced remotely.
In its approach to public sector customers, the group finalized
a plan for engaging with the public sector which resulted in the
formation of a team of dedicated managers covering all parts
of the country. In 2012 positive results were achieved across
a range of business metrics including increases in customer
numbers and customer funds, which were up by 33.7% and
36.5% respectively compared with the previous year. Another
noteworthy aspect was Banco Sabadell's active participation in
mechanisms set up by the Spanish Government to finance the
country's regional governments and manage their payments
to suppliers: the Regional Liquidity Fund and the Fund for the
Financing of Payments to Suppliers.
All through 2012 the group waged an intense promotional
effort whose primary focus was on attracting deposits and
other funds. The success of this campaign meant that, despite
fierce competition within the banking industry and the prevailing
economic climate, customer funds grew by 9.6% year-on-year,
rising by €1,805.8 million in absolute terms. Key contributors to
this growth were commercial paper (pagarés) and term deposits,
especially the "Líder" 12-month deposit. Key products in the drive
to promote customer loyalty and increase cross-sale ratios were
business and store protection policies, with take-up rates rising by
29.6% compared with the previous year. In working capital finance
the group decided to anticipate new SEPA regulations due to come
into effect in 2014 by introducing two new products, B2B and Core
Direct Debits, which provide further safeguards for customers in
their business transactions. For another year more specialized
forms of financing such as factoring and "confirming" (discounted
payments of invoices presented by a customer's named suppliers),
particularly in cross-border transactions, provided customers with
additional solutions for their global collections and payments.
One area deserving of special mention is the group's firm
commitment to e-commerce. During the year a special unit
was set up to be a source of expertise with a mission to drive
innovation and give advice and support to business customers
entering the world of online selling.
Support of another kind was offered to customers in the
form of solutions to help them meet their funding and liquidity
requirements. During the year numerous agreements were made
with official agencies at central government and regional level,
under which the Bank was able to provide a total of €1,565.0
million in loan finance. A very similar area of business that
generated much activity during the year was the provision of
finance to businesses and sole traders under Official Credit
Institute-sponsored schemes, in which the Bank achieved a 12.2%
share, putting it in third place among participating banks and
improving its ranking by two notches compared with the previous
year. The ICO funding schemes with the highest take-up were ICO
Liquidez and ICO Inversión, with disbursements totalling €752.3
million and €557.8 million respectively. The Bank was also the
2012
2011
Change
y,o,y, (%)
893,357
210,074
(21,835)
838,259
174,655
4,681
6.6
20.3
-
1,081,596
1,017,594
6.3
Loans and advances
Customer accounts
Securities
58,979
26,866
4,000
39,971
20,171
3,493
47.6
33.2
14.5
Loan loss ratio
13.61%
7.87%
Net interest income
Other profits/losses
Gross income
€'000
Group businesses
top provider of finance under the ICO Exportadores, ICO Garantía
SGR and ICO Emprendedores funding schemes, in which its shares
were 88.0%, 35.7% and 31.9% respectively.
The Bank also continued to work tirelessly to promote
international trade and offer guidance to businesses. As part of
this effort it organized a series of foreign trade seminars that were
attended by over 2,100 firms. The "Exportar para crecer" [Export
to grow] programme, an innovative combination of products and
training events designed to meet customers' exporting needs, was
launched during the year. Activities of this kind confirmed Banco
Sabadell's position as a key supplier of services for foreign trade,
both to existing and potential customers. An indication of this was
the growth in its share of the export and import documentary credit
businesses compared with 2011, with year-end market shares of
24.3% and 14.1% respectively.
In 2012 Banco Sabadell was once again a leading provider of
medium- and long-term finance, especially in the areas of leasing,
sale-and-leaseback, marine finance and finance for expansion
and renewing plant and equipment. One indication of this was an
18.0% rise in the group's plant and equipment leasing business
with its focus on energy-efficiency, in which it was a major market
player. In the area of leasing, the launch of a special product for
franchises to help franchisees obtain access to credit was a
noteworthy development.
The last month of the year saw a further progress in
implementing the group’s policy of focusing on particular market
segments, with two highly targeted sales teams being set up:
one dedicated to businesses in market segments related to
the tourist/holiday industry, and one focused exclusively on
institutional clients.
47
Individual customers
The year 2012 was of special significance for the Bank's goal, as
set out in its current 3-year strategic plan, of perfecting its growth
strategy for the individual customer segment. Record figures for
customer growth were achieved for the second year in succession
as new customers reached a total of more than 338,800, an
increase of 18.2% on the figure for 2011. At the same time, the full
integration of the Banco CAM group, the market leader in serving
the needs of individual customers in the regions of Valencia and
Murcia, resulted in Banco CAM’s two million-strong customer base
being transferred to Banco Sabadell.
Group businesses
48
Another factor of critical importance in 2012 in attaining the
group's strategic goals of winning new customers and deepening
customer relationships was a major promotional effort across the
entire branch network; this was organized around a combination of
three pivotal themes: profile-raising actions, competitive products
and service quality.
Actions to raise the group's profile took the form of
investment in advertising campaigns in which the main emphasis
was on transmitting the group's values as a basis for building
long-term relationships.
In 2012 it was once again the "Cuenta Expansión" account
that had the star role in the Bank’s product offering and provided a
keynote for campaigns to generate new business and transaction
activity from a more sophisticated customer. Cuenta Expansión, a
product strongly promoted at branch level and well established in
the marketplace, proved once again to be highly competitive.
Finally and no less importantly, the group's determination to
grow without compromising its high standards of customer service
ensured that Banco Sabadell scored the lowest customer attrition
rate of any bank in 2012 (according to research by FRS Inmark
on the banking habits of the general public in Spain), despite
substantial increases in customer numbers.
A key event in the group's promotional efforts directed at the
personal banking (non-mass market) customer segment in 2012
was the launch of the "Cuenta Expansión Premium" account,
supplementing the standard Cuenta Expansión product with a
range of exclusive features for the personal banking customer.
At the same time, efforts to attract new funds to strengthen the
balance sheet were rewarded with a 4.7% increase in funding
from customers over the year.
For middle-income customers the “Cuenta Expansión”
provided the main hook on which to hang promotional activities
aimed at winning and retaining new customers looking for a
solution to their day-to-day banking needs. By the close of the
year 173,870 new accounts of this type had been opened, with
direct debit bill payments showing a 9.3% rise as of November.
Meanwhile, promotional campaigns aimed at growing onbalance sheet funds succeeded in attracting a total of
€20,330.4 million in new funding by the end of the year, a figure
that was 17.8% higher than the year before.
In mortgage finance, a large part of the group's business
consisted of mortgage loans for purchases of properties owned
by the Bank or whose development it had financed. In 2012 these
loans accounted for 44.7% of the aggregate value of mortgage
loans granted, well above the 26.7% they represented in 2011.
The group's share of new home loans arranged during the year
increased by 57.2% (as of September), to 3.7%, compared with the
2.3% the year before.
In a context of lower consumer spending by households, the
group saw an increase in its short-term lending compared with
the previous year. This was driven partly by growth in the number
of drawdowns on pre-arranged overdraft facilities via online or
other remote channels, and partly by increased use of the "Línea
Expansión", a facility designed to provide cash advances to
households to fund day-to-day spending needs. The Bank also
continued to be a leading provider of funding for courses of study
at business schools such as IESE, ESADE or IE, a group which was
Group businesses
joined by EADA, LaSalle, AGAUR-ICF and other business schools
during the year.
The group's credit card business also saw significant growth,
with revenue increasing by 20.0% and the number of cards in use
by 63.0%, including figures for Banco CAM. The Bank’s share of the
EPOS market was up by 22.5% on the previous year, reaching 8.6%
by the end of 2012.
A notable development in the group's services targeted at
Spain’s resident expatriate community, offered mainly through
the SabadellSolbank branches, was the success of the “Regular
Transfer Plan” exclusively for UK citizens who make up 43% of the
group’s foreign customers. The plan was launched in 2012 and is
designed to make it easier for British expatriates to have regular
automatic transfers sent from the UK to their accounts in Spain
without having to make special arrangements with their UK bank.
The strong take-up of the service among UK customers resulted in
a 473.8% increase in net income from the service compared with
2011. The number of customers in this market segment reached
a year-end total of 243,000, with assets under management in
excess of €5,009.7 million.
Finally ActivoBank, with more than 55,000 customers at the
close of the year, continued to focus on wealth management,
generating business volumes of more than €1,597.6 million. Its
key priority continued to be growing its balance sheet funds, which
were up 16.3% on 2011.
€'000
Loans and advances
Customer accounts
Securities
Loan loss ratio
2011
Change
y,o,y, (%)
637,902
240,577
(68,805)
809,675
441,299
197,680
21,889
660,868
44.6
21.7
–
22.5
32,995
42,647
3,898
13,232
21,429
1,976
149.4
99.0
97.3
5.65%
3.90%
Net interest income
Gross income
2012
Banco Herrero
Banco Herrero saw its customer base increase by 32,361 in 2012,
a sign of the trust enjoyed by the brand within its regional market of
Asturias and León, as well as the popularity of its product offering
and the effectiveness of its branch sales personnel. Of these new
customers 28,571 were individuals and 3,790 were businesses,
confirming Banco Herrero's position as a key player within its
Asturias and León base.
The rise in customers immediately translated into business
growth and boosted the inflow of funding which grew by more than
for all other competitors within the territory served by the Herrero
brand, rising by €588.1 million to a year-end total of €7,145.2
million, 9.0% more than at the end of 2011. This was helped by the
boost to confidence given to all the group’s customers on seeing
it being classed as one of the most resilient Spanish banks with
sufficient capital to outride the most adverse macroeconomic
49
Group businesses
50
scenarios, as was demonstrated by independent audits carried out
on Spain's leading financial institutions.
A clear indication of Banco Sabadell's position as a key provider
of finance for business ventures is the active part it has played in
ICO-subsidized funding schemes in Asturias and León in the last few
years. In 2012 Banco Herrero was responsible for 35% and 20%,
within Asturias and León respectively, of the total amount made
available under the ICO scheme by all participating banks combined.
In some schemes, entrepreneur finance for example, Banco Herrero
saw its share rise to as much as 65% for Asturias and 24% for
León. The group's aim of bringing financing solutions to businesses
was furthered by agreements made during the year with the
Asturian Enterprise Federation (FADE) and the León Entrepreneurs'
Federation (FELE). These resulted in the "Impulso" scheme under
which funds amounting to €300 million were released to support
business entrepreneurship in Asturias and León.
Vigilance in the selection and monitoring of loans was once
again a key priority and the loan loss ratio, which stood at 3.8% at
the end of the year, was one of the lowest for the Spanish banking
industry as a whole.
Banco Herrero received awards which, for another year,
showed the high levels of appreciation and satisfaction with the
brand among customers and the wider community in Asturias
León. These included the Medal of Honour awarded by the
Humanitarios de San Martín, a local philanthropic organization,
and the Golden Apple prize from the Asturian Centre in Madrid.
Celebrations held in honour of the brand’s centenary were
brought to a brilliant climax at a recital given by soprano singer
Ainhoa Arteta at the Príncipe Felipe hall in Oviedo, before an
invited audience of 1,500 customers.
A significant event in 2012 was the second year of the
Álvarez-Margaride prize, the result of a joint initiative by Banco
Herrero and the APQ (Asturias Patria Querida) Association. The
prize is awarded to people, firms or organizations whose activities
show a long-standing connection with the Asturias region. On this
occasion the prize was won by Plácido Arango Arias, an AsturianMexican businessman.
Other activities in the cultural and social spheres included four
new exhibitions at the Banco Herrero Hall in Oviedo, organized
as part of an agreement between the bank and the Asturian
Government’s Department of Culture. Each year the Banco Herrero
Foundation awards a prize to an economist below the age of 40
judged to have done outstanding work in the economic, business
or social arenas. This year the award went to Emilio J. Castilla, a
Massachusetts Institute of Technology professor whose research
field is meritocracy and human relations within corporations.
SabadellGuipuzcoano
May 2012 saw the merger and integration of Banco Guipuzcoano
within the Banco Sabadell group following the merger of the former
into the latter. As a result, all branches serving Guipuzcoano’s
home territory of the Basque Country, Navarre and La Rioja are now
operating under the SabadellGuipuzcoano name only. Responsibility
for managing these branches lies entirely with the group's Northern
Division in the Basque Country. As the single brand bedded in, a
For a large part of the year Banco Sabadell was engaged in the
challenging task of integrating Banco CAM without any loss of
focus on business priorities. On completion of the process in June
2012 and without waiting for full systems integration, the Bank
set in motion an action plan to relaunch Banco CAM as a business
SabadellCAM
Group businesses
rationalization plan for the Bank's branches in the region was put in
hand to merge two networks that had so far operated side-by-side,
with branches sharing a single location in many cases. A total of 42
branches were affected by the reorganization, which reduced this
number through mergers to a final 21.
The plan led to further reorganization of regional branches under
the SabadellGuipuzcoano umbrella. Subsequently another eight
branches, this time from the former Banco CAM network in the region,
were integrated, again as a result of mergers. The changes brought
the SabadellGuipuzcoano network to its current total of 129 branches
serving more than 125,000 customers and handling an overall
volume of business that accounts for approximately 6% of the total
business of the Banco Sabadell group.
The reorganization was accompanied by the introduction and
rolling out of Banco Sabadell management and business processes
and systems to all branches of the former Banco Guipuzcoano,
resulting in very substantial increases in new customer numbers
and in lending and deposit taking. Given the strategic importance
that customer service has for the Banco Sabadell group, the speed
with which the group's policies on quality were adopted by these
reorganized branches was nothing short of remarkable: as early
as the second quarter, they had already attained the same high
standards and quality indicators as the rest of the organization.
Another factor which has undoubtedly cemented links with
the local community in the region has been a sustained effort in
external communication and sponsorship, which has succeeded
in giving the Bank, and especially the SabadellGuipuzcoano brand,
a high degree of visibility and recognition. There is, in fact, a clear
perception in the market that SabadellGuipuzcoano combines the
strength of Banco Sabadell, as one of Spain's top-line banking
organizations, with the closeness and dedication to the local
market represented by the Banco Guipuzcoano brand identity.
Community-based actions in 2012 were numerous and
sustained and included cultural, social, business and sporting
events within the region. Business-related actions, for example,
included sponsoring a "Basque enterprise evening" which
underscored the Bank's commitment to Basque industry and
commerce, and the Guipúzcoa Chamber of Commerce trade
prizes. In the cultural domain, the Bank continued to support major
events such as the San Sebastián Music Festival, the Kursaal
Foundation's concert season and the International Gastronomy
Fair, also held in Guipúzcoa's main city of San Sebastián. Finally,
the Bank increased its sponsorship of local sporting events, the
most important of which was undoubtedly the Basque Country
Tour cycle race, a long-established, high-level competition. That
the event was able to continue this year was only possible thanks
to a last-minute agreement by the Bank to act as a sponsor, thus
assuring it of an enormous media impact.
51
Group businesses
52
with the aim of returning to the volume of deposits it had had in the
past and rebuilding confidence among its customers.
The actions put in hand to bring about the successful relaunch
were carried out in three areas or stages. The first of these was to
set up a new sales/marketing organization and bring in the former
Banco CAM sales team to staff it. The team's offices were reassigned
among the group's Commercial Banking regional divisions. Within
the SabadellCAM regional division (covering the area served by the
former Banco CAM), four area units were set up to manage the large
number of customers and branches in that region. In this phase of
the restructuring programme, two landmark events are particularly
worthy of mention. First, conferences were held in Alicante and Sant
Cugat del Vallès for 1,200 and 400 delegates respectively, at which
attendees were given presentations on the integration and the shared
enterprise on which they were about to embark.
The second key event in that first phase was an offer to Banco
CAM customers to exchange their holdings of preferred and
subordinated debt, which was rewarded with a 95% acceptance
by customers. This was the first major success in the take-over
project and demonstrated the capabilities of the Banco CAM sales
team, now fully integrated within the group.
In June a media campaign on the revitalized Banco CAM was
launched under the slogan “Aquí nos tienes, de nuevo” [“Here we
are again”], with the clear objective of restoring Banco CAM to its
past eminence and rebuilding trust among its customers.
The aim behind the new SabadellCAM brand was to combine
Banco Sabadell's brand values with the wide recognition enjoyed
by Banco CAM within its traditional area of influence. This meant
retaining the differentiated identity of the Banco CAM brand and
perfectly fitted the group's multi-brand strategy. SabadellCAM is
now the principal name under which the group will operate in the
regions of Valencia and Murcia (along with the SabadellSolbank
branches in the main resort/expatriate areas).
Channels
Banco Sabadell is an industry leader in harnessing technology to
bring financial services to its customers. More and more customers
are talking about the Bank in blogs and on social networking sites,
where they can perform multiple interactions with a single click.
Moreover, customers can connect to networks anytime, anywhere.
They can move freely from one channel to another; at the same
time, there is no reason why the completion of any particular stage
in signing up for a product should take place on a particular channel.
For customers, therefore, it is vital that these different channels
(branch, online banking, smartphone, etc,) should be able to interact
with each other and respond to customers’ enquiries or needs in
a totally seamless way. Banco Sabadell is continually improving its
way of interacting with customers and broadening its range of multichannel services by adding convenient financial solutions, while
preserving the essence of its value proposition: quality of service.
Banco Sabadell’s ambition is to let customers experience a
new way of doing banking that not only embodies everything that
the new technologies have to offer but also, for those already using
them on a daily basis, avoids creating any distance or remoteness
between customer and bank.
Banco Sabadell is also working to enhance the day-to-day
experience of customers using these new channels and to make
the new channels work better with the traditional ones. The Bank's
aim is to convert its branches into a multi-channel network so that
employees and customers can interact in different ways; at the
same time, it is making banking easier and simpler, so that service
is what really makes the difference.
Branch network
Region
Andalucía
Province Sabadell
Atlántico
Almería
Cádiz
6
Granada
6
Huelva
3
Jaén
3
Banco
Herrero
Banco
Herrero
Bussiness
Sabadell
Guipuzcoano
Sabadell
Guipuzcoano
Bussiness
Sabadell
Urquijo
Sabadell
Solbank
ActivoBank
Sabadell
Atlántico
Corporate
Total
3
10
1
2
16
1
2
9
1
4
27
60
6
3
1
1
Sevilla
22
1
1
91
4
2
24
35
132
Huesca
6
6
Teruel
1
1
18
1
1
20
25
1
1
27
Asturias
Total, Asturias
Balearic Is.
Total, Balearic Islands
143
4
147
143
4
147
46
6
17
69
46
6
17
69
Basque
Álava
8
1
Country
Guipúzcoa
47
1
1
49
Vizcaya
45
1
1
47
100
3
2
105
Total, Basque Country
Canary
Las Palmas
Islands
Tenerife
Total, Canary Islands
11
1
5
9
7
19
7
12
14
31
16
1
5
1
6
Total Cantabria
5
1
6
Castile –
Albacete
6
La Mancha
Ciudad Real
3
3
Cuenca
2
2
Guadalajara
3
3
Toledo
7
7
Cantabria
Cantabria
Total Castile – La Mancha
21
1
1
31
Total, Aragon
Balearic Is.
Sabadell
CAM
Bussiness
Málaga
Saragossa
Asturias
Sabadell
CAM
7
13
Córdoba
Total, Andalucía
Aragon
Sabadell
Atlántico
Bussiness
Group businesses
Banco Sabadell ended the year with a total of 1,898 branches. Of
these, 901 were operating under the SabadellAtlántico name; 523
were trading under the SabadellCAM name in Valencia and Murcia;
179 made up the Banco Herrero network in Asturias and León;
128 were SabadellGuipuzcoano branches in the Basque Country,
Navarre and La Rioja; 106 were SabadellSolbank branches,
12 were SabadellUrquijo, 2 were Corporate Banking branches
and 2 were ActivoBank customer service centres. The group's
international network comprised a further 45 offices.
7
22
53
Region
Province Sabadell
Atlántico
Castile
Ávila
2
& León
Burgos
5
Sabadell
Atlántico
Bussiness
Sabadell
CAM
Sabadell
CAM
Bussiness
Banco
Herrero
Banco
Herrero
Bussiness
Sabadell
Guipuzcoano
Sabadell
Urquijo
Sabadell
Solbank
ActivoBank
Sabadell
Atlántico
Corporate
Total
2
1
6
León
31
1
32
Palencia
2
2
Salamanca
3
3
Segovia
1
1
Soria
1
Valladolid
9
Zamora
4
Total, Castile & León
27
2
Catalonia
Barcelona
10
4
31
1
61
Group businesses
300
12
54
1
55
Lleida
22
1
23
Tarragona
27
1
28
403
15
Total, Catalonia
Ceuta
1
1
Girona
Ceuta
Total Ceuta
2
1
2
1
1
1
316
422
1
1
1
1
Comunity
Alicante
234
8
of Valencia
Castellón
22
1
1
València
104
7
360
16
Total, Community of Valencia
36
278
1
1
113
2
37
415
24
Extremadura Badajoz
3
3
Cáceres
3
3
6
6
Total, Extremadura
Galicia
A Corunya
7
Lugo
6
Ourense
3
Pontevedra
9
1
10
25
3
28
Total, Galicia
La Rioja
2
9
6
3
La Rioja
Total, La Rioja
Madrid
Madrid
Total, Madrid
Melilla
Melilla
Total, Melilla
Murcia
Navarre
1
7
6
1
7
9
2
1
1
205
192
9
2
1
1
205
1
1
1
1
Murcia
143
3
3
149
143
3
3
149
Navarre
Total, Navarre
Total branches in Spain
6
192
Total, Murcia
54
Sabadell
Guipuzcoano
Bussiness
859
42
504
19
174
5
Occupational groups and agent partners
Banking services targeted on professional and occupational
groupings and the use of agent partners and associates
continued to play a key role in winning customers in 2012, whether
individuals, retail establishments or professional practices. At the
close of the year a total of 1,625 partnership agreements were
in existence with professional associations and colleges with a
combined membership of over 1,309,126, of whom 358,960 were
17
1
1
19
17
1
1
19
123
5
12
106
2
2 1,853
already customers of the Bank. The business volumes associated
with this market amounted to more than €13,000 million.
Of particular significance was the signing up of 65,000
employees and senior managers of companies that were business
customers of the Bank, as well as more than 66,500 new
customers from the professions.
Banco Sabadell’s network of agent partners, particularly in the
role of “collaborating agent”, was once again a key channel for
winning new business. New customer introductions amounted to
over 18,000 at the end of the year. A noticeable tendency in 2012
was the increasing number of financial advisory firms ("EAFIS")
and financial agents joining the Bank's network of agent partners.
At 31 December 2012 Banco Sabadell's branches and offices
outside Spain were as follows:
Country
Branch
Representative
Office
Group businesses
International network
Group subsidiary/
associate
Europe
Andorra
France
Poland
Portugal
Turkey
United Kingdom
Asia
China
Hong Kong
India
Singapore
United Arab Emirates
Americas
Brazil
Dominican Republic
Mexico
USA
Venezuela
Africa
Algeria
Morocco
ATM network
55
In the course of the year a total of 89 million transactions (24.5
million of them on Banco Sabadell ATMs and 64.5 million on
SabadellCAM machines) were done on the group's network of
3,166 self-service cash machines.
The group continued the ATM modernization programme it
began in 2009. This included replacing a total of 294 machines
and installing another 8 mini cash machines for updating bank
books only; of these the group now has a total of 337 (including
329 belonging to the SabadellCAM network).
Work also continued to ensure maximum operational
availability of ATMs, including adjustments to monitoring systems
to trigger warning signals and remedial actions in the event of a
loss of communication. Measures were also taken to ensure that
machines were dispensing cash at all times.
Improvements were made to user help screens for the most
frequent types of transaction (cash withdrawals, updating bank
books and account balance enquiries) and five new screen
languages were added: Valencian, Dutch, Finnish, Swedish and
Norwegian (plus Russian and Arabic on Banco CAM machines).
The performance of ATMs was also upgraded with the addition
of new functionality for paying taxes and utility bills using barcode
readers and payments with debit or credit cards. A new "Instant
Money" service, which allows users to withdraw money without a
card, was also introduced.
Group businesses
56
Remote access channels
BS Online
At the end of 2012 more than 1,950,000 individual customers and
385,000 businesses had signed up for the group’s online banking
service. The overall figure (which includes Banco CAM) was more
than 59% up on the year before. A total of 482 million transactions
were performed online, an annual increase of 37%.
The internetization rate (i.e. the number of transactions
done online as a proportion of the total), at 84.4%, showed a
considerable improvement compared with the previous year’s 81%,
and BS Online continued to contribute to improving the efficiency of
the Bank’s service to its customers.
In service availability, BS Online was again among the four best
online banking services according to metrics produced by Eurobits,
the specialist online banking monitoring organization.
The year saw further action to improve security and fraud
prevention, including a new system for signing e-commerce
transactions and an expanded system for requesting a second
personal detail on a mobile phone when using online banking.
Work was also done to make transfers more user-friendly and to
simplify the viewing and sending of files of orders in business-tobusiness transactions.
During the year work started on integrating the websites of
SabadellSolbank and SabadellGuipuzcoano into the main Sabadell
site, in line with group policy.
Banking on the move – BS Móvil
The BS Móvil mobile phone banking portal showed impressive
growth in the number of active users in 2012, ending the year with
a total of 360,900 users, an 182% increase. At the close of the
year more than 27% of active users of online banking were also
using their mobile phones to access the service.
The number of users of the SMS alerts service increased by
94%. SMS messages were received by more than 1,448,000 users
on their mobile phones and more than 27.4 million messages were
sent, an increase of 44% on the number sent the previous year.
In 2012 the Bank continued its strategy of developing
capabilities in native applications for phone terminals and tablets
running on key platforms such as iPhone, iPad, Android, BlackBerry
and Windows Phone.
This was accompanied by a massive expansion in the number of
new functions available on BS Móvil. These included paying credit
card bills in instalments, loan repayments, cashback on bills paid
by direct debit, changes in personal details, regular payments into
pension and retirement plans, etc. Special facilities for business
users was also added, such as single and multiple signatures to
authorize transactions and applications to open an account with the
bank or sign up for online banking by mobile phone.
Social networking sites
During the year Banco Sabadell continued to make use of social
networking sites as 24-hour-a-day servicing and communication
channels.
This year @BancoSabadell, the only financial services company
in Spain with a verified Twitter account, completed its fifth year as
a Twitter user and ended the year with more than 40,000 followers
on the social networking sites where it has a presence.
Use was made of the sites to provide ongoing support for sales
campaigns and media events such as the Open Banc Sabadell
tennis tournament and the group's “Seny”, “Relaciones” and
“Valores" campaigns.
2012 also saw the launch of a new Banco Sabadell Internet
television channel, bancosabadell.tv, offering a wide variety
of video content featuring news and features related to the
organization. It also joined a new social networking site, www.
pinterest.com/bancosabadell.
Banco Sabadell’s presence on the main social networking sites
can be viewed on socialmedia.bancsabadell.com.
Group businesses
Branch Direct
The year 2012 saw further changes to Branch Direct to give it a
more sales-oriented role. Its focus will be from now on acquiring
new customers, signing up customers for remote banking services,
dealing with customer enquiries and building customer loyalty
across a variety of communication channels (telephone, e-mail,
social networking sites, etc.).
During the year Branch Direct received and handled more than
1,630,000 enquiries, 31% more than in the previous year. The
telephone helpline achieved a service level (calls answered as a
proportion of calls received) of 95.8% and a response rate (calls
answered in less than 20 seconds) of 80%.
Another innovation was the launch of a telephone banking
service for business users and, as the integration of Banco CAM
came to completion, the group-wide implementation of the Branch
Direct service model (24/7 availability, one-number access,
proactive contact with customers, etc.).
57
Promotional campaigns
In 2012, as part of the Bank’s strategic objective of winning new
customers and deepening customer relationships and to support
its marketing efforts, a number of advertising campaigns were
undertaken.
General profile-raising actions included a continuing campaign
on the theme of "conversations" —which garnered numerous
advertising industry awards in the course of the year— and the
launch of "Values", a campaign highlighting the attributes of trust,
truthfulness and communication as vital elements in building
lasting relationships with customers. These general themes were
reinforced by promotional initiatives run in particular areas or
regions. One of these was a campaign targeted on SabadellCAM's
home territory of Valencia and Murcia, where its "Here we are
again" slogan transmitted a powerful message of optimism.
Another campaign, confined to Catalonia and themed on the
Catalan word "seny" (shrewd good sense), featured celebrities
from different walks of life explaining what the word meant to
them. No less successful, and the ultimate example of locally
focused marketing, was a campaign celebrating the Catalan town
of Sabadell in 2012, Banco Sabadell’s 130th anniversary year. The
principal campaign event, a flashmob performance of Beethoven’s
Ode to Joy, found its way into the top 20 viral ads for 2012.
Group businesses
—
—Corporate Banking and Global Businesses in 2012
—
—
Corporate Banking
58
Banco Sabadell was again one of the foremost banks actively
addressing this market segment, for which the loan loss ratio is
just 1.1%. Since these major corporate clients export a relatively
large share of their output and are therefore less exposed to local
business cycle and market conditions, activity in this segment
continued at a high level and enabled us to keep our business
growing in step with our clients. Thanks to the resilience of this
market segment, Corporate Banking was able to end the year with
a 19.1% rise in operating income, sufficient to absorb the increase
in provision charges compared with the previous year, which ended
with a net provision release. All this helped Corporate Banking to
keep its ROE for 2012 in double digits (14.1%).
—
—Strong revenue growth
—We opened an office in New York
—
In purely business terms, our key priorities continued to be
strengthening customer relationships and boosting income from feeearning services with lower capital usage, while continuing to apply
the same rigorous standards to the approval and renewal of loans.
Towards the end of the year a design was produced
for a restructured Corporate Banking division based on a
prior segmentation exercise. This will ensure that business
development and risk approval policies are more closely aligned
with the needs of each customer segment and more targeted on
core customers. The exercise will be carried out in coordination
with our Corporate Banking teams in Spain (Madrid and Barcelona)
along with those in Paris, London and Miami.
€'000
2011
Change
y,o,y, (%)
213,623
170,711
25.1
32,721
1,452
28,539
9,882
14.7
(85.3)
Gross income
247,796
209,132
18.5
Operating expenses
(25,708)
(22,735)
13.1
222,088
186,397
19.1
Impairment losses
(58,462)
0
3,221
0
0.0
163,626
189,618
(13.7)
Ratios (%)
ROE
Cost: income ratio
Loan loss ratio
14.1
10.4
1.1
123.3
19.3
10.9
0.7
86.7
Loans and advances
Customer accounts
Securities
12,792
4,079
531
11,239
4,159
444
13.8
(1.9)
19.7
95
2
2
94
2
2
1.1
0.0
0.0
Net interest income
Other income
Other information
Employees
Branches in Spain
Branches abroad
Group businesses
2012*
* Figures for 2012 include performance data for Banco CAM from June onwards.
Banco Sabadell is one of Spain's foremost providers of structured
financing solutions and lead-managed many of the deals carried
out in Spain during the year, whether in the area of project finance,
corporate finance or acquisitions.
The organization has shown a remarkable capacity for
innovation and adapting to new circumstances in all markets and
product areas, and has constantly sought new financing solutions
for its customers.
A major event in 2012 was the launch of the Bank's
representative office in New York which, along with its Miami office
and its Sabadell United subsidiary, represents a further milestone
in the Banco Sabadell Americas project and confirms its role as
a market leader in loan syndications, especially in the renewable
energy field.
The acquisition of Banco CAM led to a significant increase in
structured finance deals, with a sizeable expansion in the number
of transactions involving other European countries.
Corporate Finance
In its capacity as an advisor of mergers and acquisitions, during
the year Banco Sabadell successfully completed six transactions
in the telecommunications engineering, motor vehicle component,
audiovisual services, mass-market packaging and renewable
Structured Finance
59
energy sectors. In two cases the transaction was international
in character and involved advising Spanish companies on the
acquisition of a foreign target. Another comprised the first takeover offer for a company quoted on MAB, Spain's alternative
market for smaller companies, establishing the Bank as a major
player in finance deals of this type.
Development capital
Aurica XXI, S.C.R., S.A.
Group businesses
Aurica XXI (a company subject to the “simplified regime” for share
issues by venture capital companies) is the vehicle through which
Banco Sabadell supports the growth of well-managed non-financial
companies with strong, industry-leading positions and a good
presence in foreign markets, by providing short-term capital and
active assistance.
The year 2012 was a time for consolidation and for beginning
the process of divesting Aurica's existing equity portfolio, including
ComsaEmte.
Sinia Renovables, SCR, S.A.
Through its subsidiary Sinia Renovables (a company subject to the
“simplified regime” for share issues by venture capital companies),
Banco Sabadell takes temporary shareholdings in companies in
the renewable energy sector. The company also does investment
research in other renewable sources for electricity generation such
as solar, photovoltaic, CHP or mini-hydraulic power generation and
wind farm projects.
The year 2012 saw the commissioning of wind farms acquired the
year before while still under construction or at the development stage.
Energy production commenced at wind farms at Mirasierra (Palencia),
Sierra Sesnández (Zamora) and Loma del Capón (Granada).
International trade
60
For the Bank's international trade business 2012 was another very
busy year, thanks in part to the growth in exporting. Transactions
were directly arranged with more than 252 correspondent banks
in five continents. The group secured cross-border business
amounting to some €1,545 million, retaining healthy market
shares in documentary credits received from its correspondent
banks, with shares of 16.2% in import documentation and 24.3%
in export documentary credits based on data for transactions
handled by SWIFT, with the share of documentary credits showing
an 84 basis point rise since the end of 2011.
The Bank's international branches continued to focus on, and
adapt their services for, markets of special interest to Spanish
companies actively engaging in foreign trade, whether in the
import/export field or as part of their foreign investment activities.
During the year the Polish office of the former Banco CAM was
absorbed into the Banco Sabadell international trade organization.
The Bank's Casablanca branch, the first to be opened by
a Spanish bank in Morocco, met all the targets set for it, thus
continuing the solid progress the branch has made since its
launch. It is ideally positioned to assist Moroccan businesses with
share-owning interests or trading links in Spain by providing them
with transaction banking and financial solutions of the first order.
Banco Sabadell has long been a pioneer in building a presence
in foreign markets. This is especially true of such key markets as
China (where it has three offices), India, Singapore, Turkey, the
United Arab Emirates and Algeria. Its foreign branches and offices
continue to bring significant added value to the international
operations of Spanish businesses.
Business activity at BanSabadell Fincom continued to expand in
2012, with increases over previous years in both net revenue and
operating income, the latter rising by as much as 12%.
It also made further progress in improving efficiency in
recovering debts, thus reducing loan delinquencies and ensuring
that 100% of doubtful loans were provided for.
During the year a total of 55,000 new loans were arranged
through 4,000 points of sale in all parts of the country. This new
business resulted in top-line revenues for 2012 of €257 million.
The company continued to deliver efficiency improvements
thanks to highly skilled personnel, upgraded technology tools, and
success in managing down operating costs. All this helped the
company to bring its cost:income ratio down to below 33%.
SabadellUrquijo Banca Privada
A major milestone during the year 2012 was the integration of
Banco Urquijo into Sabadell Banca Privada under a single brand
name: “SabadellUrquijo Banca Privada”. Combining these two
business models has produced customer service benefits,
whether in the form of accessibility via the Banco Sabadell
branch network or through the specialist private banking branch
relationship, thus assuring customers of a totally personalized
approach across the full range of private banking services.
These changes, of a highly strategic nature, considerably
boosted Banco Sabadell's business effectiveness by
strengthening its position as a key player in serving high net-worth
individuals and managing large fortunes, as well as through the
synergies released by a simpler, leaner organizational structure.
The customer service team comprised 175 private bankers
working from 12 specialist private banking offices and 23
customer service centres located in 11 of the country's regions.
The office team was supplemented and supported by experts to
advise on investment, tax and wealth planning, so that customers
—
—Markets and Private Banking in 2012
—
—
Group businesses
Consumer finance: BanSabadell Fincom
61
Group businesses
could be sure of tapping a wide range of expertise according to
their individual requirements.
The acquisition of Banco CAM in June 2012 resulted in the
private banking business of that organization being merged during
the year. The result was the addition of a professionally qualified
staff of 17 with a background in sales, business volumes of
€1,927 million and 3,800 customers.
The focus on specialization led to exclusive service offerings
being developed for specific customer segments such as
prominent people from the worlds of Sport and Entertainment
and Religious Organizations, or in business areas such as
company pension/retirement plans, with a considerable impact
on customers' perceptions. Another new development was the
launch of Excellence, a programme whose aim is to systematize
the servicing of ultra-high net-worth clients and provide them with a
differentiated service tailored to their needs.
Top-line revenues for SabadellUrquijo were €25,378 million,
with a pre-tax profit of €12,686 million; the unit served a total of
28,749 customers.
For the unit 2012 was a year of consolidation in terms of
strategic positioning, brand profile and public image, providing a
platform from which the Markets and Private Banking team can
tackle the challenges and opportunities that lie ahead.
€'000
2012
2011
Change
y,o,y, (%)
Net interest income
16,753
15,599
7.4
Other income
39,422
669
42,180
5,036
(6.5)
(86.7)
Gross income
56,844
62,815
(9.5)
(41,446)
(46,520)
(10.9)
15,398
16,295
(5.5)
Provisioning expense (net)
Impairment losses
0
(2,712)
0
0
91
0
–
–
–
12,686
16,386
(22.6)
22.5
72.9
3.4
93.1
26.9
74.1
0.6
152.2
3,192
15,667
6,519
3,425
15,684
5,854
(6.8)
(0.1)
11.4
268
12
298
11
(10.1)
9.1
Operating expenses
Ratios (%)
ROE
Cost:income ratio
Loan loss ratio
62
Loans and advances
Customer accounts
Securities
Other information
Employees
Branches in Spain
Investment, Products and Research
Banco Sabadell continued to focus on financial market analysis
and research to identify the right asset allocation strategies to
Group businesses
guide investment and product planning. The year 2012 saw a major
effort to ensure customers were provided with ample information
on key market developments, investment views and product
recommendations using a variety of new formats and channels.
The difficult macroeconomic environment generated
opportunities for investment in the financial markets that were
utilized to take positions in a range of investment instruments,
launch new capital growth and guaranteed return products, and
make direct recommendations to investors. These opportunities
included the high returns available on Spanish government debt
caused by uncertainty over the euro, excellent returns on corporate
bonds and attractive earnings from higher risk assets as risk
premiums gradually declined after the summer.
During the year the investment analysis unit continued
to strengthen its advisory services, whether in stock market
investments or in private sector debt. One consequence of this was
a yet wider coverage in its range of market strategy reports focusing
on sectors and geographic regions, companies quoted on the main
Spanish and European bourses and corporate bonds or securities
issued by central or regional government or other official agencies.
The group’s Investment Management business is carried on by
the units responsible for managing collective investment schemes
(CIS's), and combines investment management with the distribution
and operation of CIS's. It also manages investments on behalf other
Banco Sabadell businesses that hold portfolios of assets.
At the close of 2012 total assets under management by the
Spanish-domiciled mutual fund industry as a whole, including real
estate investment funds, totalled €126,529.6 million, 4.3% below
the figure for the year before. Net redemptions registered in 2012 by
mutual funds investing in financial assets totalled €10,273.8 million.
The volume of assets held in Spanish-domiciled mutual funds
under management by the Banco Sabadell group amounted to
€5,423.5 million at the close of the year. This was 4.4% above the
figure for the previous year and included the mutual funds added
as a result of the integration of Banco CAM.
€'000
Gross income
Operating expenses
2012
2011
Change
y,o,y, (%)
29,946
29,155
2.7
(18,712)
(18,762)
(0.3)
11,234
10,393
8.1
(6)
0
–
11,228
10,393
8.0
25.8
62.5
15.7
64.4
6,997
8,585
6,737
8,024
3.9
7.0
148
–
153
–
(3.3)
–
63
Ratios (%)
ROE
Cost:income ratio
Assets under management in CIS's
Total assets in CIS's including schemes sold but not managed
Other information
Employees
Branches in Spain
Group businesses
The group’s offering of guaranteed return funds continued to
be very actively promoted during the year and return guarantees
were issued in respect of six guaranteed funds totalling €616.1
million at 31 December 2012. Guaranteed funds as a whole
accounted for €2,370.8 million worth of assets at the close
of the year. The proportion of assets held in guaranteed funds
increased relative to the total value of financial assets under
management in funds subject to Spanish jurisdiction, rising to
53.4% from 48.3% the year before.
Sabadell BS Inmobiliario FII, a real estate fund launched in
early 2004, ended the year with assets of €980.2 million and
17,163 fundholders, the latter increasing by 4.7% on the previous
year. The fund remains an industry leader for collective investment
in real estate assets on the Spanish market.
In 2012 Banco Sabadell mutual funds earned a number
of accolades and distinctions. Five mutual funds managed
by Sabadell Inversión were reviewed and had their Silver fund
gradings confirmed by mutual fund rating agency and analysts
Standard and Poor’s Capital IQ Fund Research. Four of the funds
were also awarded the coveted Five-Year Long Term Grading
for consistently high returns over the last five years. Sabadell
Inversión is the only fund manager subject to Spanish jurisdiction
that can boast a high quality grading from Standard & Poor’s
Capital IQ Fund Research.
During the year a total of 23 mutual funds and three
investment companies (OEICs) were added to the range of
investment vehicles as a result of the merger of Banco CAM.
There were 10 mergers in which 11 funds were absorbed by
others with the same investment objectives, having regard always
to investors' best interests. One OEIC was also merged. Two
fixed-return guaranteed funds were set up and registered with the
securities market regulator (CNMV). By the end of the year the
number of Spanish-jurisdiction collective investment schemes
stood at 269 with management split between BanSabadell
Inversión, S.A., S.G.I.I.C. Sociedad Unipersonal (101 mutual
funds, one real estate fund and one OEIC) and Urquijo Gestión,
S.A., S.G.I.I.C. Sociedad Unipersonal (166 OEICs or SICAVs).
Treasury and Capital Markets
64
In 2012, despite the prevailing difficult economic climate good
levels of activity were maintained and ensured that financial
targets were met. Low interest rates and reduced needs for longterm financing, combined with increasing export activity by our
customers, led to changes in the product mix, with currency and
exchange rate management products experiencing rising demand
at the expense of hedging and structured investment products. In
2012, as in the year before, a significant contribution was made
by fixed-income products, especially securities designed for retail
investors. These included securities issued by the group itself.
Banco Sabadell was able to continue raising funds in the
capital markets, even though the bond markets remained
inaccessible for long periods of time to a majority of Spanish
issuers. As an issuer in the primary fixed-income market, however,
Banco Sabadell not only further strengthened its position as a lead
manager of issues for the wholesale and retail markets, but also
participated in buyback offers for securitization and subordinated
debt issues.
The group’s market trading activities included notable
successes in portfolio management, despite movements in the
spreads on peripheral European debt; at the same time it was
deeply engaged in liquidity management in view of the shut-down
in capital market issuances. However, 2012 was also a year of
consolidation and reduced dependence on external sources in
the generation of financial products.
Bancassurance
Group businesses
—
—Bancassurance – a dependable, growing business
—
—
At 31 December 2012, the total volume of savings under
management by Bancassurance was €8,537.9 million. Issued
premiums totalling €774.8 million.
As a result of the 2012 merger of Banco CAM, Banco
Sabadell's insurance and pensions business is structured into
three joint ventures:
Another undertaking, Mediterráneo Mediación, distributes
insurance written by the former Banco CAM.
Bancassurance made a profit before distribution
commissions, exceptional items and taxes of €164.1 million and
a net profit of €62.3 million.
—BanSabadell Vida, BanSabadell Pensiones and BanSabadell
Seguros Generales, which since 2008 have been operating as
joint ventures in partnership with the Zurich insurance group.
—Mediterráneo Vida, in partnership with the Aegon insurance
group.
— Mediterráneo Seguros Diversos, in partnership with Caser.
BanSabadell Vida
Total premium income in life insurance for the year 2012 was
€551.2 million, placing BanSabadell Vida in ninth position in
the league table of Spanish life offices according to recent data
published by ICEA, a research organization for the insurance and
pension industries.
In protection-only life insurance, premium income totalled
€95.5 million, up 6% on the year-end figure for 2011. With
demand for mortgage payment protection policies continuing to
decline, positive trends included new high-selling offerings for
businesses and the growth in the Life Care range of free-standing
life policies, which generated €38.6 in premium income, an
annual increase of 21%.
BanSabadell Vida savings/life insurance products ended the
year with total savings under management of €5,555.0 million.
65
This ranks BanSabadell Vida as the Spanish life industry's 11th
largest provider according to recent data from ICEA.
BanSabadell Vida posted a profit before sale commissions,
exceptional items and taxes of €127.9 million. The net profit
€53.3 million.
BanSabadell Pensiones
Group businesses
Funds under management by BanSabadell Pensiones reached
a year-end total of €2,679.1 million. Of these funds, €1,681.1
million related to individual and group pension plans —up by 12%
on 2011— and €998.0 million originated from company schemes.
These totals rank BanSabadell Pensiones in tenth place in
the industry as a whole according to recent data from Inverco, an
investment and pension fund association.
BanSabadell Pensiones posted a profit before commissions and
tax of €17.9 million. The net profit for the year was €4.9 million.
BanSabadell Seguros Generales
Premium income for the group's general insurance provider in
2012 was €80.4 million. Sales of non-linked policies did especially
well, with premium income for these products increasing by 9%.
The company reported a profit before sales commissions,
exceptional items and tax of €18.3 million for 2012, with a net
profit of €4.1 million.
BanSabadell Previsión, EPSV
BanSabadell Previsión, a voluntary social insurance society,
distributes pension/retirement plans within the Basque Country
and is held in high regard by branch personnel and by customers.
In 2012 the society held savings under management totalling
€303.8 million, a volume increase of 4%.
Mediterráneo Vida
66
The company's insurance operations in 2012 generated premium
income of €252.4 million, of which €34.9 million were life-withprotection policies.
In the life-with-savings business the company ended the year
with total provisions of €1,847.1 million.
In its pension fund business, funds under management by
Mediterráneo Vida in 2012 reached a year-end total of €834.1
million. Of this amount €288.9 million related to individual and group
pension plans and €545.1 million to employment-related schemes.
Its profit before sales commissions and tax was €74.6 million
and its net profit to €42.0 million.
Mediterráneo Seguros Diversos
The company's total issued premiums for 2012 amounted to
€33.3 million.
Its profit before sales commissions and tax was €12.8 million
and its net profit was €4.5 million.
Mediterráneo Mediación
Group businesses
The company provides brokerage services to Mediterráneo Vida
and Mediterráneo Seguros Diversos in the insurance and pensions
businesses. It also acts as a broker to companies outside the
group in the insurance field.
The company reported brokered premium income of €304.5
million for 2012.
The profit for the year before commissions and tax was €27.8
million and the profit after tax as €4.2 million.
Securities and custodian services
Following the integration of Ibersecurities from 2010 onwards,
Banco Sabadell further secured its position as a key player in
the Spanish securities market, taking 6.3% of the market in
2012. This was a 35% increase in market share and propelled
Banco Sabadell from seventh to fourth largest Spanish stock
market member firm by trading volume in 2012. This result was
achieved after a successful period of business restructuring and
rebalancing. Banco Sabadell thus showed its capacity to adjust
to and cater for the needs of the market in a highly complex
environment in which the securities brokerage business underwent
a period of radical change.
In its stock broking activities, despite falling asset values
and a fall-off in corporate transactions (in both number and size),
business targets were achieved and prior year performance
levels were exceeded.
—
—BS America in 2012
—
—
—
—Lydian Private Bank integration completed
—
—
Banco Sabadell handled business volumes in excess of USD
7,000 million and held a total of USD 6,500 million in assets,
making it Florida's seventh largest local bank by total assets. It is
one of the few financial institutions in the area with the capability
and experience to provide a full range of banking services, ranging
from highly complex and sophisticated products for large corporate
67
clients, including project finance, to products for individual
customers and a full range of the products and services commonly
required by business and professional people and by companies of
all sizes.
Banc Sabadell Miami Branch
Group businesses
At the close of the year Banco Sabadell's operating branch in
Miami had more than USD 2,773 million in deposits and funds
under management. The value of securities under management
for clients was up 11%. Loans and advances were up 3% and
reached USD 1,280 million as the bank sought to meet the needs
of international corporations by arranging facilities to provide
medium- and long-term working capital finance.
In 2012 Banco Sabadell's Miami branch continued to
develop its project finance business in the energy sector,
closing two new project finance deals for wind farms, two for
solar energy and one for gas. All projects financed in 2012 were
located in the USA and Mexico.
In June it acquired the assets and liabilities of the Miami
branch of the former Caja de Ahorros del Mediterráneo.
Sabadell United Bank
68
—
—In the second quarter Sabadell United Bank earned a
5-star rating, the highest grade awarded by the independent
US bank rating organization, Bauer Financial
—
—
In the course of 2012 Sabadell United Bank completed the
operations and systems integration of Lydian Private Bank, a
Florida-based undertaking that was acquired in 2011 in a take-over
supervised by the Federal Deposit Insurance Corporation (FDIC).
The take-over carried the guarantee of an asset protection scheme
under which the FDIC agreed to absorb 80% of the losses due to
any impairment of specified loans acquired in the transaction.
The integration resulted in the six branches of Lydian Private
Bank being added to the chain of Sabadell United Bank, which
ended the year with a total of 23 branches. The latter's position in
the state of Florida was thus considerably strengthened, especially
on the west coast (Tampa, Sarasota and Naples), making it the
seventh largest local bank by deposits.
In the course of 2012 Sabadell United Bank embarked on a
programme to raise awareness of the brand in the different markets
it serves. The campaign was directed primarily at business and
professional people and also high net-worth individuals, for whom
it is a provider of private banking and wealth management services
through Sabadell Bank & Trust, its wealth management division.
In the area of Corporate Banking Sabadell United Bank
expanded its business during the year through increases in its
syndicated loans to large corporate clients as well as project
finance deals in the energy and infrastructure sectors, helping
to further its aim of diversifying its loan portfolio and bringing in
valuable new business for the organization.
As 2012 drew to a close, Sabadell United Bank was managing
assets of some USD 3,725 million, with deposits close to USD
3,200 million and loans and advances approaching USD 2,200
million. It was serving more than 45,000 customers. Sabadell
United Bank reported a net profit for 2012 of USD 30 million.
Sabadell Securities
Banco Sabadell holds a 20% equity interest in Centro Financiero
BHD, the second largest privately-owned financial services group
in the Dominican Republic. It comprises Banco BHD and nine other
subsidiaries providing stockbroking, insurance, pension funds,
fiduciary services and mutual funds.
Banco BHD is itself the Republic's second largest privatelyowned bank. As of November 2012 it accounted for 15.0% of
the total assets of the country's banking system. In December
2012 Fitch Ratings affirmed its AA– (dom) rating with a stable
outlook for long-term debt denominated in local currency; this is
the highest rating assigned by the agency to any Dominican bank.
It also confirmed its F1+ (dom) rating for the bank's short-term
debt, a level that is reserved for institutions with the highest
levels of solvency and liquidity.
At the close of 2012 Banco BHD's total assets stood at
121,805 million Dominican pesos. Loans and advances were
67,169 million pesos and customer accounts were 97,549 million.
Banco BHD's net worth amounted to 12,926 million pesos and
it posted a net profit of 3,155 million pesos. Banco BHD has 95
domestic branches and up-to-date online and telephone banking
channels. It is a provider of financial services to more than 450,000
individual and business customers. Centro Financiero BHD reported
a consolidated net profit equivalent to USD 117 million.
Centro Financiero BHD
Group businesses
Sabadell Securities USA Inc., an SEC-registered investment
consultancy, operates as a stock broker and advisor to securities
market investors. The business is both a complement to and a
strengthening factor in the BS America strategy.
Sabadell Securities provides investment and wealth
management services to commercial banking customers as
well as personal banking, corporate banking and private banking
clients. Its business strategy is based on meeting customers'
financial needs by providing advice on capital market investments.
Sabadell Securities is a member of the Financial Industry
Regulatory Authority (FINRA) and the Securities Investor
Protection Corporation (SIPC). It uses the services of Pershing
LLC, a Bank of New York Mellon subsidiary, for clearing, custody
and administrative services.
69
—
—Other businesses in 2012
—
—
Asset Management
Group businesses
—
—Once again Banco Sabadell was ahead of its
peers – by creating a fully dedicated real estate unit
—
—
From an early stage in the crisis Banco Sabadell took timely action
to expand its capabilities in the debt recovery and real estate
areas. Solvia, the company tasked with managing the group's real
estate assets, boasts a wealth of expertise in every aspect of the
property development cycle.
In a context of real estate market contraction and falling
property sales, in June 2012 Banco Sabadell's asset management
division adopted a fresh approach by setting up a system to
ensure maximum scalability of its processes for the management
of real estate and non-performing assets and provide it with a
comprehensive picture of asset portfolios and their associated
costs from a real estate, financial and risk management
perspective.
Further reasons for this action were provided by the take-over of
Banco CAM, which demanded increased efforts to make sure our
management capabilities were appropriate to the nature and type
of Banco CAM’s real estate holdings, and by regulatory changes in
2012 that could lead to real estate assets being segregated away
from financial institutions.
Sales of real estate properties topped €2,200 million in 2012,
exceeding sales targets for the year and at the same time reducing
the group's exposure to the real estate sector.
BancSabadell d'Andorra
70
BancSabadell d’Andorra was set up in the principality of Andorra in
the year 2000. Banco Sabadell holds a majority interest. The rest
of the share capital is spread among a large number of minority
shareholders. It remains the only bank in Andorra with a major
bank as a key shareholder and this, combined with the sizeable
number of private Andorran shareholders, clearly differentiates
Banc Sabadell d'Andorra from its competitors in the principality.
The bank’s target customers are medium and high-income
individuals and larger companies operating in the principality. Its
share of the domestic market is estimated at about 10%.
Its business falls into two well-defined areas: private banking
and commercial banking. At the close of 2012 business volumes
in both these areas were in the region of €1,300 million, with
loans and advances of €415 million and a profit for the year of
€6.6 million. The ROE was 11.5% and the liquidity ratio, according
to criteria laid down by the principality's supervisory body, the
Andorran National Finance Institute, was 77% (the legal minimum
is 40%). The loan loss ratio was 0.8%. Shareholders' equity at 31
December 2012 totalled over €60 million, double the bank's initial
share capital, while the capital adequacy ratio was 19%, well above
the legal minimum of 10%.
Group businesses
71
—
—
—
—
—
—
—
—
—
—Excellence
—
—
—
—
—
—
—
—
—
—Operations
—
—
—
—The integration of Banco CAM operations and systems was
successfully completed at a faster-than-expected pace
—
—
Excellence
In 2012 the Bank´s efforts were focused on the group’s 3-year
master plan, known as CREA. This focus on transforming the
group’s operating and business processes has given the Bank
the tools it needs to increase productivity and accommodate the
anticipated growth in customer numbers while maintaining the
high-quality service that is the group’s hallmark.
The CREA programme was being implemented simultaneously
with merger and integration processes completed in the course
of 2012 (Banco Urquijo, Banco Guipuzcoano, Lydian Bank and
Banco CAM).
Operational and organization change
74
Over the year the Bank continued to implement its “operations
factory” programme —designed to reduce the administrative
workload at branches— by consolidating the role of its Regional
Administrative Centre (RAC) in San Sebastián and opening a new
RAC in Alicante.
All through the year the group's RACs in Madrid, Barcelona,
Oviedo and San Sebastián were processing 94% of its servicerelated operations and 88% of its loan-related operations.
Central processing of loan and other risks at RACs was in
operation for 85% of the group's branches and should come on
stream for the remaining branches within the first quarter of 2013.
The year saw yet more business processes —enrolments of
customers acquired as a result of "associate banking" arrangements,
for example— being transferred to operations factories, thus freeing
up additional working time for group branches.
In aggregate the RACs, together with the Superdex centres
responsible for processing international payments and the Global
Service Centre which handles more specialized transactions, are
processing more than 407,000 transactions every month. These
processing centres are facilitating future expansion by providing a
platform with the capacity to accommodate the group's strategies
for growth.
The business transformation programme resulted in a number
of other initiatives to increase sales efficiency and sharpen the
focus on sales throughout the organization, while ensuring that the
Bank retained its leadership in service quality.
In 2012, for example, there was further enhancement of the
group’s capabilities in digitization and of service-related workflows
based on more efficient technologies and processes.
—Servicing Centres – Monthly
transaction processing volume
407,000
350,000
2011
2012
—Sales Values (€Mn.)
+7.5%
450
484
2011
2012
Development work also continued on the group’s current
system of sales incentives, helping to make branches more
sales-oriented.
During the year roll-out continued of the new Proteo 3.0
corporate desktop, giving users a single platform from which to
access a full set of applications, procedures and information for
everyday use by branches; this not only helped to make branches
more sales-oriented but created an operating and business
environment that was considerably more user-friendly.
Another development on the sales front was the launch of a
number of training programmes to improve sales and marketing
skills. These emphasize personal development and rely on a
workforce that is committed to and motivated by change.
As the year 2012 came to an end the roll-out was completed
of the new virtualized banking platform across the Bank's
branches, including recently integrated branches operating under
the SabadellCAM brand. Roll-out of the workplace virtualization
programme for central service buildings will start in 2013, and will
allow workplace desktops to be accessed from any terminal or
even from a mobile device.
The year also saw a programme of transformation and
optimization actions being implemented which enabled the Bank
to confidently undertake the operations integration of Banco CAM,
involving an amount of data similar in size to that of the Bank.
One of the programme's most visible manifestations was the new
Data Processing Centre (DPC) housed within the Bank's central
service building in Sant Cugat del Vallès (Barcelona). This modern
facility was constructed in accordance with the highest standards
of innovation and energy efficiency and offers unrivalled system
availability, with annual downtime not exceeding ninety minutes.
The programme of IT systems transformation and optimization
carried out in 2012 places the Bank at the forefront of technological
innovation with state-of-the-art equipment giving it the capability to
handle another nine operational integration exercises.
Excellence
Technology
Cost management
During the year the group's cost approval and management system
continued in operation and resulted in costs being 9.3% lower, on a
like-for-like basis, than those initially estimated.
Integration processes
The year 2012 saw the successful completion of four merger and
integration processes, Banco Urquijo, Banco Guipuzcoano, Lydian
Bank and Banco CAM.
Once again the Bank demonstrated its ability to undertake
operational mergers and integrations while continuing its ordinary
activities and without any change in its levels of operating efficiency
or loss in service quality or of focus in the carrying on of business.
75
The Bank also showed itself to be a banking industry leader in
carrying out successful integrations.
—
—Human Resources
—
—
Composition of group employees
Excellence
At the end of the year the Banco Sabadell group was employing
a total of 15,596 employees, an increase of 4,921 on the year
before. The average age of employees was 42.36 years and the
average length of service was 16.99 years. The gender split was
49.5% men and 50.5% women.
— Group employees – gender split
1 Women
2 Men
50.5%
49.5%
Employee training
2
The Bank continued its policy of providing training for all group
employees, achieving high levels of participation —with 90.63% of
employees undertaking some form of training— and dedication. A
total of 372,142.83 training hours were completed, an average of
24.75 hours per employee.
The practice was repeated of using in-house trainers, of whom
there are currently 88 in post.
In 2012 priority was given, first and foremost, to rolling out
job-related training across the entire branch network, with 3,500
employees (about 60% of the total) taking part; and second, to
the "Laude" programme, an arrangement with the University of
Barcelona under which group employees taking in-service training
courses can have their achievement recognized by the award of a
university qualification. The fourth and fifth courses of this type,
both held in 2012, resulted in 116 newly qualified employees, 59%
more than in 2011. Thirteen of the employees who completed one
of these courses did so with a "cum laude" distinction.
Human resources development
76
In the area of training for senior managers, the year saw further
refinements being made to training methodologies to support the
Bank's "strategic leadership" concept and all activities planned
as part of an intensive programme of executive training that
began in 2010 were fully realized. One key aspect of this training
was the involvement of the Bank's most senior executives in the
continuation of the Management Development Programme, which
was attended by 189 people.
Group level training programmes carried out in 2012 were a
response to the strategic aims of the CREA plan. A priority aim
was training for branch personnel in selling roles. This included
the design of business development strategies by sales managers
and training in sales orientation for employees in customer-facing
roles. The programmes were attended by 302 branch employees.
1
A repeat of the "Corporate Management Programme" was also
held and was taken by 64 new middle managers. The aim of the
course was to develop leadership skills within this employee group.
Integration of Banco Urquijo and Banco Guipuzcoano
Excellence
In May 2012 Banco Urquijo SBP, S.A. and Banco Guipuzcoano, S.A.
were merged by absorption into Banco Sabadell. Both mergers
were effected by the dissolution but not liquidation of Banco
Urquijo SBP, S.A. and Banco Guipuzcoano, S.A. and the transfer of
their assets and liabilities en bloc to Banco Sabadell by universal
succession. As a result Banco Sabadell was substituted in all
rights and obligations of the merged undertakings generally and
without any reservation or limitation whatsoever.
This decision was taken in response to organizational and
productivity needs and to benefit from synergies from the merged
entities. The mergers proved to be beneficial for the combined
entity and put it in a better position to compete in the marketplace.
With regard to the employees of the merged undertakings, Banco
Sabadell was substituted in all rights and obligations pertaining
to the employment, wages and salaries, social security and other
matters related to the welfare of the employees concerned.
Banco CAM
—
—SabadellCAM employees are acquiring Banco Sabadell
know-how more quickly than expected, converging branches
seamlessly with the rest of the group
—
—
In the area of personnel management, the integration of Banco
CAM was notable for being conducted in a spirit of constructive
dialogue between the Bank and employee representatives, with the
result that agreement was reached in all key areas of negotiation.
On 15 June 2012, with the aim of reaching a settlement on the
status of Banco CAM employees, Banco Sabadell and employee
representatives concluded an Agreement on terms of employment
and subrogation for all employees of the merged entity.
On 9 October 2012 Banco Sabadell and employee
representatives completed the consultation stage in a redundancy
procedure that had been initiated by Banco CAM. The consultation
ended with an agreement under which the employment of 1,250
employees would be terminated.
As part of the redundancy arrangements, the Bank offered all
employees facing redundancy an ambitious and innovative welfare
package that aimed to set a new standard in socially responsible
behaviour and included measures to reduce impacts on people
and prevent destruction of employment. With the same end in view,
an employment and personal support centre was made available
to all Banco CAM employees, provided by an external organization
that offered counselling to employees on any aspect related to
their future job prospects with Banco Sabadell.
77
To speed the integration of Banco CAM a successful training
programme was carried out in which more than 364,000 hours'
training was provided to 4,410 employees at Banco CAM branches
— an average of 83 hours' training per employee and a take-up rate
of 94%. The training was rated as "good" or "very good" by 92% of
trainees. A significant role in the training programme was played by
staff members from Banco Sabadell's own branches. In all, 551 of
the Bank's employees were involved, 443 of them as operations
support instructors in the first two weeks post-integration.
Assistance in mapping out the management structure
that would result from the merger was provided by the group's
Organization and Management Unit with the help of state-of-the-art
HR tools and techniques.
Excellence
78
—
—Quality Management
—
—
For Banco Sabadell, quality is not just a strategic option; rather, it is a
whole approach to doing business, whether in delivering value to its
stakeholders or in the execution of each and every process forming
a part of that business. This natural affinity with excellence helps to
strengthen the Bank's capabilities in all areas, transforming threats
into strengths and challenges into opportunities for the future.
Consequently the Bank evaluates its activities according to
standards and benchmarks whose purpose is to ensure that its
management approaches are right, and sets itself new goals
based on continual self-criticism.
A key benchmark against which to compare and improve
management practices is the European Foundation for Quality
Management (EFQM) excellence model, on which the Bank
is independently assessed every two years. The most recent
assessment, carried out in October 2012, resulted in the Bank’s
EFQM Gold Seal (+500 points) being renewed with a score of over
600 points being awarded under EFQM’s very demanding standards.
Banco Sabadell continues to be the only Spanish lending
institution with 100% of its financial operations certified to the ISO
9001 standard, providing further proof of its customer-focused and
rigorous approach to process management. In 2012 it passed the
annual review required for the renewal of its certificate.
The Bank also had its "Madrid Excelente" quality mark renewed
for another three years after successfully completing the required
quality audit.
Quality in customer service
Quality in customer service has traditionally been one of the key
drivers of our strategic planning and a distinctive feature of our
positioning in the market.
To make this possible, the Bank uses a set of indicators that
enables it to identify areas for improvement as they develop, both
throughout the whole organization and for each individual branch,
thus providing it with an “instrument panel” to keep track of its
progress in meeting annual targets.
Key quality indicators include the following:
Moreover, since the integration of Banco Guipuzcoano into the
group in April 2011, the data have been reconstructed to include
all group brands within the score for the group as a whole.
Excellence
— Objective quality audits. These use the “mystery shopper”
technique to evaluate the quality achieved by branches in such
areas as courtesy, knowledge, understanding of the customer’s
needs, giving clear explanations, and the quality of information
provided. Audits are carried out on all branches by rotation.
— Industry benchmarking of quality metrics. The quality of
service offered by the Bank’s branches is benchmarked
against that of other lending institutions. Here again the
“mystery shopper” system is used; the quality surveys are
performed by an independent firm of assessors — a guarantee
of the consistency and transparency of assessment process.
— Perceived quality surveys. These are carried out continuously
throughout the year and are based on customer samples. The
large number of responses collected means that the results
are statistically relevant for every one of the Bank's branches.
The surveys are of three types:
— General surveys: These are carried out on random samples
of customers, and use questionnaires adapted for each
customer segment.
— Surveys conducted among new customers to measure their
perceptions as compared with their initial expectations,
once they have had the opportunity to become familiar with
how the Bank and their branch operate.
— Surveys of customers using online banking and other
remote channels. These focus on the aspects of quality
most relevant to those channels.
— Customer claims and complaints. This is one of the indicators
that are of most value in making our processes more efficient
as it gives us precise information on aspects that have given
rise to customer dissatisfaction and therefore require prompt
attention. This information relates to claims and complaints
made through either of the channels provided by the Bank to
customers and users of its services: the Customer Service
Department and the Customer and Stakeholder Ombudsman. In
every year since 2002, Banco Sabadell has been the Bank with
the lowest ratio of complaints made to the Bank of Spain as a
proportion of total revenue. The latest report produced by the
Bank of Spain's complaints department, which for the last two
years has not provided numbers of complaints as a proportion
of gross revenue, shows a total of 82 complaints for Banco
Sabadell. This is far below the numbers reported for other large
and medium-sized banks, and ranks Banco Sabadell in 18th
position based on complaint numbers alone — a much better
position than the size of its turnover would lead one to expect.
This year the Bank of Spain's complaints department published
a list of the 10 banks that had given rise to the most complaints
actually considered. The fact that Banco Sabadell is absent
from that list gives a fair idea of where it might be on a list of
banks ranked according to their complaints-to-revenue ratios
which would, according to internal estimates, once again show
Banco Sabadell as having one of the lowest complaint ratios.
79
Indicator
Objective quality audits
Industry benchmarking of quality metrics
Banco Sabadell
Banking industry
Industry comparison
Perceived quality surveys - satisfaction with branch
Customer claims and complaints (total number handled)
2009
2010
2011
2012
Scale
1–7
0 – 10
6.08
5.99 *
5.85
5.80
7.45
6.61
0.84
5.87
3,006
7.41**
6.11**
1.30
6.04
3,131
7.24
6.06
1.18
6.04
3,212
6.9
6.01
0.89
6.01
4,435
1–7
* Because of a change in scoring methods the values shown are not comparable with prior year data. If the new scoring system had been applied to data for 2009, the score would
have been 5.89, which would indicate a 10bp improvement on 2010.
** The survey provider has changed its scoring method and this has been applied retrospectively for comparabililty with prior year data. Consequently the values shown for 2009 do not
match those shown in the annual report for that year.
Excellence
80
In addition to the above indicators, Banco Sabadell makes use
of other sources of information to obtain further insights into its
quality performance.
According to a market survey on the financial behaviour of
individual bank customers in Spain in 2012, carried out by financial
consultancy FRS Inmark on the top 10 banks by customer numbers,
the Banco Sabadell group (excluding the branches acquired along
with Banco CAM) showed the highest average scores for customer
satisfaction and recommendations (here, the "top two box"
numbers, i.e. the proportion of respondents entering a score of 6
or 7 on a scale from 1 to 7). The research was carried out between
March and July on a nationwide sample of 12,000 people aged 18
or over and living in towns with more than 2,000 inhabitants.
According to FRS Inmark, of the various banks included in the
survey Banco Sabadell (excluding Banco CAM) not only scored
highest in customer satisfaction and recommendations, but also
showed the highest proportional gain in new customers and the
highest proportion of customers increasing their transaction
activity with their bank.
Qualis Prizes for Excellence
Established by the Bank in 2002, the Qualis Prizes for Excellence
are awarded to people and groups of people who have been
particularly noted for the excellence of their work during the year.
The prizes presented in 2012 were those awarded for
performance in 2011. Of particular interest this year were the
prizes for the best bank branches as examples of successful
teamwork, and the Qualis Prizes – Gold category, which are given in
recognition of a person’s track record.
Branches selected for best branch awards were: La Finca
business park in Pozuelo de Alarcón; Leioa; Ibi; Conil de la
Frontera, and the business branch in Santander. The Qualis Gold
prize was awarded to Miquel Costa Sampere, General Manager of
BS Fincom.
Employee engagement for improvement and innovation
Excellence
To encourage employee engagement a special web site for Banco
Sabadell group employees, BS Idea, has been set up on the
corporate Intranet.
The site provides a simple and user-friendly way for employees
to use their creativity and to put forward suggestions for
improvements in working methods or additions to the range of
products and services.
A major advantage of this system is its transparency:
employees’ ideas are immediately visible to all other employees
and can be voted on, improved upon or enriched with further
opinions and ideas. This helps to establish priorities for
implementation, since the number of votes in favour of an idea
gives an excellent indication of the benefits that it could bring to
the organization.
In 2012 a total of 2,891 people posted messages on the site
and 1,650 ideas were put forward.
81
—
—
—
—
—
—
—
—
—
—Risk
management
—
—
—
—
—
—
—
One of the undertakings given to the Eurogroup in July 2012 in
order to obtain the financial assistance requested by the Spanish
government to restructure and recapitalize the Spanish banking
industry, as set out in the Memorandum of Understanding (MoU)
of 20 July 2012 between the government and the European
authorities, was that a thorough and detailed exercise would be
carried out to estimate the banking industry's capital requirements.
This exercise included a series of stress tests to be performed on
each bank.
Risk management
—
—For Banco Sabadell the results of the 2012 stress tests
on Spain's banking system were totally satisfactory
and showed conclusively that the Bank would not need
recapitalizing to face an adverse economic scenario
—
—
The purpose of the stress tests was to evaluate the banks'
resilience to an extremely adverse and highly unlikely
macroeconomic setting, so as to put to rest any possible fears
investors might have that some losses on the banks' loan books
had not been adequately recognized.
For the banks in general, and for Banco Sabadell in particular,
the exercise involved the following blocks of work:
— An ad-hoc independent audit to review the carrying values
of loan assets on the balance sheet, including any possible
misstatements of loans and refinancings.
— An in-depth appraisal of real estate assets based on valuations
by external and independent valuers.
— A stress test exercise carried out by an independent
consultancy firm (Oliver Wyman) under the assumption of
an extremely adverse scenario, to provide a highly granular
analysis of possible losses on banks' loan portfolios.
— An in-depth review of the bank's business plans according
to conservative principles to measure its capacity to absorb
hypothetical losses under particularly adverse scenarios.
From the results of the exercise the banks' capital needs were
finally determined. Banks were classified into groups as follows:
— Capital surpluses or shortfalls
under adverse scenarios (€Mn.)
+46,154
Banco Sabadell
and six other banks
84
—Group 0: banks for which no capital shortfall had been identified.
— Group 1: banks in which the Fund for Orderly Bank
Restructuring (FROB) had already taken a shareholding at the
time of the test.
— Group 2: banks that were found to have a capital shortfall in
the stress test and would be unable to fund the shortfall from
private sources or without state assistance.
— Group 3: banks found to have a capital shortfall in the stress test
but with reliable recapitalization plans in place that would enable
them to fund the shortfall without seeking state assistance.
Group 0
-46,206
-6,248
-3,449
four banks
four banks
two banks
Group 1
Group 2
Group 3
— Allocation of
economic capital (by type of risk)
1
2
3
4
6
Credit risk
Structural risk
Operational risk
Market risk
Other
77%
7%
9%
1%
6%
4
5
3
2
1
Banco Sabadell complies with guidelines drawn up under the Basel
Capital Accord, a fundamental principle of which is that a bank’s
capital requirements should be more closely related to risks
actually incurred, based on internal risk measurement models
which have been independently validated.
Banco Sabadell has supervisory approval for the use of its own
internal models for companies, real estate developers, specialized
financing, retailers and sole proprietors, mortgage loans, personal
loans, personal credit and credit cards, in estimating its regulatory
capital requirements.
Based on the risk metrics provided by these new
methodologies, Banco Sabadell has a consolidated system in
place for measuring risk.
The assessment of risk in terms of an allocated capital
requirement means that risk can be related to return, from
individual customer up to business unit level. The group has
an analytical “risk-adjusted return on capital” system in place
which provides this assessment and includes it as part of the
transaction pricing process.
—
—Continued development in risk approval and monitoring
systems and recovery processes. The full integration of
Banco CAM systems means consistency of risk management
and control procedures across the group
—
—
Risk management
In the case of the Banco Sabadell group, the results of the stress
test were entirely satisfactory since the Bank was classified in
the “zero group” of banks for which no capital shortfall had been
estimated under the assumptions used in the test.
Specifically, Banco Sabadell was found to have a capital
surplus of €3,321 million (4.7% of its risk-weighted assets) under
the base scenario, and a capital surplus of €915 million under the
adverse scenario (1.4% of its risk-weighted assets).
The chief categories of risk inherent in the business of
Banco Sabadell and its group are credit risk, market risk and
operational risk.
The accurate and efficient management and control of risk
is critical to realizing the aim of maximizing shareholder value
while ensuring an appropriate degree of financial strength. The
management and control of risk comprises a broad framework
of principles, policies, procedures and advanced evaluation
methodologies, integrated within an efficient decision-making
structure. These are fully and clearly set out in the Annual
Accounts, the Report of the Directors, the Report on Corporate
Governance and the Basel II Pillar 3 Disclosure document, all of
which can be found on the group's web site.
85
—
—Credit risk
—
—
Credit risk is the possibility that losses may be incurred as a result
of borrowers failing to meet their obligations or through losses in
value due simply to deterioration in borrower quality.
Approval, monitoring and recovery
Risk management
To maximize the business opportunities provided by each customer
and to guarantee an appropriate degree of security, responsibility
for monitoring risks is shared between the relationship manager
and the risk analyst, who are thus able to obtain a comprehensive
view of each customer’s individual circumstances.
The Board of Directors delegates powers and discretions to
the Risk Control Committee, which then sub-delegates authority at
each level. The addition of controls on these authority thresholds
to loan approval management systems ensures that the powers
delegated at each level are appropriate to the expected loss
estimates for all loan applications by business customers.
By analysing indicators and early warning alerts, and by
conducting regular credit rating reviews, the quality of a risk can be
constantly monitored in an integrated way.
The establishment of effective processes for managing
existing risk exposures also benefits the process of managing
past due accounts, since the early identification of probable
default cases ensures that measures can be taken proactively.
With an early warning system, the quality of a risk can be
monitored in an integrated way and risks transferred to recovery
specialists who are best equipped to determine the most
suitable type of recovery procedure in each case. Risks above
a certain limit are grouped into categories according to their
expected loss ratios, so that they can be treated in the most
suitable way. Alerts are managed by the account manager and
the risk manager and are supplemented by the experience of the
account that comes from direct contact with the customer.
Credit rating
86
Credit risk exposures to corporate customers, real estate
developers, specialized financing projects, retailers and sole
proprietors, financial institutions and countries are assessed
according to a system of credit ratings based on predictive factors
and internal estimates of the probability of default. The rating
model is reviewed each year on the basis of an analysis of actual
default data.
Each rating score is assigned an anticipated default rate which
allows consistent comparisons to be made across segments and
with the ratings of independent rating agencies, according to a
master scale.
— Overall risk profile by borrower
category (distribution of credit risk exposures)
1 Market segment
2 Large corporates
3 Midsize businesses
4 Small businesses
5 Retailers and sole
proprietary
6 Personal loans
7 Banks
8 Sovereign debt
9 Other
18.13%
16.67%
15.72%
1.99%
18.17%
1.10%
5.90%
14.71%
7.61%
9
1
8
7
2
6
5
3
4
—Business loan portfolio
—Credit rating profile
30
25
20
15
10
5
0
8
7
6
5
4
3
2
1
0
Credit scoring
Risk management
9
Credit risk exposures to individual customers are classified
by means of scoring systems which make use of quantitative
modelling based on historical data to identify key predictive
factors. Two types of scoring are used:
— Behavioural scoring: a system in which all customers are
automatically classified according to their transaction histories
and data for each product taken. It is used primarily for such
purposes as granting loans, setting limits on authorized
overdrafts, targeting sales campaigns, and for tracking and
segmenting in claim and/or recovery procedures.
— Application scoring: this is used to evaluate applications for
personal loans, mortgage loans and credit cards. When full
details of the application have been entered, the system
generates a result based on the estimated borrowing capacity
and financial position of the applicant and the quality of any
security or collateral.
—Individual customer loan portfolio
—Credit rating profile
40
35
30
25
20
15
87
10
5
0
9
8
7
6
5
4
3
2
1
0
Country risk
This is the risk associated with the debts of a country analysed as
a class on the basis of factors other than credit risk. It manifests
itself when a borrower is unable to meet its foreign currency
liabilities to external creditors because the country will not allow
access to, or transfers to be made in, that currency, or where a
recovery action against the borrower would fail for reasons of
sovereignty.
An overall exposure limit is set for each country, which applies
across the whole group. Country limits are approved by the Risk
Control Committee and are constantly monitored to ensure that
any deterioration in the political, economic or social situation in a
country can be detected in good time. The rating for each country
provides an additional guide, both when setting limits and in
monitoring them once set.
—Credit risk
—Counterparty risk
—Counterparty risk
(distribution by geography)
(distribution by credit rating)
(distribution by geography)
Risk management
1
2
3
4
5
6
Spain
Other European Union
USA & Canada
Rest of World
Latin America
Other OECD
92.40%
3.99%
2.43%
0.43%
0.60%
0.15%
1 AAA / Aaa
2 AA+ / Aa1
3 AA / Aa2
4 AA- / Aa3
5 A+ / A1
6 A / A2
7 A- / A3
8 BBB+ / Baa1
9 BBB / Baa2
10 BBB-/Baa3
11 BB+ / Ba1
12 BB / Ba2
13 Other ratings
5
6
2
Euro area
Other European
Other USA & Canada
US Investment banks
Rest of world
Japan
4
12
5
80.62%
4.96%
11.60%
0.15%
2.66%
0.00%
6
3
5
11
2
6
7
10
8
1
9
Credit risk in market trading
88
1
2
3
4
5
6
2
13 1 3 4
4
3
1.66%
0.00%
0.69%
1.39%
17.87%
4.05%
0.02%
21.76%
17.50%
12.56%
15.03%
4.34%
3.12%
Credit risk due to market operations arises from trading in financial
instruments, whether in spot transactions, where the amount
at risk is comparable to the nominal value of the transaction, or
transactions in derivative instruments not traded on organized
markets, where in the great majority of cases the transaction
amount is below the notional value (counterparty risk).
Banco Sabadell has a system in place for assessing and
managing these risks which allows compliance with approved
limits to be monitored and controlled in real time.
In addition, to mitigate exposure to counterparty risk Banco
Sabadell maintains a solid base of collateral agreements —Credit
Support Annexes (CSAs) or Global Master Repurchase Agreements
(GMRAs)— negotiated with key counterparties. The collateral
provisions of these agreements mean that exposure to such
counterparties is significantly reduced.
1
—
—Market risk
—
—
Discretionary market risk
Risk management
Discretionary market risk arises from the possibility of loss
in the value of financial asset positions due to variations in
any of the factors affecting market risk (stock prices, interest
rates, exchange rates or credit spreads). It arises primarily from
treasury and capital market positions which can be managed by
using other financial instruments.
Discretionary market risk is measured by the VaR (Value
at Risk) method, which allows the risks on different types of
financial market transaction to be analysed as a single class. VaR
provides an estimate of the anticipated potential maximum loss
on a position that would result from an adverse, but possible,
movement in any of the market risk factors that have been
identified. This estimate is expressed in money terms and is
calculated at a specified date, to a specified confidence level
and for a specified time horizon. The estimate takes account of
different levels of market risk factors.
VaR limits are approved by the Risk Control Committee and
are assigned on a top-down basis, with the overall limit being
divided into sub-limits for different business units and risk
factors. These sub-limits are further subdivided successively
down to individual portfolio level. Apart from VaR limits, other
types of limit are used. These include sensitivity limits, nominal
value limits and stop-loss limits, which complement the view of
risk provided by VaR techniques.
Market risk is monitored on a daily basis and reports on current
risk levels and on compliance with the limits assigned to each
unit are sent to the risk control functions. This makes it possible
to track changes in exposure levels resulting from changes in the
market prices and volatilities of financial instruments.
The reliability of the VaR methodology is validated by
backtesting techniques which are used to verify that the VaR
estimates are within a specified confidence level.
The following graph shows the movement of the 1-day VaR for
trading operations by the group's treasury market operations in the
year 2012 at a 99% confidence level.
89
—Market risk (€Mn.)
—VaR
—Interest rate VaR
—Exchange rate Var
—Equity VaR
—Credit spread VaR
7
6
5
4
3
2
Risk management
1
0
Jan
12
Feb
12
Mar
12
Apr
12
May Jun
12
12
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Des
12
Risk control techniques of this kind are supplemented by
special simulation exercises and extreme market scenarios
("stress testing"), the purpose of which is to analyse different
macroeconomic scenarios and their possible impact on the trading
portfolio. The following table shows a stress analysis of this kind
for the most significant portfolio (equity securities).
—Equity securities stress test results 2012
(€Mn.)
Date
January
February
March
April
May
June
July
August
September
October
November
December
Portfolio
value
Stable
interest rates
Fall in
interest rates
68.37
51.48
61.89
57.94
52.21
56.24
58.51
42.75
42.77
74.99
82.85
75.44
17.94
11.16
14.65
19.47
17.31
13.50
12.52
6.68
6.20
10.19
8.81
5.90
(16.78)
(14.25)
(16.17)
(11.51)
(14.50)
(8.72)
(10.16)
(9.53)
(9.77)
(15.65)
(18.93)
(19.79)
Structural interest rate and liquidity risk
90
Structural risk arises from ongoing customer-based commercial
and corporate banking operations and is divided into interest rate
risk and liquidity risk. Management of structural risk seeks to
ensure stability at the margin by maintaining appropriate levels of
liquidity and capital strength.
Interest rate risk
Interest rate risk is caused by changes, as reflected in the position
or the slope of the yield curve, in the interest rates to which
asset, liability and off-balance sheet positions are linked. Gaps or
—Structural interest rate risk
—Interest rate sensitivity
7.75
5.86
37.59
56.06
2011
2012
Risk management
mismatches arise between these items because of differences in
repricing and maturity dates so that rate changes affect them at
different times; this in turn affects the robustness and stability of
results.
The management of interest rate risk focuses on overall
financial exposure for the group as a whole and involves proposing
alternative business or hedging strategies that will meet business
objectives and are appropriate to market conditions and within the
exposure limits that apply across the group.
A number of methodologies are used to measure interest rate
risk. These include measuring the sensitivity of net interest income
to changes in interest rates over a one-year horizon. This is done
by means of static (gap analysis) or dynamic (simulation) tests
based, in the latter case, on different assumptions of balance
sheet growth and changes in the slope of the yield curve.
Another technique used is to measure the sensitivity of
shareholders' equity to changes in interest rates by duration gap
analysis. This measures the effect of interest rate changes over a
longer time horizon.
The sensitivity of net interest income and shareholders' equity
to a 100 basis point change in interest rates for the years 2011
and 2012 is illustrated in the following diagram.
Liquidity risk
This can be defined as the possibility of the Bank’s being unable
to meet payment commitments, even if only temporarily, due to a
lack of liquid assets or of its being unable to access the markets to
refinance debts at a reasonable cost.
Liquidity risk may be caused by external factors such as a
financial market downturn, a systemic crisis or reputational issues,
or internally, by an excessive concentration of maturing liabilities.
Banco Sabadell keeps a close watch on day-to-day changes in
its liquid asset position and holds a diversified portfolio of such
assets. It also carries out projections to anticipate future needs.
In addition, liquidity gap analysis is used to manage
foreseeable mismatches between cash inflows and outflows over
a medium-term horizon. Systematic checks are made to verify that
the group’s ability to raise funds on the capital markets is sufficient
to satisfy its requirements in the medium and long term.
The group maintains a number of active funding programmes to
raise finance on the medium- and long-term capital markets. Shortterm commercial paper issuance programmes further diversify
its sources of funds. It is also an issuer of covered bonds and is
active in developing new sources of finance such as asset-backed
securities, which provide a further instrument for the management
of liquidity risk.
The Bank carries out regular liquidity stress testing to enable
it to assess inflows and outflows of funds and the impact of these
flows on its cash position under different scenarios.
Based on this analytical framework, the Bank has a contingency
plan in place to deal with unexpected scenarios that could cause
an immediate funding requirement. Another type of liquidity stress
test that is carried out is to analyse the impacts that changes in
market prices may have on the collateral deposited, whether in
the futures and options markets or under collateral agreements
91
(CSAs and GMRAs). A range of different market risk scenarios are
studied and the effects of these on liquidity, individually and in
combination, are analysed.
The contingency plan is constantly being updated and identifies
the Bank's assets that are most readily convertible to cash in
the short term; it also sets out action plans should it become
necessary to raise additional cash.
—
—Operational risk
—
—
Risk management
92
Operational risk is the risk of loss resulting from inadequate
or failed internal processes, people and systems or from
unforeseen external events. Banco Sabadell pays particular
attention to operational risk and has implemented a management,
measurement and oversight framework that fulfils the conditions
necessary to opt for the use of an advanced model for calculating
regulatory capital charges for operational risk.
Management of operational risk is decentralized and devolved
to process managers throughout the organization. The full range
of group processes is identified on a corporate process map,
thus facilitating the compiling of information in a way that reflects
the structure of the organization. The group has a specialized
central unit to manage operational risk, whose main functions
are to coordinate, supervise and drive forward the identification,
assessment and management of risks by process managers in
line with Banco Sabadell's process-based approach.
The Board of Directors and senior managers play a direct,
hands-on role in managing operational risk by approving the
management framework and its implementation as proposed by
an Operational Risk Committee made up of senior managers from
different functional areas of the company; they also ensure that
regular audits are carried out on the management strategy being
applied, the reliability of the information being reported, and the
internal validation tests required by the operational risk model.
Management of operational risk is divided into two action areas:
The first action area is based on an analysis in which all
processes and any associated risks that involve potential losses
are identified, leading to a qualitative evaluation of the risks and
their associated control mechanisms. This is done by process
managers in conjunction with the central operational risk unit.
This result is an assessment that allows future exposures to be
recognized as expected and unexpected losses, tendencies to be
anticipated and mitigating action to be taken in an informed way.
This is supplemented by a system for identifying, monitoring and
actively managing risk through the use of key risk indicators. These
can be used to trigger alerts in response to increases in exposure,
identify the causes of that exposure and measure the effectiveness
of the controls in place and any improvements that are made.
Care is taken to ensure that all processes identified as critical
are protected by specific business continuity plans in the event of
a service failure.
The operational risks identified are also assessed from the point
of view of their reputational implications, should an incident occur.
— Distribution of loss events
due to operational risk (by amount)
— Distribution of loss events
due to operational risk (by number)
1 Customers, products
and business practices 34.07%
2 Property damage
4.91%
3 Process execution, delivery
and management
35.91%
4 External fraud
14.68%
5 Internal fraud
7.92%
6 Business disruption/
systems failure
0.47%
7 Staff relations and workplace
security issues
2.04%
1 Clients, productes i
pràctiques empresarials 0.77%
2 Danys a actius
materials
3.93%
3 Execució, lliurament
i gestió de processos 82.60%
4 Frau extern
12.22%
5 Frau intern
0.06%
6 Incidències en el negoci
i errades en els sistemes 0.28%
7 Relacions laborals
i seguretat en el lloc
de treball
0.13%
7
6
4
5
4
7
5
6
Risk management
The second action area is based on experience. It consists of
maintaining a database of all losses that occur in the organization.
This provides a store of information of actual operational risk
events for each business line and the causes of those events, so
that risks can be acted upon and minimized. This loss information
is also of use in measuring the extent to which estimates of
potential loss are consistent with reality, both in terms of severity
and frequency, so that loss exposure estimates are constantly
being updated and improved in this way.
The database contains historical records of actual losses
resulting from operational risk going back to 2002. It is continually
updated as information is received on losses and also on
recoveries, whether resulting from the Bank's own efforts or from
insurance provision.
1
2
1
2
3
3
93
—
—Compliance risk
—
—
Risk management
94
The direct impacts of regulatory nonconformance and loss of
prestige in the eyes of regulators, markets, employees, customers
and the media have given rise to a vital need for effective
management of compliance risk. Compliance risk may mean
exposure to legal or administrative penalties, significant financial
loss or loss of reputation as a result of infringements of laws,
regulations, internal policies and codes of conduct applicable to
banking.
To cover against this risk the group has adopted a system
of regulatory compliance that is centrally managed within the
parent company, with some functions being devolved to domestic
and foreign subsidiaries and branches abroad. This is a flexible,
risk-focused approach which can be easily adapted to changes
in group strategy as they occur; it also makes use of synergies,
especially in cases involving complex global impacts requiring
technology solutions. The main challenge with this approach is
to achieve a uniform level of regulatory compliance across the
group by establishing minimum standards that must be observed
regardless of the type of business or the country where the
business is located.
The group uses a special methodology to ensure continued
progress in compliance management. This comprises six main
areas:
— A technology solution to integrate compliance within the
group's operating processes so as to ensure high levels of
efficiency as well as total and permanent conformance with
legal requirements.
— Continuous training/instruction for relevant staff through an
annual training programme to raise awareness, highlight and
explain compliance issues of particular sensitivity or involving
the greatest risk.
— Clear procedures to ensure that all persons concerned know
how to act in any situation.
— Swift and effective channels of communication.
— Monitoring and control to ensure compliance with legal
and regulatory requirements.
—The involvement of Compliance in all approvals of new
rules and procedures, in the production or offering of new
investment products, and in the work of identifying newly
introduced regulations and verifying that the changes required
by those regulations are properly implemented. This enhanced
role ensures that the group's operations are in conformity with
all regulatory requirements.
The Banco Sabadell group has an effective control infrastructure
in all areas where a compliance risk may be present, such as
prevention of money laundering and the financing of terrorism,
market abuse, internal codes of conduct and investor protection
legislation (MiFID). Key actions implemented in 2012 included the
following:
Risk management
— Improved systems for identifying transactions giving rise to
suspicions of money laundering.
— Progress in implementing remediation plans to comply with
the requirements imposed by Spain's anti-money laundering
legislation.
— Introducing checks on the business activities of account
holders via an automatic link-up to the database of the General
Treasury of the Social Security system.
— Improving investor protection by implementing a new system to
evaluate the appropriateness of investments.
— Developing a tool for detecting possible market abuse practices.
— Strengthening the mechanisms for monitoring compliance with the
group's Internal Code of Conduct for trading on the stock market.
— Implementing measures to bring greater transparency to all
dealings with customers, particularly in the areas of marketing
and contract terms.
— Making the rule of criminal liability for unlawful conduct
applicable on a group-wide basis.
— Monitoring and actively participating in the Foreign Account Tax
Compliance Act (FATCA) project.
— Extending the group's regulatory compliance system to Banco CAM.
95
—
—
—
—
—
—
—
—
—
—
— José Permanyer Cunillera
—
— Josep Oliu Creus
—
— Jaime Guardiola Romojaro
—
— José Luis Negro Rodríguez
—
—Board of
Directors
and Senior
Management
Team
—
—
—
—
Board of Directors and
Senior Management Team
98
—
—Board of Directors
—
—
—
—Operating Divisions
—
—
—
—Central Service Divisions
—
—
—Chairman
Josep Oliu Creus
—Deputy Chairmen
Isak Andic Ermay
José Manuel Lara Bosch
José Javier Echenique Landiribar
—Managing Director
JaIme Guardiola Romojaro
—Directors
Francesc Casas Selvas
Héctor María Colonques Moreno
Sol Daurella Comadrán
Joaquín Folch-Rusiñol Corachán
M. Teresa Garcia-Milà Lloveras
Joan Llonch Andreu
José Ramón Martínez Sufrategui
José Permanyer Cunillera
António Vítor Martins Monteiro
—Director and Comptroller General
José Luis Negro Rodríguez
—Secretary to the Board
Miquel Roca Junyent
—Deputy Secretary to the Board
María José García Beato
—Commercial Banking
Carlos Ventura Santamans
Deputy General Manager
Eduardo Currás de Don Pablos
Assistant General Manager
Manuel Tresánchez Montaner
—Markets and Private Banking
Ramón de la Riva Reina
Cirus Andreu Cabot
—BS America
Fernando Pérez-Hickman
—Corporate Banking
and Global Businesses
Enric Rovira Masachs
—Catalonia Region
José Canalias Puig
—Barcelona Region
Luis Buil Vall
—Madrid, Castile and
Castile-La Mancha
Blanca Montero Corominas
—Southern Region
& Canary Islands
Juan Krauel Alonso
—Northeast Region
Pablo Junceda Moreno
—Northern Region
Pedro E. Sánchez Sologaistua
—SabadellCAM Region
Jaime Matas Vallverdú
—Operations and Technology
Federico Rodríguez Castillo
—Human Resources
Javier Vela Hernández
—Risk
Rafael José García Nauffal
—Equity investments
and Insurance
Ignacio Camí Casellas
—Communication
and Institutional Relations
Ramon Rovira Pol
—Corporate Operations
Joan M. Grumé Sierra
—Internal Audit
Nuria Lázaro Rubio
—Legal Department
Gonzalo Barettino Coloma
—Compliance, CSR and
Corporate Governance
Adrià Galian Valldeneu
—
—Executive Committee
and Group Management Team
—
—
—Chairman
Josep Oliu Creus
—Managing Director
Jaime Guardiola Romojaro
—Non-executive Director
—Director and Comptroller General
—Deputy Secretary to the Board
and Secretary General
—General Manager
Miguel Montes Güell
—General Manager
Tomás Varela Muiña
—
—Banking and other subsidiaries
—
—
—BancSabadell d’Andorra
Miquel Alabern Comas
—BanSabadell Fincom
Miguel Costa Sampere
—BanSabadell Inversión
Cirus Andreu Cabot
—BS Capital
Raúl Rodríguez Sabater
—
—
—
—
—
—
—
—
—
—Report
of the Audit
and Control
Committee
—
—
—
—
—
—
—Introduction
—
—
Report of the Audit
This report on the work of the Audit and Control Committee in
2012 is addressed to shareholders of Banco de Sabadell S.A.
It was signed off by the Committee at its meeting of 23 January
2013 and was submitted to the Board of Directors of Banco de
Sabadell S.A. for approval at its meeting on 24 January 2013.
The Committee is regulated by Article 59 bis of the Articles
of Association and Article 13 of the Regulations of the Board of
Directors of Banco de Sabadell S.A.; it also has its own rules of
organization and procedure which are published on the group
website (www.grupobancosabadell.com).
This regulatory structure ensures that the Audit and Control
Committee is compliant with the reporting requirements laid
down by Law 44/2002 of 22 November on Measures to Reform
the Financial System and later amendments, and incorporates
the main recommendations on the working of audit committees
contained in the Unified Code on Corporate Governance approved
by the CNMV in 2006.
As required by the Bank's articles and other regulations, the
Committee consists of a maximum of five Directors appointed
by the Board, one of whom is appointed by the Board to chair the
Committee. The chairperson may continue to perform that office
for a maximum of four years and cannot be re-appointed for at
least one year after the end of their four-year term. Additional
Directors may be appointed to attend meetings without the right
to vote in order to fill a vacancy on the Committee or replace a
member who is indisposed.
The Board also appoints a Secretary to the Committee, who
cannot be a Director. The Secretary takes minutes of every
meeting and these are approved at the end of the meeting itself
or at the next following meeting. A report of each meeting of the
Committee is read out at the immediately following meeting of the
Board of Directors.
As of 31 December 2012 the members of the Audit and Control
Committee were as follows:
101
Chairman
Joan Llonch Andreu
Committee members
Secretary
Miquel Roca i Junyent
Report of the Audit
As prescribed by its rules of procedure, all directors on the Audit
and Control Committee are non-executive, independent directors
and have the knowledge and experience required to perform the
duties assigned to the Committee by the Board of Directors.
The Audit and Control Committee meets as often as necessary
and in any event not less than every three months. The Committee
may request the attendance at its meetings of such executives,
including executive Directors, as it sees fit. It may also seek
assistance from independent advisors in carrying out its duties.
This report summarizes the range of activities carried out by
the Audit and Control Committee in the course of the six meetings
that it held during the year 2012, from which it can be seen that
the Committee discharged the duties assigned to it in its rules of
procedure by the Board of Directors of Banco de Sabadell, S.A.
within its main areas of responsibility.
Together with the publication of an annual report on Corporate
Governance and the information available on the group’s website,
the distribution of this report at the Annual General Meeting
underlines once again Banco Sabadell's commitment to providing
shareholders and investors with the tools and resources they need
to keep themselves fully informed of the Company's performance
and to ensure that it is transparent in everything that it does.
—
—Terms of reference
—
—
102
The Audit and Control Committee is responsible for:
1 Reporting to the General Meeting on all issues raised by
shareholders that are within its remit.
2 Monitoring the effectiveness of the company's internal
controls, its internal audit function, if any, and its risk
management systems and discussing with its auditors or firm
of auditors any significant weaknesses in its internal control
system identified in the course of the audit.
3 Supervising the preparation and presentation of statutory
financial information.
4 Making recommendations to the Board of Directors, for
submission to the General Meeting, on the appointment
of external auditors and their terms of engagement, the
scope of their professional mandate and, if applicable, the
termination or non-renewal of their engagement; reviewing the
performance of the auditing agreement and ensuring that the
opinion on the annual accounts and the main findings of the
Auditor's report are expressed in a clear and precise way.
5 Reporting on the annual accounts and the quarterly and halfyearly financial statements and any prospectuses required to be
filed with the regulatory or supervisory authorities; monitoring
regulatory compliance; ensuring that generally accepted
accounting principles have been correctly applied, and reporting
on any proposed amendments to those principles.
6 Maintaining working relations with external auditors to receive
information on, and enquire into, any issues that could
compromise their independence and keep itself informed of
any other matters related to the audit process and to auditing
standards.
7 Reporting on any issues referred to the Committee by the
Board of Directors that are within its terms of reference.
8 Any other matters for which the Committee is responsible
by law or under the Articles of Association or any regulations
made in accordance therewith, or under any generally
applicable rules on corporate governance.
As required by the Law on Measures to Reform the Financial
System, on 9 July 2003 the regulations of the Board of Directors
were amended by notarial deed and new rules on the composition
and working of the Audit Committee were added. These changes
were made having regard to amendments to certain articles of
the Bank’s Articles of Association that had been adopted by a
resolution of the Annual General Meeting on 24 April 2003.
By another deed executed on 9 July 2003 the Audit and Control
Committee was set up to replace the existing Audit and Budget
Control Committees, whose respective remits had been merged
following amendments to the Bank's Articles of Association and to
the Regulations of the Board of Directors.
On 20 October 2003 the Committee agreed new rules setting
out the principles that would govern the work of the Audit and
Control Committee of Banco de Sabadell S.A. and basic rules on
organization and procedure, within the framework of the Articles
of Association and the Regulations of the Board of Directors. The
rules were approved and confirmed by the Board of Directors at a
meeting on 30 October 2003 and were filed with the public registry
following the execution of a deed on 18 November 2003 before a
notary in Sabadell, Javier Micó Giner.
On 28 April 2009 the Committee reviewed and reported
favourably on a proposed amendment to article 13.1 of the
rules of procedure of the Board of Directors to provide for the
appointment of alternate members of the Committee. It also
resolved to amend article 7.1 of the rules of procedure of the
Audit and Control Committee accordingly. The amendments to
article 13.1 of the rules of procedure of the Board of Directors
and article 7.1 of the rules of procedure of the Audit and Control
Committee were approved and confirmed by the Board of Directors
at a meeting on 27 May 2009 and filed with the public registry
following the execution of a deed on 11 June 2009 before a notary
in Sabadell, Javier Micó Giner.
In 2010 article 59 bis of the Articles of Association and article
13.1 of the rules of procedure of the Board of Directors of Banco
de Sabadell, S. A. were amended to fix the number of members
of the Audit and Control Committee at a maximum of five in order
to keep the number of members of the Committee in the same
proportion with respect to the number of members of the Board.
The Committee also resolved to amend article 7.1 of its rules of
procedure so as to incorporate the said amendment concerning
the number of members.
Report of the Audit
—
—Regulatory structure
—
—
103
In 2012 the Committee made amendments to a number of
articles of its rules of procedure to bring them into line with the
amended Articles of Association of Banco de Sabadell, S.A. and
at the same time make those articles compliant with changes in
the legislation on public limited companies [Ley de Sociedades
de Capital] and with Law 12/2010 amending the legislation
applicable to auditing (Law 19/1988) and the stock market (Law
24/1988), as well as the consolidated legislation on companies
[Texto Refundido de la Ley de Sociedades Anónimas] as amended
by Royal Legislative Decree 1564/1989 to comply with EU law.
Report of the Audit
—
—Activities
—
—
Six meetings were held by the Audit and Control Committee in
2012 in accordance with the regulatory structure described above.
Four of these meetings were ordinary or routine in character,
while two were ad hoc meetings to discuss matters of special
interest. Meetings were regularly attended by the Comptroller
General (a member of the Board) and the head of Internal Audit.
Meetings were also attended by the Chief Financial Officer when
the business on the agenda included pre-publication reviews of
quarterly and half-yearly trading and financial reports, and by other
group senior executives when the nature of the business on the
agenda made their attendance desirable.
The Committee also maintained regular contacts with the
external auditors to keep itself informed of progress in the auditing
of the accounts.
These contacts and attendances ensured that the Committee
was able to obtain all the information it required to perform the
tasks delegated to it by the Board of Directors within its main
areas of responsibility, as follows:
Functions related to financial reporting, risk management
and internal control
104
The Committee carried out a review to verify that banking or
accounting best practice was being applied at all levels of the
organization. On the basis of reports from the External Auditor,
Internal Audit or the Comptroller General, the Committee satisfied
itself that suitable steps were being taken at General Manager
level and by other senior executive functions to ensure that the
group's main risks were being appropriately identified, measured
and controlled.
Supervision of internal controls on the group’s
offshore operations
The Committee paid particular attention to overseeing the system
of internal controls over the group's offshore operations. This
was in response to the Bank of Spain's "Banking Supervision
Memorandum" for 2003 setting out recommendations on the
Report of the Audit
policies of banks and other lenders on the use of offshore
locations to expand their overseas operations. In carrying out
this responsibility the Committee reviewed the findings of audits
carried out by official regulators, audit reports prepared by the
Audit Department, the results of audits carried out by units with
local internal audit functions and auditors' reports prepared
during the year 2011 on the accounts of subsidiaries with offshore
operations.
As a result of its review the Committee was able to conclude
that group operations conducted through offshore establishments
were being reduced and that adequate systems were in place
to ensure that offshore establishments were subject to internal
control by the parent company as required by the group's policy
on discontinuing any operations likely to give rise to legal or
reputational risks. A report on this area of the Committee's
supervisory duties was submitted to the Board of Directors on 28
March 2012.
Risk management and control systems
During the year the Committee reviewed the group's risk
management systems as described in reports prepared by the
Risk, Finance and Internal Audit departments.
To meet the group's market disclosure obligations and other
requirements set out in the Bank of Spain's Circular 4/2011
(the "Solvency Circular"), at its meeting on 24 April 2012 the
Committee reviewed the contents of the document entitled "Basel
II – Pillar 3 Disclosures" dated 31 December 2011, based on an
Internal Audit report provided for the purpose. At that meeting
it also examined information concerning the group's qualifying
capital resources and its capital adequacy position, and discussed
their compliance with the Solvency Circular and the objectives
set out in the group's risk management policies. The Committee
also carried out a detailed review of all financial data relied on as
a basis for the group's conservative risk profile in the different
categories of risk for which disclosure was required: credit and
dilution risk, market risk in the trading book, operational risk,
specific data on equity investments and equity instruments not
included in the trading book, and interest rate risk on non-trading
positions.
With regard to the organization-wide implementation of
internal ratings-based (IRB) credit risk assessment models, the
Committee reviewed the findings of internal audits carried out on
these models at the request of the Bank of Spain's Supervision
Department. These audits enabled the Committee to keep itself
informed of the action being taken to comply with requirements
specified by the Bank of Spain in its approval notices for the use of
Basel II risk assessment models.
From reports provided to it by Internal Audit during the year, the
Committee was also able to observe the significant progress being
made by the group in developing and rolling out advanced systems
for the management and measurement of operational risk and for
the control of market and counterparty risk.
The Committee also reviewed the results of the stress tests
conducted by Oliver Wyman, which were published in September.
These tests were carried out to determine the capital requirements
105
of the principal banks in the Spanish banking industry by analysing
the quality of their assets and the individual resilience they
showed to a stressed macroeconomic scenario. The test results
enabled the Committee to observe that Banco Sabadell is solidly
positioned within the "zero group" of banks for which no capital
shortfall was identified.
At its 23 January 2013 meeting the Committee reviewed a
report presented by the Risk Department on risk governance,
management and control systems for the year 2012, and reached
the conclusion that these systems were appropriate to the group's
risk profile.
Report of the Audit
Internal controls over the preparation and presentation
of regulatory financial information
In 2011 the Audit and Control Committee had approved Internal
Audit's strategic plan for 2011-2013 setting out a detailed
programme for the supervision of the group's system of internal
control over financial reporting (ICFR). The plan provides for the
carrying out of tests on areas considered to be of key importance
within the group and the completion of tests in all areas within the
three years covered by the plan, with the exception of certain areas
or processes considered to be of especial significance; these
include critical controls of period-end closing procedures, reviews
of judgements and estimates and general controls on reporting
systems subject to evaluation on an annual basis.
In the course of 2012 the reports provided by Internal Audit on
the ICFR evaluation tests were presented and were reviewed by
members of the Audit and Control Committee; any weaknesses
identified in the reports were evaluated and the action plans
proposed for correcting them were approved.
A favourable opinion on the ICFR was also expressed by the
External Auditor (PricewaterhouseCoopers) in a report dated 30
January 2012 on the accounts for the year to 31 December 2011.
Functions related to auditing
106
The Committee's functions in relation to the auditing of accounts
include making recommendations to the Board regarding
the appointment of auditors and reviewing their terms of
engagement. At its meeting of 24 January 2012 the Committee
reviewed group policy on the engagement of auditors and, on
the basis of its review, recommended to the Board that the firm
of PricewaterhouseCoopers Auditores, S.L. be re-appointed as
auditors of the Bank's individual and consolidated accounts for
the year 2012. The Board of Directors resolved to submit the
Committee's recommendation to the Annual General Meeting
of 31 May 2012 and the appointment was duly approved by the
General Meeting.
With regard to auditor remuneration, the Committee reviewed
and approved the auditor's fees for 2012. Details of fees paid to
auditors can be found in the annual accounts for the year.
To comply with auditor independence requirements, the Audit
and Control Committee reviewed the main non-auditing services
provided by PricewaterhouseCoopers in 2012. These related
Report of the Audit
primarily to the production of reports required by the regulatory
authorities, which this year included reports on the protection
of customer assets as required by the CNMV's Circular 5/2009
of 25 November, the annual report of the external advisor on
anti-money laundering practices, and the Auditor's report on
information concerning the system of internal controls on financial
reporting by quoted companies. The auditors also undertook tasks
related to the production of comfort letters and special reports
on the proforma consolidated financial position at 31 December
2011 and advised on the preparation and compiling of financial
information for inclusion in prospectuses for the increase in
the capital of Banco de Sabadell, S.A. in March 2012. Advisory
services were also rendered, principally in relation to the impacts
of regulatory changes on treasury and capital market operations
and the design of a process model, management procedures and
reporting systems for the Asset Management division to facilitate
the sale of real estate assets. All these tasks were undertaken
in conformity with the independence requirements of the
Consolidated Text of the Law on the Auditing of Accounts issued by
Royal Legislative Decree 1/2011 and Law 44/2002 on Measures
to Reform the Financial System. No activities were undertaken that
would be incompatible with the auditing function.
To verify the group's compliance with statutory limits on
concentrations of auditing business, the Committee reviewed the
proportional share of the fees paid to PricewaterhouseCoopers
by the group in the firm's total annual revenue. The share was
less than 0.02% of the total for the PricewaterhouseCoopers
worldwide organization, and less than 0.87% of the total for its
Spanish organization. From information provided by the auditors,
the Committee also reviewed the procedures and tools used by
the firm to ensure compliance with the auditor independence
requirements. Written confirmation of the firm's independence
with respect to the Banco Sabadell group was received by the
Committee on 23 January 2013. Based on the results of its
enquiries, the Committee submitted a report to the Board of
Directors, before the Auditor's report on the accounts had been
issued, giving a favourable opinion on compliance with the auditor
independence requirement and concluding that all work for
which auditors had been engaged satisfied the independence
requirements of the Consolidated Text of the Law on the Auditing of
Accounts issued by Royal Legislative Decree 1/2011.
The Committee remained in contact with the Auditor constantly
throughout the year to ensure that it was kept informed of any
significant accounting or financial reporting issues arising in the
course of the Auditor’s work.
In the area of external supervision and regulation, the
external auditors reported to the Committee, at its meeting on 19
December 2012, on the provisions of Law 8/2012 (implementing
Royal Legislative Decree 18/2012) on the revaluation and sale
of real estate assets, and of Law 9/2012 (implementing Royal
Legislative Decree 24/2012) on the restructuring and resolution
of credit institutions, with further implementing provisions under
Law 1559/2012. The Committee also received a report on the
requirement that financial institutions prepare recovery plans
setting out different crisis scenarios along with details of warning
indicators and measures to respond to such scenarios, the
estimation of impacts and an operational and reporting plan.
107
Report of the Audit
As part of the Committee's oversight of the auditors'
performance of their terms of engagement, at its meeting of 23
July 2012 the auditors reported on the results of their review of the
summary consolidated accounts for the first half of 2012, giving
the accounts a clean bill of health.
At the same meeting the auditors presented to the Committee,
for submission by the Directors to the Annual General Meeting, the
results of their review of the merged balance sheet and statement
of changes in equity for Banco de Sabadell, S.A. and Banco CAM,
S.A.U. prepared specially to meet the requirements applicable to
corporate mergers under the Consolidated Text of the Law on Public
Limited Companies [Texto Refundido de la Ley de Sociedades de
Capital] approved by Royal Legislative Decree 1/2010, and by
reason of the proposed merger of Banco Sabadell and Banco CAM,
in which the latter would be absorbed by the former.
The auditor also presented to the Committee, at its meeting
on 23 January 2013, the findings of its review of the individual and
consolidated annual accounts for the year 2012. As in previous
years, the opinion expressed by the auditor on the accounts was
that they presented a true and fair view, in all material respects,
of the consolidated financial position of the Bank and the group
and of the results of their operations and their cash flows for
the year as required by applicable financial reporting standards
and regulations and, in particular, the accounting principles and
practices embodied therein.
Functions related to trading and financial reports
108
In the course of the year the Committee paid particular attention to
reviewing the Company's accounts and its quarterly and half-yearly
trading and financial reports as well as other information disclosed
to the market, including the share prospectus, before they were
released for publication.
At its meeting of 28 March 2012 the Committee reviewed and
reported favourably on the share prospectus of Banco de Sabadell
S.A. to be filed with the National Stock Market Commission
(CNMV) in accordance with EU Commission Regulation (EC)
809/2004 of 29 April 2004 which came into effect on 18
July 2005, implementing Directive 2003/71/EC as regards
information contained in prospectuses as well as the format,
incorporation by reference and publication of such prospectuses
and dissemination of advertisements.
At the Committee's meetings of 24 April, 23 July and 23
October 2012 and 23 January 2013, the Committee reported
favourably on the quarterly financial statements for the periods
ending on 31 March, 30 June, 30 September and 31 December
2012 respectively, prior to the their being approved by the Board of
Directors and released to the markets.
At its 23 July meeting the Committee reported favourably on
the summary consolidated half-year financial statements of the
Banco Sabadell group for filing with the National Stock Market
Commission (CNMV), finding them to have been prepared and
presented in conformity with IAS 34 on Interim Financial Reporting
as incorporated into IFRS-EU, with the detailed disclosure
requirements specified by the CNMV in its Circular 1/2008 of 30
January, and with article 12 of Royal Decree 1362/2007.
In undertaking this work the Committee received documents
and held meetings with the Comptroller General, the Chief
Financial Officer and the Auditor to satisfy itself that the applicable
accounting principles had been properly applied.
Functions related to the work of Internal Audit
The Committee kept itself fully informed of progress in
implementing the recommendations of previous audit reports and
each meeting included the presentation of a report on the Audit
Department's monitoring of the group “instrument panel” of key
quality indicators.
— A report on the main internal auditing results for the fourth
quarter of 2011, at the meeting of 24 January 2012.
— A summary of Internal Audit's annual report on its activities
in 2011 and its proposed plan of activities for 2012, at the
meeting of 24 January 2012.
— A report on the main internal auditing results for the first
quarter of 2012, at the meeting of 24 April 2012.
— A report on the main internal auditing results for the second
quarter of 2012, at the meeting of 23 July 2012.
— A report on the main Internal Audit results for the third quarter
of 2012, at the meeting of 23 October 2012.
Report of the Audit
One of the Committee's tasks is to approve the plans and
methodologies of the Internal Audit department and assess the
extent to which the department's plans are being followed and its
recommendations are being implemented. This responsibility was
met largely through the approval and oversight of the Internal Audit
Year Plan.
The work of Internal Audit in 2012 consisted mainly of
conducting a review, according to the principles underlying the
strategic internal auditing plan for 2011-2013, of the group's
internal control systems to mitigate any financial risk, credit
risk, operational risk or accounting or regulatory risk to which its
operations are exposed. At the Committee's meeting of 23 July
2012 an internal audit plan for Banco CAM for the period June
to December 2012 (drawn up according to the Banco Sabadell
method), was presented to the Committee. The plan was primarily
concerned with processes for managing credit risk, operational risk
and liquidity risk. The plan also included a review of the integration
of Banco CAM systems onto the group's IT platform and certain
other mandatory audits related to compliance.
The implementation of the Internal Audit plan resulted in the
production of over 400 audit reports and the main findings of
these reports, along with replies from senior management to the
recommendations contained in the reports, were evaluated by the
Committee.
All meetings held by the Committee were attended by the
Comptroller General and the head of Internal Audit. The following
reports were presented:
109
Functions related to compliance with legal and regulatory
requirements on Corporate Governance
Report of the Audit
110
One aspect of the Committee's work in the area of corporate
governance was to review reports prepared by the Comptroller
General and Internal Audit on compliance with applicable laws,
internal Company rules and regulatory requirements.
To comply with the requirements of Royal Decree 217/2008 for
regular reviews of compliance with the EU Directive on Markets in
Financial Instruments (MiFID) by investment services companies,
the Audit and Control Committee received information specifically
related to the implementation of MiFID rules by the Banco Sabadell
group, based on an internal audit report prepared for the purpose.
In addition, as required by the CNMV in its Circular 5/2009 of
25 November, the Committee reviewed the Auditor's annual report
on the protection of customer assets held or managed by Banco de
Sabadell, S.A., Banco Guipuzcoano, S.A., Banco Urquijo Sabadell
Banca Privada, S.A., Banco CAM, S.A.U. and Gestión de Activos
del Mediterráneo, Sociedad de Valores, S.A., from the point of view
of the adequacy of arrangements made by these undertakings to
comply with customer asset protection requirements. The findings
of these reports were satisfactory and no gaps or significant
weaknesses were identified in relation to the existence and
appropriateness of internal asset protection systems in any of the
undertakings.
In accordance with the requirements on the revaluation and
disposal of real estate assets held by financial companies, under
Royal Legislative Decree 18/2012, the Committee reviewed
the Banco Sabadell group's plan of action to comply with these
requirements, approved by the Executive Committee of the Bank of
Spain according to a communication dated 27 June 2012.
At its meeting of 24 January 2012 the Committee decided to
recommend that the Board of Directors give its approval to a report on
the structure and practice of Corporate Governance at Banco Sabadell
that had been submitted by the Executive Committee in 2011.
At its meeting of 23 July 2012 the Committee approved
amendments to articles 4, 5.1, 5.2, 6 and 7 of the Audit and
Control Committee rules of procedure having regard to changes
in the Articles of Association approved by the Annual General
Meeting of Banco de Sabadell, S.A., on 31 May 2012. The said
articles were amended to read as follows:
Article 4 —Terms of reference
The Audit and Control Committee is responsible for:
I Reporting to the General Meeting on all issues raised by
shareholders that are within its remit.
II Monitoring the effectiveness of the company's internal controls,
its internal audit function, if any, and its risk management
systems and discussing with its auditors or auditing firm any
significant weaknesses in the internal control system identified
in the course of the audit.
III Supervising the preparation and presentation of statutory
financial information.
IV Making recommendations to the Board of Directors, for
Report of the Audit
submission to the General Meeting, on the appointment of
external auditors and their terms of engagement, the scope of
their professional mandate and, if applicable, the termination
or non-renewal of their engagement; reviewing the performance
of the auditing agreement and ensuring that the opinion on the
annual accounts and the main findings of the auditor's report
are expressed in a clear and precise way.
V Reporting on the annual accounts and the quarterly and halfyearly financial statements and any prospectuses required to be
filed with the regulatory or supervisory authorities; monitoring
regulatory compliance; ensuring that generally accepted
accounting principles have been correctly applied, and reporting
on any proposed amendments to those principles.
VI Maintaining working relations with external auditors to receive
information on, and enquire into, any issues that could
compromise their independence and keeping itself informed of
any other matters related to the audit process and to auditing
standards.
VII Reporting on any issues referred to the Committee by the Board
of Directors that are within its terms of reference.
VIII Any other matters for which the Committee is responsible by law
or under the Articles of Association or any regulations made in
accordance therewith.
Article 5.1 — Functions related to financial reporting
and internal control
a To supervise the processes of financial reporting and
presentation of accounts and ensure that generally accepted
accounting principles are being properly applied; to report on
any proposals by management for changes in those principles.
b To oversee the company's internal control systems and
procedures and to ensure that all the principal risks, whether
direct or indirect, subject to controls are reasonably identified,
measured and controlled.
The Committee's main functions are:
Article 5.2 — Functions related to auditing
The Committee's main functions are:
111
a To be aware of the functions, extent, working methods and
responsibilities of external auditors.
b To review the performance of the auditing agreement and
ensure that the opinion on the annual accounts and the main
findings of the auditor's report are expressed in a clear and
precise way.
c To maintain working relations with external auditors to
receive information on any issues that could compromise
their independence or other matters related to the process
of auditing the accounts, and any other disclosures required
to be made by the legislation, rules or professional standards
applicable to auditing.
Report of the Audit
d To receive each year written confirmation from the external
auditors that they are independent from the company or any
companies related to or associated with the company directly or
indirectly, with details of any additional services provided to any
such company or companies by the said auditors or any persons
or entities associated with them.
e To issue a report each year, before delivery of the Auditor's,
giving an opinion on the independence of the external auditors.
The said report should always include an opinion on the
provision of additional services as referred to in d) above.
f To be informed of management's response to the
recommendations of the external auditor and to mediate in the
event of any disagreement between them on the principles and
rules to be applied in preparing the financial statements.
g To serve as a channel of communication between the Board of
Directors and the external auditors.
Article 6 — Subject of committee's actions
The Committee's work will be applicable to Banco de Sabadell, S.A.,
without prejudice to its responsibilities extending to the collection of
information on any subsidiary companies forming a decision-making
unit with Banco de Sabadell, S.A. within the meaning of article 4 of
Law 24/1988 on the Stock Market.
Article 7 — Composition
112
1 The Committee shall consist of not more than five Directors
appointed by the Board of Directors. Additional Directors may be
appointed to attend meetings without the right to vote in order
to fill a vacancy on the Committee or replace a member who is
indisposed.
2 The Committee may make recommendations to the Board of
Directors for submission, if thought fit, to the Annual General
Meeting, for a change in the number of its members to a number
that will enable the Committee to function more effectively.
3 No person who is an Executive Director or who has previously
served in an executive post may be a member of the Committee.
4 At least one member of the Committee must be appointed for
their expertise in the field of accounting or auditing, or both fields.
The Committee also approved changes to the Rules of Internal
Audit having regard to these amendments to the Committee's
rules of procedure and with the principles laid down by the Basel
Committee in the document entitled The internal audit function in
banks, published in December 2011.
The Committee also examined half-yearly reports from the
group's Corporate Ethics Committee on action taken to ensure
compliance with the Banco Sabadell Group Code of Conduct on
stock market trading, the group's general Code of Conduct, and
actions undertaken in the area of Corporate Social Responsibility
and other key aspects.
Self-evaluation
Following Corporate Governance guidelines, the members of the
Audit and Control Committee carried out a self-evaluation and
submitted a report containing an assessment of the Committee's
performance to the Board of Directors for consideration at its
meeting of 19 December. The report found that the Committee had
fully and properly discharged the responsibilities entrusted to it in
its rules of procedure by the Board of Directors of the Bank.
Reports from supervisory authorities
Report of the Audit
During the year the Committee was briefed on the main points
of reports put out by supervisory authorities in Spain and other
countries in which the group operates. From the information
provided the Committee was able to satisfy itself that the
recommendations of the supervisory authorities were being fully
implemented.
—
—Conclusion
—
—
This report on the activities of the Audit and Control Committee
for the year 2012 was signed by the members of the Committee
on 23 January 2013 for submission to the General Meeting.
The activities described in this report ensured that the Audit and
Control Committee was able fully to discharge the duties assigned
to it in its rules of procedure by the Board of Directors of Banco de
Sabadell, S.A., within its main areas of responsibility.
As a result of its review and oversight of reports received during
the year from the Comptroller General, the Chief Financial Officer,
Internal Audit and the external auditor, the Committee was able to
conclude that the annual accounts to be signed off by the Board
of Directors provide a true and fair view of the assets and financial
position of Banco Sabadell and the results of its operations, and
contain all information necessary for their comprehension.
The Committee has, in addition, verified that all business,
financial and legal risks to which Banco de Sabadell S.A. and
its subsidiary undertakings may be exposed are clearly and
straightforwardly explained in the annual accounts and the report
of the Directors. Finally, it has reviewed the contents of the
auditor's report to ensure that the opinion on the annual accounts
and the main findings of the auditor's report are expressed in a
clear and precise way.
113
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—
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—Report
on Directors'
remuneration
—
—
—
—
—
—
—
—Report on Directors' remuneration by the Board of Directors
of Banco de Sabadell, S.A., following a recommendation from
the Nomination and Remuneration Committee
—
—
1—Introduction
Report on Directors'
remuneration
116
This report was drafted by the Board of Directors of Banco de
Sabadell, S.A. on a recommendation of the Nomination and
Remuneration Committee, to comply with article 61 ter of the
Securities Market Act 24/1998, of 28 July, as amended by the
Sustainable Economy Act 2/2011, of 4 March, which requires that
the report be distributed and submitted to a consultative vote as a
separate item of the agenda of the Annual General Meeting.
Broadly speaking, Banco Sabadell's remuneration policy has been
based on combining the principles of compensation for hard work,
responsibility and professional track record with the desire to align
value creation, shareholder interests, and prudent risk management.
Banco Sabadell has drawn up a remuneration policy for the
members of the Board in accordance with the applicable legislation,
having regard for recommendations from the Committee of
European Banking Supervisors and in accordance with the Articles
of Association and the Regulations of the Board of Directors.
The policy also complies with the recommendations of
the Spanish National Securities Commission’s Unified Good
Governance Code for Listed Companies of 22 May 2006, and
specifically with recommendations 8 and 35 to 39.
Articles 217, 218 and 219 of the Companies Act [Ley
de Sociedades de Capital] sets out basic rules for director
remuneration and expressly states that remuneration must be
fixed in the Articles of Association.
Article 81 of Banco Sabadell's Articles of Association states
that director remuneration will consist of a share in the profits
not exceeding 3% of the company's net profit, and the Board is
empowered to set the annual remuneration of its Board members
and its distribution among the Board members within this limit.
Article 22 of the Regulations of the Board of Directors states that
directors will be entitled to remuneration set by the Board of Directors
in accordance with the Articles of Association and recommendations
from the Nomination and Remuneration Committee.
In the case of directors who also perform executive functions,
Article 81 establishes that, subject to approval by the General
Shareholders' Meeting, those directors may also participate in
incentive schemes approved for Bank executives consisting of
payments in the form of shares, stock options or remuneration
linked to the share price. At all events, remuneration for executive
functions will align with the general principles of the Bank, and the
criteria of deferral and payment in shares established for Senior
Management will apply to them.
2—Composition of the Board of Directors of Banco Sabadell
The Board of Directors of Banco Sabadell comprises the
following persons:
remuneration
Josep Oliu Creus, Chairman
Isak Andic Ermay, First Deputy Chairman
José Manuel Lara Bosch, Second Deputy Chairman
José Javier Echenique Landiribar, Third Deputy Chairman
Jaime Guardiola Romojaro, Managing Director
Joan Llonch Andreu, Director
Francesc Casas Selvas, Director
Héctor María Colonques Moreno, Director
Sol Daurella Comadrán, Director
Joaquín Folch-Rusiñol Corachán, Director
Maria Teresa Garcia-Milà Lloveras, Director
José Ramón Martínez Sufrategui, Director
Antonio Vítor Martins Monteiro, Director
José Luis Negro Rodríguez, Director-Comptroller General
José Permanyer Cunillera, Director
The Board of Directors has the following committees:
3—Principles guiding policy on directors’ remuneration
a Remuneration for all directors has been established taking
into consideration such criteria as dedication, qualifications
— Executive Committee
Josep Oliu Creus (Chairman)
José Permanger Cunillera
— Nomination and Remuneration Committee
Héctor María Colonques Moreno (Chairman)
Isak Andic Ermay
— Strategy Committee
Isak Andic Ermay
José Javier Echenique Landiribar
— Audit and Control Committee
Joan Llonch Andreu (Chairman)
Sol Daurella Comadran
Maria Teresa Garcia-Milà Lloveras
— Risk Control Committee
José Permanyer Cunillera, Deputy Chairman
Joan Llonch Andreu
117
remuneration
and responsibility, the goal being to provide incentives without
in any way compromising the director's independence in
discharging his/her duties.
b The applicable criteria have been evaluated by the Nomination
and Remuneration Committee, which has taken advice
from the Bank's internal services where necessary, and any
comparable existing market conditions have been taken into
account.
c The applicable criteria have been evaluated by the Nomination
and Remuneration Committee, which has taken advice
from the Bank's internal services where necessary, and any
comparable existing market conditions have been taken into
account.
d Remuneration for all directors has been set by the Board of
Directors, on the recommendation of the Nomination and
Remuneration Committee, in accordance with the criteria and
within the limits established under article 81 of the Articles of
Association.
4—Procedure for fixing directors’ remuneration
Under article 59 ter of the Articles of Association, the Nomination
and Remuneration Committee's basic responsibilities, described
in article 14 of the Regulation of the Board of Directors, include
making recommendations to the Board of Directors for a system
and an amount of annual remuneration to be paid to the Chairman
of the Board of Directors, the executive directors, the Bank's
senior management, and for systems under which the Board
shares in the company's profits. It also advises on the directors'
remuneration policy, periodically reviews the general principles of
remuneration and remuneration programmes, considers whether
they conform to those principles and seeks to ensure transparency
with respect to remuneration.
5—Directors’ remuneration for 2012
The following system was approved for Banco Sabadell:
118
A Board of Directors
a The Chairman of the Board of Directors receives €252,000.
b Deputy Chairmen of the Board of Directors receive a base
remuneration of €126,000.
c The other members of the Board of Directors receive a base
B Board committees
a Executive directors do not receive any amount for chairing,
belonging to or attending the Board's various committees or
other boards of directors of group companies.
b With the exception of the Executive Committee (membership
of which does not generate any remuneration), members of
committees (Risk Control, Appointments and Remuneration,
Audit and Control, and Strategy) receive additional
c Chairmen of Board committees receive an additional
d The member of the Risk Control Committee who chairs the Credit
Review Committee receives an additional remuneration of €18,000.
C Directors of other group companies:
a The Chairman of the Board of Directors of Banco Guipuzcoano
received €62,727.30 until 22 May (the day of the merger with
Banco Sabadell); the Deputy Chairman received €24,545.46,
and members of that Board received €16,363.62 each.
b The Chairman of the Board of Directors of BanSabadell
Inversió Desenvolupament, S.A.U., received €60,000.
c The Chairman of the Board of Directors of Solvia Gestió
Immobiliària, S.L., received €60,000.
remuneration
D Other remuneration
a The Chairman of the SabadellGuipuzcoano Advisory Board,
created after the merger into Banco Sabadell on 22 May,
received €18,000, in addition to a remuneration of €9,000 for
being a member of the Board.
E Pension contributions amounted to €37,800 for the Chairman
of the Board and €18,900 for each member of the Board:
Francesc Casas Selvas, Héctor Maria Colonques Moreno,
Joaquin Folch-Rusiñol Corachán, Joan Llonch Andreu and José
Permanyer Cunillera.
The table below shows total director remuneration received in
2012 for performing non-executive functions:
Name of Director
Board
of Directors
Josep Oliu Creus
Isak Andic Ermay
José Javier
Echenique Landiribar
Héctor María
Colonques Moreno
Joaquín Folch-Rusiñol
Corachán
M. Teresa Garcia-Milà
Lloveras
Joan Llonch Andreu
José Ramón Martínez
Sufrategui
António Vítor Martins
Monteiro
José Luis Negro
Rodríguez
Risk
Control
Committe
C 252
DC 126
DC 126
DC 126
C
M 108
M 108
M 108
M
Nomination &
Remuneration
on Committe
M
M
Audit
Control
Committe
18
18
Strategy
Committe
Executive
Board of
Commite Other Group
Companies
P
M 18
M 18
M 18
P
M
M
C(2)63
Others Total
C(4)18
M(2)
108
126
144
M (2)16
142
144
M 18
M 108
M 108
C
36
M
18
M 18
M 18
M 108
M (5) 9
M 18
M 108
M 108
M
P
252
162
162
225
€’000
135
119
M
38
M
61
M 108
18
DC(2)25
36
M (4) 9
196
108
38
M
M
DC(1) 36
M
C: Chairman / DC: Deputy Chairman / M: Member
(1) Chairman of the Credit Review Committee
(2) Banco Guipuzcoano, S.A.
(3) BanSabadell Inversió Desenvolupament, S.A.U. and Solvia Gestió Immobiliària, S.L.
(4) SabadellGuipuzcoano Advisory Board
(5) Served on the Committee for the part of the year only
61
C(3)120
264
6—Anticipated directors’ remuneration for 2013
In view of the economic circumstances and pressure on the
financial system, the Nomination and Remuneration Committee
has recommended to the Board of Directors that remuneration for
all members of the Board for non-executive functions be reduced
by 15% in 2013.
7—Executive directors' remuneration for performing
executive functions
remuneration
120
A Broadly speaking, and in particular as regards executive
functions, remuneration at Banco Sabadell is seen as a
value-creating factor by which to attract and retain the best
professionals, and should include a competitively-structured
remuneration package which, in certain cases, should include
a variable remuneration component that is linked to specific
objectives aligned with shareholders' interests.
B The principles of the remuneration policy for executive
directors who perform executive functions are as follows:
a Executive directors receive fixed and variable remuneration
corresponding to their specific post. A suitable balance has
been established between the fixed and variable components
of remuneration.
b The criteria as to performance and attainment of set
objectives which determine fixed and variable remuneration
components are the same as for the Bank's senior managers,
and seek to provide overall remuneration that is competitive
according to comparable market parameters and in which
variable remuneration accounts for a significant portion.
c Variable remuneration is based on a range of factors, in
particular professional performance, and is not determined
simply by the general performance of the markets or sectors in
which the entity operates or other similar circumstances.
d Remuneration policy conforms to the business strategy and to
the Bank's long-term objectives, values and interests, in line
with the principles that govern customer and investor protection.
e The evaluation combines the Bank's individual and
consolidated results, having regard for current and future
risks associated with earnings as well as the cost of capital
employed and the required liquidity.
f Standard conditions in these types of relationships were taken
into consideration when drafting contracts, and the terms
were set in accordance with prevailing market standards.
g The remuneration system is complementary to the incentive plan
for executives of Banco Sabadell, the conditions of which were
approved by the General Meeting on 25 March 2010.
C Executive Directors
In 2012, the executive directors of Banco Sabadell were:
— Josep Oliu Creus, Chairman.
— Jaume Guardiola Romojaro, Managing Director.
— José Luis Negro Rodríguez, Director and Comptroller-General
(appointed on 31 May 2012).
E Variable remuneration paid in 2012
Variable remuneration in 2012, calculated as a function of
2011 earnings, was paid in February 2012. In accordance with
the rules established by Royal Decree 771/2001, of 3 June:
a 50% of variable remuneration was paid in the form of Banco
Sabadell shares.
b At the same time, 50% of total variable remuneration has been
deferred, and is expected to be paid in three equal parts in the
next three years.
c 50% of each payment is received in the form of Banco
Sabadell shares.
d The shares delivered have a vesting period of one year as from
the delivery date.
The Chairman's variable remuneration was set by the
Nomination and Remuneration Committee, based on an
objective benchmark, i.e. earnings, and other relevant aspects
such as management performance in the year. This resulted in
a payment of €182,500.
The Managing Director's variable remuneration has been
fixed by the Nomination and Remuneration Committee based on
the group's earnings; however, a set of objectives, each with a
different weighting, has been established, including: earnings,
net increase in customer numbers, liquidity gap and demand
account market share, resulting in a payment of €172,274.
Under the variable remuneration payment system
described above, 36,726 Banco Sabadell shares were
delivered to the Chairman, and 34,783 to the Managing
Director.
remuneration
D Fixed remuneration for 2012
Fixed remuneration for executive directors was set on the
basis of their maximum level of responsibility and rewards
their contribution in each position they hold and their executive
and leadership skills. Comparable situations in the market
were taken into consideration to calculate the remuneration.
Fixed remuneration includes the pay elements established by
the various agreements that apply to all employees of the Bank.
Fixed remuneration in 2012 amounted to €1,301,269 for
Josep Oliu Creus, €846,083 for Jaime Guardiola Romojaro
and €366,668 for José Luis Negro Rodríguez, from the date on
which the latter was appointed to the Board of Directors.
The Managing Director also received a fixed annual
amount of €400,000.
121
F Pension commitments
Contributions in respect of pension commitments were
provided through insurance policies in the amount of
€985,636.91 for Josep Oliu Creus and €1,385,719.00 for
Jaime Guardiola Romojaro. Additionally, each of them received
contributions to their pension plans in the amount of €762.08.
G Multi-year variable remuneration system
The remuneration system also includes an incentive scheme
for all Banco Sabadell executives, the terms of which were
approved by the Annual General Meeting on 25 March 2010.
Under the terms of the scheme, known as Stock
Appreciation Rights 2010-2013, the Chairman has been
assigned 2,600,000 rights, the Managing Director 2,000,000
rights, and the Comptroller-General 800,000 rights. However,
according to the scheme terms as currently drafted, no rights
has vested as of the date of this report.
H Other benefits
During the year the following amounts were recognised
remuneration in kind: €28,727 for the Chairman,
€9,211 for the Managing Director, and €5,429 for the
Comptroller-General.
remuneration
122
8—Anticipated remuneration payable to executive directors
in 2013 for performing executive functions
The remuneration policy envisaged for executive directors in 2013
will be based on the general principles established by Banco
Sabadell and detailed in this report.
The variable remuneration for 2012 and the first one-third
instalment of variable remuneration for 2011 will be paid in 2013.
The implementation of the system to pay variable remuneration
for 2012 in options on Banco Sabadell shares will be submitted to
the Annual General Meeting for approval in 2013. With this system,
which does not involve additional remuneration, executive directors
may receive 100% of their variable remuneration for the discharge
of duties in 2012 in the form of stock options with a three-year
vesting period, which fully complies with all legal and corporate
governance requirements in connection with the deferral of variable
remuneration and payment in the form of equity instruments.
Under this system, 100% of the variable remuneration received
by executive directors in 2013 will be linked to share performance
in the coming years.
—
—
—
—
—
—
—
—
—
—Corporate
social
responsibility
—
—
—
—
—
—
Corporate social
responsibility
Banco Sabadell has adopted a set of principles on corporate
social responsibility which apply across the organization and to all
areas of its business. They are manifested through policies and
initiatives pursued both nationally and internationally.
The Bank’s compliance, CSR and Corporate Governance
department is responsible for coordinating policy on social
responsibility once it has been approved by the Board of Directors.
In an adverse economic and social environment accompanied
by large-scale financial sector restructuring, the group showed its
ability to carry out a coherent corporate social responsibility policy
which identifies and prevents or mitigates possible social impacts
and creates shared value for stakeholders.
For a large part of the year 2012 Banco Sabadell was
meeting the challenge of integrating Banco CAM, during which it
demonstrated that its key values of transparency, truthfulness and
trust were paramount.
Stakeholders and the wider community - initiatives, alliances
and commitments
— Signatory of the United Nations Global Pact
The Banco Sabadell Progress Report for 2011 was described
by the Global Compact International Network as being of an
“advanced level”
—Signatory of the Ecuador Principles
— United Nations Principles for Responsible Investment – UNPRI:
the Bank is a signatory in the “asset owner” category
—A signatory of the Carbon Disclosure Project and the CDP
on Water Disclosure
— Party to an agreement between the Spanish Banking
Association (AEB), the CNMV and the Bank of Spain to draw up
an action programme in relation to Financial Education Plan
—Since 2008, Banco Sabadell has been included in the
FTSE4Good and FTSE4Good IBEX sustainable stock market
indices. It is also a member of the Ethibel Investment Register
— Awarded the Gold Seal of Excellence of the European
Foundation for Quality Management (EFQM)
— ISO 9001 Certification for 100% of processes and operations
of the group’s financial services in Spain
— ISO 14001 Certification for six Central Service office buildings.
— LEED NC (New Construction) GOLD dsustainable building
certificate for the new office building at the Banco Sabadell
Centre in Sant Cugat del Vallès
— A Partner in the European Greenbuilding Programme for the
sustainable construction of the Polinyà logistics centre
— Committee Member, Chair of Applied Ethics, Ethos Ramon
Llull Foundation
— A Friend of the ICO-sponsored RSE-PYME Initiative for SMEs
and the Global Compact Spanish Network to raise awareness
of corporate social responsibility among Spanish SMEs
— Executive Vice-President of the Catalonia Club for
Management Excellence
— A Member of the Madrid Excelente Foundation’s Council of Experts
— A Member of the advisory board of Responsabilidad social
corporativa journal, published by the Luis Vives Foundation
125
— A Member of the Environment Committee of the Spanish
Association for Quality (AEC)
— A member of the SECE company’s Corporate Social
Responsibility External Committee
Corporate social
responsibility
Banco Sabadell reports on its economic, social and environmental
performance in its Annual Report on Corporate Social
Responsibility, following the Global Reporting Initiative (GRI) G3.1
international guidelines and supplement on the financial services
sector. Once again, the report was verified by external auditors and
received the maximum rating of A+ from the GRI.
Some of the year’s most significant CRS highlights are
briefly described below. These are set out in more detail in the
2012 Report on Corporate Social Responsibility. The report
is available to stakeholders on the corporate website (www.
grupobancosabadell.com), together with the Report on Corporate
Governance for 2012.
Promoting economic growth
Banco Sabadell acquitted itself satisfactorily in the independent
audits carried out in 2012 by consultancy firm Oliver Wyman on
Spain’s leading financial institutions to establish their capital
requirements in an adverse economic scenario. The Bank was
classed in group 0 which included all institutions that already
held capital resources sufficient to weather the most adverse
macroeconomic conditions and were shown to be creditworthy.
Each year Banco Sabadell supports subsidized funding
schemes sponsored by the Official Credit Institute as well as the
principal schemes promoted by Spain’s autonomous regions. It
also maintains agreements with a majority of the country’s Credit
Guarantee Societies (Sociedades de Garantía Recíproca) whose
purpose is to provide guarantees to SMEs to enable them to
obtain finance.
In 2012 Banco Sabadell took the third largest share of funding
disbursed under the ICO-funded schemes, with 12.2% of the total.
Financial services and sustainability
126
Banco Sabadell and the European Investment Bank have signed
an agreement with the aim of injecting funding amounting to
€400 million into SMEs. The agreement includes a prohibition on
financing for sectors or activities that are unethical or which, for
example, have negative environmental impacts, are engaged in the
manufacture of weapons or are in violation of people’s rights or
whose activities are merely financial in character.
During the year, Banco Sabadell provided more than €643
million for structured finance deals. In 2012 a total of 17 deals
incorporating the Ecuador Principles were concluded, of which 88%
were in the field of renewable energy.
Banco Sabadell offers a number of socially responsible
investments:
—Sabadell BS Inversión Ética y Solidaria, FI, an ethical
mutual fund
— Urquijo Cooperación, SICAV
— Plan de Pensiones Ético y Solidario, an ethical pension plan
— BS Ahorro Futuro
A long-term relationship
Corporate social
responsibility
Once it had officially registered the acquisition of Banco CAM,
Banco Sabadell set in motion action plans to rebuild trust among
customers of the former saving bank and to raise standards of
quality and service to the levels required by Banco Sabadell. This
resulted in the holding of face-to-face meetings with individual
customers at SabadellCAM branches to discuss their concerns.
The Bank also offered to holders of preferred shares and
subordinated notes issued by Banco CAM the option of exchanging
these for securities that were more liquid and better suited to the
current regulatory and trading environment.
Financial education
People are key
The enthusiasm, dedication, professionalism and capacity for work
shown by Banco Sabadell employees were key to the successful
integration of Banco CAM.
At the end of the year the group was employing a total of
15,596 employees, of whom 50.5% were women.
Banco Sabadell is providing its customers with the knowledge and
tools they need to manage their finances and is constantly working
to offer them financial solutions to meet their needs.
For the third year in succession, Banco Sabadell organized
a drawing competition for children, named “What’s money for?”
The competition was open to boys and girls between the ages of
0 and 13 years wishing to put their skills to use. The Bank set up
a website providing materials and games to help children learn
the value of money and the importance of saving. A new feature
of the competition this year was an instruction guide written
with the help of teachers and educational theorists. The guide
contained material to help turn the questions that young children
ask about money into opportunities for learning and discussion
between parent and child.
Banco Sabadell set up an online “Personal Finance” service to
help people organize and manage their household affairs.
A self-help programme entitled “Exportar para crecer” (Export
to Grow) was launched by Banco Sabadell in partnership with
business schools, associations and other organizations, with
the aim of helping SMEs and other companies to become more
international as a way out of the crisis. The programme offers
a variety of learning sources and channels: a practical guide to
foreign trade, seminars, video sessions, knowledge nuggets,
practical examples of SMEs going international, etc. (www.
bancsabadell.tv/servicios).
127
Leadership and training
In 2012 the Bank concentrated on providing leadership and other
training programmes for top group executives and supporting
employees of the newly acquired Banco CAM as they became
integrated into the organization. This included:
Corporate social
responsibility
— An expanded management and leadership training programme
for senior managers, prospective heads of department and
newly-appointed managers in Central Services divisions.
— A repeat of the LAUDE programme, an arrangement under
which Bank employees completing in-service training courses
are awarded academic qualifications from the University of
Barcelona’s Institute for Continuous Training (IL3-University
of Barcelona). These qualifications are in accordance with the
European Education Area framework.
— A special learning platform set up to support employees of
the former Banco CAM throughout the process of integration
and to ensure that they acquired the knowledge and skills they
needed to work as employees of the group.
— A first series of lectures given at the new Central Services
building, opened in June 2012, on the theme of “Business and
Values”. Speakers included key names from the corporate and
academic worlds and eminent senior citizens.
Minimizing social impact and improving employment prospects
To minimize the social impact of staff reductions required by the
European Commission in connection with the acquisition of Banco
CAM, Banco Sabadell launched a re-employment plan to help
employees taking voluntary redundancy or affected by collective
dismissal to find alternative work. This included providing former
employees with counselling to improve their chances of finding
employment and, at the same time, offering them credit on
favourable terms, one year’s rent-free use of office space or
business premises, and vocational guidance.
The plan also included action to revitalize business in areas where
the numbers of people leaving Banco CAM were greatest and to
generate employment through the promotion of business initiatives.
Equality and integration
128
The committee responsible for monitoring the group’s Equality
Plan, made up of employee and management representatives,
meets twice a year to review progress in implementing the Equality
Plan, which was signed in 2010.
To make businesses more aware of women’s potential in senior
managerial roles, Banco Sabadell is working with the Alumni
Association of the ESADE Business School in organizing training
sessions under the title “The Women and Leadership Forum”.
Premises and the environment
In 2012 Banco Sabadell opened a new office building at the Banco
Sabadell Centre in Sant Cugat del Vallès. The new building is an
extension to the group’s main corporate headquarters which was
awarded the LEED-NC (New Construction) Gold Certificate v. 2.2.
According to the performance data required for certification, the new
building is approximately 23% more efficient in energy consumption
and 65% in water usage compared with a standard building of the
same type.
Banco Sabadell has six buildings certified to the ISO 14001
standard.
Banco Sabadell promotes community-based programmes
and cultural activities or events through the Banco Sabadell
Foundation, the Banco Herrero Foundation and the Banco Sabadell
Sponsorship Committee. In 2012, the Bank invested €3,841,821
million in community projects and cultural activities.
Full information on the group’s Foundations and annual award
schemes is provided in the “Society” section of the group website.
Some key awards include:
— The Fundación Herrero Prize (ninth year) awarded to Dr
Emilio J Castilla for research into organizational aspects of
work and employment.
— The Banco Sabadell Prize for Biomedical Research (seventh
year) in recognition of the work of Dr Ben Lehner, aged 33, for
what the jury described as his “brilliant and original contribution
to the understanding and prediction of how genetic mutations
lead to phenotypic changes and cause disease”.
—The UPF Emprèn Prize (fourth year) awarded by the Pompeu
Fabra University’s Social Council and the Banco Sabadell
Foundation. The prize rewards undergraduates who display
initiative and business talent; in 2012 the prize was won by the
MyVoicer project, a portable text reader for the blind.
Corporate social
responsibility
Social commitment
129
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—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— Statutory
information
—
—
—
—
—
—
—
Directors’ statement
of responsibility
Statutory information
134
Auditor’s report
135
Consolidated Annual Accounts of the Banco Sabadell group for the year 2012 - Contents
Note
Title
Financial statements
Balance sheet
Income statement
Statement of recognized income and expense
Statement of changes in total equity
Cash flow statement
Notes to the Accounts
9
10
11
12
13
14
15
16
17
18
Report of the Directors
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Annex I
Annex II
Annex III
Principal business. Accounting policies and practices
Banco Sabadell group
Proposed distribution of profits - earnings per share
Debt securities
Equity instruments
Trading derivatives (assets and liabilities)
Loans and advances to other debtors
Information required to be kept by issuers of mortgage-backed securities - the special
mortgage register
Financial asset transfers
Changes in the fair value of hedged items in portfolio hedges of interest rate risk
Hedging derivatives (assets and liabilities)
Non-current assets held for sale and liabilities associated with non-current assets held for sale
Investments
Tangible assets
Intangible assets
Other assets
Finance for construction and real estate development - anticipated capital market funding
requirements
Debt certificates including bonds
Other financial liabilities
Provisions
Fair value of financial assets and liabilities
Foreign currency transactions
Shareholders’ equity
Off-balance sheet customer funds
Income statement
Taxation (income tax)
Segmental information
Financial risk management
The environment
Related party transactions
Agents
Customer Service Department
Remuneration paid to Directors and Senior Management
Directors’ duty of loyalty
Post-balance sheet events
Banco Sabadell group undertakings
Banco CAM group - consolidated balance sheet
Balance sheets of merged undertakings
1
2
3
4
5
6
7
8
137
Consolidated balance sheet of the Banco Sabadell group
As at 31 December 2012 and 31 December 2011
€’000
Assets
2012
2011 (*)
2,483,590
1,290,678
Held for trading
Debt securities (note 5)
Equity instruments (note 6)
Trading derivatives (note 7)
Memorandum item: Loaned or advanced as collateral
2,042,177
0
0
297,752
41,390
1,703,035
0
1,682,120
0
0
205,931
38,517
1,437,672
0
170,895
0
0
0
170,895
0
173,326
0
0
0
173,326
0
Available-for-sale financial assets
16,412,630
15,193,555
1,219,075
1,052,921
13,268,170
12,090,847
1,177,323
5,869,459
Loans and advances to credit institutions (note 4)
Loans and advances to other debtors (note 8)
110,732,517
5,233,243
105,102,361
396,913
765,261
76,282,944
3,628,914
72,654,030
0
1,541,697
Held-to-maturity investments (note 5)
7,647,834
871,089
0
0
36,917
0
Hedging derivatives (note 2 & 12)
4,933,006
417,685
Non-current assets held for sale (note 13)
2,056,254
530,881
Investments (note 14)
Associates
Jointly controlled entities
746,336
744,356
1,980
696,934
694,957
1,977
Insurance contracts linked to pensions (note 25)
165,092
162,735
0
0
Tangible assets (note 15)
Tangible fixed assets
For own use
Leased out under operating leases
Investment property
Memorandum item: Acquired under finance leases
2,635,038
1,450,485
1,378,563
71,922
1,184,553
0
1,106,881
877,935
792,694
85,241
228,946
0
Intangible assets (note 16)
Goodwill
Other intangible assets
1,165,072
827,931
337,141
1,022,161
823,815
198,346
Tax assets
Current
Deferred (note 35)
6,279,864
670,556
5,609,308
1,408,384
411,076
997,308
Other assets (note 17)
Inventories
Other
4,039,863
3,709,485
330,378
2,394,481
2,238,784
155,697
161,547,085
100,437,380
Other financial assets at fair value through profit or loss
Debt securities
Changes in the fair value of hedged items in portfolio hedges of interest rate risk (note 11)
Reinsurance assets
138
Total assets
(*) Presented for comparative purposes only.
€’000
Liabilities
1,699,230
0
0
0
0
1,678,818
20,412
0
1,451,021
0
0
0
0
1,451,021
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
144,984,600
23,888,640
9,779,956
82,464,410
25,326,170
1,166,707
2,358,717
91,586,490
4,040,717
8,128,791
58,444,050
17,643,095
1,859,370
1,470,467
Changes in fair value of hedged items in portfolio hedges of interest rate risk (note 11)
337,992
449,245
Hedging derivatives (note 12)
436,225
111,145
0
0
Liabilities under insurance contracts (note 24)
2,038,815
173,348
Provisions (note 25)
Provisions for pensions and similar obligations
Provisions for taxes and other regulatory contingencies
Provisions for contingent exposures and commitments
Other provisions
1,370,326
242,354
52,284
277,162
798,526
350,203
163,510
51,079
89,611
46,003
Tax liabilities
Current
Deferred (note 35)
899,077
154,280
744,797
202,133
71,466
130,667
Other liabilities
520,048
179,651
Total liabilities
152,286,313
94,503,236
Held for trading
Trading derivatives (note 7)
Short positions
Other financial liabilities at fair value through profit or loss
Deposits from credit institutions (note 19)
Deposits from other creditors (note 20)
Debt certificates including bonds (note 21)
Subordinated liabilities (note 22)
Other financial liabilities (note 23)
Liabilities associated with non-current assets held for sale (note 13)
2011 (*)
2012
139
€’000
Equity
Shareholders’ equity (note 28)
Capital
Authorized
Less: Uncalled capital
Share premium account
Reserves
Accumulated reserves (losses)
Reserves (losses) of entities accounted for by the equity method
Equity component of compound financial instruments
Less: Treasury shares
Profit or loss for the period attributable to the parent company
Less: Dividends and similar payments
Valuation adjustments (note 29)
Cash flow hedges
Hedges of net investments in foreign operations
Foreign exchange differences
Non-current assets held for sale
Entities accounted for by the equity method
Other valuation adjustments
Non-controlling interests (note 30)
Other movements
Total equity
140
2012
2011 (*)
9,119,542
369,944
369,944
0
4,560,923
3,334,389
3,128,330
206,059
798,089
798,089
0
(25,694)
81,891
0
6,276,160
173,881
173,881
0
1,861,702
3,438,010
3,213,527
224,483
814,620
814,620
0
(174,439)
231,902
(69,516)
(317,945)
(241,661)
(37,363)
0
(13,733)
0
(19,972)
(5,216)
(389,228)
(277,573)
(30,374)
0
2,790
0
(85,062)
991
459,175
4,682
454,493
47,212
(6,150)
53,362
9,260,772
5,934,144
161,547,085
100,437,380
9,015,469
8,347,022
13,523,884
11,657,865
Memorandum item
Contingent exposures (note 31)
Contingent commitments (note 32)
Consolidated income statement of the Banco Sabadell group
For the years ended on 31 December 2012 and 2011
€’000
4,735,621
3,394,082
(2,867,633)
(1,856,819)
1,867,988
1,537,263
9,865
8,752
Share of profit or loss of equity-accounted entities
(11,735)
37,650
Fee and commission income (note 34.b)
725,766
637,624
Fee and commission expense (note 34.b)
(97,077)
(64,031)
Gains or losses on financial assets and liabilities (net) (note 34.c)
Held for trading
Other financial instruments at fair value through profit or loss
Financial instruments not measured at fair value through profit or loss
Other
546,236
132,205
(177)
395,270
18,938
271,246
139,025
0
126,056
6,165
59,881
69,999
392,751
176,847
117,124
98,780
99,429
34,912
3,563
60,954
(535,229)
(189,931)
(5,466)
(339,832)
(91,210)
(34,208)
(41)
(56,961)
2,958,446
2,506,722
(1,511,625)
(996,546)
(515,079)
(1,145,091)
(742,600)
(402,491)
(156,925)
(130,921)
(62,561)
(13,997)
(1,408,967)
(1,329,691)
(634,524)
(512,633)
(79,276)
(121,891)
(181,632)
582,189
Interest and similar income (note 34.a)
Interest expense and similar charges (note 34.a)
Net interest income
Foreign exchange differences (net)
Other operating income (note 34.d)
Income from insurance and reinsurance contracts
Sales and income from non-financial services
Other operating income
Other operating expenses (note 34.e)
Expenses from insurance and reinsurance contracts
Change in inventories
Other operating expenses
Gross income
Administrative expenses (note 34.f)
Personnel expenses
Impairment losses (net) (note 34.g)
Other financial instruments not measured at fair value
through profit or loss (note 6)
2011 (*)
2012
141
Consolidated income statement of the Banco Sabadell group
€’000
2012
2011 (*)
(896,538)
(175)
(896,363)
(377,388)
(316)
(377,072)
15,407
5,672
933,306
0
Gains (losses) on non-current assets held for sale not classified as discontinued
operations
(172,563)
(23,007)
Profit (loss) before discontinued operations and taxes
(302,020)
187,466
398,055
48,406
96,035
235,872
0
0
96,035
235,872
81,891
14,144
231,902
3,970
0.03
0.17
0.03
0.15
0.03
0.15
Losses due to impairment of other assets (net) (note 34.h)
Goodwill and other intangible assets (note 16)
Other assets
Gains (losses) on derecognition of assets not classified as non-current assets held
for sale (note 34.i) (note 34.i)
Negative goodwill arising in business combinations (note 34.j)
Income tax (note 35)
Profit (loss) for the year before discontinued operations
Profit (loss) from discontinued operations (net)
Consolidated profit (loss) for the period
Profit (loss) attributable to the parent company
Profit (loss) attributable to non-controlling interests (note 30)
Earnings per share (€)
Basic earnings per share after adjusting for conversion of mandatorily convertible
bonds (€)
Diluted earnings per share
142
Statement of changes in equity for the Banco Sabadell group
Consolidated statement of recognized income and expense
€’000
Consolidated profit (loss) for the period
96,035
235,872
Other recognized income and expense
82,115
(65,954)
75,673
(122,640)
198,313
0
(10,508)
(9,057)
(1,451)
0
0
0
0
0
0
(29,344)
(29,344)
0
0
(2,634)
(2,634)
0
0
0
65,090
51,447
13,643
0
(8,867)
(7,295)
70,644
(21,472)
92,116
0
(37,771)
(42,930)
5,159
0
0
0
0
0
0
1,632
1,629
3
0
0
0
0
0
0
(90,107)
(90,107)
0
0
0
(10,352)
Total recognized income and expense
178,150
169,918
Attributable to parent company
Attributable to non-controlling interests
153,172
24,976
166,409
3,509
Available-for-sale financial assets:
Revaluation gains (losses)
Amounts transferred to income statement
Other reclassifications
Cash flow hedges:
Amounts transferred to initial carrying amount of hedged items
Hedges of net investments in foreign operations:
Foreign exchange differences:
Non-current assets held for sale:
Actuarial gains (losses) on pension schemes
Entities accounted for by the equity method:
Income tax
The statement of changes in equity is made up of the consolidated statement of recognized income and expense together with the consolidated statement of
changes in total equity for the Banco Sabadell Group.
2011 (*)
2012
143
Consolidated statement of changes in total equity
€’000
Equity attributable to parent company
Capital
Reserves
(losses)
of entities
Share Accumulated accounted for
reserves by the equity Other equity
premium
(losses)
account
method instruments
Profit (loss)
for period
attributable
Less: Own to parent
securitie
company
Less:
Total
Dividends
and similar shareholders’ Valuation
equity adjustments
payments
Noncontrolling
Total
interests Total equity
Closing balance at 31/12/2011
Adjustments due to changes in accounting policy
Adjustments to correct errors
173,881
0
0
1,861,702
0
0
3,213,527
0
0
224,483
0
0
814,620
0
0
(174,439)
0
0
231,902
0
0
(69,516) 6,276,160
0
0
0
0
(389,228) 5,886,932
0
0
0
0
47,212
0
0
5,934,144
0
0
Adjusted opening balance
Other changes in equity
173,881
0
196,063
1,861,702
0
2,699,221
3,213,527
0
(85,197)
224,483
0
(18,424)
814,620
0
(16,531)
(174,439) 231,902
0
81,891
148,745 (231,902)
(69,516) 6,276,160
0
81,891
69,516 2,761,491
(389,228) 5,886,932
71,283
153,174
0 2,761,491
47,212
24,976
386,987
5,934,144
178,150
3,148,478
Increases in capital
Reductions in capital
Conversion of financial liabilities to equity
Increases in other equity instruments
196,063
0
0
0
2,828,820
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,024,883
0
0
0
0
0
0
0
3,024,883
0
0
0
0
0
0
0
3,024,883
0
0
0
Reclassification of financial liabilities
to other equity instruments
0
0
0
0
0
0
0
0
0
0
0
0
0
Distribution of dividend and similar
payments to shareholders
0
(110,425)
0
0
0
0
(69,516)
69,516
(110,425)
0
(110,425)
0
(110,425)
Trading in own equity instruments (net)
Transfers between equity items
0
0
0
0
(40,145)
180,810
0
(18,424)
(16,548)
0
148,745
0
0
(162,386)
0
0
92,052
0
0
0
92,052
0
0
0
92,052
0
Increases/Reductions due to
business combinations
0
0
0
0
0
0
0
0
0
0
0
0
0
Discretionary transfer to welfare projects
and funds
0
0
0
0
0
0
0
0
0
0
0
0
0
Payments in equity instruments
Other increases (reductions) in equity
0
0
0
(19,174)
0
(225,862)
0
0
0
17
0
0
0
0
0
0
0
(245,019)
0
0
0
(245,019)
0
386,987
0
141,968
369,944
4,560,923
3,128,330
206,059
798,089
(25,694)
81,891
0
9,119,542
(317,945) 8,801,597
459,175
9,260,772
Consolidated statement of changes in total equity
€’000
Equity attributable to parent company
Capital
Profit (loss)
for period
attributable
Less: Own to parent
securitie
company
157,954
0
0
1,465,980
0
0
3,102,097
0
0
193,040
0
0
818,714
0
0
Adjusted opening balance
Other changes in equity
157,954
0
15,927
1,465,980
0
395,722
3,102,097
0
111,430
193,040
0
31,443
818,714
0
(4,094)
15,927
0
0
0
400,022
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
415,949
0
0
0
0
0
0
0
Reclassification of financial liabilities
to other equity instruments
0
0
0
0
0
0
0
0
0
Distribution of dividend and similar
payments to shareholders
0
0
0
0
0
0
(197,127)
44,211
Trading in own equity instruments (net)
Transfers between equity items
0
0
0
0
7,183
151,470
0
31,443
(4,151)
0
(148,753)
0
0
(182,913)
0
0
Increases/Reductions due to
business combinations
0
0
0
0
0
0
0
Discretionary transfer to welfare projects
and funds
0
0
0
0
0
0
Payments in equity instruments
Other increases (reductions) in equity
0
0
0
(4,300)
0
(47,223)
0
0
0
57
0
0
173,881
1,861,702
3,213,527
224,483
814,620
(174,439)
231,902
(25,686)
0
0
Less:
Total
Dividends
and similar shareholders’ Valuation
equity adjustments
payments
Adjustments due to changes in accounting policy
Adjustments to correct errors
Increases in capital
Reductions in capital
Conversion of financial liabilities to equity
Increases in other equity instruments
144
Reserves
(losses)
of entities
Share Accumulated accounted for
reserves by the equity Other equity
premium
(losses)
account
method instruments
Total
Noncontrolling
interests Total equity
380,040
0
0
(113,727) 5,978,412
0
0
0
0
(323,735) 5,654,677
0
0
0
0
33,866
0
0
5,688,543
0
0
(25,686) 380,040
0
231,902
(148,753) (380,040)
(113,727) 5,978,412
0
231,902
44,211
65,846
(323,735) 5,654,677
(65,493)
166,409
0
65,846
33,866
3,509
9,837
5,688,543
169,918
75,683
415,949
0
0
0
0
0
0
0
415,949
0
0
0
0
0
0
0
(152,916)
0
(152,916)
0
(152,916)
(145,721)
0
0
0
(145,721)
0
0
0
(145,721)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(51,466)
0
0
0
(51,466)
0
9,837
0
(41,629)
(69,516) 6,276,160 (389,228)
5,886,932
47,212
5,934,144
Presented for comparative purposes only.
The statement of changes in equity is made up of the consolidated statement of recognized income and expense together with the consolidated statement of changes in total equity for the Banco Sabadell Group.
Consolidated cash flow statement for the Banco Sabadell group
€’000
1,685,871
740,332
96,035
235,872
(59,439)
156,925
(216,364)
39,198
130,921
(91,723)
Net increase/decrease in operating assets
Held for trading
Other operating assets
(4,535,286)
211,731
(23,957)
716,415
(6,245,824)
806,349
2,149,207
384,525
(4,166)
2,288,321
(845,205)
325,732
Net increase/decrease in operating liabilities
Held for trading
Other operating liabilities
(2,881,202)
75,158
0
(3,980,128)
1,023,768
2,691,687
289,900
0
2,385,750
16,037
(4,809)
(77,218)
(317,613)
(343,412)
Payments made
(-) Tangible assets
(-) Intangible assets
(-) Investments
(-) Subsidiaries and other business units
(-) Non-current assets and associated liabilities held for sale
(-) Held-to-maturity investments
(-) Other payments related to investment activities
554,713
235,163
110,382
209,168
0
0
0
0
361,944
246,604
93,933
21,407
0
0
0
0
Payments received
(+) Tangible assets
(+) Intangible assets
(+) Investments
(+) Subsidiaries and other business units
(+) Non-current assets and associated liabilities held for sale
(+) Held-to-maturity investments
(+) Other payments related to investment activities
237,100
0
733
236,367
0
0
0
0
18,532
11,645
0
6,887
0
0
0
0
Cash flows from operating activities
Consolidated profit (loss) for the year
Adjustments to obtain cash flows from operating activities
Other adjustments
Paid/received in respect of income tax
Cash flows from investment activities
2011 (*)
2012
145
Consolidated cash flow statement for the Banco Sabadell group
€’000
2012
2011 (*)
(158,823)
(360,977)
Payments made
(-) Dividends
(-) Subordinated liabilities
(-) Redemption of own equity instruments
(-) Acquisition of own equity instruments
(-) Other payments related to financing activities
1,392,750
0
489,918
0
510,808
392,024
1,173,869
152,916
480,559
2,553
504,009
33,832
Payments received
(+) Subordinated liabilities
(+) Issuance of own equity instruments
(+) Disposal of own equity instruments
(+) Other payments related to financing activities
1,233,927
0
902,556
331,371
0
812,892
40,400
410,052
362,440
0
(16,523)
1,135
Cash flows from financing activities
Effects of changes in exchange rates
Net increase/decrease in cash and cash equivalents
1,192,912
37,078
Cash and cash equivalents at beginning of period
1,290,678
1,253,600
Cash and cash equivalents at end of period
2,483,590
1,290,678
455,956
2,027,634
0
0
239,346
1,051,332
0
0
0
0
Memorandum item
Components of cash and cash equivalents at end of period
(+) Cash and banks
(+) Cash equivalents at central banks
(+) Other financial assets
(--) Less: Bank overdrafts payable on demand
Total cash and cash equivalents at end of period
of which: held by consolidated entities but not available to group
146
Notes to the consolidated annual accounts of the Banco Sabadell group
For the years ended on 31 December 2012 and 31 December 2011
Nota 1. Principal business. Accounting policies and practices
Basis of presentation
On 1 January 2005, under Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19
July, it became mandatory for companies to prepare their consolidated annual accounts in accordance with the
International Financial Reporting Standards adopted by the European Union (“IFRS-EU”) if, at their balance sheet
date, their securities were admitted to trading on a regulated market of any Member State.
This was followed by the publication of the Bank of Spain’s Circular 4/2004 with the English title of “Credit
Institutions - Public and Confidential Financial Reporting Rules and Formats”. The circular, which subsequently
appeared in a number of revised versions, changed the accounting rules applicable to banks to bring them into line
with IFRS-EU.
The consolidated annual accounts of the group for the year 2012 have been prepared in accordance with IFRSEU to give a true and fair view of the consolidated equity and financial position of the group, the consolidated
results of its operations, recognized income and expense, changes in consolidated equity and consolidated cash
flows. The consolidated annual accounts do not contain significant differences with respect to the accounts that
would be obtained if prepared in accordance with Bank of Spain Circular 4/2004. There is no obligatory accounting
principle, standard or valuation policy having a material effect that has not been applied in preparing the accounts.
A summary statement of the most significant accounting principles, standards and valuation procedures that have
been applied in these consolidated annual accounts is provided in this note.
The information provided in these consolidated annual accounts is the responsibility of the directors of the
parent company of the group. The consolidated annual accounts for the year 2012 were signed off by the directors
of Banco Sabadell at a meeting of the Board on 24 January 2013 and will be submitted to the Annual General
Meeting for approval. It is expected that the Meeting will approve the accounts without significant changes.
Unless otherwise indicated, these consolidated annual accounts are expressed in thousands of euros and all
figures are rounded to the nearest thousand euros (€’000).
Principal business
The corporate object of Banco de Sabadell, S.A. whose registered office is at Plaça de Sant Roc, 20, Sabadell,
Spain (also referred to as “Banco Sabadell” or the “Bank”) is to carry on business as a provider of banking
services. As such, it is subject to the laws and regulations applicable to all banks operating in Spain.
The Bank is the parent company of a group of financial services undertakings (see Annex I) whose activities it
controls directly or indirectly and which, together with the Bank, make up the Banco Sabadell group (the “group”).
Standards and interpretations issued by the International Accounting Standards Board (the “IASB”) coming into
effect in 2012
The following amendments to the International Financial Reporting Standards (“IFRSs”) and interpretations
(“IFRICs”) came into effect in the course of 2012. The adoption of these amended standards and interpretations by
the group has had no material impact on these consolidated financial statements.
Standards and amendments to standards
For mandatory adoption in 2012
IFRS 7 (amended)
Disclosure requirements for transfers of financial assets
147
IASB-issued standards and interpretations not yet in effect
The following standards and interpretations had been published by the IASB at 31 December 2012 and could apply
to the group, but were not yet in effect, either because their effective dates came after the date of the consolidated
financial statements or because they had not yet been approved by the European Union.
The group carried out an assessment of the impacts this would have and decided not to exercise its option to
adopt early.
Standards and amendments
to standards
IAS 12 (amended) (1)
IAS 1 (amended) (1)
IAS 19 (1)
IFRS 13 (1)
IAS 28 (1)
IAS 27 (1)
IFRS 7 (amended)
IFRS 10 (1)
IFRS 11 (1)
IFRS 12 (1)
IFRS 13 (1)
IAS 32 (amended) (1)
IFRS 9 (2)
Adoption mandatory as from
Deferred taxes: recovery of underlying assets
Presentation of statement of recognized income and expense
Employee benefits
Fair value measurement
Investments in associates and joint ventures
Separate financial statements
Financial instruments: disclosures
Consolidated financial statements
Joint arrangements
Disclosure of interests in other entities
Fair value measurement
Classification of rights issues - offsetting financial assets and liabilities
Financial instruments
2013
2013
2013
2013
2014
2014
2013
2014
2014
2013
2013
2014
2015
(1) Standards and interpretations not adopted by the EU at 31 December 2012.
(2) Awaiting endorsement.
Accounting principles and policies applied
The most significant principles, accounting standards and valuation policies that have been applied in preparing
these consolidated annual accounts are as follows:
148
(a) Consolidation principles
In the consolidation process three types of entity are distinguished: subsidiaries, jointly controlled entities and
associates.
Subsidiaries are entities over which the Bank is able to exercise control and which therefore constitute, together
with the Bank, a decision-making unit. The ability to exercise control is generally, but not exclusively, manifested
through the direct or indirect holding of an interest giving the holder more than 50% of the voting rights in the
subsidiary. Control means the power to determine the financial and operating policies of the subsidiary so as to
profit from its activities, and may be exercised even when a majority interest is not held.
The group therefore includes all subsidiary undertakings that constitute a decision-making unit together with
the Bank. These undertakings have been consolidated by the full consolidation method. Interests held by third
parties in group shareholders’ equity are shown in the balance sheet under minority interests and the share of the
profit or loss for the year attributable to these shareholders is shown in the income statement under profit or loss
attributable to minority interests.
Profits or losses generated by entities acquired by the group during the year are consolidated solely on the basis
of the profits or losses generated in the period between the date of acquisition and the end of the year. Similarly,
profits or losses generated by entities disposed of by the group during the year are consolidated solely on the basis
of the profits or losses generated in the period between the beginning of the year and the date of disposal.
Jointly controlled entities are those which are controlled jointly by the group and one or more other entity
or entities not related to the group. Entities of this kind undertake operations and maintain assets in such
a way that any strategic decision of a financial or operational nature concerning the entity requires the
unanimous consent of all interest holders. Jointly controlled entities have been consolidated by the proportional
consolidation method.
Associates are entities over which the group is able to exercise a significant influence which is generally, but not
exclusively, manifested through a direct or indirect interest that gives the group 20% or more of the voting rights.
In the consolidated accounts associates are accounted for by the equity method, that is, according to the fraction
of the equity represented by the group’s shareholding, after taking account of any dividends received from the
associate and other eliminations.
In the consolidation process all significant balances and transactions between group undertakings have been
eliminated in such proportion as may be appropriate, depending on the consolidation method being applied.
Details of the most significant acquisitions and disposals made by the group during the year are provided in
note 2.
(b) Accrual principle
These annual accounts (with the exception of certain items of the consolidated cash flow statements) have been
prepared based on real movements of goods and services, regardless of the date on which payment was made or
received.
- Impairment losses on certain financial assets (notes 1(e), 4, 5, 6, 8 and 13).
- Assumptions used in actuarial estimates of liabilities and commitments in respect of post-employment
benefits, and in estimates of liabilities under insurance contracts (notes 1(q), 1(s), 24 and 25).
- The useful lives of tangible and intangible assets (notes 1(j), 1(m), 15 and 16).
- The valuation of goodwill on consolidation (notes 1(m) and 16).
- The fair values of financial assets for which market prices are not available (notes 1(d), 5 and 6).
- The fair values of real estate assets held on the balance sheet (notes 1(h), 1(j), 1(n), 13, 15 and 17).
(d) Valuation and recording of financial instruments
As a general rule, regular way sales and purchases of financial assets are recognized in the balance sheet using
settlement date accounting.
Financial instruments are divided into the following categories according to the valuation method that is applied
to them:
• Financial instruments held for trading
Financial assets/liabilities are classified as held for trading if they have been acquired or issued to be sold or
repurchased in the near term, or form part of a portfolio of financial instruments that are managed together and in
which there has been recent action for short-term profit taking, or are instruments that do not fit the definition of a
financial guarantee contract and have not been designated as hedging instruments for accounting purposes.
Financial instruments of this type are measured at fair value. The fair value of a financial asset on a given date is
defined as the amount for which the asset could be exchanged between knowledgeable, willing parties in an arm’s
length transaction. The best evidence of fair value of an asset is the price being quoted for the asset on an actively
traded market where the market is organized, transparent and of reasonable depth.
Where there is no market price for a particular financial asset, the fair value can be estimated from the values
established for similar assets in recent transactions or, failing that, by using suitably tested valuation models. Any
peculiarities specific to the financial asset being valued are also taken into account, particularly the different types
of risk that may be associated with it. However, the limitations inherent in the valuation models that have been
developed and possible inaccuracies in the assumptions required by these models may result in the estimated
fair value of a financial asset not precisely matching the price at which the asset could be bought or sold as of the
valuation date.
In the course of 2012 a review was carried out on estimates made in relation to losses on loans secured by
mortages on property and construction industry assets and also real estate assets recorded in the consolidated
balance sheet. The review was based on industry-wide valuations of such assets during the period.
The review was put in hand in response to macroeconomic developments in Europe during the year that had a
particularly severe impact on Spain, especially from May onwards. The review covered estimates of how scarce
liquidity, oversupply and low sales volumes in the Spanish real estate market were affecting real estate asset
values and the value of loan guarantees based on property.
Although estimates are based on the best information available to senior managers in present and foreseeable
circumstances, final outcomes may be at variance with these estimates.
(c) Use of judgement and estimates in preparing the financial statements
The preparation of the consolidated annual accounts requires that certain estimates be made. It also requires the
exercise of judgement by senior management in applying the group’s accounting policies. Such estimates may
affect the carrying value of assets and liabilities and the classification of contingent assets and liabilities at the
date of the annual accounts, as well as income and expenditure items in the period covered by the accounts. Key
estimates relate to the following:
149
Changes in fair value are taken directly to profit or loss. For non-derivative instruments, the gain or loss
attributable to the returns accruing on the instrument are treated differently from the other gains or losses, with the
former being recorded as interest or dividends as appropriate, and the latter as gains or losses on financial assets
and liabilities.
• Other financial assets and liabilities at fair value through profit or loss
This category includes financial instruments which on original recognition are designated as hybrid financial
instruments and are measured entirely on a fair value basis. It also includes financial assets which are managed
together with liabilities under insurance contracts measured at fair value or with financial derivatives which have the
purpose and effect of significantly reducing exposure to changes in fair value, or which are managed in combination
with financial liabilities and derivatives for the purpose of significantly reducing overall exposure to interest rate
risk. These are valued and recorded in the same way as for financial assets/liabilities held for trading. The category
does not include equity instruments whose fair value cannot be reliably estimated.
150
• Available-for-sale financial assets
This category includes debt securities and equity instruments that are not designated as held-to-maturity
investments or financial assets at fair value through profit or loss, loans and receivables, or financial assets/
liabilities held for trading or of entities that are not subsidiaries or associates of, or jointly controlled by, the group.
Available-for-sale financial assets are measured at their fair value. Changes in value are temporarily recorded,
net of tax, under valuation adjustments in consolidated equity, unless they are due to foreign exchange differences
arising on monetary financial assets. Amounts recorded as valuation adjustments continue to be included in
consolidated equity until the asset from which they have originated is derecognized on the balance sheet, when
they are charged or credited to profit or loss.
• Loans and receivables
Loans and receivables are financial assets not traded on an active market or required to be designated as at fair
value, the cash flows on which are of a fixed or determinable amount and whose cost to the group will be recovered
in full, except for reasons related to borrower solvency. This category comprises investments associated with
normal bank lending and includes amounts loaned to customers and not yet repaid; deposits placed with other
financial institutions, regardless of the legal arrangements under which the funds were provided; unquoted debt
securities; and any debts incurred by purchasers of goods or services forming part of the group’s business.
Loans and receivables are recorded at their amortized cost, where “amortized cost” means the acquisition
cost of a financial asset less any repayments of principal and the cumulative amortization (as shown in the
income statement using the effective interest rate method) of the difference between the initial cost and the
repayment amount at maturity, and less any reduction in value due to impairment, whether recognized directly
as a write-down of the asset or through a provisioning account. Where loans and receivables are covered by fair
value hedges, any change in their fair value is recorded where the change is associated with the risk or risks
covered by the hedge.
The effective interest rate is the discount rate that exactly equates the value of a financial instrument to the
estimated cash flows over the remaining life of the instrument, based on the contract terms of the instrument
including any early repayment option but disregarding future losses due to credit risk. For a fixed-rate instrument
the effective interest rate is the same as the contract interest rate agreed at the time the instrument was acquired
plus any fees or commissions that qualify for treatment as interest. In the case of a variable-rate instrument the
effective interest rate is the same as the rate of return in respect of interest and fees on the instrument, until the
first date on which the base rate comes up for review.
Interest is determined by the effective interest rate method and recorded in the income statement under interest
and similar income.
• Financial liabilities at amortized cost
This category comprises those financial liabilities that cannot be classified under any other balance sheet heading
and are associated with the normal deposit-taking activity of a financial institution, regardless of the term and other
arrangements under which the deposit is set up.
Also included in this category is capital having the nature of a financial liability. This reflects the value of
financial instruments issued by the group which, although treated as capital for legal purposes, do not qualify for
classification as equity. These instruments consist mainly of issued shares that do not carry voting rights and on
which a dividend is paid based on a fixed or variable rate of interest.
For financial instruments the fair value measurements disclosed in the financial statements are classified
according to the following fair value hierarchy:
- Level I: Fair values are obtained from the (unadjusted) prices quoted on active markets for the same instrument.
- Level II: Fair values are obtained from the prices being quoted on active markets for similar instruments, the
prices of recent transactions, expected flows or other valuation techniques for which all significant inputs are
based on directly or indirectly observable market data.
- Level III: Fair values are obtained by valuation techniques for which some significant inputs are not based on
observable market data.
• Financial assets carried at amortized cost
Portfolios of debt instruments, contingent exposures and contingent commitments, regardless of the obligor, the
contractual arrangements or the security/collateral, are analysed to determine the credit risk to which the group is
exposed and to estimate the impairment provision required. In preparing the consolidated financial statements the
group classifies its lending transactions on the basis of credit risk, with customer insolvency risk being analysed
separately from any country risk to which transactions may be exposed.
Objective evidence of impairment is determined individually for all debt instruments that are individually
significant, and individually or collectively for groups of debt instruments that are not individually significant. When
an instrument cannot be included in any group of assets with similar credit risk features, it is analysed solely on an
individual basis to determine whether it is impaired and, if so, to estimate the impairment loss.
Such instruments are classified into the following categories, on the basis of the insolvency risk attributable to
the customer or to the transaction: standard, sub-standard, doubtful due to customer arrears, doubtful
for reasons other than customer arrears, and write-off. For debt instruments not classified as standard risks,
the required provisions for impairment are estimated having regard to the age of past-due accounts, the type
and value of any collateral or other security provided and the financial situation of the customer and any
guarantors. These estimates are made on the basis of a default schedule drawn up by the Bank of Spain from
its knowledge and experience of the Spanish banking industry in accordance with the Bank of Spain’s Circular
4/2004.
Similar estimates are also made to determine the credit risk on these instruments that is attributable to
country risk. Country risk means the risk associated with customers resident in a specific country that arises from
circumstances other than normal commercial risk.
The period of arrears on an instrument that is past due does not cease to run when the instrument is refinanced
or restructured. Where an instrument has been classified as doubtful before refinancing or restructuring occurs,
it will not be reclassified as standard or sub-standard unless there is reasonable certainty that the customer can
make payment on schedule, or additional good security is provided and, in either case, unless the overdue ordinary
interest, at least, is paid (apart from any interest for late payment).
In addition to these specific provisions, the group makes provision for latent losses on debt instruments
classified as standard risks by providing for impairment loss on a portfolio-wide basis. The collective provision is
made from historical impairment experience and other circumstances known at the time of the risk assessment,
and covers latent losses incurred at the balance sheet date, calculated using statistical procedures, but not yet
identified with specific transactions.
Since the group’s own historical and statistical data are not sufficient for this purpose, when making
these provisions it relies on parameters set by the Bank of Spain. This method of determining provisions
for latent loss due to impairment of debt instruments involves the use of percentages which vary according
to how debt instruments classified as standard risk are assessed. The sub-categories into which standard risk
instruments are classified are: negligible risk, low risk, medium-low risk, medium risk, medium-high risk and
high risk.
(e) Impairment of financial assets
In general, adjustments to the carrying value of financial assets are recognized in the income statement where
there is objective evidence that an impairment loss has occurred. In the case of debt instruments, that is,
loans and debt securities, an impairment loss is considered to have occurred when, after initial recognition of
the instrument, a single event or a combination of events causes a negative impact on its future cash flows. In
the case of equity instruments, an impairment loss is deemed to have occurred when, after initial recognition,
a single event or a combination of events makes it likely that the carrying value of the instrument will not be
recovered.
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Transactions classified as sub-standard are analysed to determine the provision coverage required. This
will of necessity be greater than the generic provision that would apply if the risk was classified as standard.
Furthermore, net impairment charges made in the period in which a transaction is classified as sub-standard will
be greater than the charges that would have been made if the transaction had continued to be classified as a
standard risk.
Interest recorded at contractual rates ceases to be recognized in the income statement for all debt instruments
that have been individually classified as impaired or for which impairment losses have been collectively calculated
as a result of there being accounts more than three months in arrears.
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• Available-for-sale financial assets
Impairment losses on debt securities and equity instruments classified as available-for-sale financial assets are
equal to the positive difference between their acquisition cost net of any repayment of principal, and their fair value
less any impairment loss previously recognized in the consolidated income statement.
Where there is objective evidence that a diminution in the fair value of an asset is due to impairment, the
unrealized losses recognized directly in equity as valuation adjustments are recorded immediately in the income
statement. If all or part of the impairment losses are subsequently recovered, the amount is recognized, in the
case of debt securities, in the income statement for the period in which the recovery occurs; in the case of equity
instruments, the recovery is recognized in equity as a valuation adjustment.
In reaching a conclusion on whether there is objective evidence of impairment in debt instruments, whether
quoted or unquoted, the group considers any potential loss events that have occurred. In particular, it analyses
any significant financial difficulty being faced by the issuer or obligor; any breaches of contract terms, such as a
default or delinquency in interest or principal payments; whether the holder of the debt instrument, for economic
or legal reasons relating to the borrower’s financial difficulty, grants to the borrower a concession that the holder
would not otherwise consider; any increased probability that the borrower will enter bankruptcy or other financial
reorganization; or the disappearance of an active market for the financial asset in question as a result of financial
difficulties and a downgrading of its credit rating that would be indicative of impairment when considered in
conjunction with other available information.
Possible impairments in sovereign debt exposures are assessed by analysing market price fluctuations caused
mainly by changes in risk premiums and by an ongoing evaluation of the solvency of issuing countries.
In the case of quoted instruments, the group will consider whether a prolonged or significant fall in the
fair value of the investment below its cost is objective evidence of impairment. In estimating valuation
adjustments in equity, the valuation is generally taken as the quoted price. When determining whether there is
objective evidence that a fall in the quoted price is due to impairment, where there are manifestly exceptional
circumstances in the markets on which prices are set, the effects of wider market movements on the quoted
price are analysed separately from those movements that reflect factors specific to the issuer of the instrument
under consideration. Where there are no exceptional market circumstances but there have been falls in the
quoted price of the instrument, an assessment is made of whether the period for which the quoted price has
remained below the carrying value of the instrument by a significant percentage should be considered as
objective evidence of impairment. If there is no principle that is more specifically applicable, the practice is to
take a standard reference period (18 months) and percentage (40%). An analysis is also made, even where
no exceptional market circumstances are present, of whether there are objective reasons to consider that the
quoted price of the instrument does not reflect its fair value and is therefore not a valid quantity from which
to assess any potential impairment. Such objective reasons may be related to a free float that is very limited,
prolonged speculative activity on the share value and other circumstances, any of which may distort the price of
the instrument.
Where exceptional market circumstances are present, market factors that will be analysed separately include
whether there have been widespread changes in risk aversion or in the valuation methods used by analysts
and investors; whether there have been major changes in the multipliers implicit in asset prices; or whether
cross-impacts are occurring between bond and equity markets and affecting quoted market prices. If such
circumstances are present an attempt is made to gauge the extent to which the instrument is responding
differently with respect to its sector or to the market as a whole. To do this a discounted cash flow analysis
is used based on known data of the issuer of the instrument and an assessment is made of how the issuer’s
future profitability will be affected by the new development. This analysis is carried out as soon as the
exceptional circumstances are detected, rather than waiting for any set standard period. If, in addition, there
is structural impairment already on the balance sheet, whether apparent or latent, a full adjustment for this is
made to the value resulting from the analysis described above.
Another method used to value this type of instrument, where there are exceptional market conditions of the kind
referred to above, is based on the use of directly observable market variables and/or data such as a published net
asset value.
For unquoted instruments the analysis undertaken to reach a conclusion on the need to adjust for impairment is
based on the use of comparable data and sector multiples for similar issuers operating in the market.
(f) Transfer and derecognition of financial instruments
Financial assets are only derecognized on the balance sheet when the cash flows generated by the assets have
ceased or when substantially all of their risks and rewards have been transferred. Similarly, financial liabilities are
derecognized only when the obligations generated by the liabilities have expired or are acquired for settlement
or resale.
Details of asset transfers that were in effect at the close of the years 2012 and 2011, including those that did
not result in assets being derecognized from the balance sheet, are given in note 10.
- It must cover exposure to changes in the values of assets and liabilities caused by interest rate and/or
exchange rate movements (fair value hedge); exposure to changes in the estimated cash flows from financial
assets and liabilities and from commitments and transactions forecast as highly probable (cash flow hedge);
or the exposure associated with net investments in foreign operations (hedge of the net investment in a
foreign operation).
- It must effectively eliminate a risk that is inherent in the hedged item or position over the expected term of the
hedge. This means that the derivative must be effective both prospectively, at the date on which it is entered
into under normal circumstances, and retrospectively, based on reasonable evidence that the hedge will
remain effective throughout the life of the item or position to be hedged.
- Suitable documentation must be available to show that the financial derivative has been entered into
specifically to provide a hedge for certain balances or transactions and to show how effective coverage is to
be achieved and assessed (such assessment necessarily being consistent with the group’s management of
its own exposures).
The effectiveness of the coverage provided by derivatives designated as hedging instruments is documented
by effectiveness testing. This is used to verify that divergences due to changes in the fair value of the hedged
item and the hedging instrument remain within reasonable limits over the life of the transaction and that the
intended effect of the derivative contract at inception has been fulfilled. If at any time this condition is not met, all
associated transactions in the hedging group are reclassified as held-for-trading and recognized accordingly in the
balance sheet.
g) Derivatives
Derivatives are instruments which, in addition to providing a gain or a loss, may under certain conditions offset
all or part of the credit and/or market risk associated with balances or transactions. The underlyings used in
derivatives may be interest rates, specified indices, the prices of specified securities, cross-currency exchange
rates or other similar benchmarks. The group uses derivatives traded on organized markets or traded bilaterally with
counterparties on the over-the-counter (OTC) market.
Derivatives may be used as part of the service to customers when they so require, or to manage risks associated
with the group’s own exposures (hedging derivatives), or to realize gains as a result of price movements. Financial
derivatives that do not qualify for designation as hedging instruments are classified as trading derivatives. To be
designated as a hedging instrument, a financial derivative must satisfy the following conditions:
• Other equity instruments
Impairment losses on equity instruments carried at acquisition cost are accounted for as the difference between
the carrying amount and the present value of the expected future cash flows discounted at the market rate of return
for similar securities. These impairment losses are recognized in the income statement for the period in which
they occur, as a direct write-down in the value of the instrument; this cannot be subsequently reversed other than
through the sale of the asset.
In the case of investments in jointly controlled entities and associates, the group estimates impairment loss by
comparing the amount recoverable with the carrying value of the investments. Impairment losses are recognized in
the income statement for the period in which they occur; subsequent reversals of previously recognized impairment
losses are recognized in the income statement for the period in which recovery takes place.
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A micro-hedge is considered to be highly effective if, at inception of the hedge and during its life, it is anticipated
prospectively that any changes in the fair value or cash flows of the hedged item that are attributable to the hedged
risk are almost entirely offset by changes in the fair value or cash flows of the hedging instrument. The micro-hedge
is deemed retrospectively to have been highly effective if the gains or losses on the hedging instrument are within a
range of 80% to 125% of the gains or losses on the hedged item.
In the case of a portfolio hedge or macro-hedge, effectiveness is assessed by comparing the overall net
amount of assets and liabilities in each time period with the hedged amount designated for each one of them.
The hedge will only be ineffective where it is found, on examination, that the net amount of assets and liabilities
is less than the hedged amount, in which case the ineffective portion must be recognized immediately in the
income statement.
Hedges may be associated with individual items or balances (micro-hedges) or with portfolios of financial assets
and liabilities (macro-hedges). In the latter case, all financial assets and liabilities being collectively hedged will
involve the same types of risk; this requirement is considered to be satisfied when the interest rate sensitivities of
the individual hedged items are similar.
Derivatives embedded in other financial instruments or other primary contracts are recorded separately as
derivatives where the risk and other characteristics of the derivative are not closely related to those of the primary
contract and the primary contract is not classified as held for trading or as other financial assets or liabilities at fair
value through profit or loss.
• Valuation
The fair value of a financial derivative quoted on an active market is determined from the daily market price.
In the case of instruments for which quoted prices cannot be determined, prices are estimated using internal
models developed by the Bank, the majority of which take data based on observable market parameters as
significant inputs. Otherwise, the models make use of other inputs which rely on internal assumptions based on
generally accepted practice within the financial services community.
The main valuation techniques in use by the group at 31 December 2012 to determine the fair values of financial
instruments are listed below:
• To measure the values of financial instruments of the swap, cross-currency interest rate swap and call money
swap types, the discounted cash flow method is used. The expected future cash flows are discounted using
the interest rate curves for the relevant currencies. Interest rate curves are observable market data.
• To measure financial instruments of the structured equity, index or exchange rate option types the BlackScholes model is normally used, although the binomial tree model may also be applied in certain cases. The
group makes use of observable market inputs to access such factors as exchange rates and interest rate
curves, and also non-observable inputs such as volatility and inter-asset correlation data.
• For the valuation of interest rate derivative instruments such as caps and floors, the Black-Scholes model
(plain vanilla options) is used; for more highly structured instruments the Hull-White model is preferred. The
main inputs used by these models are generally observable market data, including the associated interest rate
curves, volatilities and exchange rates.
Valuation models do not embody significant degrees of subjectivity, given that the above methodologies can
be adjusted and calibrated, where applicable, by internal fair value calculations and subsequent comparison with
actively traded prices.
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• Accounting for micro-hedges
For financial instruments designated as hedged items or as hedging instruments, gains or losses in value are
accounted for according to the following criteria:
- For fair value hedges any gains or losses, whether in the hedging instrument or the hedged item, to the extent
that they relate to the type of risk being hedged, are recognized directly in the income statement.
- Gains or losses in value on the ineffective portion of cash flow hedging instruments are recognized directly in
the income statement.
- In cash flow hedging, valuation differences in the effective portion of hedging instruments are temporarily
recorded in equity under valuation adjustments. Gains or losses in value are not recognized in profit or loss
until the gains or losses of the hedged item have been taken to the income statement or until the hedged
item reaches maturity.
- Hedges of net investments in foreign operations are accounted for as follows:
1. Any gain or loss attributable to that part of the hedging instrument that qualifies as an effective hedge is
recognized directly in a valuation adjustment account in equity via the statement of changes in equity. Any
other portion of the gain or loss on the instrument is taken immediately to the income statement.
2. Gains or losses on hedging instruments recognized directly in the valuation adjustment account in equity
remain in the account until the instruments are sold or otherwise removed from the balance sheet, at which
time they are taken to profit or loss.
• Accounting for macro-hedges
Fair value macro-hedges of interest rate risk that are highly effective are accounted for as follows:
(h) Non-current assets held for sale and liabilities associated with non-current assets held for sale
The “non-current assets held for sale” heading of the balance sheet comprises the carrying values of assets —
stated individually or combined in a disposal group, or as part of a business unit that the group intends to sell
(discontinued operations) — which will very probably be disposed of in their current state within one year of the
date of the consolidated annual accounts. Investments in jointly controlled entities or associates that meet these
criteria also qualify as non-current assets held for sale.
It can therefore be assumed that the carrying value of an asset of this kind, which may be of a financial or nonfinancial nature, will be recovered through the disposal of the item concerned rather than from its continued use.
Real estate or other non-current assets received by the group in full or part settlement of borrowers’ payment
obligations to the group are treated as non-current assets held for sale, unless the group has decided to make use
of the assets on a continuous basis.
The “liabilities associated with non-current assets held for sale” caption includes amounts payable that are
associated with disposal groups or discontinued operations.
Assets classified as non-current assets held for sale are generally valued at the lesser of their carrying value
at the time they are so classified and their fair value net of their estimated costs to sell. Tangible and intangible
assets that would otherwise be subject to depreciation and amortization are not depreciated or amortized while
they remain in the category of non-current assets held for sale.
If the carrying value of an asset exceeds the fair value net of its estimated costs to sell, the group adjusts the
carrying value of the asset by the amount of such excess, with a corresponding adjustment being made to gains
(losses) on non-current assets held for sale in the consolidated income statement. In the event of one or more
subsequent increases in the fair value of the asset any previously recorded losses will be reversed and the carrying
value will be increased, subject to its not exceeding the carrying value prior to the loss, and a corresponding
adjustment made to gains (losses) on non-current assets held for sale in the consolidated income statement.
In the case of portfolio cash flow hedges, a change in the value of the hedging instrument is recognised
temporarily in a valuation adjustment account in equity until the period in which the expected transactions occur,
when it is recognized in the income statement.
In the case of both micro-hedges and macro-hedges, the group discontinues hedge accounting procedures when
the hedge expires or is sold, or when the hedging instrument ceases to meet the conditions for being treated as a
hedge, or when the designation of the instrument as a hedge is withdrawn.
When a fair value hedge is discontinued any previous adjustments made to the hedged item are taken to profit
and loss using the effective interest rate method, recalculated as of the date on which the item ceased to be
hedged. The value adjustment must be fully amortized at maturity.
Where a cash flow hedge is discontinued, the cumulative gain or loss on the hedging instrument recognized in
equity under “valuation adjustments” (while the hedge was in effect) continues to be recognized under that heading
until the hedged cash flow occurs, at which time the gain or loss will be taken to profit and loss unless the hedged
transaction is considered unlikely to occur, in which case it is recognized in profit or loss immediately.
a) Hedging instruments: gains or losses that arise from measuring derivatives at fair value are recognized
immediately in the income statement.
b) Hedged amount: gains or losses arising from changes in the fair value of the hedged amount that are
attributable to the hedged risk are recognized directly in the income statement with changes in the fair value
of hedged assets or liabilities in portfolio hedges of interest rate risk as balancing items if the hedged amount
relates to financial assets or financial liabilities.
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For real estate assets subject to repossession or otherwise received in settlement of debts, as required by
Bank of Spain Circulars 3/2010 and 2/2012, the amount at which the asset is carried in the balance sheet is the
lesser of the carrying value of the associated financial asset, that is, its amortized cost reduced by the amount of
the estimated impairment and in any event not less than 10%, and the assessed market value of the property in
its current state, less the estimated costs to sell which will in no circumstances be less than 10% of the assessed
value of the property in its current state. For assets remaining on the balance sheet for more than 12, more than
24 or more than 36 months after their acquisition date, the percentage impairment charge increases to 20%, 30%
or 40% respectively.
These property valuations have been conducted by independent experts from the Bank of Spain’s special
register of valuation firms according to criteria established in Order ECO/805/2003 on the valuation of real estate
and associated rights for specified financial purposes. The valuation firms and agencies used to obtain market
valuations for these assets were Ibertasa, S.A., Krata, S.A., Gestión de Valoraciones y Tasaciones, S.A. (Gesvalt),
Colectivo Arquitectos Tasadores, S.A. (Catsa) and Sociedad de Tasación, S.A. (Sotasa).
In the case of intangible assets (software), fair value estimates have been based on updated technical studies
of useful lives based on the remaining useful lives of the assets.
(i) Discontinued operations
Gains or losses arising in the year on group operations classified as discontinued operations are recognized net
of tax under profit or loss on discontinued operations (net) in the consolidated income statement, whether the
operation has been derecognized or remains on the balance sheet at the end of the year.
A discontinued operation or activity is a component of the group that has been sold or otherwise disposed of or
is classified as a non-current asset held for sale and, in addition, meets any of the following conditions:
1. It represents a separate major line of business or geographical area of operations.
2. It is part of a single coordinated plan to sell or otherwise dispose of a separate major line of business or
geographical area of operations.
3. It is a subsidiary acquired exclusively with a view to resale.
A component of an entity is defined as operations and cash flows, such as a subsidiary, business segment
or geographical area of operations, that can be clearly distinguished, operationally and for financial reporting
purposes, from the rest of the entity.
(j) Tangible assets
Tangible assets comprise property, plant and equipment considered likely to be in continuous use by the group,
the net values of land, buildings and other structures held to be leased out or for the realization of capital gains on
disposal, and assets to be leased to customers under operating leases. As a general rule these assets are valued
at cost less accumulated depreciation and less any impairment loss identified from a comparison of the net value
of each item with its recoverable amount.
Tangible assets are depreciated systematically by the straight-line method over their estimated useful lives,
taking the depreciable amount as the acquisition cost of each item less its residual value. Land on which buildings
and other structures have been erected is treated as having an unlimited life and is not depreciated. Annual
depreciation charges on tangible assets are taken to the income statement and are calculated on the basis of the
following average estimated useful lives:
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Useful life in years
Land and buildings
Fixtures and fittings
Office furniture and equipment
Vehicles
Cash dispensers, computers and computer equipment
20 a 50
4.2 a 12.5
3.3 a 10
3.1 a 6.25
4
At the close of each accounting period the group carries out a review to determine whether there are internal
or external indications that the net value of any asset item exceeds its recoverable amount. If the net value of
an asset is found to be in excess of its recoverable amount, the group writes down the asset to its recoverable
amount, that is, the greater of its fair value (based on valuations of independent third parties) and its value
in use, and adjusts future depreciation charges in proportion to its restated carrying value and, if required, its
adjusted estimated useful life. Where there are indications that the value of an asset has been recovered, the
group records the reversal of the impairment loss recognized in previous periods and adjusts future depreciation
charges accordingly. The reversal of an impairment loss on an asset will in no circumstances result in an
increase in its carrying value above the value that the asset would have had if impairment losses in previous
periods had not been recognized.
No less frequently than at the end of each reporting year, the group carries out a review of the estimated useful
lives of all tangible assets for its own use to determine whether there have been any material changes in their
estimated useful lives. If material changes are identified, an adjustment is made by correcting the depreciation
charge for the asset in the income statement on the basis of the adjusted estimated useful life.
Maintenance and repair costs for own-use tangible assets are recorded in the income statement for the year in
which they are incurred.
Tangible assets classified as investment property are composed of the net values of land, buildings and other
structures held by the group to be leased out or for the realization of capital gains on disposal as a result of future
increases in market prices.
For real estate assets received in settlement of debts that have been let out and are therefore classified
as investment property under the “tangible asset” heading, the practice followed is similar to that set out
in section (h) above for non-current assets held for sale and liabilities associated with non-current assets held
for sale.
Where assets have been leased out under operating leases the procedure followed by the group for the
recognition of acquisition costs and in accounting for depreciation, estimating remaining useful lives and recording
impairment losses are the same as those described above for tangible assets for the group’s own use.
(k) Leases
Leasing contracts are presented on the basis of the economic substance of the lease regardless of its legal form
and are classified from inception as finance or operating leases.
• Operating leases
Leases other than finance leases are classified as operating leases.
When the group is the lessor of the asset, the acquisition cost of the leased item is recorded in tangible assets.
Leased assets are depreciated by the same procedure as for own-use property of a similar type and the payments
on the leases are recognized in the income statement on a straight-line basis.
Where the group is the lessee of the asset the costs of the lease, including any incentives offered by the lessor,
are recorded in the income statement on a straight-line basis.
Where an asset is subject to a sale at fair value and leaseback under an operating lease, any profit or loss is
recorded at the time of the sale.
For a transaction to be treated as a sale and leaseback of assets under an operating lease the following
conditions must be met:
- The asset must have been sold and all risks and rewards associated with the asset transferred to the
purchaser.
- The purchaser (lessor) cannot unilaterally transfer the leased asset to the vendor (lessee).
• Finance leases
A lease is treated as a finance lease if substantially all of the risks and rewards of ownership of the asset are
transferred.
Where the group is the lessor of an asset, the sum of the present values of payments receivable from the lessee
plus the guaranteed residual value — normally the price of the purchase option exercisable by the lessee at the
end of the lease — is recorded as financing provided to a third party and is therefore included in the balance sheet
under loans and receivables according to the type of lessee.
Where the Group is the lessee of the asset, the cost of the leased asset is recorded in the balance sheet
according to the nature of the asset and simultaneously as a liability for the same amount. This liability is the
lesser of the fair value of the leased asset and the sum of the present values of payments to the lessor plus the
exercise price of the purchase option, if applicable. The asset is depreciated using procedures similar to those
applicable to property for the group’s own use.
Finance income and expense arising from leasing agreements are credited or charged to the income statement
so that the return remains constant throughout the term of the lease.
157
- The lessee has no option to repurchase at below market value and the lessor is exposed to the risk of a fall in
the market price of the asset.
- The lessee has no option to extend the lease on terms significantly more favourable than those available in
the marketplace.
- The fair value of the assets sold and leased back is substantially greater than the current value of the lease
rentals.
- The lessor is more than a mere lender: the lessor’s income and exposure to gain or loss is linked to property
market conditions (rental payments and asset values, for example) and not only to interest rates.
- The lease does not cover the greater part of the economic life of the asset.
- The leased asset can be used by third parties without significant alteration.
(l) Business combinations
A business combination is the bringing together of two or more separate entities or economic units into one single
entity or group of entities, where the acquirer obtains control of the other entity or entities.
On the date of acquisition the acquirer incorporates into its financial statements the assets, liabilities and
contingent liabilities of the acquiree, including any intangible assets not recognised by the acquiree.
Positive differences arising between the cost of holdings in subsidiary, jointly controlled or associated
undertakings and the net fair values of the acquired assets adjusted on the date on which they were consolidated
for the first time, are accounted for as follows:
1. If the differences can be assigned to specific assets of the acquiree, they are accounted for by increasing
the value of any assets or reducing the value of any liabilities whose market values are above or below,
respectively, the net fair values at which they were recorded on the acquiree’s balance sheet, provided that
their accounting treatment has been similar to the treatment that would be given to those same assets or
liabilities by the group.
2. If they are assignable to specific intangible assets they are accounted for by explicit recognition in the
consolidated balance sheet provided that their fair value at the acquisition date can be reliably determined.
3. Any remaining differences that cannot be specifically recognized are recorded as goodwill and assigned to one
or more specific cash-generating units.
158
Negative differences, once they have been quantified, are recognized in the income statement.
Any purchases of minority interests after control of an entity has been taken are recognized as increases in the
cost of the business combination.
Where the cost of a business combination or the fair values assignable to identifiable assets, liabilities or
contingent liabilities of the acquiree cannot be determined with certainty, the initial accounting for the business
combination is treated as provisional. However, the accounting process is required to be completed within one year
of the acquisition date, and must take effect as from that date.
(m) Intangible assets
Intangible assets are identifiable non-monetary assets without physical substance. Intangible assets are deemed to
be identifiable when they are separable from other assets because they can be sold, leased or otherwise disposed
of individually, or when they arise from a contract or other legal transaction. An intangible asset will be recognized
when it meets this criterion and the group considers it likely that economic benefits will flow from the asset and its
cost can be reliably measured.
Intangible assets are initially recognized at acquisition or production cost, and are subsequently valued at cost
less any accumulated amortization and/or impairment losses.
• Goodwill
A positive difference between the cost of a business combination and the acquired portion of the net fair value of
the assets, liabilities and contingent liabilities of the acquired entity is recognized on the balance sheet as goodwill.
Goodwill represents a payment made by the group in anticipation of the future economic benefits from assets of
an acquired entity that are not capable of being individually or separately identified and recognized. Goodwill is
recognized only if it has been purchased for valuable consideration through a business combination. Goodwill is
not amortized, but at the end of each accounting period it is subjected to analysis for any possible impairment that
would reduce its recoverable value to below its stated net cost and, if found to be impaired, is written down against
the consolidated income statement.
To detect possible indications of goodwill impairment value appraisals are undertaken, generally on a present
value of future distributable earnings basis, having regard to the following parameters:
- Key business assumptions. These assumptions are used as a basis for cash flow projections as part of the
valuation. For businesses engaging in financial operations, projections are made for the following variables:
changes in lending volumes, default rates, customer deposits and rates of interest under a forecast economic
scenario, and capital requirements.
- Estimates of macroeconomic variables and other financial parameters.
- The period covered by the projections, normally five years. This yields a recurring pattern in terms of both
earnings and profitability. These projections take account of the economic outlook at the time of the valuation.
- The discount rate. The present value of future dividends, from which a value in use is derived, is calculated
from a discount rate taken as the capital cost of the entity (Ke) from the standpoint of a market participant.
To determine this present value the CAPM method is used as expressed by the formula:
“Ke = Rf + β (Rm) + α”, where: Ke = Required return or cost of capital; Rf = Risk-free rate;
β = Company’s systemic risk coefficient; Rm = Expected return of the market and α = Non-systemic risk
premium.
- The rate of growth used to extrapolate cash flow projections beyond the end of the period covered by the most
recent projections. Based on long-term estimates for the main macroeconomic numbers and key business
variables, and bearing in mind the current financial market outlook at all times, an estimate of a nil rate of
growth in perpetuity can be arrived at.
No impairment loss recognized for goodwill can subsequently be reversed.
(n) Inventories
Inventories are non-financial assets that are being held for sale or for use by the group in the normal course of
business, or are in the process of production, construction or development for such sale, or are to be consumed in
the production process or in the rendering of services.
Inventories are valued at the lesser of their cost value, including all purchase and conversion costs and other
direct and indirect costs incurred in bringing the inventories to their present condition and location, and their net
realization value.
Net realization value means the estimated sale price net of the estimated production and marketing costs to
carry out the sale.
Any value adjustments to inventories, whether caused by impairment due to damage, obsolescence or a fall
in sale prices, to reflect their net realizable value, or arising from other losses, are recognized as expense in the
year in which the impairment or other loss occurred. Any subsequent recoveries in value are recognized in the
consolidated income statement in the year in which they occur.
Impairments in the value of inventories comprising land and buildings are calculated on the basis of appraisals
by independent professional valuers on the Bank of Spain’s Special Register of firms of valuers. Such appraisals
are carried out according to the Rules for the Valuation of Real Estate and associated rights for specified financial
purposes, set out in the Economy Ministry’s Order ECO/805/2003.
• Other intangible assets
This item is made up largely of intangible assets identified in business combinations and includes such assets as
contractual relations with customers, deposits or trade marks and computer applications.
Other intangible assets may have useful lives that are indefinite — where, after all relevant factors have been
taken into account, it has been concluded that there is no foreseeable limit to the time during which they can be
expected to generate net cash flows for the group — or finite. Intangible assets that have indefinite useful lives are
not amortized; however, at the end of each accounting period, the group reviews their remaining useful lives
to verify that they are still indefinite and takes appropriate action if it finds otherwise. Intangible assets whose
useful lives are finite are amortized on the basis of their useful lives according to criteria similar to those used
for tangible assets.
Any loss in the stated value of an intangible asset due to impairment will, in any event, be recognized by the
group and a corresponding adjustment made to the consolidated income statement. The rules for recognizing
losses in value due to impairment of intangible assets and any recoveries of impairment losses in earlier periods
are similar to those that apply to tangible assets.
159
For inventories received in settlement of debts the criteria followed are similar to those set out in section (h)
above in relation to non-current assets held for sale and liabilities associated with non-current assets held for sale.
(o) Own equity instruments
An own equity instrument is defined as an equity instrument that:
- does not contain any contractual obligation to the issuer: to deliver cash or another financial asset to a third
party, or to exchange financial assets or liabilities with a third party on terms potentially unfavourable to the
issuer;
- will or may be settled in the issuer’s own equity instruments and is: a non-derivative instrument for which
the issuer is or may be obliged to deliver a variable number of its own equity instruments, or a derivative
instrument that will or may be settled for a fixed amount of cash or another financial asset, for a fixed number
of the issuer’s own equity instruments.
160
All transactions in the group’s own equity instruments, whether on issue or cancellation or otherwise, are
recognized directly in equity.
Changes in the value of instruments classified as own equity instruments are not recognized in the financial
statements. Any consideration paid or received for such instruments is added or deducted directly in equity and the
associated transaction costs are deducted in equity.
Equity instruments issued by the Bank to a creditor in full or partial settlement of a financial liability are treated
as a paid consideration.
Equity instruments issued in full or partial settlement of a financial liability are recognized at fair value unless
this cannot be reliably determined.
Any difference between the carrying value of a financial liability (or any part thereof) that has been settled and
the consideration paid is recognized in the income statement for the period. Equity instruments issued are first
recognized and measured at the date on which the financial liability (or part thereof) is settled.
(p) Payments based on equity instruments
The delivery to employees of the group’s own equity instruments in payment for their services, where the
instruments are delivered on completion of a specified period of service, is recognized as an expense for services
over the period during which the services are being provided. A corresponding increase in equity or a liability
is recognized, according to whether the compensation is classified as equity instrument-based compensation,
liabilities to employees based on the value of the group’s own equity instruments, or transactions with employees
paid in cash or equity instruments.
Where the liability is discharged by means of a transfer of commitments to financial institutions outside the
group, that is, through derivatives contracts that precisely mirror the terms and economic conditions on which the
equity instruments were issued, the group charges the anticipated costs associated with the derivatives contracts
to the income statement according to the specific period in which the services are provided, but does not recognize
any increase in equity or in the associated liability.
Transactions where, in exchange for the receipt of goods or services other than those provided by employees,
settlement is in own equity instruments or by a payment based on own equity instruments, are accounted for
according to the same rules as apply to employee compensation.
(q) Liabilities under insurance contracts
The group’s insurance undertakings credit the premiums they receive for business written and charge the sums
paid out in final settlement of claims to the income statement. Similarly, at the close of each year the amounts
paid but not earned at that date and costs incurred but not charged are recorded as accruals or deferrals in the
income statement
The most significant accruals/deferrals made by the group’s insurance undertakings in relation to the direct
insurances they write are accounted for in the following technical reserves:
• Non-life insurance reserve
The unearned premium reserve represents that portion of premiums payable in the year that can be assigned to the
period between the close of the year and the end of the period of cover according to a policy-by-policy approach. As
required by current regulations, the basis for calculation is the gross premium receivable in the financial year, less
any contingency loading.
• Life insurance reserves
For insurances with periods of cover equal to or less than one year, life insurance reserves correspond to the
unearned premium reserve; for all other life insurances these reserves correspond to the mathematical reserve.
The unearned premium reserve reflects the portion of the gross premium written in the year that is attributable to
future years. Where the reserve is insufficient, an additional reserve for unexpired risks is calculated, which covers
risk appraisal and other costs anticipated in the period remaining until the end of the period.
The mathematical reserve is calculated as the difference between the actuarial present value of the future
obligations of the insurer and those of the policyholder (or, if applicable, the insured); the calculation is based on
the inventory premium receivable in the financial year. The mortality, survival and disability tables applied in the
calculation of life insurance reserves are based on national or foreign experience adjusted according to generally
accepted actuarial practices, using confidence intervals generally accepted as appropriate to Spanish experience.
The mortality tables applied to the main types of insurance offered by the group have generally been GKM-95,
except in the case of life annuities, where the PERFM/F 2000 tables have been used.
• Technical reserves relating to life insurance where the investment risk is borne by the policyholders.
To provide for commitments linked to investments made under life insurance contracts, reserves are held based on
the value of the assets taken as benchmarks in specifying the rights of the policyholder.
• Correction of accounting mismatches
The Bank records certain adjustments on the balance sheet in order to correct mismatches due to differences
arising between valuations of financial assets and associated insurance commitments. The gains or losses
corresponding to such adjustments for mismatches are recognised in the income statement or in equity in line with
the fair value adjustments to the associated financial instruments.
• Reinsurance
Technical reserves for cessions to reinsurers are calculated having regard to the terms of the reinsurance treaties
entered into and according to the same criteria as used for direct insurance. These reserves are included in the
consolidated balance sheet under the “Reinsurance Assets” heading.
(r) Provisions and contingent liabilities
Provisions are current obligations of the group which have arisen from past events and whose nature at the balance
sheet date is clearly specified, but which are of uncertain timing and amount; when such obligations mature or
become due for settlement, the group expects to settle them through an outflow of resources embodying economic
benefits.
Provisions for restructuring will be recognized only when the group has a detailed, formal plan identifying
fundamental changes to be made and where the group has started to implement the plan or has publicly
announced its main features, or where there is objective evidence of its implementation.
• Reserve for with-profits policies and returned premiums
This includes profits accruing to policyholders, insureds or beneficiaries and any premiums to be returned to
policyholders or insureds following a change in the circumstances of the insured risk, where profits are not
allocated to policyholders individually.
• Claims reserve
This represents the insurer’s outstanding liabilities for all losses occurring prior to the close of the year, and
is equal to the difference between the estimated or actual total cost of claims and the total of any amounts
already paid in respect of such claims. The cost of a claim includes all external and internal claims handling and
management expenses and, if applicable, any additional reserves required to cover deviations from loss appraisals
in claims involving long processing periods. In order to determine the size of the reserve, losses have been
appraised individually.
The claims reserve is made up of a reserve for outstanding claims, a reserve for claims incurred but not yet
reported and an internal settlement costs reserve. The technical reserve for claims incurred but not yet reported
has been determined on the basis of the number of claims incurred but not yet reported and of the average cost of
such claims in the last three years, in accordance with current regulations.
161
Contingent liabilities are 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 that lie outside the group’s
control. Contingent liabilities include present obligations of the group the settlement of which is not likely to result
in an outflow of resources embodying economic benefits or whose amount, in extremely rare instances, cannot be
measured with sufficient reliability.
(s) Provisions for pensions
The group’s pension commitments to its employees are as follows:
• Defined contribution plans
These are predetermined contributions paid into a separate entity in accordance with agreements reached with
particular groups of employees.
Contributions to defined contribution plans in 2012 totalled €20,214,000 (€15,207,000 in 2011).
• Defined benefit plans
Defined benefit plans provide for all current pension commitments agreed under articles 35, 36 and 37 of the 22nd
Collective Agreement for the banking industry.
These commitments are financed from three sources: the pension scheme, insurance contracts and internal
funds.
The Banco Sabadell employee pension scheme covers benefits payable under collective agreements with
members of regulated employee organizations as described above, with the following exceptions:
1. Additional commitments on early retirement as provided for by article 36 of the Collective Agreement.
2. Disability occurring in certain circumstances.
3. Widows’, widowers’ and orphans’ benefits payable on the death of retired employees recognized as having
entered the Bank’s service after 8 March 1980.
162
The Banco Sabadell employee pension scheme is treated for all purposes as a scheme asset. Under it pension
commitments in respect of serving employees are totally provided for by an entity outside the group.
The insurance policies provide general cover for specified commitments under articles 36 and 37 of the 22nd.
Collective Agreement for the banking industry, including:
1. Commitments that are expressly excluded from the Banco Sabadell employee pension scheme (1, 2 and 3
above).
2. Serving employees covered by a collective agreement with the former Banco Atlántico.
3. Pension commitments in respect of some serving employees, not provided for under the collective agreement.
4. Commitments to employees on leave of absence who are not entitled to benefits under the Banco Sabadell
employee pension scheme.
5. Commitments to early retirees. These may be partly financed out of pension rights under the Banco Sabadell
employee pension scheme.
These insurance policies have been taken out with insurers outside the group, principally for commitments to
former Banco Atlántico employees, and also with BanSabadell Vida, S.A. de Seguros y Reaseguros.
The internal funds cover obligations to early retirees up to their legal retirement age for employees previously
working for Banco Guipuzcoano and Banco CAM. There are also two groups of former Banco CAM employees for
whom pension commitments are provided for by means of an internal fund.
The acquisition of Banco Guipuzcoano resulted in the takeover of Gertakizun E.P.S.V., a voluntary social
insurance society which covers defined benefit commitments in respect of the bank’s serving and former
employees. The society was set up by Banco Guipuzcoano in 1991 as a legally separate entity governed by Law
25/83 of 27 October of the Basque Parliament, Decree 87/84 of 20 February and Decree 92/2007 of 29 May.
Pension commitments to serving and former employees are fully covered by entities independent from the group.
The acquisition of Banco CAM S.A.U. resulted in the Bank taking over the “CAM-Pensiones” pension plan which
was set up in 1990 as a private, voluntary, open-access scheme of the “employment system” type. The nature of
its specified obligations makes this a mixed-benefit scheme. The defined benefits covered by the scheme relate
mainly to retired employees.
The balance sheet heading “provisions for pensions and similar obligations” includes the actuarial present value
of pension commitments, calculated individually by the projected unit credit method on the basis of financial and
actuarial assumptions which are set out below.
From the obligations so calculated, the scheme assets at their fair value have been deducted. These assets,
including insurance polices, are those from which pension obligations are to be settled since they meet the
following requirements:
The assets to fund pension commitments shown in the individual balance sheet of BanSabadell Vida, S.A. de
Seguros y Reaseguros, a group insurance subsidiary, are not scheme assets as the company is a related party of
the Bank.
The group has decided to apply a corridor in recognizing in profit and loss for the following year only one fifth of
any actuarial gains and losses that exceed 10% of the greater of the present value of defined benefit obligations
and the fair value of scheme assets at the end of the year.
However, actuarial gains or losses related to commitments to early retirees until they acquire legally retired
status are recognized immediately.
1. They are not owned by the Bank but by a legally separate, non-related third party.
2. They are available only to pay or fund employee benefits and are not available to creditors of the Bank, even in
the event of the Bank becoming insolvent.
3. They cannot be returned to the Bank unless the assets remaining in the scheme are sufficient to meet all
obligations of the scheme and of the Bank relating to employee benefits, or unless assets are to be returned
to the Bank to reimburse it for employee benefits previously paid.
4. They are not non-transferable financial instruments issued by the Bank.
The actuarial assumptions used in the valuation of pension commitments are as follows:
2011
PERM / F 2000 (new)
4.00% per annum
4.00% per annum
2.86% per annum
2.86% per annum
2.00% per annum
3.00% per annum
SS90-Absoluta
None assumed
Allowed for
65 or 67
PERM / F 2000 (new)
4.00% per annum
4.00% per annum
4.60% per annum
4.60% per annum
2.00% per annum
3.00% per annum
SS90-Absoluta
None assumed
Allowed for
65
The discount rate on insurance policies has been determined by reference to the yield on AA-rated 15-year
corporate bonds (Bloomberg €AA composite).
The age of early retirement is assumed to be the earliest retirement date after which pension entitlements
cannot be revoked by the employer for all employees.
The expected long-term return on pension scheme assets is 4% per annum (a target return that is compatible
with a level of risk set in accordance with the investment policy of the Banco Sabadell employee pension scheme).
For fixed-rate, without profits, unmatched insurance policies, the return assumed in respect of each commitment is
the average insured interest on each premium paid, weighted according to the mathematical reserve corresponding
to each premium paid. For fixed-rate, without profits, matched insurance policies the rate of return used is the
discount rate.
(t) Foreign currency transactions
The functional currency of the group is the euro. All balances and transactions denominated in currencies other
than the euro are therefore treated as denominated in a foreign currency. Euro equivalent values (in thousands
of euros) for the aggregate balances of asset and liability accounts in foreign currency held by the group at 31
December 2012 and 2011 are given in note 27.
Tables
Discount rate - pension scheme
Discount rate - internal fund
Discount rate - polices taken out with related parties
Discount rate - policies taken out with non-related parties
Inflation
Rate of increase in salaries
Retirement due to disability
Staff turnover
Early retirement
Normal retirement age
2012
163
On initial recognition, debit and credit balances denominated in foreign currency are translated to the functional
currency at the spot exchange rate — defined as the exchange rate for immediate delivery — on the recognition
date. Subsequent to initial recognition, the following procedures are used to translate foreign currency balances to
the functional currency:
- Monetary assets and liabilities are translated at the closing exchange rate, defined as the average spot
exchange rate ruling at the reporting date.
- Non-monetary items measured at historical cost are translated at the exchange rate ruling on the date of
acquisition.
- Non-monetary items stated at fair value are translated at the exchange rate ruling on the date on which the
fair value was determined.
- Income and expenses are translated at the exchange rates ruling at the transaction date.
In general, foreign exchange differences arising on the translation of debit and credit balances denominated in
foreign currency are recorded in the income statement. However, for foreign exchange differences arising on nonmonetary items measured at fair value where the fair value adjustment is made and recognized under valuation
adjustments in equity, the exchange rate component is recorded separately from the revaluation of the nonmonetary item.
(u) Recognition of income and expense
Interest income and expense and similar items are generally recorded in the period in which they accrue, using the
effective interest method. Dividends received from other companies are recognized as income when the entitlement
vests.
Generally, fee and commission income and expense and similar items are recorded in the income statement
according to the following criteria:
164
- Fees and commissions relating to financial assets and liabilities measured at fair value through profit or loss
are recognized when received.
- Fees and commissions relating to transactions or services that take place over a period of time are allocated
over the period during which the transaction or service takes place.
- Fees and commissions relating to transactions or services that are completed in a single act are recognized at
the time of the act that gives rise to the fee or commission.
Financial fees and commissions forming an integral part of the effective cost or yield of a financial transaction
have been deferred net of associated direct costs and recognized in the income statement over the expected
average life of the transaction.
Non-financial income and expense is accounted for on an accrual basis. Amounts paid or received that are
deferred over time are recorded at the value obtained by discounting the expected cash flows at market rates of
interest.
(v) Income tax
Spanish corporation tax and similar tax expense applicable to foreign subsidiaries are treated as expenses and
are recorded in the income statement under income tax unless the tax has arisen on a transaction accounted
for directly in equity, in which case the tax is also recognized directly in equity, or unless it relates to a business
combination, in which case the deferred tax is recognized as an asset or liability of the business combination.
The tax expense shown under the income tax heading is the tax charge assessed on the taxable income for the
year, after taking account of applicable tax deductions and allowances and any tax losses. The taxable income for
the year may be at variance with the profit for the year as shown in the income statement, as it excludes items of
income or expenditure that are taxable or deductible in other years as well as items which are non-taxable or nondeductible.
Deferred tax assets and liabilities refer to the tax that is expected to be payable or recoverable on differences
between the carrying values of assets and liabilities in the financial statements, on the one hand, and the tax
bases of those assets and liabilities, on the other. These tax assets and liabilities are determined by applying to
such temporary differences or tax credits the tax rate at which they are expected to be recovered or paid.
A deferred tax asset such as a tax prepayment, or a credit in respect of a tax deduction or allowance, tax loss or
other benefit is always recognized provided that the group is likely to obtain sufficient future taxable profits against
which the tax asset can be realized. A deferred tax liability will, in general, always be recognized.
All recognized deferred tax assets and liabilities are reviewed in each accounting period to verify that they still
apply and are adjusted as necessary.
Banco Sabadell group undertakings included in the consolidated accounts for corporation tax purposes are listed
in Annex I. Their tax charges for the year have been worked out on this basis and are payable to Banco de Sabadell,
S.A. as the parent company of the consolidated group, which is responsible for paying the tax to the Revenue
authorities.
- The value of all fees, commissions or premiums receivable is discounted by recording the differences in the
income statement as interest income.
- The value of a guarantee contract is the amount initially recognized as a liability item less the amount credited
to the consolidated income statement on a straight-line basis over the anticipated life of the contract.
(w) Financial guarantees
Financial guarantees are contracts by which the group undertakes to make specified payments for a third party
in the event of the third party failing to do so. They may take a variety of legal forms such as guarantees, avals,
insurance contracts or credit derivatives.
Guarantees are recognized by the group at their fair value under the liability heading “other financial
liabilities”. On first recognition and in the absence of evidence to the contrary, the fair value will be the present
value of the expected cash flows. The present value of the future cash flows receivable is simultaneously
recorded as an asset.
Subsequent to initial recognition, guarantee contracts are treated as follows:
Financial guarantees are classified according to the credit risk attributable to the customer or the transaction
and in appropriate cases an assessment will be made of the need to provide for the risk by following procedures
similar to those described in note 1(e) for debt instruments carried at amortized cost.
(x) Assets under management
Third party assets managed by the group are not included in the consolidated balance sheet. Management fees are
shown in the income statement under fees and commission income.
- Cash flows: inflows and outflows of cash and cash equivalents, where “cash equivalents” are short-term,
highly liquid investments for which the risk of a change in value is minimal.
- Operating activities: the ordinary activities of the group, as well as other activities that cannot be described as
investing or funding activities.
- Investing activities: the acquisition, sale or other disposal of long-term assets and other investments not
included in cash and cash equivalents.
- Funding activities: activities that result in changes in the size and composition of equity and of liabilities not
included in operating activities.
(z) Netting
Where credit and debit balances arising from transactions are permitted, whether by contract or by law, to be set off
against each other and the group intends to settle them on a net basis or to realize the asset and settle the liability
simultaneously, they are reported in the balance sheet at their net values.
• Comparability of information
The information presented in the annual accounts for 2011 is provided solely and exclusively for purposes of
comparison with information for the year to 31 December 2012.
As explained in note 2, during the year Banco Sabadell acquired 100% of the Banco CAM group. Because of this
acquisition balance sheet and profit and loss data are not comparable with data for the previous year.
(y) Consolidated cash flow statement
The consolidated cash flow statement includes certain items which are defined as follows:
165
Nota 2. Banco Sabadell group
The undertakings comprising the group as at 31 December 2012 and 2011 are listed in Annex I along
with their registered offices, principal activities, the Bank’s proportional holding in each, key financial data
and the consolidation method used (full consolidation, proportional consolidation or equity method)
in each case.
Takeover of Banco CAM, S.A.U.
166
Acquisition process
On 7 December 2011 Banco Sabadell took control of Banco CAM, S.A.U. (“Banco CAM”) following a competitive
bidding procedure organized by Spain’s Fund for Orderly Bank Restructuring (Spanish initials: FROB).
Banco CAM is a Spanish-registered SA company with its principal centre of operations and place of business in
Alicante. It corporate object is to engage in ordinary banking operations and services and other activities directly or
indirectly related thereto, The balance sheet at first consolidation is shown in Annex II.
As part of the takeover arrangements an agreement was entered into by the FROB, the Bank Deposit Guarantee
Fund (Spanish initials: “FGD”) and Banco Sabadell under which Banco Sabadell agreed to a purchase of Banco CAM
shares. At the same time a protocol of financial assistance was signed by Banco CAM, Banco Sabadell, the FROB
and the FGD for the provision of assistance for the restructuring of Banco CAM.
Once all necessary permissions and consents had been received and the Banco CAM restructuring plan had
been approved by the European Commission on 30 May 2012, on 1 June the FGD increased the Banco CAM’s
share capital by €2,449 million in addition to the €2,800 million it had previously paid out on 15 December 2011.
Banco Sabadell then purchased the shares of Banco CAM for a price of one euro.
As a result of this purchase the Asset Protection Scheme (APS) came into force with retroactive effect as from
31 July 2011, in accordance with the protocol on financial assistance for the restructuring of Banco CAM. Under
the scheme, which covers a specified portfolio of assets with a gross value of €24,660 million, the FGD will absorb
80% of all losses on the portfolio for a period of ten years, once provisions made in respect of those assets have
been used up.
Subsequently, as part of the approval process, Banco Sabadell undertook to carry out an integration plan drawn
up by FROB officials. This will include the closure of 450 branches of the combined entity and staff reductions of
approximately 2,200 employees by 31 December 2013.
On 5 December 2012 a notarial instrument was registered with the Barcelona Mercantile Registry for the merger
by absorption of Banco CAM, S.A.U. into Banco de Sabadell, S.A. Banco CAM was then dissolved without being
liquidated and its entire assets were transferred en bloc to Banco de Sabadell S.A. by universal succession. Banco
de Sabadell was substituted in all rights and obligations of the absorbed undertakings generally and without any
reservation or limitation whatsoever.
From 1 June 2012 onwards all operations of the absorbed undertakings were treated for accounting purposes as
operations of Banco de Sabadell, S.A.
Immediately prior to the merger of Banco CAM with Banco Sabadell, the two undertakings CAMGE Financiera,
Establecimiento Financiero de Crédito S.A. and CAMGE Holdco S.L. were simultaneously merged by absorption into
Banco CAM. All operations of the two merged undertakings were treated for accounting purposes as operations of
Banco CAM from 1 January 2012 onwards.
Accounting for the business combination
These consolidated annual accounts provide valuation and accounting data for the business combination
by allocation of the transaction cost to specific assets, liabilities and contingent liabilities (Purchase Price
Allocation”, PPA).
The fair values of assets and liabilities were determined on the basis of management estimates of the fair
values of assets and liabilities, having regard to the stress testing exercises carried out across the Spanish
financial system and the assessments made by the European Union’s Directorate-General for Competition
in the course of approving the transaction. The estimates have been reviewed by an independent third
party valuer.
As of the date on which control was taken, Banco CAM shareholders’ equity stood at €3,500 million with
negative valuation adjustments, arising mainly from capital losses on portfolios of debt and equity instruments,
amounting to €274 million. Banco CAM shareholders’ equity at the date of its takeover by Banco Sabadell already
included the following items:
• Restructuring provisions of €809 million.
• Asset impairment provisions of €2,986 million.
• A credit (hedging) derivative for 80% of net provisions and impairments to the portfolio of assets subject to
protection under the Asset Protection Scheme and recognized between 31 July 2011 and the date of taking
control. The value at which the derivative was recognized is €3,766 million.
1. To determine the fair value of the loan portfolio, a range of internally estimated expected loss ratios were
applied to the portfolio. The estimated ratios were determined according to standard market procedures and
having regard to the nature of the loans and to any collateral. In addition, a review has been carried out of the
fair values of the real estate portfolio based on such parameters as the type of use, maturity and location of
the assets.
Following a review by the group it was judged that provisions should be made in respect of the lending and
real estate books to adjust them to their estimated fair values. The amount allocated to additional provisions
currently stands at €3,967 million; of this amount, under the protocol on financial assistance for Banco CAM
restructuring, a total of €518 million would be underwritten by the APS and has been recognized as a debit
balance under the “hedging derivatives” caption of the balance sheet. The provision requirement to cover
fair value impairments and expected unsecured losses should therefore be €3,449 million (€2,414 million
net of tax).
2. The application of the Group’s own valuation criteria to portfolios of unquoted equity instruments recorded
as financial assets available for sale, held-to-maturity debt instruments, and equity investments in associated
undertakings resulted in unrealized capital losses being recognized totalling €345 million (€241 million
net of tax).
3. Debt securities issued by Banco CAM and its subsidiaries and sold on the wholesale market were likewise
measured and found to be showing unrealized losses totalling €827 million (€579 million net of tax).
4. A provision requirement of €311 million has been estimated for contingent liabilities; the tax impact of this is
calculated at €218 million.
5. Finally, an adjustment has been made under the heading of deferred tax assets to allow for the tax effects
(at a rate of 30%) of all the valuation adjustments explained in paragraphs 1 to 4 above. These amount to
€984 million.
The full price paid by Banco Sabadell to acquire 100% of the ordinary shares of Banco CAM was one euro.
Therefore the acquisition cost of the shareholding, when compared with Banco CAM’s net worth at 1 June 2012,
showed an initial shortfall of €3,226 million.
As part of the PPA exercise, valuations were made of the following assets, liabilities and contingent liabilities of
the acquired undertaking:
After adjustments to the values of all former assets and liabilities of Banco CAM, the resulting negative goodwill
on consolidation was €933 million (see note 34(j)).
167
a) Changes in basis of consolidation
The changes in the basis of consolidation are described below.
Changes in the year 2012:
Undertakings included in the consolidated accounts for the first time:
€’000
Name of
undertaking (or operation)
acquired or merged
168
Metrovacesa, S.A.
Administración y Proyectos MDT, S.A. P.I. de C.V.
Alma Gestión de Hoteles, S.L.U.
Alma Hotelmanagement GMBH
Alquezar Patrimonial, S.L.
Altavista Hotelera, S.L.
Alze Mediterráneo, S.L.
Amci Habitat Mediterráneo, S.L.
Arrendamiento de Bienes Inmobiliarios del Mediterráneo, S.L.
Artemus Capital, S.L.
B2B Salud, S.L.U.
Balam Overseas BV
Banco CAM S.A.U
Beren Mediterráneo, S.L.
Blue-Lor, S.L.
CAM AEGON Holding Financiero, S.L.
CAM Capital, S.A.U.
CAM Global Finance
CAM Global Finance, S.A.U.
CAM International Issues, S.A.U.
CAM US FINANCE, S.A.U.
CAMGE Financiera, E.F.C., S.A.
CAMGE Holdco, S.L.
Caminsa Urbanismo, S.A.
Can Parellada Parc, S.L.
Cap Eval, S.A.
Cartera de Participaciones Empresariales, C.V., S.L.
Compañía Trasmediterránea, S.A.
Congost Residencial, S.L.
Costa Marina Mediterráneo, S.A.
Costa Mujeres Investment BV
Crédito Inmobiliario, S.A. de C.V., Sociedad Financiera de
Objeto Múltiple, E.N.R.
Datolita Inversiones 2010, S.L.
Delta Swing, S.A.
Desarrollo y Ejecución Urbanística del Mediterráneo, S.L.
Desarrollos y Participaciones Inmobiliarias 2006, S.L.
Deurmed, S.L.
Dime Habitat, S.L.
Dreamview, S.L.
E.B.N. Banco de Negocios, S.A.
Ecamed Barcelona, S.L.U
Ecamed Pamplona, S.L.U
Eco Resort San Blas, S.L.
El Mirador del Delta, S.L.
Elche-Crevillente Salud S.A.
Emporio Mediterráneo, S.L.
Espais Arco Mediterráneo S.L.
Espais Catalunya Mediterráneo, S.A.
Especializada y Primaria L’ Horta-Manises, S.A.
Fbex del Mediterráneo, S.L.
Financiaciones Turísticas del Caribe, S.L.
Fonomed Gestión Telefónica Mediterráneo, S.A.
G.I. Cartera, S.A.
GDSUR Alicante, S.L.
Gesta Aparcamientos, S.L.
Category
Transaction
effective
date
Cost of
combination
Amount paid/
consideration
Associate
Subsidiary
Jointly controlled
Jointly controlled
Associate
Associate
Associate
Associate
Subsidiary
Subsidiary
Jointly controlled
Associate
Subsidiary
Jointly controlled
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Jointly controlled
Associate
Jointly controlled
Associate
Jointly controlled
Associate
Subsidiary
01/01/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
Subsidiary
Subsidiary
Jointly controlled
Subsidiary
Subsidiary
Jointly controlled
Associate
Jointly controlled
Associate
Jointly controlled
Jointly controlled
Jointly controlled
Jointly controlled
Jointly controlled
Associate
Subsidiary
Jointly controlled
Associate
Jointly controlled
Associate
Subsidiary
Subsidiary
Associate
Associate
Voting Voting rights
rights acquired as
acquired prop. of total
(%)
(%)
Direct/
indirect
Method or
procedure
349.078
-
12.35%
100.00%
49.72%
49.72%
33.33%
40.00%
45.00%
40.00%
100.00%
100.00%
50.00%
40.00%
100.00%
40.00%
27.62%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
50.00%
40.00%
25.00%
49.00%
50.00%
0.00%
50.00%
33.33%
100.00%
12.35%
100.00%
49.72%
49.72%
33.33%
40.00%
45.00%
40.00%
100.00%
100.00%
50.00%
40.00%
100.00%
40.00%
27.62%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
50.00%
40.00%
25.00%
49.00%
50.00%
12.86%
50.00%
33.33%
100.00%
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Equity method
Full consolidation
Proportional consol.
Equity method
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Equity method
Full consolidation
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Equity method
Equity method
Full consolidation
01/06/12
-
100.00%
100.00%
Indirect
Full consolidation
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
-
100.00%
50.00%
95.00%
100.00%
30.00%
40.00%
49.00%
20.00%
49.72%
49.72%
43.86%
50.00%
50.00%
45.00%
100.00%
49.72%
20.00%
25.00%
39.94%
100.00%
100.00%
20.00%
40.00%
100.00%
50.00%
95.00%
100.00%
30.00%
40.00%
49.00%
20.00%
49.72%
49.72%
43.86%
50.00%
50.00%
45.00%
100.00%
49.72%
20.00%
25.00%
39.94%
100.00%
100.00%
20.00%
40.00%
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Equity method
Full consolidation
Equity method
Equity method
Full consolidation
Full consolidation
Equity method
Equity method
€’000
Name of
acquired or merged
Cost of
combination
Amount paid/
consideration
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Subsidiary
Associate
Associate
Associate
Subsidiary
Subsidiary
Subsidiary
Associate
Jointly controlled
Subsidiary
Subsidiary
Jointly controlled
Jointly controlled
Associate
Subsidiary
Associate
Jointly controlled
Jointly controlled
Jointly controlled
Subsidiary
Associate
Jointly controlled
Subsidiary
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
Subsidiary
Direct/
indirect
Method or
procedure
-
100.00%
95.00%
100.00%
100.00%
40.00%
100.00%
49.00%
40.00%
40.00%
38.18%
27.81%
48.15%
30.61%
33.33%
86.67%
100.00%
40.00%
40.00%
20.00%
100.00%
45.00%
29.49%
13.33%
49.72%
66.66%
17.50%
50.00%
100.00%
100.00%
95.00%
100.00%
100.00%
40.00%
100.00%
49.00%
40.00%
40.00%
38.18%
27.81%
48.15%
30.61%
33.33%
86.67%
100.00%
40.00%
40.00%
20.00%
100.00%
45.00%
29.49%
13.33%
49.72%
66.66%
17.50%
50.00%
100.00%
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Full consolidation
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Equity method
Full consolidation
Full consolidation
Equity method
Full consolidation
Equity method
Full consolidation
Equity method
Full consolidation
01/06/12
-
100.00%
100.00%
Indirect
Full consolidation
Associate
01/06/12
-
50.00%
50.00%
Indirect
Equity method
Subsidiary
Jointly controlled
Associate
Subsidiary
Associate
Associate
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Jointly controlled
Jointly controlled
Jointly controlled
Jointly controlled
Jointly controlled
Associate
Associate
Associate
Associate
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Subsidiary
Associate
Subsidiary
Subsidiary
Jointly controlled
Jointly controlled
Subsidiary
Associate
Associate
Subsidiary
Jointly controlled
Subsidiary
Associate
Associate
Associate
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
01/06/12
11/06/12
29/06/12
25/09/12
30/11/12
30/11/12
30/11/12
2.975
-
50.00%
49.14%
75.00%
50.00%
32.50%
22.54%
25.00%
100.00%
100.00%
100.00%
100.00%
35.00%
100.00%
100.00%
100.00%
100.00%
50.00%
50.00%
50.00%
50.00%
50.00%
36.09%
20.00%
20.00%
20.00%
30.01%
100.00%
100.00%
100.00%
100.00%
20.05%
100.00%
24.23%
100.00%
100.00%
50.00%
50.00%
100.00%
40.00%
30.00%
60.00%
5.00%
38.18%
0.00%
0.00%
0.00%
50.00%
49.14%
75.00%
50.00%
32.50%
22.54%
25.00%
100.00%
100.00%
100.00%
100.00%
35.00%
100.00%
100.00%
100.00%
100.00%
50.00%
50.00%
50.00%
50.00%
50.00%
36.09%
20.00%
20.00%
20.00%
30.01%
100.00%
100.00%
100.00%
100.00%
20.05%
100.00%
24.23%
100.00%
100.00%
50.00%
50.00%
100.00%
40.00%
30.00%
100.00%
50.00%
38.18%
25.00%
25.00%
25.00%
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
Full consolidation
Equity method
Full consolidation
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Full consolidation
Equity method
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Full consolidation
Full consolidation
Equity method
Equity method
Equity method
(*) With the exception of Metrovacesa, S.A., all undertakings included in the consolidated accounts for the first time were included as a result of the takeover
of Banco CAM, S.A.U.
rights acquired as
(%)
(%)
Gestión de Activos del Mediterráneo, S.V., S.A.
Gestión de Proyectos Urbanísticos del Mediterráneo, S.L.
Gestión Financiera del Mediterráneo, S.A.U.
Gestión Mediterránea del Medioambiente, S.A.
Gestora de Aparcamientos del Mediterráneo, S.L.
Gestora de Fondos del Mediterráneo, S.A., S.G.I.I.C.
Gradiente Entrópico, S.L.
Grupo Azul Caribe, S.A. de C.V.
Grupo Inversiones y Promociones el Almendro, S.R.L.
Hansa Baja Investments, S de R.L. de C.V.
Hansa Cabo, S.A. de C.V.
Hansa México S.A. DE C.V.
Hansa Urbana S.A.
Hantinsol Resorts, S.A.
Hotelera H.M., S.A. de C.V.
Hotelera Marina, S.A, de C.V.
Inerzia Mediterráneo, S.L.
Inmobiliaria Ricam 2005, S.L.
Inversiones Ahorro 2000, S.A.
Inversiones Cotizadas del Mediterráneo, S.L.
Inversiones Hoteleras La Jaquita, S.A.
La Ermita Resort, S.L.
Liquidambar Inversiones Financieras, S.L.
Mankel System, S.L.U.
Mar Adentro Golf, S.L.
Marina Salud, S.A.
Medes Residencial, S.L.
Mediterranean CAM International Homes, S.L
Mediterráneo Mediación, S.A., Operador de Banca-Seguros
vinculado del Grupo Caja de Ahorros del Mediterráneo
Mediterráneo Seguros Diversos, Compañía de Seguros y
Reaseguros, S.A.
Mediterráneo Vida, S.A.U. de Seguros y Reaseguros
Market Inmobiliario de Futuro, S.L.
Mercurio Alicante Sociedad de Arrendamientos 1, S.L.U.
Meserco, S.L.U.
Murcia Emprende, S.C.R., S.A.
Parque Tecnológico Fuente Álamo, S.A.
Planificación TGN 2004, S.L.
Playa Caribe Holding IV B.V.
Playa Caribe Holding V B.V.
Playa Caribe Holding VI B.V.
Playa Marina, S.A, de C.V.
Prat Spolka, Z.O.O.
Procom Residencial Rivas, S.A.
Promociones e Inmuebles Blauverd Mediterráneo, S.L.
Promociones y Desarrollos Ribera Mujeres S.A, de C.V.
Puerto Mujeres, S.A, de C.V.
Ribera Salud Infraestructuras, S.L.U
Ribera Salud Proyectos, S.L.U.
Ribera Salud Tecnologías, S.L.U.
Ribera Salud, S.A.
Rigolisa Residencial, S.L.
Rocabella, S.L.
Ros Casares Espacios, S.A.
Sercacín, S.A.
Servicio de Recuperación de Créditos, S.A.
Servicios Inmobiliarios Trecam, S.L.
Simat Banol, S.L.
Tabimed Gestión de Proyectos, S.L.
Tasaciones de Bienes Mediterráneo, S.A.
Tasaciones y Avalúos, S.A. de C.V.
Técnicas Valencianas del Agua, S.A.
Tenedora de Inversiones y Participaciones, S.L.
Terra Mítica, Parque Temático de Benidorm, S.A.
Tinser Cartera, S.L.
Tinser Gestora de Inversiones, S.L.
Torrejón Salud, S.A.
Torrevieja Salud, S.L.U.
Tratamientos y Aplicaciones, S.L.
Tremon Maroc Services Inmobiliers S.A.R.L.
Valfensal, S.L.
Operadora Cabo de Cortes S. DE R.L.. DE C.V.
Aviones Carraixet CRJ-200 II A.I.E.
Aviones Turia CRJ-200 I A.I.E
Aviones Portacoli CRJ-200 III A.I.E
Category
Transaction
effective
date
169
Following Banco Sabadell’s taking up of new shares in a capital increase by Metrovacesa, S.A. as part of
a loan-for-equity swap deal, in 2012 the Bank recognized that this was equivalent to a significant influence
and for this reason its shareholding in Metrovacesa, S.A. was reclassified as an investment in an associated
undertaking.
Undertakings no longer included in the consolidated accounts:
€’000
Name of
sold, spun off or eliminated
Eólica Sierra Sesnández, S.L. (c)
FS Colaboración y Asistencia, S.A.
M.P. Costablanca, S.L.
Banco del Bajío, S.A.
Banco Guipuzcoano, S.A. (a)
Banco Urquijo Sabadell Banca Privada, S.A. (a)
Bansabadell Professional, S.A. (a)
Axel Group, S.L. (a)
Guipuzcoano, S.G.I.I.C., S.A. (b)
Compañía Trasmediterránea, S.A. (c)
Beren Mediterráneo, S.L.
Terra Mítica, Parque Temático de Benidorm, S.A.
Técnicas Valencianas del Agua, S.A. (c)
Cap Eval, S.A.
Financiaciones Turísticas del Caribe, S.L. (b)
Grupo Azul Caribe, S.A. de C.V.
Grupo Inversiones y Promociones el Almendro, S.R.L.
Deurmed, S.L. (b)
Egumar Gestion, S.L.
Inerban Proyectos, S.L.
Desarrollos Inmobiliarios La Serreta, S.L.
Garnova, S.L. (c)
Cepric-Imobiliária, LDA. (b)
Harinera Ilundain, S.A. (b)
Vera Muniain, S.L. (b)
Solvia Estate, S.L. (d)
Solvia Gestió Immobiliària, S.L. (d)
Solvia Properties, S.L. (d)
Lagar de Tasara, S.L. (b)
Medes Residencial, S.L.
Rigolisa Residencial, S.L.
Promociones y Desarrollos Creaziona Castilla La Mancha, S.L. (b)
Tasaciones y Avalúos, S.A. de C.V.
Aldoluz, S.L. (b)
CAMGE Financiera, E.F.C., S.A. (a)
CAMGE Holdco, S.L. (a)
Banco CAM S.A.U (a)
Especializada y Primaria L’Horta-Manises, S.A.
Torrejón Salud, S.A.
Sociedad de Inversiones y Participaciones COMSA EMTE, S.L.
Congost Residencial, S.L.
Crédito Inmobiliario, S. A. de C. V., Sociedad Financiera de
Objeto Múltiple, E. N. R.
170
Gestión de Assetss del Mediterráneo, S.V., S.A. (b)
Delta Swing, S.A.
El Mirador del Delta, S.L.
Hidrodata, S.A.
(a)
(b)
(c)
(d)
Category
Proportion of
Transaction voting rights
effective surrendered on
disposal (%)
date
Proportion of
voting rights
held after
disposal (%)
Profit/
loss to
group
Direct/
indirect
Method or
procedure
Subsidiary
Associate
Associate
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Jointly controlled
Associate
Associate
Associate
Associate
Associate
Associate
Jointly controlled
Associate
Jointly controlled
Associate
Associate
Associate
Associate
Associate
Subsidiary
Subsidiary
Subsidiary
Associate
Jointly controlled
Jointly controlled
Associate
Subsidiary
Associate
Subsidiary
Subsidiary
Subsidiary
Associate
Jointly controlled
Associate
Jointly controlled
31/01/12
21/02/12
07/03/12
30/03/12
21/05/12
21/05/12
21/05/12
21/05/12
24/05/12
06/06/12
15/06/12
27/06/12
28/06/12
14/06/12
18/06/12
13/07/12
13/07/12
06/09/12
24/09/12
25/09/12
25/09/12
28/09/12
01/10/12
03/10/12
03/10/12
15/10/12
15/10/12
15/10/12
26/10/12
26/10/12
26/10/12
29/10/12
13/11/12
16/11/12
03/12/12
03/12/12
03/12/12
05/12/12
05/12/12
07/12/12
13/12/12
62.10%
35.00%
45.00%
20.00%
100.00%
100.00%
100.00%
100.00%
100.00%
12.86%
40.00%
24.23%
20.05%
49.00%
39.94%
40.00%
40.00%
30.00%
30.00%
50.00%
25.00%
25.00%
45.00%
45.00%
45.00%
100.00%
100.00%
100.00%
33.78%
50.00%
50.00%
20.00%
100.00%
30.06%
100.00%
100.00%
100.00%
20.00%
25.00%
20.00%
50.00%
40.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
12.86%
0.00%
0.00%
15.22%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0
48
0
28,038
0
0
0
0
0
(10,654)
(243)
2,832
0
30
(2)
1,043
3,117
(49)
0
0
0
(40)
0
0
0
0
0
0
0
948
(8)
0
(258)
0
0
0
0
4,315
832
(15,161)
(2,677)
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Full consolidation
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Full consolidation
Equity method
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Subsidiary
14/12/12
100.00%
0.00%
10,489
Indirect
Full consolidation
Subsidiary
Jointly controlled
Jointly controlled
Associate
17/12/12
21/12/12
21/12/12
31/12/12
100.00%
50.00%
50.00%
45.75%
0.00%
0.00%
0.00%
0.00%
(726)
(70)
(4,474)
0
Indirect
Full consolidation
Indirect Proportional consol.
Indirect
Equity method
Removed from the consolidated accounts after being merged into Banco Sabadell.
Eliminated from the consolidated accounts on dissolution and/or liquidation.
Removed from consolidated accounts since a significant influence is no longer exercised.
Merged by absorption into Solvia Development, S.L.
Merger by absorption of Banco Guipuzcoano, S.A., Banco Urquijo Sabadell Banca Privada, S.A., BanSabadell
Profesional, S.A. and Axel Group, S.L. into Banco de Sabadell, S.A.
On 21 May 2012 Banco Guipuzcoano, S.A., Banco Urquijo Sabadell Banca Privada, S.A., Bansabadell
Profesional, S.A. and Axel Group, S.L. were absorbed by Banco de Sabadell, S.A. All these businesses were
dissolved but not liquidated, with their entire share capital being transferred en bloc to Banco de Sabadell, S.A.
by universal succession. Banco de Sabadell, S.A. was subrogated in all rights and obligations of the absorbed
companies generally and without any reservation or limitation whatsoever.
From 1 January 2012 onwards all operations of the merged companies were treated for accounting purposes as
operations of Banco de Sabadell, S.A.
Sale of holding in Banco del Bajío, S.A.
On 30 March 2012 Banco de Sabadell, S.A. sold its 20% shareholding in Banco del Bajío, S.A. Part of the holding –
a 13.3% stake – was bought by a subsidiary of Temasek Holdings (Private) Limited, with the remaining 6.7% being
acquired by a group of Banco del Bajío shareholders. The total amount received for the divested holding in Banco
del Bajío was 2,645,528,000 Mexican pesos, generating a profit of €28,038,000.
Changes in the year 2011:
Undertakings included in the consolidated accounts for the first time:
€’000
Desarrollos Inmobiliarios La Serreta, S.L. (a)
Hidrodata, S.A.
Solvia Atlantic, L.L.C.
Societat d’Inversió dels Enginyers, S.L.
Atalanta Catalunya 2011, S.L.
Energias Renovables Sierra Sesnández, S.L.
Eólica Sierra Sesnández, S.L. (b)
Eólica Mirasierra, S.L.
Parque Eólico Loma del Capón, S.L.
Sistema Eléctrico de Conexión Valcaire, S.L. (c)
Cost of
combination
Category
Transaction
effective
date
Amount paid/
consideration
Associate
Associate
Subsidiary
Associate
Associate
Jointly controlled
Jointly controlled
Jointly controlled
Subsidiary
Associate
01/01/2011
05/04/2011
23/05/2011
17/06/2011
24/08/2011
29/07/2011
29/07/2011
29/09/2011
07/10/2011
07/10/2011
5,083
10,200
12
10
1
3,776
2,904
-
rights acquired as
(%)
(%)
Direct/
indirect
25.00%
33.42%
100.00%
28.79%
25.00%
62.10%
62.10%
50.00%
100.00%
46.88%
Indirect
Equity method
Indirect
Equity method
Indirect
Full consolidation
Indirect
Equity method
Indirect
Equity method
Indirect
Full consolidation
Indirect
Equity method
25.00%
33.42%
100.00%
28.79%
25.00%
62.10%
62.10%
50.00%
100.00%
46.88%
Method or
procedure
Name of
acquired or merged
(a) Included in the consolidated accounts following a change in the consolidation method used for Inerban Proyectos, S.L., which holds 25% of the Bank’s
share in the company. Inerban Proyectos, previously accounted for by the equity method, is now a proportionally consolidated company.
(b) The holding was acquired on 29 July 2011 as a result of the acquisition of a stake in Energias Renovables Sierra Sesnández, S.L.
(c) This holding was acquired on 7 October 2011 as a result of the acquisition of the company Parque Eólico Loma del Capón.
Acquisition by Sabadell United Bank, N.A. of assets and liabilities of Lydian Private Bank & Trust
Sabadell United Bank N.A. (“SUB”), Banco Sabadell’s subsidiary in Florida USA, became the new owner of Lydian
Private Bank following a sale process organized by the Federal Deposit Insurance Corporation (FDIC), after a period
during which this Florida-based private bank had been in FDIC-administered receivership.
On completion of the sale, which took place according to an established FDIC process, SUB took over assets to
a value of USD 1,607 million (€1,118 million) at a discount of USD 176 million (€122 million), along with liabilities
of USD 1,607 million (€1,118 million) including customer deposits totalling USD 1,224 million (€852 million),
advances from the Federal Home Loan Bank of USD 351 million (€244 million) and sundry lesser items amounting
to USD 32 million (€22 million).
The acquisition was carried out as a loss-share transaction in which the greater part of the losses associated
with certain assets were apportioned in an 80/20 split between the FDIC and SUB respectively.
The transaction did not result in any capital outlay by SUB and generated a total of €13,213,000 in goodwill.
Acquisition of 50% of Eólica Mirasierra, S.L.
On 29 September 2011 the group, through its subsidiary Sinia Renovables S.C.R. de R.S., S.A., acquired 50% of
Eólica Mirasierra, S.L. for a consideration of €13,000. On the same day, an Extraordinary and Universal General
Meeting of Eólica Mirasierra, S.L. resolved that the share capital be increased by 2 new shares with a nominal
value of €10 each, ranking pari passu with existing shares as to voting and other rights, plus a share premium of
€3,763,000 payable on taking up each new share.
Acquisition of Hidrodata, S.A. for a contribution of shares in Santex Pluser, S.L. held by Sinia Renovables S.C.R. de
R.S., S.A., and subsequent merger
On 5 April 2011 a merger was registered with the Barcelona Mercantile Registry whereby a number of companies,
including Santex Pluser, S.L., a group subsdiiary wholly owned by Sinia Renovables S.C.R. de R.S., S.A., and an
associated undertaking, Establecimientos Industriales y de Servicios, S.L., were merged into Hidrodata, S.A.
The merger transaction resulted in the Banco Sabadell group acquiring 33.42% of Hidrodata, S.A. through its
subsidiary Sinia Renovables, S.C.R. de R.S., S.A. On 18 May 2011 its holding was increased to 45.75% by the
purchase of additional shares in Hidrodata, S.A..
171
The new shares were taken up in equal parts by the members of the company, Sinia Renovables, S.C.R. de R.S.
and Enerpal Eólica S.L.U, and paid for in cash.
Acquisition of 100% of Parque Eólico Loma del Capón, S.L.
On 7 October 2011 the group, through its subsidiary Sinia Renovables, S.C.R. de R.S., S.A., acquired 100% of
Parque Eólico Loma del Capón, S.L. for a total of €2,904,000.
Formation of Solvia Atlantic, L.LC
On 23 May 2011 Solvia Atlantic, L.L.C., was set up as a wholly-owned subsidiary of Solvia Development, S.L., itself
a Banco Sabadell group subsidiary. The capital paid into the new company was €10,200,000.
Undertakings no longer included in the consolidated accounts:
€’000
Name of
sold, spun off or eliminated
Establecimientos Industriales y de Servicios, S.L.(a)
Santex Pluser, S.L. (a)
Zurriola Inversiones, S.A.
Guipuzcoano Mediador de Seguros,
Sociedad de Agencia de Seguros, S.L. (b)
Guipuzcoano, Entidad Gestora
de Fondos de Pensiones, S.A. (b)
PR 12 PV 15, S.L. (b)
Category
Proportion of
Transaction voting rights
effective surrendered on
disposal (%)
date
Proportion of
voting rights
held after
disposal (%)
Profit/
loss to
group
Direct/
indirect
Method or
procedure
Associate 05/04/2011
Subsidiary 05/04/2011
26.75%
100.00%
100.00%
0.00%
0.00%
0.00%
0
0
9
Indirect
Indirect
Indirect
Equity method
Full consolidation
Full consolidation
100.00%
0.00%
0
Indirect
Full consolidation
100.00%
0.00%
0
Indirect
Full consolidation
Associate 20/12/2011
41.00%
0.00%
0
Indirect
Equity method
(a) Removed from the consolidated accounts after being merged by absorption into Hidrodata, S.A. (see under “undertakings included in the consolidated accounts for the first
time” for further details)
(b) Eliminated from the consolidated accounts on dissolution and/or liquidation.
172
Additional information
On 6 July 2012 Banco Sabadell gave proper and timely notice of its intention to exercise a contractually agreed
option to sell its entire shareholding in Dexia Sabadell, S.A., comprising 10,162,440 shares representing 40%
of the share capital of the company, to Dexia Credit Local S.A., which holds 60% of the share capital of Dexia
Sabadell, S.A. The consideration payable for the shares in Dexia Sabadell, S.A. is subject to an agreed procedure
and no transfer will therefore take place until a share price has been finally fixed. Once a price has been set the
sale will remain subject to regulatory approval.
b) Acquisition agreement
On 13 November 2012, Banco Sabadell reached an agreement with Banco Mare Nostrum, S.A. (“BMN”) on the
terms of a transfer to Banco Sabadell of certain assets and liabilities forming the banking operations of BMN’s
Catalonia and Aragón division, provided that certain conditions and prerequisites were met.
On 18 December 2012, on completion of normal due diligence procedures, Banco Sabadell and BMN formally
concluded a Contract for the Transfer of Assets and Liabilities.
Details of the assets and liabilities to be transferred will be finally settled once the preconditions stipulated
in the contract have been fulfilled. Among these are the requirement that BMN should have transferred specified
assets and liabilities of the Catalonia/Aragón banking business to the asset management company SAREB. Key to
establishing the precise assets and liabilities to be transferred is the intention that gross lending should be in the
region of €10,600 million and estimated customer deposits should be not less than €7,900 million.
Banco Sabadell will pay BMN the difference between the net assets and liabilities at the time they are actually
transferred, amounting to €350 million; this may result in some adjustments being made, if required, to the assets
and liabilities included in the transfer.
A final agreement on the transaction is subject to certain conditions being met and to all necessary official
permissions being granted.
Nota 3. Proposed allocation of profits - earnings per share
The allocation of the Bank’s profit for the year 2012 which the Board will propose to the Annual General Meeting is
shown in the following table. The allocation for 2011 was approved by the Annual General Meeting on 31 May 2012
and is also shown in the table.
€’000
To
To
To
To
dividends
statutory reserve
reserves for investment in Canary Islands
voluntary reserves
Profit of Banco de Sabadell, S.A. for the year
2012
2011
29,596
4,520
58
11,030
69,516
26
294
128,147
45,204
197,983
Proposed allocations of the profits of subsidiaries and associates are subject to approval by their respective
Annual General Meetings.
The Board of Directors will recommend to the General Meeting that it pass the following resolutions:
- that a gross dividend for the year be paid of €0.01 per share; and
- that in addition to the cash dividend, a final dividend of €0.02 per share be paid to shareholders in the form
of a distribution of shares of an equivalent value out of the Bank’s holding of treasury shares and charged to
the share premium account.
For the year 2011 the Board decided to pay an interim dividend on account of earnings for the year 2011
totalling €69,516,000. This was approved by General Meeting of 31 May 2012 and paid on 6 September 2011.
At the General Meeting of 31 May 2012 it was further resolved that a final dividend of €0.05 per share be paid
to shareholders on top of the interim dividend for the year 2011, consisting of a distribution of part of the share
premium account by allotting shares of an equivalent value from the Bank’s holding of treasury shares.
The following table shows that sufficient profits were generated by the Bank in 2011 to enable an interim
dividend to be paid.
€’000
Profit of Bank
Estimated income tax
Dividends paid
149,175
55,607
(69,516)
Net profit available for distribution
135,266
Amount proposed and distributed
69,516
Payment date
06.09.2011
31.08.2011
Earnings per share
Basic earnings per share are obtained by dividing the net profit or loss attributable to the group by the weighted
average number of ordinary shares outstanding in the year, excluding any treasury shares purchased by the group.
Diluted earnings per share are calculated by adjusting the attributable profit or loss, and the weighted average
number of shares outstanding, for the estimated effect of all conversions to ordinary shares being exercised.
Earnings per share calculations are shown in the following table:
173
2012
2011
81,891
0
231,902
0
2,387,443,232
224,286,723
2,611,729,955
1,336,236,199
192,560,056
1,528,796,255
Earnings per share (€)
0.03
0.17
Basic earnings per share after adjusting for conversion of mandatorily
convertible bonds (€)
0.03
0.15
Diluted earnings per share (€)
0.03
0.15
Net profit attributable to group (€’000)
Profit from discontinued operations (net) (€’000)
Ordinary shares outstanding (weighted average)
Assumed conversions of convertible bonds
Ordinary shares outstanding (weighted average) - adjusted
Nota 4. Loans and advances to credit institutions
Loans and advances to credit institutions recorded in the consolidated balance sheet at 31 December 2012 and
2011 are analysed in the following table:
€’000
2012
2011
Analysis by heading:
5,233,243
3,628,914
Total
5,233,243
3,628,914
Analysis by type:
Time deposits
Reverse repos
Other accounts
Doubtful assets
Other financial assets
Impairment provisions
927,436
1,503,508
1,057,283
480
1,741,215
(995)
4,316
951,849
733,110
1,210,856
859
725,087
(1,907)
9,060
Total
5,233,243
3,628,914
Analysis by currency:
Euro denominated
Foreign currency denominated
4,937,292
295,951
3,395,366
233,548
Total
5,233,243
3,628,914
Average annual interest rates on loans and advances to credit institutions for the years 2012 and 2011 were
The “other financial assets” item at 31 December 2012 and 2011 consisted mainly of deposited as security
deposits paid in cash.
Nota 5. Debt securities
Debt securities reported in the consolidated balance sheet at 31 December 2012 and 2011 are analysed as
follows:
€’000
174
2012
2011
Held for trading
Held-to-maturity investments
297,752
15,193,555
396,913
7,647,834
205,931
12,090,847
0
0
Total
23,536,054
12,296,778
Analysis by type:
Government securities
Treasury bills
Other book-entry securities
General government
Securities of financial institutions and other issuers
Doubtful assets
14,721,134
819,444
11,154,434
2,747,256
9,153,213
44,370
(382,663)
7,939,556
1,175,162
5,086,979
1,677,415
4,359,945
8,281
(11,004)
Total
23,536,054
12,296,778
Euro denominated
23,039,823
496,231
11,663,885
632,893
Total
23,536,054
12,296,778
Average annual rates of interest on debt securities in the years 2012 and 2011 were 3.55% and 3.31%
respectively.
Details of debt instruments comprised within the “available-for-sale financial assets” category are as follows:
€’000
2012
Level II (*)
Level III (*)
Level I (*)
2011
Level II (*)
Level III (*)
14,238,248
14,347,516
917,971
825,644
20,876
20,395
11,506,834
11,267,034
765,304
778,089
42,766
45,724
Accumulated losses recognized in equity
at end of period
(153,767)
(104,894)
(515)
(372,148)
(8,512)
(483)
Accumulated gains recognized in equity
at end of period
175,408
11,424
33
13,281
13,583
746
Losses recognized as impairment in the income
statement for the period
(36,128)
(1,983)
0
(1,290)
(85)
0
Quoted
price
Discounted
cash flow
Internal
models
Quoted
price
Discounted
cash flow
Internal
models
Acquisition cost
Fair value
Valuation method
(*) The levels used in this table are explained in note 1 (d) of these annual accounts, in the section on accounting principles and policies - valuation and
recording of financial instruments.
Level I (*)
Of the debt securities comprising government securities held in the portfolio of financial assets available for
sale, at 31 December 2012 a total of €8,056,878,000 were Spanish government securities while €,704,601,000
were securities issued by foreign governments. Within the latter category, the group was holding positions in
French, German, Netherlands and Portuguese government debt amounting to €267,824,000, €151,846,000,
€124,560,000 and €97,875,000 respectively.
At 31 December 2011 a total of €7,697,111,000 was invested in Spanish general government debt and
€110,001,000 in foreign government debt. The latter included positions in Portuguese, Irish, Moroccan
and Andorran government debt amounting to €56,411,000, €40,840,000, €1,180,000 and €11,570,000
respectively.
The breakdown of the group’s government debt exposures by fair value levels was as follows:
€’000
2012
Level II (*)
Level III (*)
Level I (*)
2011
Level II (*)
Level III (*)
8,581,156
8,730,723
18,911
18,306
12,450
12,450
7,956,315
7,767,057
0
0
38,624
40,055
at end of period
(35,724)
(435)
0
(265,852)
0
(71)
at end of period
94,125
403
0
7,607
0
732
(31,312)
0
0
0
0
0
Quoted
price
Discounted
cash flow
Internal
models
Quoted
price
Discounted
cash flow
Internal
models
Acquisition cost
Fair value
Valuation method
Level I (*)
In the case of the securities held to maturity portfolio, the breakdown was as follows:
175
€’000
2012
Debt securities
General government (*)
Credit institutions
5,600,694
1,311,092
846,087
Total
(*) Of the amount shown, €5,689,855,000 consisted of bonds issued by Spanish government agencies.
(110,039)
7,647,834
The current balance of the portfolio of held-to-maturity investments was affected by the addition of the Banco
CAM held-to-maturity portfolio and also by a reclassification of available-for-sale debt securities with a total nominal
value of €4,095 million in the first half of 2012, after it became clear that there was both a positive intention and
the financial capacity to hold these securities in the portfolio until they reached maturity.
The assets comprising the held-to-maturity portfolio, showing the location of risk by geography, were as follows:
€’000
2012
6,812,789
630,193
204,852
7,647,834
Spain
Other euro area countries
Other countries
Nota 6. Equity instruments
The “equity instruments” heading of the consolidated balance sheet at 31 December 2012 and 2011 can be
analysed as follows:
€’000
2012
2011
Held for trading
41,390
170,895
1,219,075
38,517
173,326
1,177,323
Total
1,431,360
1,389,166
478,709
10,407
468,302
656,802
567,066
89,736
838,591
(542,742)
790,881
62,654
728,227
573,417
542,029
31,388
771,466
(746,598)
Total
1,431,360
1,389,166
Euro denominated
1,395,660
35,700
1,350,440
38,726
Total
1,431,360
1,389,166
Analysis by type:
Resident sector
Credit institutions
Other
Non-resident sector
Credit institutions
Other
Share in net assets of mutual funds and OEICs
Financial assets at fair value through profit or loss consisted of investments associated with unit-linked life
policies sold through two group subsidiaries: Assegurances Segur Vida, S.A. (as of the close of 2011 and 2012)
and Mediterráneo Vida Sociedad Anónima de Seguros y Reaseguros (as of the close of 2012).
176
Details of equity instruments comprised within the “available-for-sale financial assets” category are as follows:
€’000
Level I (*)
2012
Level II (*)
Level III (*)
Level I (*)
2011
Level II (*)
Level III (*)
Acquisition cost
Fair value
237,671
261,422
930,951
951,698
2,528
5,955
224,222
195,619
931,302
943,827
35,113
37,877
at end of period
(11,030)
(9,652)
0
(32,670)
(7,331)
0
at end of period
34,781
30,399
3,427
4,067
19,856
2,764
(34,177)
(1,257)
0
(115,484)
0
0
During the year an impairment was recognized in the group’s shareholding in Banco Comercial Português, S.A.
(BCP) amounting to €10,868,000 (€114,301,000 in 2011). As a result, the value of the group’s holding in BCP at
31 December 2012 was written down to the quoted price of the shares. The impairment has been recorded under
impairment losses on financial assets in the consolidated income statement.
Nota 7. Trading derivatives (assets and liabilities)
The breakdown by transaction types for the trading derivatives captions on the asset and liability sides of the
consolidated balance sheet at 31 December 2012 and 2011 is as follows:
€’000
2012
Assets
2011
Liabilities
Assets
Liabilities
165,144
1,319,131
204,617
14,143
212,211
1,301,610
150,906
14,091
188,218
1,021,999
222,072
5,383
231,391
1,036,240
177,832
5,558
Total
1,703,035
1,678,818
1,437,672
1,451,021
Euro denominated
1,568,866
134,169
1,549,760
129,058
1,341,612
96,060
1,350,813
100,208
Total
1,703,035
1,678,818
1,437,672
1,451,021
Securities derivatives
Interest rate derivatives
Currency derivatives
Other derivatives
177
The fair values and valuation techniques being used for each type of trading derivative at 31 December 2012
and 2011 are shown in the table below.
€’000
Fair value
2012
Valuation method
2011
Assets
Trading derivatives:
1,703,036
1,437,672
1,310,356
943,932
Discounted cash flow
7,256
10,798
Montecarlo simulations on Black-Scholes
model. Garman & Kohlhagen
Interest rate options
129,922
121,422
Black & Black-Scholes with convexity adjustment.
Simulation on Hull-White model
Index and securities options
173,096
183,810
Black-Scholes and binomial
tree Montecarlo simulations
on Black-Scholes model
82,406
177,710
1,703,036
1,437,672
1,678,818
1,451,021
1,280,913
962,817
7,241
10,956
Montecarlo simulations on Black-Scholes model.
Garman & Kohlhagen
Interest rate options
114,570
120,702
Black & Black-Scholes with convexity adjustment.
Simulation on Hull-White model
Index and securities options
215,473
223,662
Black & Black-Scholes and binomial tree
Montecarlo simulations on Black-Scholes model
60,621
132,884
1,678,818
1,451,021
Swaps, CCIRS, Call Money Swap
Exchange rate options
Currency forwards
Total assets held in trading portfolio
Liabilities
Trading derivatives:
Swaps, CCIRS, Call Money Swap
Exchange rate options
Currency forwards
Total assets held in trading portfolio
Fair values of trading derivatives are calculated from inputs based on observable market data, except in the case
of stock and index options, where the inputs are supplemented by estimated volatilities and correlations, using
methods generally accepted within the financial services community.
At 31 December 2012, trading derivatives measured at fair value according to the hierarchy of levels described
in note 1 to these annual accounts (accounting principles and polices applied) for the years 2012 and 2011, were
classified as follows:
€’000
Trading derivatives (assets)
Trading derivatives (liabilities)
178
Level I
2012
Level II
Level III
Level I
2011
Level II
Level III
757
5,831
1,565,721
1,458,877
136,558
214,110
6,227
56,729
1,243,454
1,207,795
187,991
186,497
Changes in the carrying value of derivative instruments measured at fair value according to Level III of the
hierarchy, and gains or losses due to changes in value during the years 2012 and 2011, are shown in the
following table:
€’000
Balance at 31 December 2010
(5,644)
Additions
Disposals
Transfers
Gain/loss taken to income statement due to changes in value
(1,565)
6,166
0
2,537
1,494
(72,392)
54
(880)
0
(5,828)
(77,552)
Due to acquisition of Banco CAM group
Additions
Disposals
Transfers
Gain/loss taken to income statement due to changes in value
Nota 8. Loans and advances to other debtors
Loans and advances to other debtors on the consolidated balance sheet at 31 December 2012 and 2011 are
analysed as follows:
€’000
2011
105,102,361
72,654,030
Total
105,102,361
72,654,030
Analysis by type:
Reverse repos settled through central counterparties
Commercial loans
Secured receivables
Other term receivables
Payable on demand and other accounts
Finance leases
Factoring and confirming
Doubtful assets
1,890,884
2,179,432
58,776,532
27,091,766
3,259,828
2,316,459
2,244,814
19,589,071
(12,180,914)
(65,511)
1,286,731
2,479,422
37,910,786
20,889,437
1,852,445
2,673,778
2,975,350
4,759,280
(2,268,043)
94,844
Total
105,102,361
72,654,030
Analysis by sector:
General government
Resident sector
Non-resident sector
Doubtful assets
5,276,900
85,027,807
7,455,008
19,589,071
(12,180,914)
(65,511)
2,212,140
61,595,746
6,260,063
4,759,280
(2,268,043)
94,844
Total
105,102,361
72,654,030
Euro denominated
100,308,099
4,794,262
68,783,112
3,870,918
Total
105,102,361
72,654,030
Average annual rates of interest on loans and advances to other debtors in the years 2012 and 2011 were
2012
179
Details of finance leases for the year are as follows:
- At 31 December 2012 the total gross value of finance leases amounted to €2,534,834,000
(€2,839,591,000 in 2011);
- At 31 December 2012 the present value of future minimum lease payments receivable by the Bank during the
non-cancellable part of the lease period (assuming that any existing rights to extend the lease or purchase
options are not exercised) was €,469,732,000 within one year, €1,226,956,000 in 1 to 5 years and
€737,512,000 after more than 5 years;
- Contingent rents recognized in income for the year 2012 were €158,383,000;
- Unaccrued finance income totalled €334,764,000 (€434,375,000 in 2011);
- The non-guaranteed residual values of the leases totalled €163,933,000 (€176,867,000 in 2011); and
- Value adjustments due to impairment of finance leases amounted to €82,662,000 (€86,853,000 in 2011).
Leasing contracts with the “general government” sector comprised €5,120,935,000 in leasing to Spanish
government agencies (€2,037,794,000 at 31 December 2011) and €155,963,000 to foreign government
agencies. Within the latter category, €115,615,000 consisted of leases to US government agencies.
The distribution of loans and advances to other debtors by geographical region at 31 December 2012 and 2011
was as follows:
€’000
180
2012
2011
Spain
Latin America
USA and Canada
Other OECD
Rest of world
109,284,229
3,318,744
727,718
3,424,547
112,215
415,822
(12,180,914)
68,346,894
2,860,318
393,752
2,882,911
47,073
391,125
(2,268,043)
Total
105,102,361
72,654,030
Loans and advances to other debtors due for repayment but not classified as doubtful assets at 31 December
2012 amounted to €756,920,000 (€585,527,000 at 31 December 2011). At 31 December 2012 more than 49%
of this total was not more than one month overdue (31 December 2011: 65% of the total).
The distribution of loans and advances to other debtors by loan type and purpose at 31 December 2012 was as
follows:
€’000
Mortgage and other secured loans - Loan-to-value
TOTAL
Of which:
Secured on
real estate
Of which:
Secured by
charges on
other assets
General government
5,055,763
51,126
Other financial institutions
3,862,068
Non-financial firms & sole proprietors
Real estate construction & development
Civil engineering construction
Other purposes
40%
or less
More than
40% & equal
to or less
than 60%
More than
60% & equal
to or less
than 80%
More than
80% & equal
to or less
than 100%
More
than 100%
21,795
8,584
15,438
26,398
15,172
7,328
156,907
13,535
51,890
49,753
62,690
6,109
0
58,632,822
30,252,314
2,457,580
9,392,403
9,633,881
7,687,145
3,138,564
2,857,900
13,284,685
11,759,509
79,117
2,647,424
2,859,812
3,685,716
1,358,063
1,287,611
1,194,316
156,657
63,478
58,908
92,679
26,881
13,226
28,440
44,153,821
18,336,149
2,314,985
6,686,072
6,681,390
3,974,548
1,767,275
1,541,849
22,359,383
6,230,309
1,544,614
2,519,655
2,367,984
1,281,763
787,123
818,398
SMEs & sole proprietors
21,794,438
12,105,840
770,371
4,166,416
4,313,406
2,692,785
980,152
723,451
Other residential property and housing
associations (ISFLSHs)
41,740,513
37,079,036
336,641
7,405,765
11,077,355
13,326,043
4,281,602
1,324,912
903,954
Home loans
33,603,624
32,265,709
24,547
5,831,988
9,550,854
12,166,138
3,837,322
Personal loans
5,766,622
4,471,815
58,476
1,447,911
1,401,279
1,050,164
402,550
228,387
Other loans
2,370,267
341,512
253,617
125,866
125,222
109,741
41,729
192,572
105,102,361
67,539,383
2,829,551
16,858,643
20,776,427
21,102,276
7,441,447
4,190,141
11,419,428
9,737,209
136,312
2,220,098
2,391,401
2,825,420
1,027,258
1,409,345
Less: Writedowns due to impairment
of assets not associated with specific
transactions
TOTAL
Large corporates
4,188,806
MEMORANDUM ITEM
Refinancings; refinanced and
restructured loans
€’000
2012
2011
Debt securities
480
44,370
19,589,071
859
8,281
4,759,280
Total
19,633,921
4,768,420
Doubtful assets
Assets recognized as doubtful under different balance sheet headings at 31 December 2012 and 2011 were as
follows:
Changes in doubtful assets were as follows:
€’000
Additions
Write-downs and recoveries
Written off
3,952,867
4,507,583
(2,873,998)
(818,032)
4,768,420
Additions
Written off
12,984,109
8,750,241
(5,916,080)
(952,769)
19,633,921
181
The distribution of doubtful assets at 31 December 2012 and 2011 according to the type of security provided
was as follows:
€’000
2012
Of which:
ASP-protected
2011
Mortgage (1)
Other security represented by a charge on property (2)
Other
13,133,542
3,691,050
2,809,329
6,290,322
2,615,656
662,356
3,283,460
619,737
865,223
Total
19,633,921
9,568,334
4,768,420
(1) Loans secured by mortgage where the outstanding amount was less than 100% of the assessed value.
(2) Includes all other loans secured on property.
The distribution of doubtful assets by geographical region at 31 December 2012 and 2011 was:
€’000
2012
2011
Spain
Latin America
USA and Canada
Other OECD
Rest of world
19,017,470
248,136
303,476
2,642
8,020
54,177
4,555,679
108,624
2,699
83,744
4,452
13,222
Total
19,633,921
4,768,420
Provisions for value adjustments due to impairment of assets under different balance sheet headings at 31
December 2012 and 2011 were as follows:
€’000
182
2012
2011
Debt securities
995
382,663
12,180,914
1,907
11,004
2,268,043
Total
12,564,572
2,280,954
Details of changes in, and opening and closing balances of, provisions to cover against credit risk exposure are
shown in the following table:
€’000
Individually
determined
1,805,120
Movements taken to income statement
Net provisions in period
Provisions charged to income statement
Releases of provision charges in year
Recoveries of provision charges in previous years
422,749
890,508
3,551,889
(2,661,381)
(467,759)
(647)
2,602
7,511
(4,909)
(3,249)
Total
2,222,221
456,248
986,857
3,655,594
(2,668,737)
(530,609)
369,673
0
369,673
0
0
0
(398,590)
(812,644)
414,054
696
370
9
1,075
1,460,302
815,959
4,693
2,280,954
6,001,525
5,831,757
147
11,833,429
Movements taken to income statement
Net provisions in period (*)
Provisions charged to income statement
Releases of provision charges in year
Recoveries of provision charges in previous years (*)
364,907
1,715,864
2,764,682
(1,048,818)
(1,350,957)
671,700
834,504
846,892
(12,387)
(162,804)
(1,323)
2,097
5,485
(3,388)
(3,420)
1,035,284
2,552,466
3,617,059
(1,064,593)
(1,517,181)
Movements not taken to income statement (**)
Utilizations
Other movements
(739,237)
(1,263,508)
524,271
(1,845,824)
(21,519)
(1,824,306)
(32)
(32)
(2,585,094)
(1,285,059)
(1,300,035)
(1)
(1)
Adjustments due to foreign exchange differences
Adjustments due to foreign exchange differences
(768,263)
(812,644)
44,381
34,146
93,747
96,194
(2,447)
(59,601)
Country risk
5,331
0
0
7,087,496
5,473,592
3,484
Movements not taken to income statement
Utilizations
Other movements
Collectively
determined
411,770
12,564,572
The distribution of impairment provisions by geographical region at 31 December 2012 and 2011 was as
follows:
€’000
2012
2011
Spain
Latin America
USA and Canada
Other OECD
Rest of world
12,359,160
86,180
98,328
1,085
1,948
17,871
1,909,572
32,326
6,492
321,193
2,197
9,174
Total
12,564,572
2,280,954
(*) The sum of these figures and the amount of write-offs/recoveries charged or credited to the income statement in respect of impaired financial assets shown as
derecognized in this note are shown below in note 34 (g) - impairment losses on loans and receivables and debt securities.
(**) The change in the generic provision is due mainly to expected loss provisions made during the year in the course of an exercise to measure assets and liabilities
associated with business combinations at fair value (see note 2).
183
Finance income accruing on impaired financial assets but not recognized in the consolidated income statement at
31 December 2012 and 2011 amounted to €604,493,000 (of which sum €475,018,000 related to Banco CAM)
and €104,929,000 respectively.
The outstanding values of loans subject to refinancing or restructuring at 31 December 2012 are shown in the
table below:
€’000
Of which:
Finance for
Other corporate
construction
General borrowers and and real estate
government sole proprietors development (*)
STANDARD RISKS
Fully secured by real estate mortgage
Number of transactions
Gross amount
Secured by charges on other assets
Gross amount
Unsecured
Gross amount
SUB-STANDARD RISKS
Gross amount
Gross amount
Unsecured
Gross amount
Exposures covered by specific provisions
DOUBTFUL RISKS
Gross amount
Gross amount
Unsecured
Gross amount
TOTAL
Gross amount
184
Other
individual
borrowers
Total
0
0
9,806
3,945,590
2,928
1,945,668
15,387
1,086,336
25,193
5,031,926
1
1,006
1,217
754,377
354
258,358
1,881
73,892
3,099
829,275
31
26,037
7,996
1,211,212
751
147,391
9,572
76,673
17,599
1,313,922
0
0
1,349
888,595
269
715,678
4,093
293,112
5,442
1,181,706
0
0
201
166,296
35
117,391
878
70,155
1,079
236,451
0
0
0
99
200,980
317,460
39
52,104
267,106
37
531
37,826
136
201,512
355,286
0
0
10,197
3,315,263
5,752
2,131,973
9,684
810,469
19,881
4,125,732
0
0
1,847
1,007,108
1,146
737,380
1,325
114,992
3,172
1,122,100
0
0
0
3,774
437,718
1,853,638
959
166,807
1,358,833
4,959
34,939
213,550
8,733
472,657
2,067,189
32
27,043
0
36,486
11,927,138
2,171,098
12,233
6,272,751
1,625,938
47,816
2,561,100
251,376
84,334
14,515,282
2,422,475
The outstanding values of loans subject to refinancing or restructuring and classified as doubtful in 2012 were
as follows:
€’000
2012
General government
Other corporate borrowers and sole proprietors
Of which: Finance for construction and real estate development
Other individual borrowers
Total
0
1,319,667
782,897
151,181
1,470,848
%
2012
General government (*)
Other corporate borrowers and sole proprietors
Of which: Finance for construction and real estate development
17
20
Other individual borrowers
15
Total
17
Average probabilities of default on loans subject to refinancing or restructuring, analysed by loan and borrower
category, at 31 December 2012 were as follows:
(*) Permission has not been granted for the use of internal models to obtain capital requirements for this category.
Impaired financial assets derecognized from the balance sheet on the ground that the probability of recovery was
remote showed the following evolution:
€’000
1,479,220
Additions
Charged to impairment provisions
Charged directly to income statement
Sums unpaid and in arrears
Other circumstances
1,002,749
812,644
95,327
20,179
74,599
Reductions
Recovery of principal sum in cash
Recovery of sums unpaid and in arrears
Repossession of tangible assets with debt forgiveness
Expiry of claim
Repossession of tangible assets
Repossession of other assets
Debt refinancing or restructuring
Other circumstances
(264,112)
(125,539)
(1,966)
(135,938)
(669)
0
0
0
0
175
2,218,032
2,601,986
Additions
Charged to impairment provisions
Charged directly to income statement
Sums unpaid and in arrears
Other circumstances
1,969,618
1,285,059
372,290
33,512
278,757
Reductions
Recovery of principal sum in cash
Recovery of sums unpaid and in arrears
Repossession of tangible assets with debt forgiveness
Expiry of claim
Repossession of tangible assets
Repossession of other assets
Debt refinancing or restructuring
Other circumstances
(1,035,527)
(49,023)
(3,744)
(977,714)
0
0
0
0
(5,046)
0
5,754,108
185
Nota 9. Information required to be kept by issuers of mortgage market securities – the special mortgage
register
This section provides information from the Special Mortgage Register kept by Banco Sabadell as an issuing
bank as required by Royal Decree 716/2009, article 21 and the Bank of Spain’s Circular 5/2011 to credit
institutions (amending the earlier Circular 4/2004 of 22 December on public and confidential financial
reporting and model financial statements of credit institutions), which deal with certain aspects of the mortgage
market.
A) Lending
Details of the aggregate nominal values of mortgage loans and credit at 31 December 2012 and 31 December
2011 covering issues of asset-backed securities, their eligibility and the extent to which they qualify as such for
mortgage market purposes are presented in the following table:
186
€’000
Analysis of overall mortgage loan & credit portfolio - eligible loans & qualifying amounts (nominal values)
Total mortgage loan and credit portfolio
Mortgage securities in issue
Of which: Loans retained on the balance sheet
Loans in respect of which mortgage transfer certificates issued
Of which: Loans retained on the balance sheet
Mortgage loans pledged as security for funds received
Loans covering issues of mortgage bonds and covered bonds
Non-eligible loans
Loans satisfying eligibility requirements except for limit stated in Royal Decree 716/2009, art. 5.1
Other loans
Eligible loans
Non-qualifying portions
Qualifying portions
Loans used to back issues of mortgage bonds
Loans eligible as cover assets for issues of covered bonds
2012
2011
75,524,154
7,970,256
7,421,461
9,249,074
9,021,076
0
58,304,824
22,202,888
18,166,789
4,036,099
36,101,936
51,944
36,049,992
0
36,049,992
37,107,842
1,909,018
1,826,564
4,796,162
4,749,478
0
30,402,662
10,336,263
8,496,312
1,839,951
20,066,399
40,552
20,025,847
0
20,025,847
A breakdown of these nominal values according to different classifications is given below:
€’000
Analysis of total mortgage loan & credit portfolio (overall, and eligible only)
2012
2011
Total
Of which:
Eligible loans
Total mortgage loan & credit portfolio
58,304,824
36,101,936
30,402,662
20,066,399
Origin of loan
Originated by Bank
Transferred from other lenders
Other
58,304,824
57,153,488
300,423
850,913
36,101,936
35,557,214
257,654
287,068
30,402,662
29,266,656
302,861
833,145
20,066,399
19,540,251
233,065
293,083
Currency of denomination
Euro
Other currencies
58,304,824
57,553,236
751,588
36,101,936
35,990,038
111,898
30,402,662
30,159,901
242,761
20,066,399
19,992,986
73,413
Payment position
Normal repayment
Other situations (*)
58,304,824
43,374,673
14,930,151
36,101,936
30,117,784
5,984,152
30,402,662
26,738,469
3,664,193
20,066,399
18,470,554
1,595,845
Average residual term
10 years or less
10 to 20 years
20 to 30 years
More than 30 years
58,304,824
18,960,685
15,377,983
16,347,148
7,619,008
36,101,936
8,140,712
11,065,920
11,818,877
5,076,427
30,402,662
10,958,025
7,836,351
7,586,145
4,022,141
20,066,399
5,380,178
5,506,670
5,963,621
3,215,930
Average residual term
Fixed
Variable
Split fixed/variable
58,304,824
2,634,807
55,670,017
0
36,101,936
704,969
35,396,967
0
30,402,662
767,810
29,634,332
520
20,066,399
419,046
19,647,112
241
Borrower
Corporate borrowers/individual proprietors
Of which: Real estate developers
Other individuals, housing associations (“ISFLSHs”)
58,304,824
32,195,572
15,904,869
26,109,252
36,101,936
15,376,897
7,135,328
20,725,039
30,402,662
18,231,926
8,568,412
12,170,736
20,066,399
10,103,573
4,919,724
9,962,826
Security/collateral
Assets/completed buildings
Residential
Of which: State/local authority-susbsidized housing
Commercial
Other
Assets/Buildings under construction
Residential
Of which: State-susbsidized housing
Commercial
Other
Land
Development land
Other
58,304,824
46,552,234
36,405,984
963,400
10,121,629
24,621
1,814,150
1,576,883
21,990
233,101
4,166
9,938,440
7,093,964
2,844,476
36,101,936
32,195,323
26,419,033
776,397
5,762,504
13,786
1,226,910
1,128,899
18,586
93,858
4,153
2,679,703
2,001,674
678,029
30,402,662
24,685,425
18,492,090
39,042
5,530,853
662,482
959,712
912,671
2,448
45,158
1,883
4,757,525
3,971,486
786,039
20,066,399
17,433,320
14,232,224
29,083
3,065,436
135,660
773,285
728,879
2,448
42,525
1,881
1,859,794
1,576,502
283,292
Of which:
Eligible loans
Total
(*) For 2012: subject to APS protection: €8,516,790,000 (including €2,877,039,000 in eligíble loans).
187
The nominal values of drawable funds (i.e. undrawn loan commitments) within the total mortgage loan and credit
portfolio were as follows:
€’000
Available amounts (nominal values) - total mortgage loans & credit covering issues of
mortgage bonds and covered bonds
Potentially eligible
Non-eligible
2012
2011
1,017,200
591,174
957,285
644,028
The following table shows a breakdown of nominal values of loans and credit by loan-to-value (LTV) ratio (loan
exposure as a percentage of the most recent appraised value) for mortgage loans and credit eligible as cover
assets for issues of mortgage bonds (bonos hipotecarios) and covered bonds (cédulas hipotecarias):
€’000
LTV ratio by type of security/collateral - loans eligible to cover issues of mortgage
bonds and covered bonds
Secured on residential property
LTV less ≤ 40%
LTV less 40%-60%
LTV less 60%-80%
LTV less > 80%
Secured on other property
LTV less ≤ 40%
LTV less 40%-60%
LTV less > 60%
2012
2011
27,461,704
7,464,929
9,562,864
10,362,601
71,310
15,850,901
4,854,242
5,507,277
5,417,242
72,140
8,640,232
4,071,270
4,568,962
0
4,215,498
2,065,700
2,149,798
0
Changes during 2012 and 2011 in the nominal values of mortgage loans covering issues of mortgage bonds and
covered bonds (eligible and non-eligible) are as follows:
€’000
Changes in nominal value of mortgage loans
188
Eligible
20,218,757
Non-eligible
10,737,837
Eliminations during the period
Terminated at maturity
Repaid before maturity
Transferred to other entities
Other
(2,439,775)
196,149
690,695
0
1,552,931
(1,693,366)
149,401
356,320
0
1,187,645
2,287,417
2,222,296
10,463
54,658
1,291,792
1,051,537
3,733
236,522
20,066,399
10,336,263
17,494,667
13,047,486
Eliminations during the period
Terminated at maturity
Repaid before maturity
Transferred to other entities
Other
(8,592,487)
1,842,714
1,100,425
0
5,649,348
(6,440,819)
733,589
899,354
0
4,807,876
7,133,357
1,852,096
7,860
5,273,401
5,259,958
1,289,711
1,397
3,968,850
36,101,936
22,202,888
Additions en el período
Originated by Bank
Transferred from other entities
Other
Additions en el período
Originated by Bank
Transferred from other entities
Other
B) Funding
Information on issues of collateralized securities backed by Banco Sabadell mortgage loan and credit portfolios is
provided in the following table, analysed by unexpired term and according to whether the sale was by public offering
or otherwise.
€’000
Nominal value
Mortgage securities in issue
Of which: Not registered as liabilities on balance sheet
11,150,000
2,700,000
2,500,000
2,700,000
3,250,000
0
0
8,645,000
3,000,000
1,500,000
1,900,000
920,000
1,325,000
0
6,512,222
1,056,774
895,854
1,072,756
1,177,778
1,932,650
376,410
9,450,000
1,000,000
2,700,000
1,000,000
3,250,000
1,500,000
0
2,958,500
538,500
500,000
0
420,000
1,500,000
0
1,230,000
200,000
380,000
130,000
0
100,000
420,000
2011
Valor
Average
nominal unexpired term
(€’000)
(in years)
(€’000)
(in years)
Mortgage transfer certificates
Issued via public offering
Issued otherwise than by public offering
9,249,074
0
9,249,074
17
0
17
4,796,162
0
4,796,162
14
0
14
Mortgage participations
Issued via public offering
Issued otherwise than by public offering
7,970,256
0
7,970,256
19
0
19
1,909,018
0
1,909,018
15
0
15
At 31 December 2012 the over-collateralization ratio (the nominal value of the whole of the loan and credit
portfolio divided by the nominal value of covered bonds in issue) for Banco de Sabadell, S.A. stood at 224.14%.
As required by Royal Decree 716/2009, which developed certain aspects of Law 2/1981 of 25 March on
the regulation of the mortgage market and other matters relating to mortgage lending, the Board of Directors is
responsible for ensuring that, at 31 December 2012, the Bank has a set of policies and procedures in place to
assure compliance with mortgage market regulations.
In line with these policies and procedures for managing the group’s mortgage market activities, the Board of
Directors is responsible for ensuring compliance with all mortgage market regulations and for implementing the
group’s risk management and control procedures (see note 37, Financial Risk Management). In the area of credit
risk, in particular, the Board of Directors delegates powers and discretions to its Risk Control Committee, which then
sub-delegates authority at each level of decision-taking. The internal procedures set up to handle the origination and
monitoring of the assets that make up the group’s lending and particularly those secured by mortgage, which serve as
cover for the group’s covered bond issues, are described in detail below for each type of loan applicant.
Individuals
• Analysis. Applications are analysed with the help of scoring tools that measure the risk involved in a
transaction by evaluating such customer profile aspects as the likely return and the nature of the property
on which the loan is to be secured. There will be some circumstances that require the intervention of a risk
analyst, who will examine the case in more detail and whose opinion will be required before any decision can
be made on the application, favourable or otherwise.
2012
Nominal
Average
value unexpired term
2011
13,638,500
1,340,750
Debt securities issued via public offering
Unexpired term up to 1 year
Unexpired term 1 - 2 years
Unexpired term more than 10 years
Debt securitiesissued otherwise than via public offering
Deposits
2012
26,307,222
7,816,250
189
190
• Decision. A decision will be based on the result of the credit scoring procedure supplemented, where
necessary, by the opinion of an analyst. There will, in addition, be a whole range of other details and
parameters to be considered, such as the consistency of the customer’s application and how well it matches
his possibilities; the customer’s ability to pay based on his current and future position; the value of the
property provided as security for the loan (as determined by an appraisal carried out by a Bank of Spainauthorized valuation firm which Banco Sabadell’s own internal approval processes will, additionally, have
shown to be free of any association with the group); the availability of any additional security; examinations of
internal and external databases of defaulters, etc.
One aspect of the decision-making process is to establish the maximum amount of the loan, based on
the assessed value of the security (the loan-to-value ratio, or LTV). As a general rule, under internal group
procedures the maximum LTV is applicable to purchases by individuals of properties for use as their normal
residence and is fixed at 80%. This provides an upper limit below which a range of other maximum LTV ratios
of less than 80% are set, having regard to the purpose of the loan.
A further step that must be taken before an application can be decided upon is to review all charges
associated with the property on which the loan is to be secured and also any insurance taken out to cover
the security. Once a loan application has been approved, the mortgage must be registered with the Property
Registry as part of the formalities for arranging the loan.
• Autonomy levels. The scoring of an application is the key stage in determining the viability of a loan. Where the
loan being sought is above a certain amount, or where factors are present that are not readily captured by a
scoring procedure, a risk analyst will be involved. The limit for each autonomy level is based on credit scores,
with additional conditions being specified at each level to determine when special intervention is required.
A list of exceptions has been drawn up, based on the particular circumstances of a borrower or sector, and
these exceptions are covered in the group’s internal rules and procedures.
• Monitoring. The group has a wide-ranging monitoring system in place to identify customers that may be
showing early signs of default, ensuring that prompt action can be taken to initiate a timely response
procedure in every case. A key part of this process consists of well-established procedures to review and
validate the security provided.
Businesses (other than construction/real estate development)
• Analysis. This is carried out by “key management teams” made up of staff members on both the business and
the risk management sides, thus ensuring a suitable separation of functions. This is supported by a credit
rating tool that takes account of the following parameters:
- Management skill and effectiveness
- Market competitiveness
- Economic/financial aspects
- Track record
- Security/guarantees
• Decision. A decision will be based on the credit rating assessment together with a range of other data and
parameters such as the consistency of the application, ability to pay and the nature of the security provided
(as determined by an appraisal carried out by a Bank of Spain-authorized valuation firm which Banco
Sabadell’s own approval processes will, additionally, have shown to be free of any association with the group)
and taking account of any supplementary guarantees, the “fit” between the company’s working capital and its
total sales; the appropriateness of the total amount borrowed from the group based on the business’s capital
strength; examinations of internal and external databases of defaulters, and so on.
With companies the decision process followed is similar to that used with individuals, with a scale of
maximum LTV ratios being defined internally by the group having regard to the intended purpose of the loan.
For business borrowers, as a general rule, the maximum LTV ratio is applied to mortgage loans to property
developers, which are then transferred to buyers of homes for use as their principal residences. This is fixed
at 80%.
Business loans are likewise subject to processes to evaluate any charges associated with the security
provided and to have any mortgage registered with the Property Registry.
• Autonomy levels. An autonomy level is assigned on the basis of the expected loss associated with a
transaction. There are several levels at which decisions may be taken. Each of these levels involves the “key
management team”, one member of which will be on the business side and one on the risk management side.
All loan approvals must be the result of a joint decision. As with individual customers, a set of exceptional
circumstances has been specified for borrowers or sectors, and these are provided for in the group’s internal
procedures.
• Monitoring. A comprehensive monitoring system ensures that any customer showing signs of deteriorating
creditworthiness will be identified. Loan monitoring is triggered by certain events such as the expiry of a credit
rating, a change in the nature of the business or risk and other aspects identified by the group’s system of
early warning alerts. Again, this includes procedures to ensure that the borrower’s security or guarantees are
constantly being reviewed and validated.
The Banco Sabadell group is an active participant in the capital markets and has a number of funding
programmes in operation (see note 37). As one element of its funding strategy Banco de Sabadell, S.A. is an
issuer of covered bonds. Covered bond issues are backed by the Bank’s portfolio of loans secured by real estate
mortgages that meet the eligibility criteria applicable under Royal Decree 716/2009 which provides rules on the
mortgage market and mortgage finance in Spain. The group has review procedures in place to monitor its entire
portfolio of loans and credit lines secured by mortgages. These include maintaining special accounting records of
all mortgage assets — and any assets that replace them — used to back issues of covered and mortgage bonds,
and of any financial derivatives associated with them; verifying that all loans and other assets meet the eligibility
criteria for use as collateral in issues of covered bonds; and ensuring that bond issues are at all times kept to
within their maximum limits, as required by the applicable mortgage market legislation.
Businesses (construction/real estate development)
Real estate assets and property development loans are handled by the Bank’s Asset Management division. The
division is organizationally structured to focus exclusively on the management of assets of this type with the aim of
limiting overall exposure.
Managing the risks in these real estate and loan assets is the responsibility of the Bank’s Asset Risk unit, part
of the Risk Management division.
• Analysis. This is carried out by specialist management teams who operate in conjunction with the real estate
lending units to ensure that a risk management perspective is combined with a view based on direct contact
with the customer.
• Decision. Factors influencing the decision will include the borrower’s credit rating assessment together with a
series of other considerations such as the financial position and net worth of the business, revenue and cash
flow projections, any business plans and, most particularly, an in-depth study of current credit risks whether
related to completed developments, land holdings or other assets.
Other considerations are the existence of any outstanding encumbrances on the assets to be pledged as
security, as well as the results of any value appraisal, as in the case of non-real estate businesses.
• Autonomy levels. Decision-taking powers and discretions are assigned according to the specific types of asset
portfolio handled within this business segment. which may be related to sales, purchases or action plans. All
these different circumstances are provided for in the Bank’s rules and procedures.
• Monitoring. Loans are subject to the kind of continuous monitoring that asset management necessarily
implies. For completed developments, monitoring will focus on sales or rental figures; for developments
under construction, the state of progress of the work. Constant checks are made that commitments are being
adhered to and, as with non-real estate businesses, procedures are in place for the continuous review and
validation of the loan security provided.
191
Nota 10. Financial asset transfers
In recent years the Banco Sabadell group has undertaken a number of securitization programmes, either alone or
in partnership with other highly rated domestic and foreign banks. Financial assets securitized by the group under
these programmes at the end of the years 2012 and 2011 are summarized below. Assets on which the associated
risks and rewards were transferred are shown separately in the table.
€’000
2012
2011
855,877
780,327
58,304
17,246
131,010
129,139
1,871
0
Retained in full on balance sheet:
Mortgage-backed securities
Other transfers to credit institutions
19,351,643
16,442,337
2,895,786
13,520
9,888,144
6,576,041
3,312,103
0
Total
20,207,520
10,019,154
Derecognized in full from balance sheet:
Mortgage-backed securities
Other financial asset transfers
Assets and liabilities held in securitization funds set up after 1 January 2004 and whose associated risks
and rewards were not transferred to third parties have been retained in the consolidated financial statements.
That is, for the assets listed there was no transfer of risk but some form of subordinate financing or other credit
enhancement for the securitization vehicles was arranged.
192
Details of current securitization programmes in which Banco de Sabadell, S.A. has participated are given in the table below:
€’000
Credit rating
Moody’s
S&P
DBRS
TDA 12, FTA (**)
Series A3
Series B
-----
A3
A3
-----
-----
564
530
34
56,323
53,000
3,323
5,325
3,225
2,100
6,511
4,411
2,100
EURIBOR 3M + 0.28%
EURIBOR 3M + 0.50%
TDA 14-MIXTO, FTA (**)
Series A3
Series ANC
Series B1
Series BNC
---------
A3
A3
Baa1
Baa1
---------
---------
614
362
217
21
14
61,362
36,200
21,700
2,076
1,386
11,378
5,915
2,363
1,800
1,300
13,119
7,174
2,845
1,800
1,300
EURIBOR 3M + 0.27%
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.65%
EURIBOR 3M + 0.65%
Series A1
Series A2
Series B1
Series B2
---------
A3
A3
Baa2
Baa2
---------
---------
1,279
972
251
41
15
127,798
97,200
25,100
4,033
1,465
24,836
15,849
4,287
3,500
1,200
28,998
19,273
4,925
3,600
1,200
EURIBOR 3M + 0.23%
EURIBOR 3M + 0.25%
EURIBOR 3M + 0.65%
EURIBOR 3M + 0.65%
AA-AA-BBB
BB
---------
A-A-A-BB
---------
5,000
1,968
2,667
215
150
500,000
196,800
266,700
21,500
15,000
0
0
0
0
0
56,907
18,009
24,405
8,537
5,956
EURIBOR 3M
EURIBOR 3M + 0.26%
EURIBOR 3M + 0.50%
EURIBOR 3M + 1.20%
---------
A3
A3
A3
Baa3
---------
---------
4,480
3,950
438
70
22
248,327
195,400
43,800
6,927
2,200
44,598
30,346
5,452
6,600
2,200
51,049
35,668
6,481
6,700
2,200
EURIBOR 3M + 0.24%
EURIBOR 3M + 0.26%
EURIBOR 3M + 0.65%
EURIBOR 3M + 0.65%
AA-A+-
A3
A3
-----
-----
12,000
11,712
288
1,200,000
1,171,200
28,800
288,777
259,977
28,800
-----
EURIBOR 3M + 0.225%
EURIBOR 3M + 0.70%
---------
Aaa
Baa1
Baa2
Baa2
AAA
A-A-BBB
---------
12,000
1,500
10,206
192
102
1,200,000
150,000
1,020,600
19,200
10,200
356,918
0
338,250
12,191
6,476
407,744
0
388,050
12,861
6,832
EURIBOR 3M + 0.06%
EURIBOR 3M + 0.17%
EURIBOR 3M + 0.42%
EURIBOR 3M + 0.78%
AA--A
BB---
A3
Ba1
Caa3
-------
-------
1,968
1,435
416
117
196,800
143,500
41,600
11,700
77,481
42,281
27,473
7,727
-------
EURIBOR 3M
EURIBOR 3M + 0.33%
EURIBOR 3M + 0.70%
---------
Aaa
A3
Baa1
B3
AAA
A-A-BB--
---------
6,000
4,408
1,241
234
117
600,000
440,800
124,100
23,400
11,700
61,805
0
40,311
14,329
7,164
84,281
0
62,787
14,329
7,164
EURIBOR 3M + 0.11%
EURIBOR 3M -- 0.01%
EURIBOR 3M + 0.35%
EURIBOR 3M + 0.80%
TDA CAM 4, F.T.A. (*)
Series A
Series B
AA-A
Baa1
Ba1
-----
-----
20,000
19,520
480
2,000,000
1,952,000
48,000
678,351
630,351
48,000
-----
EURIBOR 3M + 0.09%
EURIBOR 3M + 0.24%
Series A
Series B
AA-BBB
Baa2
Caa1
-----
-----
20,000
19,440
560
2,000,000
1,944,000
56,000
918,679
862,679
56,000
-----
EURIBOR 3M + 0.12%
EURIBOR 3M + 0.35%
GC FTPYME SABADELL 4, F.T.A.
Series AS
Series AG (a)
Series B
Series C
AAA
AA-BBB
CCC
Aaa
A3
Ba1
Caa3
---------
---------
7,500
5,494
1,623
240
143
750,000
549,400
162,300
24,000
14,300
111,257
0
72,957
24,000
14,300
150,655
0
112,355
24,000
14,300
EURIBOR 3M + 0.10%
EURIBOR 3M + 0.00%
EURIBOR 3M + 0.42%
EURIBOR 3M + 0.70%
GC FTGENCAT SABADELL 1, F.T.A.
Series AS
Series AG (b)
Series B
Series C
AAA
A
BB
CC
---------
---------
---------
5,000
1,289
3,456
198
57
500,000
128,900
345,600
19,800
5,700
97,690
0
72,190
19,800
5,700
143,032
0
117,532
19,800
5,700
EURIBOR 3M + 0.15%
EURIBOR 3M -- 0.04%
EURIBOR 3M + 0.42%
EURIBOR 3M + 0.78%
42,600
28,800
7,400
6,400
0
0
0
0
20,221
10,995
2,825
6,400
EURIBOR 3M
EURIBOR 3M + 0.25%
EURIBOR 3M + 1.50%
Fund name and series
2000
2002
2003
2004
2004
2004
2005
2005
2005
2005
2005
2005
2005
2006
Sub-total
Series A1
Series A2
Series B1
Series B2
TDA CAM 3, FTA (*)
Series A
Series B
GC SABADELL 1, F.T.H.
Series A1
Series A2
Series B
Series C
FTPYME TDA CAM 2, F.T.A. (*)
Series 1CA (a)
Series 2SA
Series 3SA
IM FTPYME SABADELL 3, F.T.A.
Series 1SA
Series 1CA (a)
Series 2
Series 3SA
FTPYME TDA 5, FTA (**)
Series 2CA (a)
Series 2SA
Series 3SA
TDA 23, FTA (**)
Series A
Series B
Series C
FTPYME TDA 6, FTA (**)
Series 2CA (a)
Series 2SA
Series 3SA
Series A1
Series A2
Series A3
Series B
2012
2011
Yield
Market
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
2004
FTPYME TDA SABADELL 2, F.T.A.
Series 1CA (a)
Series 1SA
Series 2SA
Series 3SA
Amount
2003
Liability outstanding
FITCH
Year
2001
Issue
Number of
securities
AIAF
AIAF
AA
AA
BBB
-------
-------
-------
426
288
74
64
-------
Baa1
Baa2
B2
-------
-------
8,557
8,372
163
22
289,500
281,000
6,100
2,400
84,068
75,568
6,100
2,400
95,680
87,180
6,100
2,400
EURIBOR 3M + 0.09%
EURIBOR 3M + 0.3%
EURIBOR 3M + 0.75%
A
BBB
CCC
-------
-------
-------
420
300
75
45
42,000
30,000
7,500
4,500
19,790
12,232
3,058
4,500
26,519
17,615
4,404
4,500
EURIBOR 3M
EURIBOR 3M + 0.45%
EURIBOR 3M + 0.65%
A
A
A
B
--Baa2
Baa2
Caa2
---------
---------
13,000
3,430
1,550
7,520
500
1,300,000
343,000
155,000
752,000
50,000
610,794
0
136,400
424,394
50,000
---------
EURIBOR 3M + 0.09%
EURIBOR 3M + 0.14%
EURIBOR 3M + 0.13%
EURIBOR 3M + 0.27%
3,391,747
1,084,714
193
AIAF
AIAF
AIAF
AIAF
€’000
Credit rating
Year
FITCH
Moody’s
Issue
S&P
DBRS
Number of
securities
Amount
Sub-total
2006
2006
2006
2006
2006
2006
2007
2007
2007
2007
194
2007
Sub-total
IM FTGENCAT SABADELL 2, F.T.A.
Series AS
Series AG (b)
Series B
Series C
2012
2011
3,391,747
1,084,714
Yield
AA-BBB
CCC
CC
---------
---------
---------
5,000
2,028
2,717
198
57
500,000
202,800
271,700
19,800
5,700
176,069
0
150,569
19,800
5,700
233,125
0
207,625
19,800
5,700
EURIBOR 3M + 0.15%
EURIBOR 3M -- 0.045%
EURIBOR 3M + 0.40%
EURIBOR 3M + 0.70%
--BB
B-CC
---------
--A-B+
CCC--
---------
5,750
0
5,157
293
300
575,000
0
515,700
29,300
30,000
210,233
0
150,933
29,300
30,000
0
0
0
0
0
EURIBOR 3M + 0.05%
EURIBOR 3M + 0.18%
EURIBOR 3M + 0.38%
EURIBOR 3M + 0.80%
--A
A
B
--Baa2
Baa2
Caa2
--AA-AA-B+
---------
15,000
0
12,073
2,000
927
1,500,000
0
1,207,300
200,000
92,700
907,759
0
664,323
150,736
92,700
0
0
0
0
0
EURIBOR 3M + 0.05%
EURIBOR 3M + 0.18%
EURIBOR 3M + 0.38%
EURIBOR 3M + 0.80%
Series A1
Series A2
Series A3 (G) (a)
Series B
Series C
AAA
AA-AA-BBB
CCC
Aaa
A3
A3
Baa2
Caa3
-----------
-----------
12,500
2,200
8,803
828
400
269
1,250,000
220,000
880,300
82,800
40,000
26,900
230,836
0
81,136
82,800
40,000
26,900
308,392
0
158,692
82,800
40,000
26,900
EURIBOR 3M + 0.07%
EURIBOR 3M + 0.13%
EURIBOR 3M + 0.01%
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.58%
Series 1-A2
Series 1-B
Series 1-C
Series 1-D
Series 2-A
Series 2-B
Series 2-C
AA-A
BBB
CCC
AA-BBB
CCC
Baa1
B1
Caa1
C
-------
---------------
---------------
6,783
6,364
182
54
40
130
10
3
435,500
402,100
11,500
3,500
4,000
13,000
1,000
400
206,015
178,450
10,987
3,500
4,000
7,824
1,000
255
229,402
201,236
10,987
3,500
4,000
8,421
1,000
258
EURIBOR 3M + 0.14%
EURIBOR 3M + 0.35%
EURIBOR 3M + 0.5%
EURIBOR 3M + 3.5%
EURIBOR 3M + 0.16%
EURIBOR 3M + 0.37%
EURIBOR 3M + 2.5%
Series A1
Series A2
Series A3 (CA) (a)
Series B
Series C
Series D
--A
A
BB
CCC
C
--A3
A3
B1
Caa3
C
--A+
A+
BB
CCC-D
-------------
11,918
0
9,315
1,270
660
380
293
1,191,800
0
931,500
127,000
66,000
38,000
29,300
374,865
0
133,569
107,996
66,000
38,000
29,300
0
0
0
0
0
0
0
EURIBOR 3M + 0.06%
EURIBOR 3M + 0.16%
EURIBOR 3M + 0.02%
EURIBOR 3M + 0.29%
EURIBOR 3M + 0.61%
EURIBOR 3M + 4.00%
A
BB
B
CC
Ba1
--Caa2
C
AA-CCC
CCC-D
---------
17,128
16,354
459
187
128
1,712,800
1,635,400
45,900
18,700
12,800
913,776
854,376
45,900
18,700
12,800
0
0
0
0
0
EURIBOR 3M + 0.13%
EURIBOR 3M + 0.27%
EURIBOR 3M + 0.47%
EURIBOR 3M + 3.50%
-----------
Aaa
A3
A3
B2
Caa3
AAA
A-A-BBB
B
-----------
10,000
1,750
6,354
1,341
355
200
1,000,000
175,000
635,400
134,100
35,500
20,000
258,679
0
69,079
134,100
35,500
20,000
335,783
0
146,183
134,100
35,500
20,000
EURIBOR 3M + 0.11%
EURIBOR 3M + 0.19%
EURIBOR 3M + 0.005%
EURIBOR 3M + 0.43%
EURIBOR 3M + 0.75%
BBB
BBB
BBB
BB
CCC
CC
Ba2
Ba2
Ba2
Caa1
Ca
C
AA-AA-AA-CCC-D
D
-------------
15,150
2,500
9,435
2,300
480
285
150
1,515,000
250,000
943,500
230,000
48,000
28,500
15,000
853,703
74,671
515,179
172,353
48,000
28,500
15,000
0
0
0
0
0
0
0
EURIBOR 3M + 0.12%
EURIBOR 3M + 0.19%
EURIBOR 3M + 0.20%
EURIBOR 3M + 0.40%
EURIBOR 3M + 0.75%
EURIBOR 3M + 3.50%
--BBB-BBB-B
CC
C
-------------
--BBB-BBB-CCC-D
D
-------------
12,308
0
10,000
950
595
455
308
1,230,800
0
1,000,000
95,000
59,500
45,500
30,800
601,900
0
405,814
60,287
59,500
45,500
30,800
0
0
0
0
0
0
0
EURIBOR 3M + 0.10%
EURIBOR 3M + 0.25%
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.75%
EURIBOR 3M + 1.25%
EURIBOR 3M + 4.00%
---------
Aaa
A3
Ba3
Caa3
AAA
A-A-CCC
---------
10,000
2,000
7,390
250
360
1,000,000
200,000
739,000
25,000
36,000
188,186
0
127,186
25,000
36,000
275,371
0
214,371
25,000
36,000
EURIBOR 3M + 0.25%
EURIBOR 3M + 0.35%
EURIBOR 3M + 1.25%
EURIBOR 3M + 2.50%
8,331,768
2,466,788
EMPRESAS HIPO TDA CAM 3, F.T.A. (*)
Series A1
Series A2
Series B
Series C
TDA CAM 7, F.T.A (*)
Series A1
Series A2
Series B
Series C
Series A
Series B
Series C
Series D
Series A1
Series A2
Series A3(G) (a)
Series B
Series C
Series A1
Series A2
Series A3
Series B
Series C
Series D
EMPRESAS HIPO TDA CAM 5, F.T.A (*)
Series A1
Series A2
Series A3
Series B
Series C
Series D
IM SABADELL EMPRESAS 1, F.T.A.
Series A1
Series A2
Series B
Series C
Market
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
€’000
Credit rating
Year
FITCH
Moody’s
Issue
S&P
DBRS
Number of
securities
Amount
Sub-total
2007
2007
2007
2008
2008
2008
2008
2008
Yield
---------
---------
AAA
A-A-B--
--AAH
-----
3,500
1,690
1,573
139
98
350,000
169,000
157,300
13,900
9,800
86,778
0
63,078
13,900
9,800
113,296
0
89,596
13,900
9,800
EURIBOR 3M + 0.25%
EURIBOR 3M + 0.21%
EURIBOR 3M + 1.25%
EURIBOR 3M + 2.50%
AAA
AA-BBB
CCC
CC
Aa1
Baa2
B1
Caa2
C
-----------
-----------
8,128
3,483
4,350
174
93
28
452,173
192,800
240,773
10,300
5,500
2,800
230,318
0
211,718
10,300
5,500
2,800
260,268
17,168
224,500
10,300
5,500
2,800
EURIBOR 3M + 0.14%
EURIBOR 3M + 0.2%
EURIBOR 3M + 0.5%
EURIBOR 3M + 0.85%
EURIBOR 3M + 3.5%
TDA CAM 10, FTA (*)
Series A1
Series A2
Series A3
Series A4
Series B
Series C
Series D
---------------
--Baa1
Baa1
Baa1
B3
C
C
--AA-AA-AA-CCC-D
D
---------------
12,369
0
8,022
1,478
1,750
464
420
235
1,236,900
0
802,200
147,800
175,000
46,400
42,000
23,500
728,469
0
413,656
92,908
110,006
46,400
42,000
23,500
0
0
0
0
0
0
0
0
EURIBOR 3M + 0.10%
EURIBOR 3M + 0.20%
EURIBOR 3M + 0.23%
EURIBOR 3M + 0.26%
EURIBOR 3M + 0.65%
EURIBOR 3M + 1.5%
EURIBOR 3M + 3.5%
FTPYME TDA 7, FTA (*)
Series A1
Series A2 (G)
Series B
Series C
Series D
-----------
A3
A3
Baa3
Caa1
C
A
A
-------
-----------
2,904
2,303
183
202
112
104
290,400
230,300
18,300
20,200
11,200
10,400
85,538
25,438
18,300
20,200
11,200
10,400
117,015
56,915
18,300
20,200
11,200
10,400
EURIBOR 3M + 0.3%
EURIBOR 3M + 0.1%
EURIBOR 3M + 0.6%
EURIBOR 3M + 1.25%
EURIBOR 3M + 4%
GC SABADELL EMPRESAS 2, F.T.A.
A1
A2
B
C
---------
---------
AAA
A-BBB-CCC
--AH
-----
10,000
2,000
7,475
400
125
1,000,000
200,000
747,500
40,000
12,500
254,499
0
201,999
40,000
12,500
341,965
0
289,465
40,000
12,500
EURIBOR 3M + 0.35%
EURIBOR 3M + 0.55%
EURIBOR 3M + 1.25%
EURIBOR 3M + 1.75%
IM SABADELL RMBS 2, F.T.A.
A
B
C
-------
-------
A-A-BBB
AAH
-----
14,000
13,650
182
168
1,400,000
1,365,000
18,200
16,800
854,645
819,645
18,200
16,800
952,850
917,850
18,200
16,800
EURIBOR 3M + 0.45%
EURIBOR 3M + 1.25%
EURIBOR 3M + 1.75%
FTPYME TDA CAM 7, FTA (*)
Series A1
Series A2
Series A3
Series A4
Series B
-----------
A3
A3
A3
Baa1
B1
-----------
AL
AL
AL
-----
10,000
6,035
1,700
1,235
630
400
1,000,000
603,500
170,000
123,500
63,000
40,000
501,337
150,776
143,391
104,170
63,000
40,000
0
0
0
0
0
0
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.35%
EURIBOR 3M + 0.50%
EURIBOR 3M + 0.75%
EURIBOR 3M + 1.50%
A1
A2 (G)
B
C
---------
---------
AAA
A-A-BB--
AAA
AAH
-----
10,000
4,975
4,025
650
350
1,000,000
497,500
402,500
65,000
35,000
330,419
0
230,419
65,000
35,000
436,999
0
336,999
65,000
35,000
EURIBOR 3M + 0.45%
EURIBOR 3M + 0.50%
EURIBOR 3M + 1.25%
EURIBOR 3M + 1.75%
--A+
A+
A+
A-BB----
--Baa1
Baa1
Baa1
Baa1
B3
C
---------------
---------------
13,812
0
5,179
4,032
2,291
330
1,320
660
1,381,200
0
517,900
403,200
229,100
33,000
132,000
66,000
1,227,873
0
402,279
379,156
215,438
33,000
132,000
66,000
0
0
0
0
0
0
0
0
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.40%
EURIBOR 3M + 0.50%
EURIBOR 3M + 0.60%
EURIBOR 3M + 0.75%
EURIBOR 3M + 1.5%
EURIBOR 3M + 3.5%
---------
---------
A-A-A-B
AAA
AAA
-----
5,000
2,350
1,941
393
316
500,000
235,000
194,100
39,300
31,600
163,645
0
92,745
39,300
31,600
230,610
0
159,710
39,300
31,600
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.50%
EURIBOR 3M + 1.25%
EURIBOR 3M + 1.75%
1,440,000
1,411,200
14,400
14,400
936,367
907,567
14,400
14,400
1,033,951
1,005,151
14,400
14,400
EURIBOR 3M + 0.40%
EURIBOR 3M + 0.85%
EURIBOR 3M + 1.25%
1,740,000
1,409,400
208,800
121,800
613,797
283,197
208,800
121,800
843,431
512,831
208,800
121,800
EURIBOR 3M + 0.35%
EURIBOR 3M + 1.0%
EURIBOR 3M + 1.50%
14,345,456
6,797,173
TDA 29, FTA (**)
Series A1
Series A2
Series B
Series C
Series D
Series A1
Series A2
Series A3
Series A4
Series B
Series C
Series D
IMFTGENCAT SABADELL 4, F.T.A.
A1
A2 (G)
B
C
Market
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
2008
2011
2,466,788
2007
IM FTGENCAT SABADELL 3, F.T.A.
Series AS
Series AG (b)
Series B
Series C
2012
8,331,768
AIAF
195
2008
2008
Sub-total
IM SABADELL RMBS 3, F.T.A.
A
B
C
-------
Baa1
Baa1
Ba2
-------
AAH
-----
14,400
14,112
144
144
A
B
C
-------
A3
A3
Ba2
-------
AH
-----
17,400
14,094
2,088
1,218
AIAF
AIAF
€’000
Credit rating
Year
FITCH
Moody’s
Issue
S&P
DBRS
Number of
securities
Amount
Sub-total
2008
2009
2009
2009
2009
2010
2010
2010
2011
2011
TDA 31, FTA (**)
Series A
Series B
Series C
2011
6.797.173
Yield
-------
Baa1
Baa2
Caa2
AA-BBB
BB--
-------
3.000
2.805
60
135
300.000
280.500
6.000
13.500
176.651
157.151
6.000
13.500
197.439
177.939
6.000
13.500
EURIBOR 3M + 0.3%
EURIBOR 3M + 0.6%
EURIBOR 3M + 1.2%
--A+
A+
A+
A+
BB
---
--A3
A3
A3
Ba1
B3
C
---------------
---------------
15.960
0
6.650
4.180
2.280
570
1.520
760
1.596.000
0
665.000
418.000
228.000
57.000
152.000
76.000
1.452.550
0
521.550
418.000
228.000
57.000
152.000
76.000
0
0
0
0
0
0
0
0
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.40%
EURIBOR 3M + 0.50%
EURIBOR 3M + 0.60%
EURIBOR 3M + 0.75%
EURIBOR 3M + 1.5%
EURIBOR 3M + 3.5%
GC SABADELL EMPRESAS 4, F.T.A.
A
B
C
-------
A3
A3
Ba2
-------
AAA
-----
6.200
5.258
251
691
620.000
525.800
25.100
69.100
236.243
142.043
25.100
69.100
327.003
232.803
25.100
69.100
EURIBOR 3M+0.55%
EURIBOR 3M+1.25%
EURIBOR 3M+1.75%
A1
A2
B
-------
-------
AAA
BB
B+
--AH
---
9.000
1.500
5.340
2.160
900.000
150.000
534.000
216.000
234.520
0
18.520
216.000
381.484
0
165.484
216.000
EURIBOR 3M+0.40%
EURIBOR 3M+0.50%
EURIBOR 3M+1.50%
TDA EMPRESAS 1, FTA (**)
Series A
Series B
-----
Aa3
B3
A+
---
-----
2.750
2.145
605
275.000
214.500
60.500
52.124
0
52.124
125.887
65.387
60.500
EURIBOR 3M + 0.3%
EURIBOR 3M + 1.5%
A1 (G) (a)
A2 (G) (a)
A3
B
---------
---------
A-A-A-BB
AH
AH
AH
BBH
10.000
2.500
3.900
1.600
2.000
1.000.000
250.000
390.000
160.000
200.000
555.786
72.314
123.472
160.000
200.000
904.550
154.550
390.000
160.000
200.000
EURIBOR 3M+1.30%
EURIBOR 3M+1.35%
EURIBOR 3M+1.40%
EURIBOR 3M+1.50%
TDA EMPRESAS 2, FTA (**)
Series A
Series B
-----
A3
Baa1
BBB
---
-----
2.000
1.563
437
200.000
156.300
43.700
64.485
20.785
43.700
140.904
97.204
43.700
EURIBOR 3M + 0.3%
EURIBOR 3M + 1.5%
Series A1
Series A2
-----
--A3
-----
--AAH
4.160
0
4.160
416.000
0
416.000
199.060
0
199.060
0
0
0
EURIBOR 3M + 0.30%
EURIBOR 3M + 0.35%
A1
A2 (G)
B
-------
-------
AA-AA----
AAA
AAA
BH
15.000
2.950
6.500
5.550
1.500.000
295.000
650.000
555.000
1.176.154
0
621.154
555.000
1.500.000
295.000
650.000
555.000
EURIBOR 3M+0.40%
EURIBOR 3M+0.30%
EURIBOR 3M+1.00%
EMPRESAS TDA CAM 10 (*)
Series A
Series B
-----
-----
-----
-----
7.500
6.750
750
750.000
675.000
75.000
530.281
455.281
75.000
0
0
0
EURIBOR 3M+0.90%
EURIBOR 3M+1.10%
19.023.310
10.374.440
Series A1
Series A2
Series A3
Series A4
Series B
Series C
Series D
Total
(*)
(**)
(a)
(b)
2012
14.345.456
Market
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
AIAF
Banco CAM current issuance programmes.
Banco Guipuzcoano current issuance programmes.
Guaranteed by the Spanish Government.
Guaranteed by the Catalan Government.
Of the total outstanding liability, in 2012 a total of €5,292,960,000 (2011: €1,575,889,000) was accounted
for by bonds associated with assets not removed from the balance sheet (reported in the balance sheet under
debt certificates including bonds (see note 21) and deposits from other creditors and deposits from other
creditors.
196
Nota 11. Changes in fair value of hedged items in portfolio hedges of interest rate risk
At 31 December 2012 the balances under this heading on the asset and liability sides of the consolidated balance
sheet were made up of gains and losses on items covered by fair value hedges of the interest rate risk on portfolios
of financial instruments. At the end of the year losses on hedged items were €301,075,000 (€449,245,000 at 31
December 2011) but these losses were almost entirely offset by gains on their associated hedging derivatives.
Nota 12. Hedging derivatives (assets and liabilities)
€’000
2012
Assets
Liabilities
2011
Assets
Liabilities
Micro-hedges:
Fair value hedges
Cash flow hedges
4,415,684
145,184
97,701
178,502
16,641
7,322
45,660
9,626
Macro-hedges:
Fair value hedges
Cash flow hedges
372,138
0
81,790
78,232
393,722
0
11,086
44,773
Total
4,933,006
436,225
417,685
111,145
Euro denominated
4,933,006
0
435,930
295
417,685
0
109,317
1,828
Total
4,933,006
436,225
417,685
111,145
The main types of interest rate risk hedging contract entered into by the group are fixed/variable interest rate
swaps. The most usual valuation technique used with these swaps is the discounted cash flow method.
As a result of the Banco CAM acquisition, Banco Sabadell duly recognized a fair value hedging derivative linked
to a portfolio of assets (loans, real estate or other assets surrendered up in payment of loan arrears or acquired
from associated undertakings engaging in real estate development or managing repossessed properties) under the
Asset Protection Scheme granted by Spain’s Bank Deposit Guarantee Fund (see note 2).
The group enters into interest rate hedging contracts as part of its policy for managing interest rate risk (see
note 37 on financial risk management). The main types of hedging instrument used are described below:
The fair values of these items of the consolidated balance sheet at 31 December 2012 and 2011 are analysed as
follows:
a) Fair value hedges:
The items covered are as follows:
• Capital market funding operations by the group, resulting in debt issues at fixed rates of interest. At 31
December 2012 and 2011 the fair values of swaps covering these items showed a net loss of €293,830,000
and €386,118,000 respectively.
• Deposit products offered through the group’s branch network at fixed rates of interest. At 31 December
2012 and 2011 the fair values of swaps covering these deposits showed a net gain of €11,487,000 and
€18,723,000 respectively.
• Individual loans by the group at fixed rates of interest. At 31 December 2012 and 2011 the fair value of swaps
covering these items showed a net loss of €80,266,000 and a net gain of €18,333,000 respectively.
197
The majority of the group’s hedging operations were carried out by Banco de Sabadell, S.A.
Gains and losses recognized during the year on hedging instruments and on hedged items are shown in the
following table:
€’000
2012
Hedged
items
Hedging
instruments
Hedged
items
Micro-hedges
Fixed-rate assets
Exchange rate hedges
Capital market
Fixed-rate liabilities
(61,098)
(44,045)
0
(8,961)
(8,092)
59,951
43,046
0
8,579
8,326
(9,636)
(2,430)
49
5,508
(12,763)
9,382
1,953
(49)
(5,508)
12,986
Macro-hedges
Capital market and fixed-rate liabilities
(36,152)
(36,152)
55,693
55,693
61,764
61,764
(55,345)
(55,345)
Total
(97,250)
115,644
52,128
(45,963)
b) Cash flow hedges:
Amounts recognized in consolidated equity in the year and amounts derecognized from consolidated equity and
taken to the consolidated income statement for the year are reported in the consolidated statement of changes in
total equity for the Banco Sabadell group.
In the case of interest rate micro-hedges, the expected cash flows are considered likely to occur in the near
term.
The group enters into cash flow macro-hedges to reduce net interest income volatility caused by fluctuations in
interest rates over a one-year time horizon. The macro-hedge is thus a hedge of future cash flows related to the
net exposure of a portfolio made up of highly probable liabilities with exposures similar to interest rate risk. At the
present time the hedging instruments used for this purpose are interest rate swaps.
Nota 13. Non-current assets held for sale and liabilities associated with non-current assets held for sale
The components of this item of the consolidated balance sheet at 31 December 2012 and 2011 were as follows:
€’000
Assets
Land and buildings for own use
Repossessed assets (*)
Other assets
Total non-current assets held for sale
Liabilities associated with non-current assets held for sale
198
2011
Hedging
instruments
2012
2011
3,241,006
143,383
3,087,629
9,994
594,880
29,809
489,121
1,902
(1,184,752)
(63,999)
2,056,254
530,881
0
0
(*) For details of repossessed assets subject to APS protection see note 18.
The above totals are made up of non-current assets and liabilities whose book values are expected to be
recoverable on disposal within one year of the balance sheet date.
Repossessed assets comprise assets received from borrowers or others debtors of the Bank in full or part
settlement of financial assets representing claims against those borrowers or debtors.
The fair values of repossessed properties classified as non-current assets held for sale at 31 December 2012
totalled €2,365,985,000.
Changes in the group’s non-current assets held for sale in 2012 and 2011 were as follows:
€’000
465,214
15,783
304,708
(56,460)
(134,365)
Additions/reductions due to changes in basis of consolidation
Additions
Transfers
594,880
2,053,763
0
1,727,733
(1,106,548)
(28,822)
3,241,006
Impairment provisions:
Additions
Transfers
113,300
11,924
17,108
(18,346)
(59,987)
Additions
Transfers
63,999
1,345,168
0
419,376
(489,495)
(154,296)
1,184,752
530,881
Net balance at 31 December 2012
2,056,254
Cost:
Additions
Transfers
199
Nota 14. Investments
The following table shows the composition of, and changes in, this item at 31 December 2012 and 2011.
€’000
813,492
Profit (loss) for the period
Acquisition or increase in capital
Disposal or dissolution
Payment of dividends
Transfer
Impairment, valuation adjustments, translation differences and other movements
52,641
21,407
(2,460)
(48,003)
(30,703)
(109,440)
696,934
Acquisition of Banco CAM group
Profit (loss) for the period
Acquisition or increase in capital
Disposal or dissolution
Payment of dividends
Transfer
Impairment, valuation adjustments, translation differences and other movements
200,196
(20,706)
8,972
(233,796)
(41,527)
257,653
(121,390)
746,336
Note: For details of undertakings added to and removed from the consolidated accounts, see note 2.
The goodwill associated with investments at 31 December 2012 was €55,906,000.
Nota 15. Tangible assets
The composition of this item of the consolidated balance sheet at 31 December 2012 and 2011 was as follows:
€’000
2012
Cost
Impairment
Net value
Property, plant & equipment
2,742,680
(1,198,249)
(93,946)
For own use:
2,631,137
(1,158,628)
(93,946)
Computer and related equipment
Furniture, vehicles & other equipment
Buildings
Cost
Depreciation
and
amortization
Impairment
1,450,485
1,583,306
(699,536)
(5,835)
877,935
1,378,563
1,455,226
(656,697)
(5,835)
792,694
Net value
481,999
(376,898)
0
105,101
263,889
(196,153)
0
67,736
1,113,966
(629,256)
0
484,710
667,604
(375,655)
0
291,949
331,522
953,950
(151,431)
(93,946)
708,573
422,241
(84,884)
(5,835)
Building work in progress
50,490
(253)
0
50,237
73,605
0
0
73,605
Other
30,732
(790)
0
29,942
27,887
(5)
0
27,882
111,543
(39,621)
0
71,922
128,080
(42,839)
0
85,241
Investment property (*)
1,514,915
(66,819)
(263,543)
1,184,553
291,015
(12,640)
(49,429)
228,946
Buildings
1,504,883
(66,139)
(263,475)
1,175,269
281,878
(12,290)
(49,276)
220,312
10,032
(680)
(68)
9,284
9,137
(350)
(153)
8,634
4,257,595
(1,265,068)
(357,489)
2,635,038
1,874,321
(712,176)
(55,264)
1,106,881
200
2011
Depreciation
and
amortization
Rural property, building plots and sites
Total
(*) For details of assets subject to APS protection see note 18.
Changes in tangible assets for 2012 and 2011 are shown in the following table:
€’000
Investment
properties
Leased out
under operating
leases
Total
Cost:
Additions
Retirements & disposals
Changes in basis of consolidation
Other
528,632
38,286
(5,367)
0
(37,818)
951,574
72,890
(85,922)
0
(7,049)
228,411
112,799
(13,156)
0
(37,039)
141,461
28,021
(42,371)
0
969
1,850,078
251,996
(146,816)
0
(80,937)
Additions
Other
523,733
542,544
51,013
(7,034)
(774)
(74,310)
931,493
594,298
94,088
(50,687)
(214)
26,987
291,015
969,216
230,145
(17,013)
2,986
38,566
128,080
0
22,664
(40,758)
0
1,557
1,874,321
2,106,058
397,910
(115,492)
1,998
(7,200)
1,035,172
1,595,965
1,514,915
111,543
4,257,595
Accumulated depreciation:
Additions
Other
83,379
7,208
(3,053)
0
(2,645)
585,953
67,999
(80,161)
0
(1,983)
6,930
4,052
(446)
0
2,104
45,922
21,424
(25,201)
0
694
722,184
100,683
(108,861)
0
(1,830)
Additions
Other
84,889
65,185
11,056
(4,319)
(21)
(4,316)
571,808
393,584
77,022
(38,527)
460
1,807
12,640
36,996
15,676
(1,882)
1,082
2,307
42,839
0
19,142
(23,155)
0
795
712,176
495,765
122,896
(67,883)
1,521
593
152,474
1,006,154
66,819
39,621
1,265,068
5,894
212
(165)
0
(106)
0
518
(451)
0
(67)
40,451
35,140
(26,705)
0
543
0
0
0
0
0
46,345
35,870
(27,321)
0
370
5,835
93,970
14,159
(15,351)
0
(4,667)
0
0
6
0
0
(6)
49,429
194,594
25,686
(5,885)
0
(281)
0
0
0
0
0
0
55,264
288,564
39,851
(21,236)
0
(4,954)
Impairment losses:
Additions
Other
Additions
Other
93,946
0
263,543
0
357,489
433,009
359,685
228,946
85,241
1,106,881
788,752
589,811
1,184,553
71,922
2,635,038
Furniture &
equipment
Land and
buildings
201
The fair value of properties for the group’s own use at 31 December 2012 was €1,301,947,000 (€743,461,000
in 2011). Fair values of properties have been estimated on the basis of assessed values certified by firms of
valuers from the Bank of Spain’s special register of valuation firms according to criteria set out in the Economy
Ministry’s Order ECO/805/2003 on the valuation of real estate and associated rights for specified financial
purposes.
The gross value of own-use tangible assets that was fully depreciated and remained in use at 31 December
2012 and 2011 amounted to €503,996,000 and €279,788,000 respectively.
The net book cost of tangible assets of foreign operations was €60,768,000 at the close of 2012 (€57,146,000
at the close of 2011).
In 2010 the group completed arrangements for the sale of 379 properties for a total of €410 million, realizing a
net profit of €252,737,000. As part of the same legal arrangement the Bank leased back the properties from the
purchaser under operating leases (with the Bank being responsible for maintenance, insurance and taxes) for a
non-cancellable term of 10 years, during which time the rent (initially fixed at €37,500 per month) will be reviewed
annually. A purchase option exercisable by the group is included in 396 of the leases; in another 14 leases no
purchase option is provided.
Rental costs recognized by the group for the year 2012 totalled €51,883,000 (€45,255,000 in 2011) and have
been recorded under “other general administrative expenses” in the income statement (note 34(f)).
In 2012 Banco Sabadell signed four operating leases on properties sold for a consideration of €5,105,000. The
leases on these properties have obligatory 15 year terms and all carry a purchase option.
The year also saw the addition of 20 operating leases from Banco CAM (which were taken over by Banco
Sabadell, S.A. when Banco CAM was merged into the Bank in December 2012). These leased properties have
obligatory terms of between 10 and 12 years and all include purchase options.
The present values of minimum future rental payments to be incurred by the Bank under all these operating
leases, that is, during the minimum term of the leases (assuming that none of the available options to renew the
lease or purchase the asset are likely to be exercised) at 31 December 2012 stood at €47,073,000 for leases with
terms of one year (2011: €39,821,000); €149,558,000 for terms from one to five years (2011: €122,315,000);
and €178,445,000 for terms of more than five years (2011: €145,293,000).
With regard to the “Leased out under operating leases” column of the table, the bulk of the group’s operating
lease business is carried on by BanSabadell Renting, S.A. and consists of vehicle leasing.
The fair values of assets shown in the “Investment properties” column amounted to €1,258,169,000 at the end
of 2012. Neither the rental income from these investment properties nor the associated direct costs, whether the
properties were producing rental income during the year or not, were of significance in relation to the consolidated
annual accounts.
In 1996 Banco de Sabadell, S.A., and also Banco Herrero, S.A. and Europea de Inversiones y Rentas, S.L.
(both now merged into Banco Sabadell) availed themselves of article 5 of Royal Decree Law 7/1996 of 7 June and
subsequent legislative provisions to restate their property, plant and equipment in accordance with Royal Decree
2607/1996 of 20 December. The maximum amount to which any asset could be revalued was the professionally
assessed market value of the asset. Increases in the valuations of property, plant and equipment for these
undertakings were as follows:
€’000
Increase in valuation
Banco de Sabadell, S.A.
Banco Herrero, S.A. (1)
Europea de Inversiones y Rentas, S.L. (2)
36,402
6,353
2,254
Total
45,009
(1) Banco Herrero, S.A. was merged by absorption into Banco de Sabadell, S.A. in 2002.
(2) Europea de Inversiones y Rentas, S.L. was merged by absorption into Banco de Sabadell, S.A. in 2008.
202
Of the total amount of assets affected by the restatement, €192,000 was written off for depreciation in the year
2012 for Banco de Sabadell, S.A. (2011: €208,000).
To comply with accounting requirements under the Consolidated Text of the Corporation Tax Law [Ley del
Impuesto sobre Sociedades], article 93.1 sections a) and c), in relation to mergers that had taken place, as of the
reporting date, between Banco de Sabadell, S.A. and Solbank SBD, S.A., Banco Herrero, S.A., Banco de Asturias,
S.A., BanSabadell Leasing EFC, S.A., Solbank Leasing EFC, S.A., BanAsturias Leasing EFC, S.A., Banco Atlántico,
S.A., Banco Urquijo, S.A., Europea de Inversiones y Rentas S.L., Banco CAM, S.A., Banco Guipuzcoano, S.A.,
BS Profesional and Axel Group, data are available showing the years in which amortizable assets were acquired
by the companies being merged. Also available are detailed lists of acquired assets that have been recorded in
the accounting records of Banco Sabadell, S.A. at values that were at variance with those shown for the merged
undertakings prior to their being merged and showing the two values; the amortization charges, and the impairmentrelated value adjustments entered in the accounting records of acquirer and acquirees.
Nota 16. Intangible assets
The composition of this item at 31 December 2012 and 2011 was as follows:
€’000
2011
Goodwill:
Axel Group, S.L.
Sabadell Corporate Finance, S.L.
Banco Urquijo Sabadell Banca Privada, S.A.
BanSabadell Fincom, E.F.C., S.A.
BanSabadell Profesional, S.L.
Eólica Sierra Sesnández, S.L.
Grupo Banco Guipuzcoano (1)
Jerez Solar, S.L.
Sabadell United Bank, N.A. (1) (2)
827,931
1,128
0
7,858
473,837
4,923
984
0
285,345
2,930
50,926
823,815
1,128
7,858
0
473,837
4,923
984
1
285,345
2,873
46,866
Other intangible assets:
With finite useful lives:
Contractual relations with customers (Banco Guipuzcoano)
Contractual relations with customers and brand name (Banco Urquijo)
Private banking business, Miami
Contractual relations with customers (Sabadell United Bank)
Computer software purchase costs
Other deferred charges
337,141
337,141
44,819
17,705
22,122
20,304
207,547
24,644
198,346
198,346
48,917
30,326
24,140
24,149
61,177
9,637
1,165,072
1,022,161
Total
2012
(1) See note 2.
(2) Includes the goodwill arising on taking over the assets and liabilities of Lydian Private Bank & Trust.
Goodwill
Banco Urquijo
To measure the goodwill in Banco Urquijo, the cost of the business combination was determined from the fair
values of the assets surrendered, the liabilities incurred, any potential income and cost synergies identified, and
the costs attributable to the business combination. From a comparison of the cost of the business combination
with the net fair value of the assets, liabilities and contingent liabilities of the acquired undertaking, a difference of
€473,837,000 arose and was recognized in assets as goodwill. In measuring assets at their fair values, increases
in property values were recognized for a total of €80,690,000 (€61,410,000 after tax) and intangible assets were
identified with a value of €78,587,000 (€54,598,000 after tax).
This goodwill was then allocated to the cash-generating units (CGUs) thought likely to benefit from the synergies
identified. These were the Private Banking CGU, the Commercial Banking CGU, the Business Banking CGU and
Other CGUs. Synergies that could not be allocated to any one CGU because of limitations in the historical data
available for the acquired undertaking were assigned to all CGUs. In 2009 the goodwill for the Business Banking
CGU was assigned to the Commercial Banking CGU and the newly created Corporate Banking CGU, in line with the
group’s current business model.
At the end of 2012 the Bank made an assessment, on a recoverable value basis, of whether there were any
indications of impairment in the goodwill associated with Banco Urquijo. The assessment showed there had been
no impairment in the value of the goodwill.
The valuation method used was to estimate the present value of future distributable net profits associated
with the business carried on by Banco Urquijo over a projection period of 5 years (up to 2017) and to calculate a
terminal value based on a nil growth rate in perpetuity. The key variables on which the financial projections were
built were: growth in net interest income (determined on the basis of forecast business volumes and rates of
interest), changes in other income and expense items, and capital ratios.
Forecasts were based on a steadying of the Spanish economy from the second half of 2013 thanks to a more
benign financial environment, although activity will remain weak. A tight fiscal policy and ongoing private sector
deleveraging will continue to hold back domestic demand. Moreover, real estate asset prices will continue to
decline and this will have a knock-on effect on families’ net worth.
203
204
Exporters, however, will continue to make a positive contribution to economic growth. In these conditions the
deficit on current account will continue to show improvement and should be close to balance by the end of the year.
In the labour market, the absence of economic growth will cause further falls in employment and the numbers of
unemployed will remain at a high level.
On the prices front, inflation will remain above the ECB target rate. The continuing impact on prices of fragile
domestic demand will be offset by increases in officially-set prices and the effect of taxes such as VAT. Finally, the
Spanish authorities will request a precautionary credit line from Europe, which will not in the end be used; however,
the ECB will activate its programme of government debt purchases (OMT).
On the interest rate front, in 2013 the European Central Bank will not alter its benchmark rate (0.75%) or its
marginal deposit rate (0.0%) in a context of economic fragility and in the absence of inflationary pressures in the
medium term.
However, the ECB will activate its new programme of government debt purchases (OMT) and act as the de facto
lender of last resort to the more solvent countries.
In the longer term, the ECB will gradually increase interest rates to levels closer to monetary neutrality.
The present value of future distributable income flows used to measure value in use was calculated taking the
discount rate as the cost of Banco Sabadell’s capital (Ke) from the standpoint of a market participant. To do this
the Capital Asset Pricing Model (CAPM) was used.
In applying this method discount rates of between 10.9% and 11.3% were used, depending on the CGU that was
being valued.
The annualized growth rates (CAGRs) used for lending and deposit-taking in the projection period were between
-2% and 5%, depending on the particular analysis being carried out for each CGU.
A sensitivity analysis was conducted for key valuation variables; here again, there was no indication of any
impairment. The variables on which the analysis was performed were: cost of capital (up by more than 1%),
regulatory core capital, perpetuity growth rate, changes in net interest income and increases in the recurring cost
of risk.
Under the Spanish Corporation Tax legislation [Ley del Impuesto de Sociedades] this goodwill is not tax
deductible.
Banco Guipuzcoano
The goodwill arising in Banco Guipuzcoano was valued at the difference between the fair value of the shares and
other securities paid (Banco Sabadell ordinary shares and subordinated bonds mandatorily convertible to shares in
Banco Sabadell) as of 24 November 2010 when control passed to the Bank — a total of €613,479,000 — and the
estimated fair value of the acquired assets and liabilities.
This goodwill was assigned to the Commercial Banking CGU and reflects the future income generation potential
of the acquired assets and liabilities, the value of the potential cost and income synergies identified and the costs
associated with the business combination.
Under current accounting rules the period allowed for completion of a final accounting for a business
combination is one year from the date of taking control. As a result of this accounting process, the fair values
of the acquired assets and liabilities, and of the goodwill associated with the business combination, were
included in the financial statements for the year to 31 December 2011. These values were €328,134,000 and
€285,345,000 respectively.
A difference between the fair values and the carrying values of assets and liabilities net of tax was recognized
and measured at €298,311,000. This is attributable mainly to the loan portfolio and the real estate portfolio.
Intangible assets amounting to €54,862,000 were also identified; these related to core deposits and mutual fund
management.
To determine the fair value of the loan portfolio, a range of estimated expected loss ratios were applied to the
portfolio. The estimated ratios were determined according to standard market procedures and having regard to the
nature of the loans and of any collateral or other security.
The fair value of the real estate assets taken over by the group was determined from observed percentage falls
in market values. These percentages were determined on the basis of the length of time the assets had remained
on the balance sheet, their use, their location and their status from the planning/development point of view.
At the end of 2012 the Bank made an assessment, on a recoverable value basis, of whether there were
indications of impairment in the goodwill associated with Banco Guipuzcoano. The economic assumptions used to
derive interest rates were the same as those described above for Banco Urquijo. The assessment showed there
had been no impairment in the value of the goodwill.
The valuation method used was to estimate the present value of future distributable net profits associated with
the business carried on by the bank over a projection period of 5 years (up to 2017) and to calculate a terminal
value based on a nil growth rate in perpetuity.
discount rate as the cost of capital to Banco Sabadell (Ke) from the standpoint of a market participant. To do this
the Capital Asset Pricing Model (CAPM) was used.
In applying this method a discount rate of 10.9% was employed.
The impairment test on the associated goodwill was validated by an independent expert.
A sensitivity analysis was conducted for key variables affecting valuation; again, there was no indication of
any impairment. The variables on which the analysis was performed were: cost of capital (up by more than 1%),
regulatory core capital, perpetuity growth rate, changes in net interest income and increases in the recurring cost
of risk.
As of 31 December 2012 this goodwill was not tax deductible under the applicable tax legislation.
Goodwill arising on acquisition of assets and liabilities of Lydian Private Bank
The goodwill arising on the acquisition of assets and liabilities of Lydian Private Bank was valued at the difference
between their carrying value at the date on which control was taken (19 August 2011) and the estimated fair or
market values of those assets and liabilities.
Current regulations allow a period of one year from the time control of the acquiree is taken to complete
a final accounting for the business combination. As a result of the accounting process estimates of the fair
values of the acquired assets and liabilities – USD 1,458,223,000 (€1,126,998,000) and USD 1,607,218,000
(€1,242,150,000) respectively – and of the goodwill associated with the business combination were included in the
financial statements for the year to 31 December 2011.
A difference between the fair values and the carrying values of the assets and liabilities, net of tax, arose and
was measured at USD 100,000 (€76,000). The difference originated mainly from the loan book and an amount to
be received from the Federal Deposit Insurance Corporation (FDIC) under the terms of the asset protection scheme
agreed with the FDIC. In addition, intangible assets valued at USD 3,059,000 (€2,318,000) were identified; these
were associated with core deposits and the management of customer investment portfolios.
To determine the fair value of the loan book, a range of expected loss ratios was applied to loans in accordance
with market standards. These were determined mainly according to the nature of the loans, the collateral provided
and the expected future cash flows. The premises were the same as those used with the FDIC to determine the fair
value of the assets and the terms of the asset protection agreement.
At the close of 2012 the Bank carried out an assessment of whether there were any indications of impairment to
the goodwill in the acquired assets of Lydian Private Bank and to make an estimate of their recoverable value. The
results of the assessment showed that there had been no loss in the value of the goodwill.
The valuation method used was to estimate the present value of future distributable net profits associated with
the business carried on by the bank over a projection period of 5 years (up to 2015) and to calculate a terminal
value based on a nil growth rate in perpetuity.
discount rate as the cost of capital to the bank from the standpoint of a market participant. To do this the capital
asset pricing model (CAPM) was used. The discount rate established according to this method was 12.6%.
In 2010, within the legally-permitted time, a final accounting for the business combination was completed. To
value the goodwill in MUNB, the cost of the business combination was calculated based on the fair values of the
assets and liabilities acquired. From a comparison of the cost of the business combination with the net fair values
of the assets and liabilities a difference of USD 41,314,000 (€30,174,000) arose and was recorded in assets as
goodwill.
The discount rate used in the valuation was calculated using the capital asset pricing model (CAPM) and was
16.0%. The task of valuing the acquired assets and liabilities and allocating the purchase consideration was
undertaken by an independent valuer.
205
Banco Urquijo
Under the “other intangible assets” heading, the main intangibles associated with the purchase of Banco Urquijo
were the values of contractual rights under agreements with customers taken over from Banco Urquijo in relation
to certain products and services (OEICs, investment and pension funds, credit/debit cards, short-term loans,
brokerage and custody services), the values of deposits, and the value of the Banco Urquijo brand. These assets
were valued by the income (discounted cash flow) method, with the multi-period excess earnings technique being
used for income from contractual relations and deposits, and the price premium technique to measure the brand
value.
These intangible items have finite useful lives of 12 years for Private Banking customers, seven years for
Commercial Banking customers and five years for other categories. They are being amortized over these lives on a
straight-line basis in a way similar to that used for tangible assets.
Private Banking business, Miami
The intangibles associated with the 2008 acquisition of the Miami private banking business include the value of
contractual arrangements arising from customer relationships transferred along with the business and consisting
mainly of short-term loans and also of deposits. As required by the accounting rules, a final accounting for the
business combination resulting from this acquisition was completed in the course of 2009. The final accounting
identified and recognized intangible assets with a total value of €29,495,000. The assets are being amortized over
a period of 15 years from creation and were valued at USD 28,558,000 (€21,645,000) as of 31 December 2012.
Caja de Ahorros del Mediterráneo, Miami branch
The intangible assets associated with the 2012 acquisition of the business of the Miami branch of Caja de Ahorros
del Mediterráneo included contractual rights arising from customer relationships, relating mainly to deposits,
handled by the branch. As required by applicable regulations, during 2012 a final accounting for these deposits was
put in hand. This involved identifying and accounting for intangible assets worth USD 620,000 (€470,000). These
assets are being amortized over the 10 years following their creation and were valued at USD 589,000 (€446,000)
as of 31 December 2012.
206
Banco Guipuzcoano
The intangible assets associated with the acquisition of Banco Guipuzcoano are made up largely of the value
of rights under contracts with customers from Banco Guipuzcoano for core (demand) deposits and mutual
funds. The core deposits were valued according to the income approach, using the cost saving method. The
fair value was determined, in most cases, by estimating the net present value of the cash flows generated
by the lower cost of core deposits compared with alternative funding sources. The mutual fund management
was valued, by the income approach using the excess profit method. The fair value was determined, in most
cases, by estimating the net present value of the cash flows in the form of commissions from the distribution of
mutual funds. These assets are to be amortized over a period of 10 years from the date of acquisition of Banco
Guipuzcoano.
Intangible assets amounting to USD 35,051,000 (€25,600,000) were identified. These consist of core deposits
and conceptually their value derives from the fact that existing customers are enabling the bank to obtain funding
at below market rates. These are intangibles with finite lives since it can be assumed that customer accounts
will be closed over time as customers change address, die or move to another bank. To determine their value,
therefore, a customer loss rate was set which would vary, according to the type of deposit, from 9% to 20% per
annum. The benefit of the existing deposit base is equal to the present value of the cash flows calculated as the
difference between maintaining the existing deposits and replacing them with alternative sources of funds. These
assets are being amortized over a period of 10 years from creation and their value at 31 December 2012 was USD
24,682,000 (€18,707,000).
For all the intangible assets described above indications of impairment were found to exist, and a comparison
of actual performance with initial valuation assumptions was made for the variables most likely to cause
impairment. These variables are: possible loss of customers, average balance per customer, average gross
income, assigned cost: income ratio, etc. At 31 December 2012 there was no need to make any charge for
impairment.
Software purchase costs comprise mainly the capitalized costs associated with subcontracted IT work and the
purchase of software licences.
Changes in goodwill for the years 2012 and 2011 were as follows:
€’000
Additions
Write-downs and impairments
Other
Impairment
Total
(1,221)
748,622
13,469
0
62,163
(439)
0
0
13,030
0
62,163
825,475
(1,660)
823,815
5,063
0
(1,004)
0
0
57
5,063
0
(947)
829,534
(1,603)
827,931
Changes in other intangible assets in 2012 and 2011 were as follows:
Additions
Other
Goodwill
749,843
€’000
Depreciation and
amortization
Impairment
Total
315,247
(227,792)
(4,776)
82,679
0
66,862
(4,221)
79,942
0
(30,234)
3,467
10
0
0
0
(159)
0
36,628
(754)
79,793
457,830
(254,549)
(4,935)
198,346
Additions
Other
348,636
(343)
139,346
(10,519)
141,896
(334,888)
343
(34,027)
9,753
(121,455)
0
0
0
33
20
13,748
0
105,319
(733)
20,461
1,076,846
(734,823)
(4,882)
337,141
Additions
Other
Balance at 31 December 2012 (*)
(*) Includes transfers of assets totalling €53 million from non-current assets held for sale.
The gross value of other intangible assets that were still in use and had been fully amortized at 31 December
2012 and 2011 totalled €297,788,000 and €226,792,000 respectively.
Cost
Nota 17. Other assets
The composition of other assets at 31 December 2012 and 2011 was as follows:
207
€’000
2012
2011
Inventories (*)
Other
3,709,485
330,378
2,238,784
155,697
Total
4,039,863
2,394,481
(*) For details of repossessed assets subject to APS protection see note 18.
Changes in inventories in 2012 and 2011 were as follows:
€’000
Additions
Reductions
Transfers
Impairments charged to income statement
Additions
Reductions
Transfers
Impairments charged to income statement
Land
Real estate
developments
Other
Total
1,052,165
542,138
2,455
1,596,758
409,178
(158,021)
78,404
(52,509)
745,260
(313,474)
148,640
(214,113)
13
0
(7)
(1,345)
1,154,451
(471,495)
227,037
(267,967)
1,329,217
908,451
1,116
2,238,784
453,644
948,702
(70,174)
(70,249)
(508,670)
640,920
797,133
(722,934)
(38,956)
34,560
4,876
22
(128)
(1,427)
3,382
1,099,440
1,745,857
(793,236)
(110,632)
(470,728)
2,082,470
1,619,174
7,841
3,709,485
The fair value of inventories stood at €4,753 million at 31 December 2012 (€2,715 million at 31 December
2011); 59.50% of this amount was based on appraisals more than 12 months old.
At 31 December 2012 the total value of inventories subject to a mortgage or other charge was €9,594,000.
Nota 18. Finance for construction and real estate development - anticipated capital market funding
requirements
Finance for construction and real estate development
Details of finance for construction and real estate development, along with associated provisions, are given in the
following table:
€Mn.
31/12/2012
provided by credit institutions in the group (Spanish
operations) (1)
Of which: Doubtful
Of which: Sub-standard
Gross
amount
Of which:
APSprotected
Excess
value of
security
Of which: Provision cover
APSindividually
protected
determined
Of which:
APSprotected
17,908
8,812
5,338
7,369
6,190
4,457
10,069
1,561
7,135
351
3,463
313
7,024
121
4,673
696
3,607
233
(1) The loans to which these data relate are classified according to the purpose of the loan rather than the type of business or sector of the borrower. For
example, if the borrower is: (a) a real estate company using the loan for a purpose other than construction or real estate development, the loan has not
been included in the table; or (b) a company that is not in the business of construction or real estate development but is using the loan to finance real
estate for development, the loan has been included in the table.
208
€Mn.
31/12/2011
provided by credit institutions in the group (Spanish
operations) (1)
Of which: Doubtful
Of which: Sub-standard
Gross
amount
Excess over
value of security
Provision cover
individually determined
9,402
1,575
717
2,120
1,564
379
323
482
234
(1) The loans to which these data relate are classified according to the purpose of the loan rather than the type of business or sector of the borrower. For
example, if the borrower is: (a) a real estate company using the loan for a purpose other than construction or real estate development, the loan has not
been included in the table; or (b) a company that is not in the business of construction or real estate development but is using the loan to finance real
estate for development, the loan has been included in the table.
€Mn.
Memorandum item
Assets written off
Gross amount
31/12/2012
150
31/12/2011
85
Carrying value
31/12/2012
31/12/2011
€Mn.
Memorandum item:
Total loans and advances to other debtors excluding government and local authorities
(Spanish operations)
105,515
66,931
Total assets (all operations)
Value adjustments and provisions for credit risk Generic provisions (all operations)
161,547
5,474
100,437
816
€Mn.
Of which:
APS-protected
Lending: gross amount
at 31/12/2011
1,764
630
640
Secured by mortgage
Completed buildings
Residential
Other
Buildings under construction
Residential
Other
Land
Plots prepared for development
Other land
16,145
8,147
5,842
2,305
1,476
1,151
325
6,521
5,588
934
8,182
4,306
3,074
1,232
765
654
111
3,112
2,620
491
8,762
4,340
3,295
1,045
724
620
104
3,698
3,342
356
Total
17,908
8,812
9,402
Unsecured by mortgage
Transactions recorded by credit institutions (Spanish operations): details of home purchase loans to households
provided by the group are shown in the following table:
€Mn.
31/12/2012
Gross Of which: APSamount
protected
Loans for purchase of residential property
Unsecured by mortgage
Secured by mortgage
32,655
0
32,655
1,385
0
1,385
31/12/2011
Of which: Of which: APSDoubtful
protected
2,500
0
2,500
386
0
386
Gross
amount
Of which:
Doubtful
14,288
101
14,187
468
1
467
Transactions recorded by credit institutions (Spanish operations): a breakdown of home loans secured by
mortgages, showing the group’s total exposure as a proportion of the most recent available valuation of mortgaged
property, is given in the following table:
€Mn.
31/12/2012
Gross Of which: APSamount
protected
LTV ratio
LTV ≤ 40%
40% < LTV ≤ 60%
60% < LTV ≤ 80%
80% < LTV ≤ 100%
LTV > 100%
32,655
6,337
9,704
12,072
3,640
902
1,385
261
431
504
147
42
31/12/2011
Of which: Of which: APSDoubtful
protected
2,500
385
606
940
413
156
386
89
132
102
41
22
Gross
amount
14,187
3,072
4,208
5,395
1,373
139
Of which:
Doubtful
467
57
91
241
67
11
Lending: gross amount
at 31/12/2012
Transactions recorded by credit institutions (Spanish operations): details of finance provided by the group for
construction and real estate development are shown in the following table:
209
Details of asset repossessions by group undertakings in connection with loans granted by credit institutions in
Spain are given in the following table:
€Mn.
31/12/2012
Real estate assets originating from loans to
construction firms and real estate developers
Completed buildings
Residential
Other
Residential
Other
Land
Other land
Real estate assets originating from mortgage loans to
households for the purchase of a home
Other repossessed real estate assets
Equity interests and investments in, and loans to,
companies holding repossessed assets
Total real estate portfolio
Carrying value
(gross) (*)
Provisions
(amount)
Provisions
(%)
Carrying value
(net)
7,254
3,217
44%
4,036
2,379
1,403
976
428
150
278
4,447
2,747
1,699
626
380
246
142
51
91
2,449
1,521
927
26%
27%
25%
33%
34%
33%
55%
55%
55%
1,752
1,022
730
286
99
188
1,998
1,226
772
3,594
1,197
33%
2,397
0
0
0%
0
600
321
54%
278
11,447
4,735
41%
6,711
Loans to unconsolidated associated undertakings are included in the first table in this note.
(*) €5,219 million of this amount is APS-protected (see note 2).
€Mn.
31/12/2011
Real estate assets originating from loans to
construction firms and real estate developers
Completed buildings
Residential
Other
Residential
Other
Land
Other land
Real estate assets originating from mortgage loans to
households for the purchase of a home
Other repossessed real estate assets
Equity interests and investments in, and loans to,
companies holding repossessed assets
Total real estate portfolio
Carrying value
(gross) (*)
Provisions
(amount)
Provisions
(%)
Carrying value
(net)
3,444
1,058
31%
2,385
1,097
736
361
414
197
217
1,933
1,230
703
246
169
77
114
57
57
698
425
274
22%
23%
21%
28%
29%
26%
36%
35%
39%
851
567
284
300
140
160
1,235
805
430
562
100
18%
463
0
0
0%
0
603
253
42%
350
4,609
1,411
31%
3,198
Loans to unconsolidated associated undertakings are included in the first table in this note.
210
As part of its ongoing risk management and, in particular, its policy on the construction and real estate
industries, the Bank has a number of specific policies for mitigating risk.
The chief mitigation policy is a constant monitoring of risks and reappraisal of borrowers’ continued financial
viability in the new economic environment. If the position is satisfactory the existing arrangements continue on the
basis agreed, with fresh commitments being required where appropriate in the light of changed circumstances.
With regard to real estate developments under construction, the key objective is to bring projects to completion
where it is expected that the new properties can be absorbed by the market in the short to medium term.
For land-related loans, again, the saleability of properties to be built on the site is the key consideration in
deciding on the provision of finance for construction.
Where monitoring and scrutiny of a borrower’s position do not indicate a reasonable degree of viability, the
solution may take the form of a surrender of assets in settlement of the debt and/or the purchase of assets.
Where a solution of this kind is not practicable legal proceedings will be taken, leading to repossession of the
assets.
All assets taken into the possession of the group, whether by surrender in settlement of debt or by purchase, or
as a result of legal proceedings, are managed in a very active way by the Bank’s Asset Management department
with a view to early disposal. Depending on the maturity of the real estate assets, three different strategies may be
adopted:
1. Offer for sale
A number of mechanisms designed to put completed properties (residential, commercial, industrial, parking
facilities, etc.) on the market have been set up using a variety of distribution channels and commercial agents
depending on the type, location and state of repair of each property and its status from the land/planning
viewpoint. A key role in this strategy is performed by www.solvia.es, the group’s online real estate market.
2. Mobilization:
Given the very difficult conditions surrounding the sale of building plots and buildings under construction, a
mobilization strategy has been adopted whose aim is to generate liquidity from building plots. A number of
mobilization schemes have been launched:
• Collaboration with real estate developers: this seeks to make building land available in areas of high housing
demand and allow developers to develop and sell properties.
• An investor programme: the aim of this is to develop “tertiary” sites for office, commercial and industrial use
with capital inputs from investors.
• A social housing programme: this involves developing social housing units to be let out and subsequently
sold off.
3. Development/planning status:
Land that is not yet ready for development must be managed to secure development rights. This is vital as a means
of leveraging the value of the sites and is key to any subsequent development and sale.
Assessment of liquidity requirements - funding policy
Since the onset of the financial crisis in 2007 Banco Sabadell’s funding policy has focused on generating a liquidity
gap from its trading operations, reducing the total amount of funds raised on the wholesale markets and increasing
the Bank’s liquidity position. At 31 December 2012 the effective value of the group’s liquid assets stood at
€17,585 million (€11,413 million at 31 December 2011).
In 2012 Banco Sabadell’s maturing wholesale market debt totalled €5,824 million. This was refinanced out of a
€15,451 million positive liquidity gap built up in 2012 and by capital market issues totalling €3,845 million; at the
same time, the Bank’s reserve of liquid assets was increased.
In 2013 Banco Sabadell will see maturing medium- and long-term wholesale market debt of €3,625 million.
In line with the funding strategy pursued by the Bank since 2007, it is intended that the maturing debt will be
refinanced mainly from liquid funds generated by the Bank and, to a lesser extent, by capital-raising issues on the
wholesale debt markets. Even if Banco Sabadell does not issue any debt on the capital markets, it has sufficient
reserves of liquid assets to cover its maturing debt.
Additional information on the group’s policies and strategies for issuing mortgage market securities and the
keeping of a special mortgage register is provided in note 37 on financial risk management and in note 9 on the
information required to be kept by issuers of mortgage-backed securities.
211
Nota 19. Deposits from credit institutions
Deposits from credit institutions, a liability item on the consolidated balance sheet, are analysed as follows for the
years 2012 and 2011:
€’000
2012
2011
9,779,956
8,128,791
Total
9,779,956
8,128,791
Analysis by type:
Time deposits
Other accounts
7,724,907
1,718,984
270,097
65,968
6,872,308
1,049,933
161,415
45,135
Total
9,779,956
8,128,791
Euro denominated
9,342,645
437,311
7,318,671
810,120
Total
9,779,956
8,128,791
Average annual rates of interest payable on deposits from credit institutions for the years 2012 and 2011 were
Nota 20. Deposits from other creditors institutions
212
The deposits from other creditors reported on the consolidated balance sheet at 31 December 2012 and 2011 can
be analysed as follows:
€’000
2012
2011
82,464,410
58,444,050
Total
82,464,410
58,444,050
Analysis by type:
Demand deposits
Time deposits
27,084,643
53,526,063
1,466,003
387,701
18,739,971
32,819,805
6,297,269
587,005
Total
82,464,410
58,444,050
Analysis by sector:
General government
Resident sector
Non-resident sector
2,102,538
73,058,219
6,915,952
387,701
2,983,741
49,161,785
5,711,519
587,005
Total
82,464,410
58,444,050
Euro denominated
77,653,798
4,810,612
53,958,484
4,485,566
Total
82,464,410
58,444,050
Average annual rates of interest payable on deposits from other creditors for the years 2012 and 2011 were
Nota 21. Debt certificates including bonds
Details of issues and buybacks and redemptions of debt securities by the group from 31 December 2011 to 31
December 2012 are given in the table below together with comparative information for the previous year.
€’000
31/12/2012
(+) Debt
issues
(-) Buybacks
and
redemptions
(+/-) Exchange
and other
movements
Outstanding at
31/12/2012
Debt securities issued in an EU Member
State and requiring the filing of a
prospectus
17,508,185
6,787,334
3,736,612
(2,755,266)
13,342
25,290,207
State and not requiring the filing of a
prospectus
0
0
265,944
(228,570)
(1,411)
35,963
134,910
0
0
0
(134,910)
0
17,643,095
6,787,334
4,002,556
(2,983,836)
(122,979)
25,326,170
Debt securities issued in a non-EU
Member State
Total
Outstanding at
31/12/2011
Acquisition of
Banco CAM
group
€’000
31/12/2011
(+) Debt
issues
(-) Buybacks
and
redemptions
(+/-) Exchange
and other
movements
Outstanding at
31/12/2011
State and requiring the filing of a
prospectus
19,013,612
3,079,144
(4,511,184)
(73,387)
17,508,185
State and not requiring the filing of a
prospectus
367,053
1,270,118
(1,652,334)
15,163
0
Debt securities issued in a non-EU
Member State
126,832
8,078
0
0
134,910
19,507,497
4,357,340
(6,163,518)
(58,224)
17,643,095
Total
Outstanding at
31/12/2010
213
Details of debt certificates or bonds issued by the group and recorded on the balance sheet at 31 December
2012 and 2011 are given in the table below:
€’000
Issuer
214
Rate of interest at
31.12.2012 Maturity date
Issue
currency
Date of issue
Type of security
2012
2011
Banco Guipuzcoano, S.A. (2)
CAM Global Finance SAU
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Subscribed by group companies
04.10.2006
22.05.2009
20.11.2009
02.08.2010
09.03.2011
29.09.2011
22.12.2011
29.12.2011
27.02.2012
04.05.2012
04.05.2012
24.05.2012
29.06.2012
29.06.2012
02.07.2012
25.07.2012
27.07.2012
01.08.2012
10.10.2012
10.10.2012
20.12.2012
30.11.2009
18.04.2007
05.12.2006
14.06.2007
04.06.2008
30.06.2005
15.02.2006
08.03.2006
12.11.2009
23.06.2010
01.12.2009
21.02.2012
21.02.2012
09.03.2012
Straight bonds
Straight bonds
Straight bonds
Straight bonds
Straight bonds
Straight bonds
State-guaranteed ord. bonds
Straight bonds
Straight bonds
Straight bonds
Straight bonds
Structured bonds
Straight bonds
Straight bonds
Structured bonds
Structured bonds
Structured bonds
Structured bonds
Structured bonds
Structured bonds
Structured bonds
Straight bonds
Straight bonds
Straight bonds
Structured bonds
Straight bonds
Straight bonds
Straight bonds
50,000
0
0
0
0
300,000
1,500,000
300,000
500,000
500,000
250,000
7,050
300,000
300,000
1,550
3,000
2,200
2,000
1,600
1,525
3,000
0
25,000
107,000
500,000
100,000
48,350
100,000
50,000
1,000,000
357,000
500,000
1,400,000
1,400,000
1,200,000
(5,419,652)
50,000
750,000
800,000
22,000
74,750
300,000
1,500,000
300,000
0
0
0
0
0
0
0
0
0
0
0
0
0
400,000
25,000
0
0
0
0
0
0
0
0
0
0
0
0
(1,815,000)
EURIBOR 3M + 0.14
EURIBOR 1M + 1.90
4.25%
5.44%
4.25%
4.20%
4.00%
4.25%
linked to underl. assets
4.00%
4.20%
2.38%
1.50%
EURIBOR 3M + 0.225
EURIBOR 3M + 0.15
0.058
EURIBOR 3M + 0.10
EURIBOR 3M + 0.10
EURIBOR 3M + 0.10
3.00%
3.00%
EURIBOR 6M + 0.33
4.00%
4.80%
4.50%
04.10.2016
22.05.2012
20.02.2012
02.08.2012
09.03.2012
29.03.2013
22.12.2014
29.03.2013
27.08.2013
04.05.2013
04.05.2014
19.06.2015
27.06.2013
27.12.2013
27.07.2015
25.07.2022
27.07.2015
03.08.2015
10.10.2016
10.10.2017
20.12.2019
30.11.2012
18.04.2022
05.12.2016
14.01.2013
04.06.2018
15.08.2015
15.08.2015
15.08.2015
12.11.2014
12.11.2014
01.12.2014
21.02.2015
21.07.2016
09.03.2017
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Banco de Sabadell, S.A. (1)
Banco de Sabadell, S.A. (1)
Banco de Sabadell, S.A. (ofic. Londres) (1)
Banco Guipuzcoano, S.A. (1), (2)
09.03.2010
10.03.2011
08.03.2012
25.06.2008
03.06.2010
07.06.2011
Notes
Notes
Notes
Notes (ECP)
Notes
Notes
0
679,648
2,525,765
37,374
0
16,263
(104,072)
194,192
1,910,574
0
0
51,000
146,300
(22,553)
Between 2.8% and 3.7%
Between 1% and 4.92%
Between 1.55% and 4%
Various
Various
Various
Various
Various
Various
Euro
Euro
Euro
Euro
Euro
Euro
29.04.2003
15.06.2005
19.01.2006
10.05.2006
16.05.2006
24.01.2007
20.06.2007
17.02.2009
08.05.2009
17.07.2009
31.07.2009
18.09.2009
20.01.2010
30.06.2010
10.09.2010
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
1,500,000
1,500,000
1,750,000
300,000
120,000
1,500,000
300,000
0
100,000
0
200,000
150,000
1,000,000
500,000
0
1,500,000
1,500,000
1,750,000
300,000
120,000
1,500,000
300,000
488,500
100,000
50,000
200,000
150,000
1,000,000
500,000
1,000,000
4.50%
3.25%
3.50%
4.13%
4.25%
4.25%
EURIBOR 3M + 0.05
3.50%
EURIBOR 3M + 1
3.12%
EURIBOR 3M + 1.30
EURIBOR 3M + 0.90
3.13%
EURIBOR 1M + 2.00
3.25%
29.04.2013
15.06.2015
19.01.2016
10.05.2016
16.05.2016
24.01.2017
20.06.2017
17.02.2012
08.05.2021
17.07.2012
31.07.2017
18.09.2018
20.01.2014
30.06.2013
10.09.2012
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
17,464,601
15,144,763
Sub-total
(1) A prospectus for an issue of €8,500 million has been filed with the CNMV.
(2) Now merged with Banco Sabadell.
€’000
Issuer
Date of issue
Type of security
Sub-total
2012
2011
17,464,601
15,144,763
10.12.2010
11.01.2011
11.02.2011
07.06.2011
13.07.2011
12.12.2011
29.12.2011
16.02.2012
19.09.2012
05.10.2012
28.12.2012
19.01.2011
23.01.2008
22.10.2009
27.04.2010
14.04.2011
03.05.2011
06.05.2011
19.01.2012
16.02.2012
16.02.2012
30.04.2012
10.08.2012
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Public sector bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Public sector bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Covered bonds
Public sector bonds
Public sector bonds
Covered bonds
150,000
100,000
1,200,000
200,000
50,000
150,000
500,000
1,200,000
500,000
95,000
200,000
100,000
150,000
1,000,000
30,000
1,500,000
1,500,000
1,000,000
1,000,000
500,000
450,000
500,000
400,000
(9,348,250)
150,000
100,000
1,200,000
200,000
50,000
150,000
500,000
0
0
0
0
100,000
0
0
0
0
0
0
0
0
0
0
0
(1,867,466)
BancSabadell d’Andorra, S.A.
Securitization funds
Various dates
Various dates
Ordinary bonds
Ordinary bonds
0
5,292,960
134,910
1,575,889
Valuation and other adjustments
Total
(558,141)
204,999
25,326,170
17,643,095
EURIBOR 3M + 2.35
EURIBOR 3M + 2.60
4.50%
EURIBOR 3M + 2.25
EURIBOR 3M + 2.60
EURIBOR 3M + 3.10
4.50%
3.63%
4.25%
EURIBOR 3M + 4.80
EURIBOR 3M + 4.15
EURIBOR 3M + 2.75
EURIBOR 3M + 0.14
3.38%
4.60%
4.88%
4.63%
4.75%
EURIBOR 3M + 3.5
EURIBOR 3M + 3.5
EURIBOR 3M + 3.5
EURIBOR 3M + 3.5
EURIBOR 3M + 4
10.12.2020
11.01.2019
11.02.2013
07.06.2019
13.07.2021
12.12.2021
29.12.2014
16.02.2015
19.09.2014
05.10.2022
28.12.2020
19.01.2019
23.01.2013
22.10.2014
31.07.2020
14.04.2014
03.05.2013
06.11.2013
19.01.2015
17.08.2015
17.08.2015
30.04.2015
10.08.2015
Issue
currency
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Banco CAM, S.A. (2)
Own securities
Rate of interest at
31.12.2012 Maturity date
(1) A prospectus for an issue of €8,500 million has been filed with the CNMV.
(2) Now merged with Banco Sabadell.
215
Nota 22. Subordinated liabilities
Details of subordinated liabilities issued by the group and recorded on the consolidated balance sheet at 31
December 2012 and 2011 are as follows:
€’000
Date of issue
2012
2011
Rate of
interest at
31.12.2012
25.05.2006
20.09.2006
24.02.2009
26.04.2010
25.02.2011
30.03.1999
15.02.2002
15.10.2004
21.03.2006
01.05.1992
27.04.2004
19.11.2009
16.08.2001
16.08.2002
29.09.2009
01.06.1992
15.09.1988
25.11.1988
16.02.2004
02.05.2005
29.09.2006
26.04.2007
-
217,300
23,800
11,007
424,600
40,400
21,432
0
50,000
79,400
0
1,279
17,734
9,942
5,458
34,773
15,025
618
101
9,410
88,500
92,150
94,950
(21,464)
(49,708)
353,500
49,200
500,000
500,000
40,400
250,000
30,000
50,000
125,000
62
50,000
50,000
0
0
0
0
0
0
0
0
0
0
(164,158)
25,366
0.99%
5.23%
4.50%
6.25%
4.19%
4.50%
0.00%
4.20%
1.08%
0.00%
0.44%
6.54%
0.44%
0.39%
6.80%
0.00%
2.88%
2.88%
0.34%
4.25%
1.12%
1.00%
0.00%
0.00%
1,166,707
1,859,370
Amounts
Issuer
216
Sabadell International Equity Ltd.
Guipuzcoano Capital, S.A.
Guipuzcoano Capital, S.A.
CAM Capital, S.A.U.
CAM Capital, S.A.U.
CAM Capital, S.A.U.
Banco CAM, S.A. (a)
Banco CAM, S.A. (a)
Banco CAM, S.A. (a)
Banco CAM, S.A. (a)
CAMGE Financiera E.F.C., S.A.(a)
CAM International Issues, S.A.U
CAM International Issues, S.A.U
Valuation and other adjustments
Total
Maturity/
redemption
date
25.05.2016
20.09.2016
26.04.2020
25.02.2021
15.10.2012
15.10.2014
21.03.2016
29.09.2016
26.04.2017
-
(a) Now merged with Banco de Sabadell, S.A.
Subordinated liabilities rank below the claims of all other unsecured creditors of the group. All issues are
denominated in euros.
At a meeting of the Board of Directors of Banco de Sabadell, S.A. on 13 June 2012, under powers granted
to it by a resolution of the Annual General Meeting of 31 May 2012, the decision was taken to make an offer
to holders of preferred and subordinated debt securities issued by the Banco CAM group whereby all preferred
and subordinated debt securities would be purchased for cash and the said cash automatically applied by those
accepting the purchase offer to the purchase of and/or subscription for Banco de Sabadell shares to be offered
in a simultaneous public offer for subscription/sale of newly issued shares and existing shares from the Bank’s
holding of treasury shares. In addition, those accepting the offer would be entitled to a further cash payment of up
to 24% of the nominal value of the existing shares that were purchased by way of a deferred payment. The initial
fair value of the deferred payment was estimated at €176,760,000 and has been accounted for in the balance
sheet under the “financial liabilities at amortized cost – other financial liabilities” heading.
At the end of the acceptance period for the Banco de Sabadell Public Offer for sale of/subscription for Banco
Sabadell shares addressed exclusively to holders of preferred and subordinated debt securities issued by the
Banco CAM group, the debt securities to be exchanged and their nominal values on acceptance of the Offer were
as follows:
€’000
Securities in issue
CAM Capital, S.A.U. - Preferred Securities Series A
CAM Capital, S.A. Sociedad Unipersonal - Preferred Securities Series B
CAM Capital, S.A. Sociedad Unipersonal - Preferred Securities Series C
Caja de Ahorros del Mediterráneo (“CAM”) - Subordinated bonds 09/1988
Caja de Ahorros de Torrent - Subordinated bonds 11/1988
CAM Special Subordinated Debt 02/2004
Buyback acceptances - nominal value
288,074
151,607
814,525
17,403
2,904
285,439
€’000
Securities exchanged
Buyback acceptances - nominal value
Banco de Sabadell, S.A. - 500,000 Preferred Securities Series I/2009
Sabadell International Equity Ltd. - 250,000 Preferred Securities Series A
Guipuzcoano Capital, S.A.U. - 50,000 Preferred Securities Series III
Guipuzcoano Capital, S.A.U. - 50,000 Preferred Securities Series I
488,534
228,142
32,266
48,390
In September 2012 Banco de Sabadell, S.A. made an offer to repurchase preferred securities and subordinated
bonds issued by various companies in the group. The total nominal value of the securities in respect of which the
offer was accepted was €109,250,000.
At a meeting of the Board of Directors of Banco de Sabadell, S.A. on 2 December 2011, under an authority
granted to it by a resolution of the Annual General Meeting of 14 April 2011, the decision was taken to make an
offer to holders of preferred securities issued by various Banco Sabadell consolidated group undertakings whereby
all preferred securities would be repurchased and the proceeds automatically applied by those accepting the
offer to the purchase of/subscription for Banco Sabadell shares to be offered in a simultaneous public offer for
subscription/sale of newly issued shares (see note 28) and existing shares from the Bank’s holding of treasury
shares, addressed exclusively to holders of the said preferred securities.
At the end of the acceptance period for the Banco Sabadell public offer for sale of/subscription for Banco
Sabadell shares addressed to holders of certain preferred securities issued by Banco Sabadell or undertakings
forming part of its consolidated group of credit institutions, the debt securities to be exchanged and their nominal
values on acceptance of the offer were as follows:
At 31 December 2012 the rate of interest payable on securities issued by Sabadell International Equity Ltd. was
4.5% (4.5% at 31 December 2011).
Nota 23. Other financial liabilities
€’000
2012
2011
2,358,717
1,470,467
Total
2,358,717
1,470,467
908,627
300,977
45,836
187,703
915,574
152,241
352,954
79,269
122,907
763,096
2,358,717
1,470,467
Analysis by type:
Obligations payable
Guarantee deposits received
Clearing houses
Tax collection accounts
Other financial liabilities (*)
Total
The “other financial liabilities” item of the consolidated balance sheet at 31 December 2012 and 2011 is analysed
below.
217
Euro denominated
2,285,940
72,777
1,431,216
39,251
Total
2,358,717
1,470,467
(*) Includes amounts payable to suppliers.
In fulfilment of the Bank’s duty of disclosure under Law 15/2010 amending Law 3/2004 on measures to
combat late payment in commercial transactions, information for the group for the years 2012 and 2011 is set out
in the following table:
€’000
2012
Amount
Payments made within statutory time limit
Other payments (1)
Total payments in period
Weighted average number of days past due (*)
Payments deferred beyond statutory limit (**)
2,724,198
139,982
2,864,180
69
26,910
%
95
5
100
-
2011
Amount
2,302,154
95,983
2,398,137
%
96
4
100
-
78
424
-
Total
(*) Weighted average number of days past due: the weighted average number of days over the statutory time limit for payments, weighted according to the
size of the payment.
(**) The statutory time limit for payment in the year 2012 was 75 days (2011: 85 days).
(1) Depending on the circumstances of each case, payments may be deferred beyond the statutory time limit when such deferral is warranted.
Nota 24. Liabilities under insurance contracts
The balances for this item at 31 December 2012 and 2011 were:
€’000
218
2012
2011
1,187
0
Unearned premiums and unexpired risks
Non-life business:
Claims
Life business:
Mathematical reserves
Benefits
With-profits insurance and returned premiums
Life policies where investment risk is borne by policyholders
Implied adjustments due to accounting mismatches
243
0
1,792,578
14,492
8,493
216,412
5,410
0
0
0
173,348
0
Total
2,038,815
173,348
Figures for 2012 include data for Mediterráneo Vida, S.A.U. de Seguros y Reaseguros, a life insurer and former
member of the Banco CAM group.
Nota 25. Provisions
The components of this item of the consolidated balance sheet at 31 December 2012 and 2011 were as follows:
€’000
Other provisions
Total
2012
2011
242,354
277,162
850,810
163,510
89,611
97,082
1,370,326
350,203
Details of changes in provisions during the years 2012 and 2011 are given in the following table:
Contingent
exposures and
commitments
Other
provisions
Total
176,258
91,672
99,732
367,662
26,895
4,955
8,260
13,680
66,062
0
0
66,062
8,877
0
0
8,877
101,834
4,955
8,260
88,619
0
(67,943)
(9,663)
(77,606)
2,016
0
0
2,016
0
137
8
145
(36,947)
(8,977)
(32,123)
4,153
0
0
0
0
(19,154)
0
0
(19,154)
(56,101)
(8,977)
(32,123)
(15,001)
(4,712)
(317)
17,282
12,253
163,510
89,611
97,082
350,203
119,329
107,762
1,015,918
1,243,009
Provisions charged to income statement:
Personnel expenses
Provisioning expense
18,118
5,604
11,418
1,096
193,140
0
0
193,140
60,672
0
0
60,672
271,930
5,604
11,418
254,908
Releases to income statement
(5,060)
(113,822)
(115,114)
(233,996)
(26,957)
0
0
(26,957)
0
0
(27)
(27)
(25,388)
0
(25,388)
0
0
0
0
0
(315,409)
0
0
(315,409)
(340,797)
0
(25,388)
(315,409)
(1,198)
471
107,688
106,961
242,354
277,162
850,810
1,370,326
Provisions charged to income statement:
Personnel expenses
Provisioning expense
Releases to income statement
Actuarial gains/losses
Utilizations:
Insurance premiums paid
Pension payments
Other
Other movements
Actuarial gains/losses
Utilizations:
Insurance premiums paid
Pension payments
Other
Other movements
The main provision components are as follows:
• Provisions for pensions and similar obligations: includes provisions to cover post-employment benefits,
including pension commitments in respect of employees taking early retirement and similar obligations.
• Provisions for contingent exposures: includes all provisions to cover contingent exposures associated with
financial guarantees or other contractual commitments.
Pensions
and similar
obligations
€’000
219
• Other provisions: consists largely of reserve funds assigned by the group to cover certain risks incurred in
the normal course of business, including those described in note 35, and to provide for restructuring costs in
relation to Banco CAM. It is expected that most of this will be used in the coming year.
• Most provisions are long-term in character.
Pensions and similar obligations
The balances giving rise to pension liabilities recognized in the group balance sheet are shown below:
€’000
Obligations due to pension commitments
Actuarial gains / (losses) and assets not recognized in
income statement
Fair value of scheme assets
Net liability recognized on balance sheet
2012
2011
2010
2009
2008
950,952
765,700
781,660
656,430
685,994
40,761
(18,600)
(13,173)
(5,327)
(11,745)
(752,281)
(583,590)
(592,229)
(461,520)
(471,277)
239,432
163,510
176,258
189,583
202,972
The return on the Banco Sabadell pension scheme in 2012 was 4.055% and the return of the group’s voluntary
social insurance society [Spanish term: EPSV] was 3.57%. The return on the Banco CAM pension scheme for the
year was 1.55%.
Changes in obligations due to pension commitments and in the fair value of pension scheme assets during the
years 2012 and 2011 are shown in the following table:
€’000
Obligations
due to pension
commitments
Fair value of scheme
assets
781,660
592,229
Interest costs
Expected returns
Normal costs in year
Benefit payments
Settlements, reductions and terminations
Employer’s contributions
Actuarial gains and losses
Other movements
32,622
0
6,040
(54,855)
(1,107)
0
960
380
0
24,630
0
(22,731)
(7,849)
8,978
(5,383)
(6,284)
765,700
583,590
Interest costs
Expected returns
Normal costs in year
Benefit payments
Settlements, reductions and terminations
Employer’s contributions
Actuarial gains and losses
Other movements
247,858
40,628
0
5,604
(90,658)
(85,012)
0
66,832
0
126,033
0
28,953
0
(32,720)
(57,664)
(3,174)
107,263
0
950,952
752,281
220
Obligations covered by specific assets totalled €864,081,000 (including €14,995,000 in commitments to early
retirees) at 31 December 2012, and €738,280,000 (including €23,217,000 in commitments to early retirees) at
31 December 2011.
The fair value of pension-linked assets reported in the group balance sheet stood at €165,092,000 at 31
December 2012 and €162,735,000 at 31 December 2011.
The main categories of scheme assets as a proportion of total scheme assets were as follows:
%
Own equity instruments
Debt instruments
Mutual funds
Other (Insurance policies taken out with non-related parties)
Total
2012
2011
0.02%
0.00%
0.49%
0.04%
99.45%
0.24%
1.75%
25.29%
2.26%
70.46%
100.00%
100.00%
The fair value of scheme assets includes the following financial instruments issued by the Bank:
€’000
2011
Equity instruments
Debt instruments
Deposits and current accounts
122
0
0
1,373
3,786
5,866
Total
122
11,025
2012
Estimates of probability-weighted present values at 31 December 2012 of benefits payable over the next ten
years are shown below:
€’000
Probable pension
payments
2013
2014
2015
2016
39,517
35,028
27,319
22,804
Year
2017
18,938
2018
2019
2020
2021
2022
15,155
11,968
10,192
9,878
9,596
Total
200,395
The fair values of the main balance sheet items valued at amortized cost are shown in the table below.
Assets and liabilities stated in the balance sheet at amortized cost have been valued by the discounted future
cash flow method using the risk-free interest rate curve plus a spread to reflect the credit risk of the different
financial instruments being valued. The interest rate curve used in the analysis was worked out from the quoted
inter-bank rates for deposits and swaps from which pure discount factors could be derived to obtain present values
that the market would accept as unskewed. The curve is constructed from an equation which adjusts to observed
market rates and gives forward interest rates for any intermediate period or maturity.
Nota 26. Fair value of financial assets and liabilities
221
€’000
2012
Account balance
Fair value
Assets at amortized cost:
Debt securities
5,233,243
105,102,361
396,913
7,647,834
5,337,098
114,220,930
396,913
7,772,633
Total assets at amortized cost
118,380,351
127,727,574
€’000
2012
Account balance
Fair value
Liabilities at amortized cost:
23,888,640
9,779,956
82,464,410
25,326,170
1,166,707
2,358,717
23,905,420
9,389,254
83,245,597
26,911,928
1,438,365
2,358,717
Total liabilities at amortized cost
144,984,600
147,249,281
€’000
2011
Account balance
222
Fair value
Assets at amortized cost:
3,628,914
72,654,030
3,659,179
77,966,688
Total assets at amortized cost
76,282,944
81,625,867
€’000
2011
Account balance
Fair value
Liabilities at amortized cost:
4,040,717
8,128,791
58,444,050
17,643,095
1,859,370
1,470,467
4,241,927
8,331,248
58,130,170
18,798,683
2,185,169
1,470,460
Total liabilities at amortized cost
91,586,490
93,157,657
Nota 27. Foreign currency transactions
Euro equivalent values for different classes of foreign currency-denominated assets and liabilities held by the group
at 31 December 2012 and 2011 were as follows:
€’000
2011
Foreign currency assets:
Debt securities
Loans to customers
Other assets
612,017
295,951
496,231
4,794,262
726,959
369,049
233,548
632,893
3,870,918
517,498
Total
6,925,420
5,623,906
Foreign currency liabilities:
Other liabilities
241
437,311
4,810,612
277,583
239
810,120
4,485,566
192,242
Total
5,525,747
5,488,167
2012
The group’s net position in foreign currency assets and liabilities is covered by transactions consisting of
spot and forward currency trades and exchange rate swaps in line with the group’s risk management policy (see
note 37).
223
Nota 28. Shareholders’ equity
Changes in own funds in the years 2012 and 2011 were as follows:
€’000
Reserves and
share premium
Capital
account
Own
securities
Profit/loss
for the year
Dividends
on account
Total
818,714
(25,686)
380,040
(113,727)
5,978,412
157,954
4,761,117
Appropriation to retained earnings
0
266,313
0
0
(266,313)
0
0
Interim dividend for 2010
0
0
0
0
(113,727)
113,727
0
Final dividend for 2010
0
(83,400)
0
0
0
0
(83,400)
Translation differences and other movements
0
26
57
0
0
0
83
Acquisition of own equity instrumentss
0
0
0
(504,009)
0
0
(504,009)
358,288
Disposal of own equity instrumentss
0
7,183
(4,151)
355,256
0
0
Issuance of other equity instruments (1)
0
(46,275)
0
0
0
0
(46,275)
15,927
400,022
0
0
0
0
415,949
Increase in capital - issue expenses
0
(5,274)
0
0
0
0
(5,274)
Adjustment to fair value of own equity instruments
0
0
0
0
0
0
0
Transfers
0
0
0
0
0
0
0
Profit for the year 2011
0
0
0
0
231,902
0
231,902
0
0
0
0
0
(69,516)
(69,516)
173,881
5,299,712
814,620
(174,439)
231,902
(69,516)
6,276,160
Appropriation to retained earnings
0
162,386
0
0
(162,386)
0
0
0
0
0
0
(69,516)
69,516
0
Final dividend for 2011
0
(110,425)
0
110,425
0
0
0
Translation differences and other movements
0
835
17
0
0
0
852
Acquisition of own equity instrumentss
0
0
0
(510,808)
0
0
(510,808)
Disposal of own equity instrumentss
0
(40,145)
(16,548)
549,128
0
0
492,435
Issuance of other equity instruments (1)
0
(43,958)
0
0
0
0
(43,958)
196,063
2,822,842
0
0
0
0
3,018,905
Increase in capital
Increase in capital
224
Other
equity
instruments
Increase in capital - issue expenses
0
(19,175)
0
0
0
0
(19,175)
Adjustment to fair value of own equity instruments
0
(176,760)
0
0
0
0
(176,760)
Transfers
0
0
0
0
0
0
0
Profit for the year 2012
0
0
0
0
81,891
0
81,891
0
0
0
0
0
0
0
369,944
7,895,312
798,089
(25,694)
81,891
0
9,119,542
(1) See the section on “other equity instruments” in this note.
Minimum capital requirement - capital management
At 31 December 2012 and 2011, the group’s qualifying capital resources were above the required levels both
under Bank of Spain rules and under the requirements of the Bank of International Settlements in Basel (BIS).
Ongoing active management of the group’s capital base ensured that funding was available to finance growth in
conformity with minimum regulatory capital requirements.
At 31 December 2012 the group’s qualifying capital under the revised BIS framework (known as Basel II)
stood at €8,576,641,000. This gave the group a capital surplus of €2,551.496,000, as can be seen from the
following table:
Capital management
€’000
2011
Variación (%)
interanual
369,944
7,838,177
798,089
51,078
(1,206,783)
173,881
5,171,378
814,620
53,239
(1,151,809)
112.76
51.57
(2.03)
(4.06)
4.77
7,850,505
5,061,309
55.11
10.42
9.01
(5,413)
520,711
(101.04)
7,845,092
5,582,020
40.54
10.42
9.94
731,549
567,164
0.97
1.01
Capital base
8,576,641
6,149,184
39.48
Minimum capital requirement
6,025,145
4,493,377
34.09
Capital surplus
2,551,496
1,655,807
54.09
11.39
10.95
4.00
75,314,313
56,167,208
34.09
Capital
Reserves
Convertible bonds
Deductions
Core capital
Core capital ratio (%)
Preferred shares and deductions
Primary capital
Tier I capital ratio (%)
Secondary capital
Tier II capital ratio (%)
BIS Ratio (%)
Risk-weighted assets (RWA)
2012
28.98
Core capital contributed 10.42% towards the BIS ratio and accounted for 91.53% of qualifying capital resources.
Secondary or Tier II capital provided a further 0.97% of the BIS ratio and was made up very largely of
subordinated debt, valuation adjustments and generic provisions (subject to regulatory limits as to eligibility), less
other required deductions.
The primary or Tier I capital ratio, calculated according to guidelines provided in the Bank of Spain’s Circular
7/2012 which came into effect on 1 January 2013, was 9.23%
Share capital
Changes in share capital in 2012 and 2011
Year 2012
As a result of the preferred securities buyback offer described in note 22, a total of 271,179,763 Banco Sabadell
shares were issued or allotted to holders of the preferred securities applying sums in cash equivalent to 90%
of the nominal value of the repurchased preferred securities, less any fractional amounts. Of this total number
48,000,000 were treasury shares held by the Bank, and 223,179,763 were new shares representing 13.83% of
the Bank’s share capital as increased by the result of the offer.
On 5 January 2012 a notarial instrument for an increase in the share capital of Banco Sabadell by 223,179,763
new shares was filed with the Barcelona Mercantile Registry; on 12 January 2012 the new shares were admitted
to be traded on the Barcelona, Madrid and Valencia Stock Exchanges via the electronic trading system [Market
Continuo].
An Extraordinary General Meeting of the Company was called by the Board of Directors of Banco de Sabadell,
S.A. to take place on 23 February 2012. The Meeting approved an increase in capital to be paid in cash in a
nominal amount of €86,476,525,625, by the issue and allotment of 691,812,205 ordinary shares with a nominal
value of €0.125 each, subject to a right of preferential subscription and to the possibility of the issue not being
fully subscribed, with powers being granted to the Board of Directors, including the power of substitution, to carry
out the increase in capital and to decide on the terms thereof except as specifically determined by the Meeting. The
225
226
Board of Directors was also granted powers to increase the share capital on one or more occasions and, if thought
fit, to exclude any right of preferential subscription.
The subscription period for shares offered as a result of the increase in capital came to an end on 21 March
2012. The overall nominal amount of the increase was €85,469,329,125 and the overall effective amount was
€902,556,115.56. The increase resulted in the issue and allotment of 683,754,633 ordinary shares, each with a
nominal value of €0.125 and of the same class and series as those then in issue.
On 22 March 2011 a notarial instrument was filed with the Barcelona Mercantile Registry to increase the capital
of Banco Sabadell by 683,754,633 new ordinary shares. On 26 March 2012 the new shares were admitted to be
traded on the Barcelona, Madrid and Valencia Stock Exchanges via the electronic trading system [Market Continuo].
At a meeting of the Board of Directors on 13 June 2012 the Board, under powers granted to it by a resolution of
the Annual General Meeting of 31 May 2012, made a decision to increase the share capital of the Bank by up to
€85,871,486.50 by the issue and allotment of 686,971,892 ordinary shares payable in cash with a nominal value
of €0.125 each, all of the same class and series as the shares then in issue; no right of preferential subscription
would apply to the issue, which was subject to the possibility of not being fully subscribed. The issue was directed
exclusively to any holders of certain Banco CAM group issues of preferred securities and subordinated debt who
accepted a public offer for sale of /subscription for shares in Banco de Sabadell, S.A.
At the end of the offer acceptance period on 27 July 2012, the total number of shares of the Bank to be issued
and sold as a result of the application by holders of the preferred securities of a cash sum equivalent to 100% of
the nominal value of the repurchased preferred shares, less any fractional amounts, was 678,194,448 (of which
22,000,000 were treasury shares and 656,194,488 were new shares representing 22.21% of the ordinary share
capital of the Bank after the result of the offer).
On 3 August 2012 a notarial instrument for an increase in the share capital of Banco Sabadell by 656,194,488
new shares was filed with the Barcelona Mercantile Registry; on 13 August 2012 the new shares were admitted
to trading on the Barcelona, Madrid and Valencia Stock Exchanges via the electronic trading system [Market
Continuo].
On 20 July 2012, at the end of the third voluntary conversion period for holders of mandatorily convertible
subordinated bonds issue I/2009, at a meeting of the Board of Directors on 26 July 2012, the Board took
a decision to increase the capital of the Bank to provide funds for voluntary conversions of the 2,898 bonds
comprising the said issue. The increase in capital, which was filed with the Barcelona Mercantile Registry on 3
August 2012, resulted in the issue and allotment of a total of 693,247 new ordinary shares with a nominal value of
€0.125 each. The new shares were admitted to trading on the Barcelona, Madrid and Valencia Stock Exchanges via
the electronic trading system [Market Continuo] on 13 August 2012.
On 9 November 2012, by the end of the second voluntary conversion period for mandatorily convertible
subordinated bonds Issue I/2010, issued to be offered in exchange for shares in Banco Guipuzcoano, S.A. as part
of a takeover offer by Banco de Sabadell, S.A., applications for conversion had been received from a total of 814
bondholders holding 3,925,686 bonds which, under the terms of the issue, were equivalent in value to a total of
4,684,169 shares.
On 11 December 2012 a notarial instrument for the increase in capital that would provide new shares for this
second voluntary conversion of bonds was filed with the Barcelona Mercantile Registry. On 14 August 2012 the
4,684,169 new shares were admitted to trading on the Barcelona, Madrid and Valencia Stock Exchanges via the
electronic trading system [Market Continuo].
Year 2011
On 1 February 2011 Banco de Sabadell, S.A. completed the accelerated placement of the new shares as resolved
by the Board of Directors of the Bank at a meeting on 31 January 2011. This increase in capital resulted in one
hundred and twenty-six million three hundred and sixty-three thousand and eighty-two (126,363,082) ordinary
shares, of the same class and series as those already in circulation, being issued and subscribed for at an
effective price of three euros and twenty-five cents (€3.25) per share, comprising the nominal value of the shares
plus an issue premium.
The total effective amount of the increase in capital (the nominal value of the new shares plus the issue
premium) was four hundred and ten million six hundred and eighty thousand and sixteen euros and fifty cents
(€410,680,016.50).
The purpose of the increase in capital from paid-in cash contributions was to strengthen the Bank’s core capital
ratio and secure the necessary funds for a buyback offer for debt securities which took place at the same time as
the increase in capital (see note 22).
On 20 July 2011, at the end of the second voluntary conversion period for holders of mandatorily convertible
subordinated bonds issue I/2009, at a meeting of the Board of Directors on 21 July 2011, the Board took
Company
Direct
holding
Number
of shares
Blackrock Investment Management (UK) Ltd.
Fundo de Pensoes do Grupo BCP
3.105%
3.097%
91,907,673
91,672,628
Indirect shareholder
Blackrock, Inc (1)
Banco Comercial Portugues, S.A. (2)
(1) According to information published on the CNMV website on 14 September 2012, the company has an indirect shareholding of 3.110% in Banco Sabadell.
From the time of giving notice to the CNMV up to 31 December 2012 no notification thresholds had been reached or exceeded, or any holding reduced
below a threshold, for the purposes of Royal Decree 1362/2007, article 23.
(2) Owns a direct 0.125% shareholding amounting to 3,695,217 shares.
Share capital at close of year
Following the actions described above, the Bank’s issued share capital at 31 December 2012 stood at
€369,944,377.125, divided into 2,959,555,017 registered shares with a nominal value of €0.125 each. The
corresponding figure at 31 December 2011 was €173,881,089.63, divided into 1,391,048,717 registered
shares with the same nominal value. All shares were fully paid and were numbered consecutively from 1 to
2.959.555.017, both inclusive.
The Bank’s shares are quoted on the Madrid, Barcelona and Valencia stock exchanges via the automatic
quotation system managed by Sociedad de Bolsas, S.A.
None of the other undertakings included in the consolidated accounts are quoted on any stock exchange.
The rights attaching to all equity instruments of the Bank are regulated by the Spanish companies legislation
[Ley de Sociedades de Capital]. At a General Meeting shareholders may cast votes in a number that reflects their
proportional holding in the share capital.
As required by article 23 of Royal Decree 1362/2007 of 19 October, implementing the Securities Market Law
(Law 24/1988 of 28 July), the following table gives details of significant shareholdings in Banco Sabadell (i.e.
holdings amounting to 3% or more of the share capital or voting rights) at 31 December 2012:
a decision to increase the capital of the Bank to provide funds for voluntary conversions of the 1,597 bonds
comprising the said issue. The increase in capital was filed with the Barcelona Mercantile Registry on 22 August
2011, and resulted in the issue and allotment of a total of 320,455 new ordinary shares with a nominal value of
€0.125 each; the new shares were admitted to trading on the Barcelona, Madrid and Valencia Stock Exchanges via
the electronic trading system [Market Continuo] on 5 September 2011.
On 10 November 2011, the end of the first voluntary conversion period for mandatorily convertible
subordinated bonds Issue I/2010, issued to be offered in exchange for shares in Banco Guipuzcoano, S.A. as
part of a takeover offer by Banco de Sabadell, S.A., applications for conversion had been received from a total of
425 bondholders holding 734,346 bonds which, under the terms of the issue, were equivalent in value to a total
of 734,346 shares.
On 13 December 2011 the increase in capital that would provide new shares for these voluntary conversions
was filed with the Barcelona Mercantile Registry. On 22 December 2011 the 734,436 new shares were admitted to
trading on the Barcelona, Madrid and Valencia Stock Exchanges after the market regulator (CNMV) had verified that
the requirements for admission to trading of the shares, issued by Banco Sabadell with a nominal value of €0.125
each, had been met.
The balance of the share premium account at 31 December 2012 was €4,560,923,000 (€1,861,702,000 at 31
December 2011).
On 18 September 2010 an Extraordinary General Meeting of Banco Sabadell resolved that an issue be made of
subordinated bonds mandatorily convertible into newly issued shares of Banco de Sabadell, S.A. to be offered
as part of the offer price in a takeover offer for 100% of the share capital of Banco Guipuzcoano, S.A. The
nominal value of the bond issue was four hundred and sixty-eight million euros (€468,000,000); the effective
value was €325,470,600. The number of mandatorily convertible subordinated bonds issued was ninety-three
million six hundred thousand (93,600,000) with a nominal value of €5.00 each issued by Banco Sabadell as part
of the price of the takeover offer. The convertible bonds have a term of three years and bear interest at 7.75%
per annum. On each quarterly payment date Banco Sabadell may, at its discretion, decide to pay interest on
the bonds or declare a voluntary conversion period in which bonds may be converted at a price pre-set in each
period.
227
In 2009 Banco Sabadell carried out an issue of Series I/2009 mandatorily convertible bonds for a total of €500
million. The bonds can be exchanged voluntarily for shares of the Bank on 21 July of each of the years 2010, 2011
and 2012 and are obligatorily exchangeable on 21 July 2013.
After the conversion periods that took place in 2011 (as described above under changes in share capital) the
number of mandatorily convertible bonds outstanding in the I/2009 and I/2010 series stood at 493,880 and
88,939,968 respectively.
Interest paid on these mandatorily convertible bonds in the year 2012 totalled €63,757 (€64,846,000 in 2011).
On 20 December 2012 the Board of Directors of Banco Sabadell took the decision to make a buyback offer to
holders of mandatorily convertible subordinated bonds in Series I/2009 and Series I/2010 whereby their entire
holdings would be repurchased for cash and the said cash simultaneously applied by those accepting the buyback
offer to subscribe for newly issued mandatorily convertible subordinated bonds Series I/2013 and Series II/2013
respectively.
Under the buyback offer made by Banco de Sabadell, the bonds in Series I/2009 and I/2010 are to be valued
at 100% and 78.4% of their nominal values, respectively. This will be paid in the following manner: (i) Holders of
the Series I/2009 bonds will receive, for each Series I/2009 bond held by them, €1,000 in cash, subject to their
making an irrevocable application to subscribe for bonds in the I/2013 series with a nominal value of €1,000 each.
(ii) Holders of the Series I/2010 bonds will receive, for each Series I/2010 bond held by them, €3.92 in cash,
subject to their making an irrevocable application to subscribe for bonds in the II/2013 series with a nominal value
of €3.92 each.
The bonds in Series I/2013 and II/2013 will mature on 21 July and 11 November 2015, respectively, that is,
two years after the maturity dates of the bonds in Series I/2009 and Series II/2010, respectively.
The interest payable on the new bonds will be (i) for the bonds in Series I/2013, 3-month Euribor plus a 5%
spread, compared with the rate currently being paid on the Series I/2009 bonds, which is 3-month Euribor plus a
spread of 4.5%; and (ii) for the bonds in Series II/2013, a nominal rate of 10.2% per annum, compared with the
interest payable on the Series I/2010 bonds which is a nominal 7.75% per annum (for illustrative purposes, the
interest on the Series II/2013 bonds – 10.2% on a nominal value of €3.92 – would be equivalent to a rate of 8% on
a nominal value of €5 (the nominal value of the Series I/2010 bonds).
The offer subscription period expires on 31 January 2013.
The mandatorily convertible subordinated bonds are listed on the Madrid, Barcelona y Valencia securities
markets. The bonds are intended primarily for retail investors resident in Spain although they are also available to
qualified investors, whether resident or non-resident.
Reserves
€’000
2012
2011
287,015
34,776
241,734
7,390
113
3,002
265,581
34,750
220,620
7,096
113
3,002
2,841,315
2,947,946
206,059
224,483
3,334,389
3,438,010
Restricted reserves:
Statutory reserve
Reserve for own shares pledged as security
Reserve for investment in Canary Islands
Share redenomination reserve
Capital redemption reserve
Available reserves:
Reserves of equity-accounted undertakings
228
Total
The contributions of consolidated undertakings to group reserves are shown in Annex I.
Transactions in own equity instruments
The Bank’s holdings of shares in the parent company showed the following evolution during the year:
Purchases
Sales
Purchases
Sales
Balance at 31 December 2012 (1)
No. of shares
Nominal value
(€’000)
Average share price
(€)
Proportion of
total (%) (1)
7,679,200
959.90
3.34
0.61
174,292,304
124,023,477
21,786.54
15,502.93
2.91
2.82
12.53
8.92
57,948,027
7,243.50
2.93
4.17
271,334,096
320,286,821
33,916.76
40,035.85
1.88
1.94
9.17
10.82
8,995,302
1,124.41
1.97
0.30
Net gains and losses arising on transactions in the Bank’s own equity instruments have been included in “own
funds – reserves” under Equity in the consolidated balance sheet.
At the close of the year a total of 122,397,274 shares of the Bank with a nominal value of €15,300,000 were
pledged as security (75,194,406 shares with a nominal value of €9,399,000 at 31 December 2011).
The number of Banco de Sabadell, S.A. own equity instruments held by third parties but under management
by group undertakings at 31 December 2012 and 2011 was 9,518,766 and 2,216,301 securities, with nominal
values of €5,453,000 and €7,431,000, respectively. Of these securities, 9,462,008 and 2,153,591 were Banco
Sabadell shares; the rest were mandatorily convertible subordinated bonds.
(1) This excludes 3,272,945 shares loaned in a liquidity facility agreement entered into with Caixabank, S.A., as described in the Securities Note for the issue
of mandatorily convertible subordinated bonds, Series I/2009, filed with the National Stock Market Commission (CNMV) on 25 June 2009.
Nota 29. Valuation adjustments
€’000
2012
2011
Debt securities
Cash flow hedges
Undertakings accounted for by the equity method
(241,661)
(275,990)
34,329
(37,363)
(13,733)
(19,972)
(5,216)
(277,573)
(250,910)
(26,663)
(30,374)
2,790
(85,062)
991
Total
(317,945)
(389,228)
Valuation adjustments for the group at 31 December 2012 and 2011 are analysed below:
The income tax effects of valuation adjustments for the different items of recognized income and expense at 31
December 2012 and 2011 were:
229
€’000
2012
Debt securities
Cash flow hedges
Total
2011
Gross
amount
Tax
effect
Net
amount
Gross
amount
Tax
effect
Net
amount
75,673
(26,960)
102,633
(10,508)
(29,344)
65,090
(11,501)
(22,702)
8,088
(30,790)
3,152
8,803
0
3,452
52,971
(18,872)
71,843
(7,356)
(20,541)
65,090
(8,049)
70,644
88,362
(17,718)
(37,771)
1,632
(90,107)
0
(21,193)
(26,509)
5,316
11,331
(490)
0
0
49,450
61,853
(12,403)
(26,440)
1,142
(90,107)
0
89,410
(7,295)
82,115
(55,602)
(10,352)
(65,954)
Nota 30. Minority interests
The undertakings in which non-controlling interests are held are as follows:
€’000
2012
Minority
interests %
2011
Attributable
Amount profit (loss)
Minority
interests %
Attributable
Amount profit (loss)
Hansa México S.A. de C.V.
La Rivera Desarrollos BCS, S. DE R.L. DE C.V.
49.03%
50.00%
70.00%
51.85%
61.82%
24,951
400,251
(315)
10,309
(5,056)
2,951
19,183
(2,154)
912
(8,483)
49.03%
0.00%
0.00%
0.00%
0.00%
19,029
0
0
0
0
3,052
0
0
0
0
Sabadell BS Select Fund of
Hedge Funds SICAV (Luxemburgo)
54.26%
15,455
650
50.89%
17,227
(11)
5.22%
0.00%
10,934
2,646
1,191
(106)
5.22%
0.00%
9,760
1,196
772
157
-
459,175
14,144
-
47,212
3,970
Sabadell United Bank, N.A.
Other
Total
Changes in non-controlling interests in 2012 and 2011 were as follows:
€’000
Balance at
31.12.2010
Changes in year
2011
Balance at
31.12.2011
Changes in year
2012
Balance at
31.12.2012
Other
Merger of Banco CAM group subsidiaries
(5,689)
39,555
0
(461)
13,807
0
(6,150)
53,362
0
10,832
401,131
379,118
4,682
454,493
379,118
Changes in proportional shareholdings
and other movements
22,648
9,837
32,485
7,869
40,354
Profit for the year
16,907
3,970
20,877
14,144
35,021
33,866
13,346
47,212
411,963
459,175
Total
Nota 31. Contingent exposures
The breakdown of this item is as follows:
€’000
230
2012
2011
Financial guarantees
Other contingent exposures
9,014,869
600
8,346,422
600
Total
9,015,469
8,347,022
Doubtful contingent exposures
The movement in the doubtful contingent exposures account was as follows:
€’000
Additions
Disposals
121,084
133,574
(146,523)
108,135
Additions
Disposals
270,372
58,116
(51,247)
385,376
The distribution of contingent exposures by geographical region at 31 December 2012 and 2011 was as follows:
€’000
2012
2011
Spain
Latin America
Other OCDE
Rest of world
384,341
1,020
7
5
3
108,128
7
0
0
0
Total
385,376
108,135
Provisions for credit risk arising from doubtful contingent exposures were as follows:
€’000
2011
Provision cover - individually determined:
Provisions for credit risk
Provisions for country risk
244,243
243,812
431
73,771
72,790
981
Provision cover - collectively determined:
32,919
15,840
277,162
89,611
Total
2012
Changes in these provisions, which are reported in provisions on the liability side of the balance sheet, are
shown in note 25.
Nota 32. Contingent commitments
€’000
Drawable by third parties
Credit institutions
General government
Other resident sectors
Non-resident sector
Financial asset forward purchase commitments
Regular way financial asset purchase contracts
Other contingent commitments
Total
2012
2011
9,647,747
9,133
306,513
8,711,724
620,377
166,332
1,907,594
1,802,211
9,590,753
8,397
272,263
8,988,775
321,318
199,801
104,853
1,762,458
13,523,884
11,657,865
At 31 December 2012 the “drawable by third parties” item included mortgage-secured credit commitments
amounting to €1,241,007,000 (€1.251.564,000 at 31 December 2011). Other commitments under this heading
were secured in most cases by other types of guarantee in line with the group’s risk management policy.
The composition of this item at 31 December 2012 and 2011 was as follows:
231
Nota 33. Off-balance sheet customer funds
Off-balance sheet customer funds under the group’s management and funds sold but not managed by the group
were of the following types:
€’000
2012
2011
Under management by the group:
Investment companies and mutual funds
Asset management
8,048,970
6,997,311
1,051,659
7,870,425
6,737,188
1,133,237
Mutual funds sold but not managed by the group
1,587,537
1,286,997
Pension funds (1)
3,708,868
2,858,299
Insurance (1)
7,313,153
5,926,378
Financial instruments deposited by third parties
39,646,946
33,895,532
Total
60,305,474
51,837,631
(1) The amounts shown for pension funds and insurance relate to pension and other funds distributed by the group.
Net fees and commissions on these products are reported in the income statement under fee and commission
income and amounted to €117,145,000 in 2012 (€131,015,000 in 2011).
Nota 34. Income statement
Some salient aspects of the Group’s consolidated income statement for the years 2012 and 2011 are presented in
the following tables.
232
(a) Interest income and expense
The components of net interest income were as follows:
€’000
2012
2011
Interest and similar income:
Cash and balances with central banks
Money market transactions through counterparties
Debt securities
Doubtful assets
Adjustments to income as a result of hedging transactions
Income from insurance contracts linked to pensions
Other interest
8,571
56,463
3,867
3,673,451
775,368
61,880
116,164
35,762
4,095
12,750
43,347
0
2,805,126
417,928
33,665
41,278
26,861
13,127
Total
4,735,621
3,394,082
Interest expense and similar charges:
Money market transactions through counterparties
Adjustments to income as a result of hedging transactions
Interest cost of pension funds
Other interest
(150,011)
(287,004)
(8,206)
(1,599,146)
(787,058)
(57,754)
62,873
(40,371)
(956)
(25,689)
(237,329)
0
(1,086,647)
(602,540)
(88,504)
214,027
(27,511)
(2,626)
Total
(2,867,633)
(1,856,819)
(b) Fee and commission income
Fee and commission income from trading and for services was composed of the following:
€’000
2011
On contingent exposures
On contingent commitments
Foreign currency and banknote exchange
Collection and payment services
Securities-related services
Distribution of non-bank financial products
Other fees and commissions
96,582
24,617
1,981
315,830
66,918
113,435
106,403
87,160
19,086
1,307
240,436
81,955
113,640
94,040
Total
725,766
637,624
2012
2011
Fees and commissions payable to correspondent and other banks
Other fees and commissions
(69,095)
(27,982)
(52,629)
(11,402)
Total
(97,077)
(64,031)
Fee and commission expenses were as follows:
€’000
2012
(c) Gains and losses on financial assets and liabilities (net)
The composition of this item of the consolidated income statement for the years to 31 December 2012 and 2011
was as follows:
€’000
2011
Financial assets held for trading
Financial instruments not measured at fair value through profit or loss
Other
132,205
395,270
18,761
139,025
126,056
6,165
Total
546,236
271,246
Analysis by type of financial instrument:
Net gain (loss) on debt securities
Net gain (loss) on equity instruments
Net gain (loss) on derivatives contracts
Other net gains (losses) (note 22)
277,804
(14,550)
136,500
146,482
49,128
(19,229)
148,102
93,245
Total
546,236
271,246
2012
During the year the group sold off a number of debt securities from its portfolio of available-for-sale financial
assets, recording gains amounting to €270,335,000 at 31 December 2012 (€45,347,000 at 31 December 2011).
This included losses of €1,590,000 on disposals of public sector debt securities.
(d) Other operating income
The composition of this item of the consolidated income statement for the years to 31 December 2012 and
2011 was as follows:
€’000
2012
2011
Income from insurance and reinsurance contracts written
Sales and income from non-financial services
Other operating incom
Income from rental of investment property
Insurance settlements
Other income
176,847
117,124
98,780
24,537
383
73,860
34,912
3,563
60,954
7,464
361
53,129
Total
392,751
99,429
233
Income from insurance and reinsurance contracts includes written premiums of the life offices Mediterráneo
Vida, S.A.U. de Seguros y Reaseguros (in which the group holds an indirect interest through CAM AEGON Holding
Financiero, S.L.), and Assegurances Segur Vida, S.A. (in which the group holds an indirect interest through
BancSabadell d’Andorra, S.A.). The costs of these operations are shown in note 34 (e).
Sales and income from non-financial services consisted, for the most part, of income generated by group
undertakings operating in the hospitality and healthcare industries.
Income from rental of investment property was accounted for mainly by Banco de Sabadell, S.A., Solvia
Development, S.L., and Tenedora de Inversiones y Participaciones, S.L., with rental income of €11,746,000,
€6,189,000 and €3,669,000 respectively.
The figure shown for “other income” consisted largely of income received by group undertakings engaging in nonfinancial activities.
(e) Other operating expenses
was as follows:
€’000
2012
2011
Expenses on insurance and reinsurance contracts written
Change in inventories
Other operating expenses
Operating expenses on investment property
Payments to deposit guarantee funds
Other expenses
(189,931)
(5,466)
(339,832)
(73)
(220,258)
(119,501)
(34,208)
(41)
(56,961)
(38)
(29,820)
(27,103)
Total
(535,229)
(91,210)
Expenses from insurance and reinsurance contracts written include the costs of written premiums of the life
offices Mediterráneo Vida, S.A.U. de Seguros y Reaseguros (in which the group holds an indirect interest through
CAM AEGON Holding Financiero, S.L.) and Assegurances Segur Vida, S.A. (in which the group holds an indirect
interest through BancSabadell d’Andorra, S.A.). The income from these operations is shown in note 34 (d).
The figure shown under “payments to deposit guarantee funds” for 2012 consisted mostly of payments by
Sabadell United Bank, N.A. and Banco de Sabadell, S.A. of €1,866,000 and €218,392,000 respectively.
The “other expenses” category consists, for the most part, of costs to sell items relating to undertakings of a
non-financial nature.
(f) Administrative expenses
This heading of the consolidated income statement includes expenses incurred by the Bank in respect of personnel
and other general administrative expenses.
Personnel expenses
The personnel expenses charged to the consolidated income statement for the years to 31 December 2012 and
2011 are as follows:
€’000
234
2012
2011
Salaries and bonuses of current employees
Social security contributions
Provisions for pension schemes
Other staff-related costs
(749,824)
(156,349)
(24,784)
(65,589)
(539,693)
(113,017)
(20,162)
(69,728)
Total
(996,546)
(742,600)
The average number of employees employed by all group undertakings in 2012 was 13,933, of whom 7,132
were men and 6,801 were women (2011: 10,670 employees, of whom 5,703 were men and 4,967 were
women).
The gender and category split of group employees at 31 December 2012 and 2011 was as follows:
Number of employees
2012
Men
2011
Men
Women
Women
Technical/specialist
Administrative
6,434
1,290
5,404
2,468
4,883
789
3,964
1,039
Total
7,724
7,872
5,672
5,003
Of the total number of people employed at 31 December 2012, 135 were recognized as having some form of
disability (69 at 31 December 2011).
At consolidated group level, the headcount was increased by the incorporation of the Banco CAM group (Banco
CAM and its subsidiaries) into the consolidated group from June 2012.
A new share-based incentive scheme for senior group executives was approved by the Annual General Meeting of
Banco de Sabadell, S.A. on 25 March 2010.
The scheme was set up to foster high degrees of motivation and loyalty among senior executives. Under its
terms, a certain number of stock appreciation rights (SARs) were given to employees who, when the rights vested,
would become entitled to receive shares in the Bank equal in value to the amount by which Banco Sabadell shares
had appreciated over a maximum period of three years and three months, with an end date of 11 June 2013.
The changes in the value of SARs awarded under the share-based incentive scheme during 2012 and 2011 are
as follows:
€’000
24,806
Awards
Cancellations
0
(332)
24,474
Awards
Cancellations
0
(634)
23,840
All the SARs have an exercise price of €3.36, with the settlement amount being the positive difference, if any,
between the quoted share price at the end of the scheme and the exercise price.
At the inception of the SAR scheme, to meet the resulting commitment the Bank entered into hedging
arrangements with financial institutions outside the group. These contracts have economic effects that act to offset
the commitment undertaken by the Bank. The premium paid for the hedge (€21.8 million) was considered as the
fair value of services received during the 3-year duration of the scheme.
Personnel expenses totalling €6.9 million associated with the share-based incentive schemes were recognized in
both 2012 and 2011 (see note 1 (p)).
This includes all other administrative expenses incurred during the year:
€’000
2012
2011
Premises, fittings and equipment
Information systems
Communications
Advertising and promotion
Central government and local taxes
Other expenses
(159,735)
(66,875)
(27,323)
(48,261)
(73,212)
(139,673)
(127,835)
(58,007)
(20,277)
(35,585)
(61,962)
(98,825)
Total
(515,079)
(402,491)
235
A total of €1,762,000 in fees was paid to PricewaterhouseCoopers Auditores, S.L. for auditing and other
services in Spain in the year 2012 (€978,000 in 2011). Fees for auditing services in relation to foreign branches
and subsidiaries totalled €1,074,000 in 2012 (€515,000 in 2011).
Fees totalling €105,000 were paid to other auditors for auditing services in Spain in 2012 (€118,000 in 2011),
plus another €37,000 for services relating to foreign branches and subsidiaries in 2012 (€133,000 in 2011).
The fees paid to PricewaterhouseCoopers Auditores, S.L. and other firms operating under the
PricewaterhouseCoopers Auditores, S.L. name for tax advisory services in the year 2012 was €85,000, while fee
payments to these firms for other services amounted to €1,437,000. Fees for these services in 2011 totalled
€77,000 and €560,000 respectively.
Among the most significant items under “other expenses” were the costs of security and cash transit services
amounting to €15,056,000 in 2012 (€10,879,000 in 2011), technical reports costing a total of €11,710,000 in
2012 (€11,227,000 in 2011) and subcontracted services totalling €32,868,000 in 2012 (€27,919,000 in 2011).
(g) Impairment losses (net)
was as follows:
€’000
2012
2011
Loans and receivables (*)
Other financial instruments not measured at fair value through profit or loss
Debt securities (*)
Other equity instruments (see note 6)
(1,329,691)
(79,276)
(79,276)
(28,677)
(50,599)
(512,633)
(121,891)
(121,891)
(3,928)
(117,963)
Total
(1,408,967)
(634,524)
(*) The sum of these amounts is equal to the sum of the net provisions/reversals charged or credited to the income statement in respect of value
adjustments for credit risk plus the write-offs/recoveries charged or credited to the Income statement in respect of impaired financial assets eliminated
from the balance sheet (note 8).
236
The increase in loan impairment charges was due in large measure to the fair value estimates explained in note
1 (c).
(h) Impairment losses on other assets
The “impairment losses on other assets” item of the consolidated income statement consisted mainly of value
adjustments in respect of properties for the group’s own use and inventories of investment and other real estate.
The adjustments were made on the basis of updated value appraisals by independent experts and the revised
estimates referred to in note 1.
(i) Gains (Losses) on derecognition of assets not classified as non-current assets held for sale
was as follows:
€’000
2011
Gains
On disposal of tangible assets
On disposal of equity investments
Other
48,459
18,367
30,092
0
7,878
3,183
4,695
0
Losses
On disposal of tangible assets
On investment property
On disposal of equity investments
Other
(33,052)
(5,531)
0
(27,521)
0
(2,206)
(2,182)
0
(23)
(1)
15,407
5,672
Total
Major contributors to the “gains (losses) on disposal of tangible assets” items for the year 2012 were
the disposal of Banco del Bajío, S.A., Institución de Banca Múltiple and its subsidiaries, and of Sociedad de
Inversiones y Participaciones COMSA EMTE, S.L. (see note 2).
2012
(j) Negative goodwill in business combinations
The negative goodwill on consolidation reported for 2012 reflects the business combination resulting from the
takeover of Banco CAM explained in note 2 of these annual accounts.
(k) Other P&L items
The negative goodwill referred to under (j) above has not been included in the group’s assessed income for
corporation tax purposes and does not involve the recognition of any deferred tax liability. It has not therefore
resulted in any tax charge on income for the period.
Tax liabilities of a contingent nature could arise as a result of different possible interpretations of the tax rules
applicable to certain types of transaction within the banking industry. However, the possibility of such liabilities
arising is remote, and if they did arise the resulting tax charge would not be such as to have any significant impact
on the annual accounts.
Nota 35. Taxation (income tax)
Undertakings treated as consolidated for tax purposes
Banco de Sabadell, S.A. is the parent company of a group treated as consolidated for tax purposes which includes
all Spanish-domiciled group undertakings that qualify as dependent companies under the Spanish income tax
regulations for consolidated groups.
Undertakings treated as part of the group for tax purposes are shown in Annex I.
All other group companies submit individual tax returns in accordance with the applicable tax regulations.
237
Reconciliation
The reconciliation of the difference between the accounting results for the years 2012 and 2011 and the assessed
income for corporation tax purposes is as follows:
€’000
2012
2011
Profit before tax
Increases in taxable income
Reductions in taxable income
(302,020)
1,274,496
(3,262,005)
187,466
593,966
(623,826)
Assessed income for tax purposes
(2,289,529)
157,606
(686,859)
47,282
(2,451)
(10,581)
(689,310)
36,701
248,986
0
42,269
(19,653)
0
(65,454)
(398,055)
(48,406)
Tax (at 30%)
Double taxation, training and other allowances
Net tax payable
Tax due to timing differences (net)
Adjustments on recognition of reinvestment allowance to be deducted
Other adjustments (net)
Income tax
In the first quarter of 2011 the Tax Inspectorate recognized the tax deductibility of the goodwill arising as a result
of the merger in which Banco Herrero S.A. was absorbed by the Bank on 18 September 2002. This goodwill was
valued at €376.62 million.
Also in the first quarter of the year, the Tax Inspectorate reached a final decision on the tax deductible amount of
the merger difference arising from the absorption of Banco Atlántico, S.A. by the Bank on 1 September 2004. This
was fixed at €759.09 million.
As a result of the Inspectorate’s recognition of the tax deductibility of the consolidation difference arising from
the merger of Banco Herrero, S.A. and its final assessment of the difference arising in respect of the merger of
Banco Atlántico, S.A., Banco de Sabadell, S.A. recorded a €66.2 million income item under income tax for 2011.
An allocation of €294,000 to the Reserve for investment in the Canary Islands (reported in note 3 to these
annual accounts) was approved by the Annual General Meeting of Banco Sabadell on 14 April 2011. The reserve
was fully utilized in 2011 as a result of a number of investments during the year in fixed assets classifiable as
property, plant and equipment.
Taxable income - increases and reductions
The increases and reductions in taxable income shown in the previous table are analysed in the following table on
the basis of whether they arose from temporary or permanent differences.
€’000
238
2012
2011
Permanent differences
Temporary differences arising in the current year
Temporary differences arising in earlier years
50,705
9,387
1,214,404
66,116
46,323
481,527
Increases
1,274,496
593,966
Permanent differences
Temporary differences arising in the current year
Temporary differences arising in earlier years
(1,208,262)
(16)
(2,053,727)
(161,487)
(1,609)
(460,730)
Reductions
(3,262,005)
(623,826)
Tax assets - deferred
This caption shows the amount reclaimable from the Spanish Treasury in respect of deferred tax assets. These
arise primarily from deferred tax due to differences between accounting and tax assessment procedures.
The differences relate to non-tax deductible provisions totalling €3,019,273,000 (€383,993,000 in 2011),
transfers into pension funds totalling €69,342,000 (€60,537,000 in 2011), merger reserves of €177,219,000
(€179,243,000 in 2011), and funds totalling €68,475,000 related to adjustments to fair value of assets and
liabilities originating from Banco Guipuzcoano,
The changes in deferred tax assets, other than those related to valuation adjustments in equity, in the last two
years were as follows:
€’000
923,589
Intragroup transactions
Pension funds
Non-tax deductible reserve funds
Merger reserves
Recognition of loan arrangement fees
Change in corporation tax rate
Advance tax payments for foreign branches
Accelerated depreciation
Consolidation adjustments
Other
26,948
(15,458)
(65,125)
41,647
(404)
788
308
(500)
73,910
1,720
9,885
997,308
Pension funds
Non-tax deductible reserve funds
Merger reserves
Recognition of loan arrangement fees
Change in corporation tax rate
Advance tax payments for foreign branches
Accelerated depreciation
Tax losses
Other
4,164,076
35,064
14,645
222,690
(2,024)
(337)
0
(330)
0
(33,145)
(141,204)
400,620
(48,055)
5,609,308
€’000
97,536
Mergers
Deferred tax charges applicable to foreign branches
Transfer of business/operations
Asset restatements
Other
5,190
(97)
3,091
(1,630)
(2,579)
(231)
30,101
(714)
130,667
Mergers
Deferred tax charges applicable to foreign branches
Transfer of business/operations
Asset restatements
Other
664,061
(37,780)
(70)
(391)
(3,241)
0
9,630
(23,164)
5,085
744,797
Tax liabilities - deferred
This consists of amounts payable to the Spanish Treasury in respect of deferred tax liabilities. These liabilities
include deferred tax charges due to accelerated depreciation as permitted by the tax regulations, and reversals to
the Treasury of deferred tax totalling €5,676,000 (€6,049,000 in 2011) in relation to mergers, and €35,532,000
(€58,696,000 in 2011) due to consolidation adjustments.
Changes in deferred tax liabilities in the last two years were as follows:
239
240
In the course of 2012 the Banco Sabadell group transferred certain assets on which tax deductions had been
claimed in respect of reinvested profits in earlier years, before the end of the period in which investment had to
be maintained. The amounts transferred totalled €483,554,000, of which an estimated €154,567,000 had not
yet been reinvested at the time this annual report was signed off. It is anticipated that this sum will be reinvested
within the time period set in article 42 of the Consolidated Text of the Corporation Tax Law (Royal Legislative
Decree 4/2004 of 5 March),
In 2012 the Banco Sabadell group received €5,616,000 in income qualifying for tax deductibility on
reinvestment. The deduction will be carried forward to the year in which the reinvestment actually occurs.
In 2011 the Banco Sabadell group made investments amounting to approximately €124,652,000, allowing it to
claim deductions on the reinvestment of exceptional profits as permitted by article 42 as mentioned above. These
deductions amounted to €359,000 and were applicable to income of €2,990,000 generated during the year. The
deductions were not, however, applied at group level but can be claimed in future years.
Income to which tax deductions for reinvestment were applied in the years 2007, 2008, 2009, and 2010 were
€173,641,000, €392,358,000, €388,968,000 and €536,250,000 respectively.
With regard to the obligatory disclosures to be made in annual accounts under the Corporation Tax law referred
to above, article 12.3, final paragraph, information for the year 2011 has been reported in the individual accounts
of the group undertakings concerned.
As a result of its absorption of Banco Guipuzcoano, S.A. and Banco CAM, S.A., Banco de Sabadell, S.A. is
obligated to satisfy certain requirements in relation to the following tax benefits claimed by Banco Guipuzcoano,
S.A. and Banco CAM, S.A.
Tax benefits accruing to Banco Guipuzcoano, S.A.:
Exemption from tax on reinvested extraordinary profits In each of the years 2007, 2008, 2009, 2010 and 2011
Banco Guipuzcoano, S.A. claimed exemption from Corporation Tax in respect of taxable income of €1,826,000,
€20,159,000, €28,552 000, €24,324,000 and €1,028,000, respectively, subject to a commitment to reinvest
€1,892,000, €23,757,000, €34,430,000, €30,364,000 and €1,158,000 in each of those years.
Tax deduction on new property, plant and equipment. In each of the years 2009 and 2010 tax deductions
on new investment in property, plant and equipment were generated amounting to €119,000 and €116,000
respectively.
Tax deduction on cash contributions to Economic Interest Groupings In 2007 a tax deduction accrued in respect
of a cash payment of €134,000 to an Economic Interest Grouping.
Tax deductions on cash contributions to private equity funds and companies. In each of the years 2007, 2008
and 2011 tax deductions accrued in respect of cash contributions to private equity funds and companies amounting
to €20,000, €13,000 and €29,000, respectively.
Tax deduction on cash contributions to Business Promotion Companies for the last 5 years. In each of the years
2007, 2008, 2009 and 2010 tax deductions accrued on cash payments into companies of this type totalling
€1,430,000, €15,645,000, €11,295,000 and €5,267,000, respectively.
Of the tax deductions listed above, a total of €26,513,000 had not yet been applied as of 31 December 2011.
Tax benefits accruing to Banco CAM, S.A.:
Tax deduction in respect of research, development and technological innovation costs. In 2010 Banco CAM, S.A.
became entitled to a tax deduction of €159,000 in respect of research, development and technological innovation
costs. This deduction has yet to be applied.
Tax audits
On 27 June 2012 the Spanish Inland Revenue’s Inspectorate of Taxes commenced tax audits of Banco de
Sabadell, S.A. in respect of Corporation tax for the years 2007 to 2010, Value Added Tax from July 2008 to
December 2010, deduction/payment of the tax on investment income from July 2008 to December 2010 and
deduction/payment of the tax on earned income (from employment or from a profession) from July 2008 to
December 2010.
Given the position of Banco de Sabadell, S.A. as parent company of a consolidated group of companies, the
commencement of the audit had the effect of interrupting the time period within which payment of the Corporation
Tax for the years 2007 to 2010 could be enforced for all companies which were, in those years, being treated as
part of the consolidated group for Corporation Tax purposes.
Likewise, in view of the Bank’s position as parent company of a consolidated group assessed as a unit for
VAT purposes, the time period within which payment of the Value Added Tax for the years 2007 to 2010 could be
enforced ceased to run for all companies which were, in those years, being treated as part of the consolidated
group for VAT purposes.
In a separate development, on 12 July 2012 the Inspectorate of Taxes for the province of Guipúzcoa commenced
a partial audit of Banco Guipuzcoano, S.A., (now Banco de Sabadell, S.A.), whose scope was limited to verifying
that the Bank had satisfied the conditions to be fulfilled in order to claim tax deductions against Corporation Tax for
the years 2007 and 2008 in respect of contributions to business promotion companies (sociedades de promoción
de empresas).
As a result of earlier inspections by the tax authorities, audit reports had been issued and were contested and
were the subject of appeals both by the group and by the acquired and subsequently merged companies. The
liability assessed was €25,305,000 of which €13,259,000 was due to timing differences in the assessment for
Corporation Tax. The Bank has, in any event, made suitable provision for any contingencies that could arise in
relation to these tax assessments.
Tax liabilities of a contingent nature could arise as a result of different possible interpretations of the tax rules
applicable to certain types of transaction within the banking industry. However, the possibility of such liabilities
arising is remote, and if they did arise the resulting tax charge would not be such as to have any significant impact
on the annual accounts.
All companies treated as part of the consolidated group for tax purposes are liable to be inspected for any tax
which has not subject to an audit and for which the statutory time limit has not expired.
Nota 36. Segmental information
Segmentation policy
Segmental reporting is organized primarily according to business units, and secondarily according to geography.
The business units described below are based on the group’s organizational structure as it was at the end of
the year 2012. For customer-facing businesses (Commercial Banking, Corporate Banking and Private Banking),
segmentation is based on the types of customer addressed by those units. Investment Management is a cross
selling business that offers specialized products which are sold through the group’s branch network.
Business unit segmentation
Presentation principles and methods: information for each business unit is based on the individual accounting
records of each group undertaking, after all consolidation eliminations and adjustments have been made, and
on an analytical accounting for income and expense where particular business lines are allocated to one or more
corporate entities. The income and expense for each customer can thus be assigned according to the business to
which they have been allocated.
Each business division is treated as a free-standing operation. Where services are provided by one division to
another (distribution, services, systems, etc.) inter-unit commissioning applies. The impact of this on the group’s
income statement is nil.
Each business pays the direct costs allocated to it through generic and analytical accounting, as well as the
indirect costs attributable to Central Services divisions.
Capital is allocated in such a way that each business has the equivalent of the minimum regulatory capital
requirement to cover its risk exposure. This minimum capital requirement is allocated by reference to the
supervisory authority for each business (the Bank of Spain for customer-facing businesses and the National Stock
Market Commission [CNMV] for Investment Management).
241
Key data for each business division are shown in the tables that follow:
a) Segmentation by business unit
Details of profit before tax and other financial data for each business unit for the year 2012 are shown in the table
below, along with a reconciliation of the totals shown in the table with those shown in the consolidated group
accounts.
€’000
2012
Commercial
Banking
Corporate
Banking
Private
Banking
Investment
Management
1,531,259
213,623
16,753
293
450,652
(90,640)
32,721
1,452
39,422
669
27,846
1,807
1,891,271
247,796
56,844
29,946
(1,151,999)
(562,835)
0
(587,574)
0
(25,708)
(6,843)
0
(58,462)
0
(41,446)
(23,010)
0
(2,712)
0
(18,712)
(11,415)
0
0
(6)
151,698
163,626
12,686
11,228
Profit (loss) before tax, by segment
151,698
163,626
12,686
11,228
Ratios (%)
ROE
Cost:income ratio
3.1%
60.9%
14.1%
10.4%
22.5%
72.9%
25.8%
62.5%
Other information
Employees
Branches in Spain
10,924
1,839
95
2
268
12
148
0
Net interest income
Other income
Gross income
Operating expenses
of which: Personnel expenses
Impairment losses
Other gains/losses
Profit before tax - reconciliation
242
Consolidated
All Business Units
(+/-) Unallocated profits/losses (1)
(+/-) Eliminations (inter-segment profits/losses)
(+/-) Other profits/losses (2)
(+/-) Income tax and/or discontinued operations
339,238
127,459
0
(768,717)
0
(302,020)
(1) Includes net provisions arising from a review of estimated losses as described in note 1, and the negative goodwill on consolidation (see note 34(j)).
(2) Includes amounts relating to impairment of real estate assets reported by the Asset Management Division.
€’000
2011
Corporate
Banking
Private
Banking
Investment
Management
1,279,557
170,711
15,599
509
372,335
26,570
28,539
9,882
42,180
5,036
28,073
573
1,678,462
209,132
62,815
29,155
(883,867)
(406,340)
0
(352,364)
0
(22,735)
(6,514)
0
3,221
0
(46,520)
(23,948)
0
91
0
(18,762)
(11,446)
0
0
0
442,231
189,618
16,386
10,393
Profit (loss) before tax, by segment
442,231
189,618
16,386
10,393
Ratios (%)
ROE
Cost:income ratio
12.2%
52.7%
19.3%
10.9%
26.9%
74.1%
15.7%
64.4%
Other information
Employees
Branches in Spain
7,259
1,322
94
2
298
11
153
0
Net interest income
Other income
Gross income
Operating expenses
of which: Personnel expenses
Impairment losses
Other gains/losses
Profit before tax - reconciliation
All Business Units
(+/-) Unallocated profits/losses (1)
(+/-) Eliminations (inter-segment profits/losses)
(+/-) Other profits/losses
(+/-) Income tax and/or discontinued operations
Commercial
Banking
Consolidated
658,628
(244,910)
0
(226,252)
0
187,466
Average total assets for the group as a whole at 31 December 2012 were €138,234,738,000 compared with
€96,009,015,000 a year earlier.
The types of products and services from which ordinary income is derived are described below for each business
unit:
- Commercial Banking offers products for both investors and savers. Products for investment include mortgage
loans and credit facilities. The product range for savers includes demand and term deposit accounts, mutual
funds and pension plans.
Other key business areas are insurance products and payment media such as credit cards and transfers.
- Corporate Banking has a comprehensive offering of specialized financing services and solutions, ranging from
transaction banking to more sophisticated, tailor-made solutions in such areas as financing, treasury services
and corporate finance.
- Private Banking services are provided by a business-focused team of 175 private bankers working from 12
specialist branches and 23 customer service centres covering 11 of Spain’s regions.
- The group’s Investment, Products and Research business is integrated within the area responsible for
managing the group’s collective investment schemes (CIS’s), and combines asset management with the
selling and operation of CIS’s; it also manages investments for other Banco Sabadell businesses that hold
portfolios of assets.
(1) Includes exceptional items due to impairment of financial assets and other assets.
243
The ordinary income generated by each business unit in 2012 and 2011 was as follows:
€’000
Consolidated
Ordinary income
from customers
Ordinary income
- intersegmental
31/12/2012
31/12/2011
31/12/2012
3,357,418
500,806
262,427
57,613
2,464,452
448,093
266,352
63,937
92,635
859
36,510
3,945
0
0
4,178,264
3,242,834
31/12/2011
Total ordinary income
31/12/2012
31/12/2011
118,525
901
38,551
4,454
3,450,053
501,665
298,937
61,558
2,582,977
448,994
304,903
68,391
(58,616)
(69,869)
(58,616)
(69,869)
75,333
92,562
4,253,597
3,335,396
BUSINESS SEGMENT
Commercial Banking
Corporate Banking
Private Banking
Investment Management
(-) Adjustments and eliminations of
intersegmental ordinary income
Total
The following table shows the proportion of net interest income, net fees and commissions and income from
services generated by each business unit in 2012 and 2011:
%
Segmentation of net interest income and net fees and commissions 2012
Income from
Loans & advances
to other debtors
services (*)
Share of avg.
Share of avg.
Share of avg.
Share of avg.
Share of avg.
total volume
total return
total volume
total return
total income
BUSINESS SEGMENT
Commercial Banking
Corporate Banking
Private Banking
85.2%
11.8%
3.0%
0.0%
84.1%
12.5%
3.4%
0.0%
83.8%
3.8%
12.4%
0.0%
77.5%
4.2%
18.3%
0.0%
77.2%
5.6%
6.7%
10.5%
Total
100%
100%
100%
100%
100%
(*) Percentage share of total fee and commission income for each business segment.
%
Segmentation of net interest income and net fees and commissions 2011
Income from
Loans & advances
to other debtors
services (*)
Share of avg.
Share of avg.
Share of avg.
Share of avg.
Share of avg.
total volume
total return
total volume
total return
total income
BUSINESS SEGMENT
Commercial Banking
Corporate Banking
Private Banking
78.4%
16.6%
5.0%
0.0%
79.5%
14.2%
6.3%
0.0%
68.8%
7.1%
24.1%
0.0%
66.4%
8.4%
25.2%
0.0%
72.9%
5.6%
8.3%
13.3%
Total
100%
100%
100%
100%
100%
(*) Percentage share of total fee and commission income for each business segment.
244
b) Segmentation by geography
The distribution of interest and similar income by geography for the years 2012 and 2011 was as follows:
€’000
Distribution of interest and similar income by geography
Parent company
Group
31/12/2012
31/12/2011
31/12/2012
31/12/2011
Domestic market
Export markets:
European Union
Other OECD
Other countries
4,590,655
3,030,187
4,541,673
3,207,330
26,659
33,997
0
29,970
27,447
0
26,671
145,200
22,077
33,477
131,762
21,513
Total
4,651,311
3,087,604
4,735,621
3,394,082
Nota 37. Financial risk management
Risk management and risk policy are conducted centrally on a group-wide basis to realize synergies and ensure
overall control. For this reason, most of the information provided in this note relates to the group as a whole,
except in a number of cases where the data relates almost entirely to the Bank.
The main financial risks faced by Banco Sabadell group companies in the course of their operations involving the
use of financial instruments are credit risk, market risk and liquidity risk.
The group is aware that the accurate and efficient management and control of risk ensures that shareholder
value is maximized and that an appropriate degree of solvency is maintained in a context of sustainable growth.
With this in view, the management and control of risk has been embodied in a broad framework of principles,
policies, procedures and advanced valuation methods, forming an efficient decision-taking structure whose aim is
to achieve an optimum balance of return and risk.
Credit risk
Credit risk arises from the possibility of one of the parties to a contract for a financial instrument failing to perform
the obligations arising from its financial liabilities.
Credit risk exposure is subjected to rigorous monitoring and control through regular reviews of borrowers’
creditworthiness and their ability to meet their obligations to the group, with exposure limits for each counterparty
being adjusted to levels that are deemed to be acceptable. It is also normal practice to mitigate exposure to credit
risk by requiring borrowers to provide collateral or other security to the Bank.
The group makes provisions to cover against credit risk, both in respect of specific losses actually incurred at the
balance sheet date and for losses considered likely in the light of past experience. This is done in such a way as to
ensure that losses could not exceed loss provisions even in the event of a major change in economic conditions or
in borrower quality.
To maximize the business opportunities provided by each customer and to guarantee an appropriate degree of
security, responsibility for monitoring risks is shared between the relationship manager and the risk analyst, who
by maintaining effective communication are able to obtain a comprehensive view of each customer’s individual
circumstances.
The relationship manager monitors the business aspect through direct contact with customers and by handling
their day-to-day banking, while the risk analyst takes a more system-based approach making use of his specialized
knowledge.
The Board of Directors delegates powers and discretions to the Risk Control Committee, which then subdelegates authority at each level. The implementation of authority thresholds on credit approval management
systems ensures that powers delegated at each level are linked to the expected loss calculated for each business
loan or other transaction that is requested.
The establishment of advanced methodologies for managing risk exposures — in line with the New Basel Capital
Accord (NBCA) and industry best practice — also benefits the process in ensuring that proactive measures can be
taken once a risk has been identified. Of vital importance in this process are risk assessment tools such as credit
• Solvency. Banco Sabadell has opted for a prudent and balanced policy on risk to ensure sustained and
profitable business growth in line with the strategic targets set by the group for maximum value creation. It is
vital that the structure of limits and thresholds should be able to prevent concentrations of risk from building
up in such a way as to compromise a significant proportion of the Bank’s capital resources. For this reason,
the risk variable is taken into account in decisions at every level, quantified according to a common measure in
terms of assigned capital.
• Responsibility. The Board of Directors is committed to maintaining processes for the management and
control of risk: deciding on policy, setting limits, assigning powers and discretions at different levels of the
organization, and approving management models, procedures and techniques of measurement, supervision
and control. At the executive level there is a clear separation of functions between risk-originating business
units and the functions responsible for managing and controlling risk.
• Monitoring and control. The ongoing management of risk is supported by robust control procedures to ensure
compliance with specified limits, clearly defined responsibilities for monitoring indicators and predictive alerts,
and the use of an advanced risk assessment methodology.
Underlying principles
The Banco Sabadell group has laid down basic principles for the management and control of risk. These are
described in the following paragraphs.
245
rating for corporate borrowers and credit scoring for retail customers, as well as indicators that serve as advance
alerts in monitoring risk.
During periods of economic weakness, debt refinancings and restructurings generally acquire greater prominence
as risk management techniques. The purpose of these exercises will be to bring a borrower’s debt servicing into
line with changed circumstances brought on by an adverse business environment, affecting his ability to pay, and
to increase the security on the loan. A number of specific policies to achieve this are in place across the group,
including procedures for the approval, monitoring and control of debt refinancing and restructuring processes.
These include the following:
• The possession of a borrower’s repayment history over a reasonable period and evidence of his intention to
repay.
• There must be reasonable certainty that borrowers will be able to meet their new commitments and any new
terms that have been agreed.
• Obtaining improved security and ensuring that any existing security is not impaired. All ordinary interest must
always by paid up to the refinancing date.
• No access to further refinancings for at least six years.
The group continually monitors compliance with current terms and conditions and with the above policies.
Recovery of past-due accounts is the responsibility of a specialized function which coordinates initial out-of-court
negotiations and, where necessary, legal proceedings conducted by the group’s legal department or by independent
legal advisors, depending on the nature and size of the debt. The outcomes of the recovery process are evaluated
to measure the effectiveness of the loss mitigation procedures that are in place.
Year-end carrying values of financial assets involving credit risk exposures, analysed by asset type, counterparty
type and instrument type, and for domestic and foreign operations, are set out in the table that follows. These
values give a good indication of maximum exposure to credit risk since they are based on the maximum
indebtedness for each borrower at the close of each year.
€’000
2012
Credit risk exposure
Foreign
operations
Total
Spanish
operations
Foreign
operations
Total
Cash and banks centrales
1,885,387
598,203
2,483,590
925,977
364,701
1,290,678
Loans and advances to credit
institutions
3,116,034
372,673
3,488,707
2,523,057
373,617
2,896,674
182
298
480
561
298
859
110,666,414
5,151,055
30,120
105,515,360
19,495,338
4,261,637
156,182
217
4,105,454
63,396
114,928,051
5,307,237
30,337
109,620,814
19,558,734
68,982,121
2,051,064
15,110
66,931,057
4,655,153
4,194,553
177,188
1,002
4,017,365
88,015
73,176,674
2,228,252
16,112
70,948,422
4,743,168
23,343,958
14,685,239
4,921,966
3,692,384
44,370
574,759
35,895
108,364
430,499
0
23,918,717
14,721,134
5,030,330
4,122,883
44,370
11,599,917
7,891,190
3,007,445
693,001
8,281
707,865
48,366
96,752
562,747
0
12,307,782
7,939,556
3,104,197
1,255,748
8,281
Trading derivatives
1,673,862
29,173
1,703,035
1,414,415
23,257
1,437,672
Hedging derivatives
4,933,006
0
4,933,006
417,685
0
417,685
8,666,283
349,186
9,015,469
7,895,158
451,864
8,347,022
12,921,981
601,903
13,523,884
11,383,793
274,072
11,657,865
167,206,925
6,787,534
173,994,459
105,142,123
6,389,929
111,532,052
Of which: doubtful assets
General government
Debt securities
General government
Credit institutions
Doubtful assets
246
2011
Spanish
operations
Total
The group also has exposures and commitments to borrowers of a contingent nature. These generally arise from
guarantees given by the group or commitments under credit facilities extended to customers for up to a given limit
so that they have access to funds when required. These facilities also involve credit exposure and are subject to
the same processes of approval, monitoring and control as described above.
The global distribution of the group’s credit risk by region and borrower type at 31 December 2012 was as
follows:
€’000
Spain
Other European
Union
Americas
Rest of world
Credit institutions
10,250,273
9,280,963
581,764
319,331
68,215
General government
Central government
Other
18,782,077
13,585,147
5,196,930
18,325,072
13,544,809
4,780,263
436,926
40,337
396,589
5,572
0
5,572
14,507
0
14,507
5,577,676
5,045,237
168,550
363,888
0
78,688,051
72,678,030
3,202,233
2,410,012
397,778
13,986,024
2,427,707
62,274,320
37,526,418
24,747,902
13,835,015
2,416,559
56,426,455
32,739,278
23,687,177
14,374
6,339
3,181,519
2,589,580
591,940
136,096
4,809
2,269,106
1,848,279
420,827
538
0
397,239
349,281
47,958
41,937,897
39,634,165
1,661,703
75,054
566,975
33,603,624
5,766,622
2,567,651
31,456,331
5,653,084
2,524,750
1,557,478
83,840
20,385
52,789
7,529
14,735
537,026
22,168
7,781
144,963,467
6,051,176
3,173,857
1,047,474
Real estate construction & developmen
Other purposes
Large corporates
associations (“ISFLSH”)
Home loans
Personal loans
Other loans
transactions
TOTAL
4,188,806
Total
151,047,168
The distribution of the group’s credit risk by Spanish autonomous region at 31 December 2012 was as follows:
AUTONOMOUS REGIONS
TOTAL
Andalucía
Aragón
Asturias
Balearic
Islands
9,280,963
320,283
81,832
182
15
37,250
0
0
0
1,644,098
18,325,072
13,544,809
4,780,263
238,277
5,021
95,355
65,667
40,808
11,716
35,667
107,261
834,576
238,277
5,021
95,355
65,667
40,808
11,716
35,667
107,261
834,576
5,045,237
589
23
964
463
57
5,935
101
1,258
2,493,656
Non-financial firms & sole
proprietors
72,678,030
3,940,545
1,256,826
2,273,395
1,803,039
899,899
336,618
472,368
1,222,214
25,285,473
13,835,015
1,714,275
500,275
532,756
336,688
174,287
27,112
102,394
198,272
3,947,865
Credit institutions
General government
Central government
Other
Real estate construction
& development
Civil engineering
construction
Canary
Islands
Cantabria
Castile & La
Mancha
Castile &
León
Catalonia
2,416,559
63,626
9,036
83,778
12,399
5,373
17,809
5,772
31,298
520,332
Other purposes
Large corporates
56,426,455
32,739,280
2,162,644
906,765
747,516
387,618
1,656,860
743,695
1,453,952
699,312
720,239
404,619
291,696
144,524
364,202
129,865
992,645
407,353
20,817,276
11,933,844
SMEs & sole
proprietors
23,687,175
1,255,878
359,898
913,165
754,640
315,619
147,173
234,337
585,291
8,883,432
39,634,165
2,574,032
311,636
1,306,456
1,785,456
637,730
100,593
491,744
619,371
11,072,816
31,456,331
5,653,083
2,524,751
2,085,145
390,076
98,810
244,303
48,639
18,694
1,048,666
191,007
66,782
1,469,648
268,288
47,520
510,058
114,792
12,881
75,348
21,972
3,274
416,208
65,701
9,835
515,131
77,997
26,243
8,509,189
1,450,758
1,112,870
7,073,726
1,655,339
3,676,352
3,654,640
1,615,744
454,863
999,880
1,950,103
41,330,619
Other residential property
and housing associations
(“ISFLSH”)
Home loans
Personal loans
Other loans
transactions
TOTAL
144,963,467
€’000
247
€’000
AUTONOMOUS REGIONS
Credit institutions
General government
Central government
Other
Real estate construction & development
Other purposes
Large corporates
associations (“ISFLSH”)
Home loans
Personal loans
Other loans
Extremadura
Galicia
Madrid
Murcia
Navarre
Community
of Valencia
Basque
Country
La Rioja
Ceuta &
Melilla
0
39,547
6,304,872
0
0
310,362
542,521
0
0
38,142
0
38,142
28,899
0
28,899
1,795,405
0
1,795,405
93,733
0
93,733
58,105
0
58,105
979,868
0
979,868
337,409
0
337,409
14,354
0
14,354
0
0
0
1
503
2,497,343
2,685
95
10,522
31,038
3
0
87,439
17,672
1,341
68,426
33,673
34,753
1,173,863
185,184
97,427
891,252
623,817
267,435
18,310,447
2,354,937
1,293,695
14,661,816
11,643,270
3,018,546
2,870,432
1,431,524
18,781
1,420,127
481,529
938,598
731,822
93,494
14,135
624,193
422,525
201,668
8,296,495
1,682,185
85,516
6,528,794
1,999,213
4,529,580
3,268,083
432,390
152,889
2,682,803
1,525,236
1,157,568
310,339
103,706
3,352
203,282
113,692
89,590
138,732
0
0
138,732
138,729
3
106,112
335,408
5,189,071
3,398,515
129,930
10,661,800
837,051
76,281
161
90,272
13,839
2,001
265,539
56,973
12,895
4,047,364
515,056
626,651
2,645,675
649,819
103,021
102,150
20,871
6,910
8,689,090
1,647,876
324,834
683,064
108,393
45,594
59,480
10,865
5,935
0
161
0
231,695
1,578,220
34,097,139
6,365,366
919,952
20,259,048
5,016,102
400,978
138,893
transactions
TOTAL
248
The value of the credit risk exposure described above has not been reduced by the value of any collateral or
other credit enhancement that may have been accepted as security. Such guarantees are in everyday use with the
types of financial instrument dealt in by the group.
Guarantees normally consist of charges on property, and will in most cases be mortgages on buildings for
residential use, either completed or under construction. To a lesser degree, the Bank will also accept other types
of security such as mortgages on business premises, industrial buildings and the like, or deposits of securities.
Another type of security commonly used by the Bank to mitigate credit risk is the aval or third-party guarantee,
provided that it is fully satisfied as to the solvency of the guarantor.
All these risk mitigation techniques are expressed in a form that affords full legal certainty, that is, by framing
them in contracts that are legally binding on all parties and can be enforced in all relevant jurisdictions, thus
ensuring that the security can be realized at any time. The whole contract process is subject to internal review for
legal soundness and legal opinions may be sought from international experts where contracts are drawn up under
the laws of a foreign country.
Guarantees involving a charge on property are drawn up as public instruments and executed before a notary to
be fully valid and effective as against third parties. A public instrument, in the case of a real property mortgage,
will then be registered in the appropriate land registry to make its effectiveness in law and vis-à-vis third parties
complete. In the case of a chattel mortgage or pledge, the pledged items are generally deposited with the Bank.
Contracts are not open to unilateral termination by borrowers and the security remains in effect until the loan has
been repaid in full.
Personal guarantees or suretyships in the Bank’s favour may be arranged and will again, in all but exceptional
cases, be in the form of a notarially authorized public instrument to ensure that the contract is drawn up to
give maximum legal security and that legal proceedings can be taken to enforce it in the event of default. Such
guarantees are irrevocable and give the Bank a direct, first demand claim against the guarantor.
In addition to the risk mitigation provided by guarantees formally agreed between borrowers and the Bank, since
the acquisition of Banco CAM the group has had the additional guarantee offered by the Asset Protection Scheme
which covers a specified set of assets with retroactive effect from 31 July 2011, for a period of 10 years.
In its market trading operations the Banco Sabadell group, in line with current industry practice, enters into
agreements to set up netting arrangements with most of the institutional counterparties with which it trades in
derivative instruments and has agreed a number of Credit Support Annexes (CSAs). Both these measures are
designed to mitigate the group’s exposure to, and prevent excessive concentrations of, credit risk. Security
deposits held by Banco Sabadell by way of collateral at the end of 2012 totalled €275 million (€426 million at the
end of 2011).
The greater part of the group’s credit risk exposures covered by one or other type of guarantee or credit
enhancement are those covered by mortgages to mitigate exposures arising from loans to finance home purchases
or the development of residential or other types of real estate. Loans secured by mortgages currently account for
55% of all group loans and advances.
The loan loss ratios and loan loss coverage ratios for the Banco Sabadell group are as follows:
%
Loan loss ratio - ex APS (*)
Loan loss coverage ratio - incl. APS (**)
2012
2011
2010
9.33
13.9
5.95
4.5
5.01
4.2
(*) Excludes assets subject to the Asset Protection Scheme agreed as part of the acquisition of Banco CAM.
(**) Measures loan loss and real estate impairment provisions in proportion to overall credit risk exposure.
As mentioned earlier, the group uses internally generated models to rate most of the borrowers (or transactions)
with whom it incurs credit exposure. These models have been designed in accordance with best practice as
proposed by the NBCA. However, not all asset portfolios giving rise to credit risk are subject to these models, partly
because the design of such models demands a certain degree of experience of actual cases of default. To give
a clear view of the overall quality of the portfolio, the following table uses risk categories defined in the financial
reporting standards laid down by the Bank of Spain’s Circular 4/2004. These categories are used to analyse credit
risks to which the group is exposed and to estimate provisioning requirements to cover against impairment losses
in portfolios of debt instruments.
%
Credit quality of financial assets
Negligible risk
Low risk
Medium-low risk
Medium risk
Medium-high risk
High risk
Total
2012
2011
21
29
16
26
7
1
23
22
24
28
2
1
100
100
%
Analysis of risk exposures by credit rating
AAA/AA
A
BBB
BB
B
Other ratings
Total
Measured by credit rating/scoring
2012
22
9
36
26
6
1
As much as 54% of the Bank’s credit risk is internally rated. The distribution of these exposures, rated on an
internal rating scale based on the available information, is as follows:
100
Rating information on transactions from Banco CAM is not available and is therefore not included in the table.
Market risk
Market risk arises from possible fluctuations in the fair value or future cash flows of a financial instrument as a
result of changes in market risk factors. Several types of market risk factors can be distinguished. The main types
are interest rates, exchange rates, equity prices and credit spreads.
Different approaches are taken to the management of market risk, depending on which of the group’s main
business lines has given rise to the risk:
• Risks arising from the group’s customer-focused commercial banking and corporate banking businesses,
known as structural risk. This can be sub-classified into interest rate risk, currency risk and liquidity risk. These
categories of risk are discussed separately below.
• Risks generated through proprietary trading or market making activities by group undertakings, including trading
in foreign exchange instruments, equities and bonds, whether on the spot or the derivatives markets. Trading
of this kind will often be undertaken as part of treasury and capital market operations, with which this section
is specifically concerned.
249
250
Market risk is measured by the VaR (Value at Risk) method, which allows the risks on different types of financial
market transaction to be analysed as a single class. The VaR method provides an estimate of the potential
maximum loss on a position that would result from an adverse, but normal, movement in any of the above risk
factors. This estimate is expressed in money terms and is calculated at a specified date, to a specified confidence
level and over a specified time horizon.
Market risk is monitored on a daily basis and reports on current risk levels and on compliance with the limits
assigned to each unit are sent to the risk control functions. Limits are assigned by the Board of Directors for each
risk monitoring unit (based on nominal amounts, VaR or sensitivity limits, as applicable). This makes it possible to
keep track of changes in exposure levels and measure the contribution of each risk factor.
Risk control of this kind is supplemented by special simulation exercises and extreme market scenarios (stress
testing). The reliability of the VaR methodology is validated by back testing techniques which are used to verify that
VaR estimates are consistent with the specified confidence level. Using the VaR methodology does not, however,
rule out the possibility that losses will be above the set limits, as significant market movements may occur that
exceed the confidence levels being applied.
Risk levels in 2011 and 2010 as measured by the 1-day VaR at a 99% confidence level were as follows:
€Mn.
Average
2012
Maximum
Minimum
Average
2011
Maximum
Minimum
Interest rate risk
3.06
5.72
1.58
3.50
5.24
1.98
Currency risk - trading
0.55
1.96
0.09
0.82
1.52
0.02
Equity risk
0.88
1.68
0.39
1.23
2.46
0.61
Credit spread
0.08
0.15
0.01
0.45
1.56
0.00
Aggregate VaR
4.57
9.50
2.07
6.00
10.78
2.61
Currency risk - structural
4.53
5.59
2.47
4.04
6.60
2.09
Interest rate risk
Interest rate risk arises from changes in market rates of interest that impact on different balance sheet assets
and liabilities. The group is exposed to this risk of unexpected interest rate movements, which may ultimately feed
through into unforeseen changes in interest margins and economic value if, as is common in banking, there are
temporary mismatches in the maturity or repricing dates of asset, liability or off-balance sheet exposures.
Interest rate risk is managed on a consolidated basis for the whole group. This task is performed by the Asset
and Liability Committee. This means actively managing the balance sheet by means of transactions (micro- and
macro-hedges) designed to optimize the level of risk exposure in relation to expected returns. For risk management
and accounting purposes the group maintains two distinct types of macro-hedge of the interest rate risk from
portfolios of financial instruments:
• Cash flow macro-hedges of interest rate risk: the purpose of the cash flow macro-hedge is to reduce the
volatility of net interest income due to changes in interest rates over a one-year time horizon. The macro-hedge
is thus a hedge of future cash flows related to the net exposure of a portfolio made up of highly probable
assets and liabilities with exposures similar to interest rate risk. At the present time the hedging instruments
used for this purpose are interest rate swaps.
• Fair value macro-hedges of interest rate risk: the purpose of this kind of hedge as an accounting tool is
to cover the economic value of the hedged portfolios, the components of which are fixed-rate assets and
liabilities, options that are embedded in or linked to balance sheet items (caps and floors, for example), and
derivatives sold to customers through the Treasury Desk. At the present time the hedging instruments used for
this purpose are interest rate swaps.
The results of hedging operations are reviewed on a regular basis and tests carried out to measure their
effectiveness.
A number of methodologies are used to measure interest rate risk, allowing a more flexible approach to be
taken. One of these methodologies is to measure the sensitivity of net interest income to changes in interest
rates over a one-year horizon on a maturity and repricing matrix. In this technique the carrying values of financial
assets and liabilities are grouped according to their maturity dates or the dates on which their rates of interest
are reviewed, whichever is nearer in time. For the purposes of this analysis the remaining maturity is assumed
to be the time from 31 December 2012 to the due date of each payment. In addition, for current accounts, it is
assumed that expected maturities will exceed contractually agreed terms, in line with the Bank’s past experience.
The analysis allows an estimate to be made of the effect that a change in interest rates would have on net interest
income, assuming that all rates change by the same amount and in a sustained manner.
An analysis of interest rate sensitivity at 31 December 2012 and 2011 is presented in the following table:
€’000
31.12.2012
Loans and advances
1 month
or less
From 1 to
3 months
From 3 to
12 months
From 1 to
2 years
From 2 to
3 years
From 3 to
4 years
From 4 to
5 years
More than
5 years
Not
sensitive
Total
14,577,133
30,068,072
50,418,196
1,452,764
1,251,744
592,704
392,676
2,360,365
of which: General government
1,051,295
3,160,774
716,561
33,251
91,975
47,741
90,935
128,782
0
5,321,314
Money market
1,967,294
227,121
427,723
196,408
0
0
0
0
34,613
2,853,159
245,488
90,530
427,461
196,408
0
0
0
0
0
959,887
3,694,450
137,927
2,064,165
1,965,389
4,281,268
2,149,542
2,506,855
7,525,577
16,701
24,341,874
Capital market
1,567,780 102,681,434
0
766,287
381,389
1,861,839
1,071,432
1,339,708
5,409,049
0
11,099,779
1,616,045
0
0
0
0
0
0
0
30,054,573
31,670,618
Total assets
21,854,922
30,433,120
52,910,084
3,614,561
5,533,012
2,742,246
2,899,531
9,885,942
31,673,667 161,547,085
Customer accounts
15,185,055
11,820,860
28,342,208
9,312,172
2,199,989
791,140
657,165
8,386,471
0
Money market
25,954,266
1,403,900
428,256
320,182
11,804
0
0
0
0
28,118,408
Capital market
6,936,443
9,637,548
8,041,663
4,406,117
3,159,321
2,752,549
2,560,084
2,819,837
0
40,313,562
Other liabilities
0
0
0
0
0
0
0
0
16,420,055
16,420,055
Total liabilities
48,075,764
22,862,308
36,812,127
14,038,471
5,371,114
3,543,689
3,217,249
11,206,308
277,939
1,135,412
1,393,088
(1,510,956)
Hedging derivatives
Interest rate sensitivity gap
(25,942,903)
8,706,224
17,491,045 (11,934,866)
(620,433)
(546,580)
13,521
(458,535) (1,348,023)
(304,197)
(141,991)
76,695,060
270,075
Other assets
16,420,055 161,547,085
0
0
(1,462,357) 15,253,612
0
€’000
From 1 to
3 months
From 3 to
12 months
From 1 to
2 years
From 2 to
3 years
From 3 to
4 years
From 4 to
5 years
More than
5 years
Not
sensitive
Total
12,613,144
22,183,188
32,888,445
1,127,946
574,589
440,375
236,651
757,704
181,575
71,003,618
242,366
785,475
831,423
16,350
14,556
60,840
33,108
67,127
181,575
2,232,820
1,037,256
312,545
811,967
306
0
0
0
0
31,961
2,194,035
72,857
292,398
809,840
306
0
0
0
0
0
1,175,401
1,771,396
647,316
1,296,524
1,820,211
1,455,088
923,467
1,077,649
4,514,224
10,278
13,516,152
0
3,865
826,304
732,243
155,376
130,231
553,355
3,337,239
0
5,738,613
Other assets
1,534,302
0
0
0
0
0
0
0
12,189,273
13,723,575
Total assets
16,956,098
23,143,049
34,996,936
2,948,463
2,029,677
1,363,842
1,314,300
5,271,928
Customer accounts
Loans and advances
Money market
Capital market
12,413,087 100,437,380
10,652,115
8,739,288
16,889,124
3,940,696
3,503,515
1,540,488
542,923
5,433,661
0
51,241,810
Money market
6,394,683
1,850,243
312,255
29,419
300,000
4,092,752
54,097
0
1,588
13,035,037
Capital market
2,454,078
6,119,611
4,928,928
3,577,855
1,649,679
1,690,004
2,238,491
2,703,783
0
25,362,430
Other liabilities
0
0
0
0
0
0
0
0
10,798,104
10,798,104
Total liabilities
19,500,876
16,709,142
22,130,308
7,547,970
5,453,194
7,323,244
2,835,511
8,137,445
2,376,721
5,322,460
(1,553,871)
Hedging derivatives
Interest rate sensitivity gap
(168,057) 11,756,367
11,312,757
(984,665) (2,419,228) (2,284,277)
(459,463)
(5,584,172) (5,842,745) (8,243,679) (1,980,674)
2,322
(2,863,194)
1 month
or less
31.12.2011
10,799,692 100,437,380
0
0
1,613,396
0
The term structure shown in the table is typical for a bank with commercial banking as its main activity, with
gaps or mismatches that are negative in the very short term, positive for terms of up to one year (reflecting the
loan components of the portfolio) and negative for longer-term or not sensitive instruments. The matrix also
shows the effects that hedging instruments have in altering the term profile of the group’s exposure to interest
rate risk.
This kind of analysis is supplemented by simulations which measure the effects of different interest
rate movements at different maturities, for example, due to changes in the slope of the yield curve. These
simulations assign probabilities to each scenario so as to arrive at a more precise estimate of the effect that
interest rate movements might have. Another technique that is used is to measure the sensitivity of equity to
changes in interest rates by duration gap analysis. This measures the effect of interest rate changes over a
longer time horizon.
The sensitivity of net interest income and net asset values, in relative terms in the latter case, to a change of
100 basis points (1%) in euro interest rates would be €56 million and 7.75% respectively (5.86% in 2011). The
main assumption used in making this estimate is to take the estimated average term for current accounts as
roughly two and a half years even though, contractually speaking, balances in current accounts can be withdrawn
251
at any time. This assumption is consistent with the observation that balances in current accounts can normally
be expected to remain stable. Another assumption that is made is to exclude all possible maturities other than
those fixed by contract, that is, such scenarios as early repayment or requests for early redemption are not taken
into account. Finally, it is assumed that the 100 basis point change in interest rates is immediate and sustained
throughout the time horizon. A change of this kind is itself hypothetical as there is nothing to indicate that this
particular change should be expected. It has been used for illustrative purposes only.
252
Currency risk
Currency risk arises from possible changes in exchange rates between different currencies. The group’s structural
foreign currency exposure remained stable throughout 2012 and was associated with long-term investments in
foreign branches and subsidiaries.
Foreign currency exposure is not significant and is generally associated with facilitating customer operations.
The Board of Directors sets overall daily limits for intraday positions (positions resulting from all transactions up
to a certain moment in a single day) and overnight positions (positions reached at the end of the day). These limits
are monitored and reviewed on a daily basis.
Liquidity risk
This is the risk that a bank may have difficulty in meeting obligations associated with financial liabilities that are
settled by the delivery of cash or another financial asset.
The group is exposed to daily demands on its available cash resources to meet contractual obligations related
to financial instruments, such as maturing deposits, drawdowns of credit facilities, settlements on derivatives and
so on. Experience shows, however, that only a minimum amount is ever actually required and this can be predicted
with a high degree of confidence.
Limits are set by the Board of Directors for the maintenance of minimum cash levels and for levels of structural
borrowing. The group monitors changes in its liquid asset position on a daily basis and holds a diversified portfolio
of such assets. It also carries out yearly projections to anticipate future needs.
In addition, a review is carried out of gaps or mismatches between cash inflows and outflows over a short,
medium and long time horizon using a maturity matrix based on the time remaining between the date to which the
financial statements were made up and the contract maturity dates of assets and liabilities.
In the matrix presented below, times to maturity have been based on contract maturity/repayment dates; for
assets and liabilities on which payments are made over a period of time, the time to maturity has been taken as
the time between 31 December 2012 and the due date of each payment.
The maturity matrix at 31 December 2012 and 2011 is as follows:
€’000
Payable
at sight
1 month
or less
From 1 to
3 months
From 3 to
12 months
From 1 to
5 years
Loans and advances
0
4,682,671
8,299,494
15,022,142
30,519,001
0
457,500
829,193
402,821
3,208,774
423,026
5,321,314
0
5,321,314
Money market
0
1,967,294
227,121
427,723
196,408
0
2,818,546
34,613
2,853,159
31.12.2012
More than
5 years
Sub-total
42,590,346 101,113,654
No fixed
maturity
Total
1,567,780 102,681,434
0
245,488
90,530
427,461
196,408
0
959,887
0
959,887
Capital market
0
3,698,420
55,215
2,085,892
10,953,177
7,532,469
24,325,173
16,701
24,341,874
0
270,075
0
766,287
4,654,368
5,409,049
11,099,779
0
11,099,779
Other assets
0
1,616,045
0
0
0
0
1,616,045
30,054,573
31,670,618
Total assets
0
11,964,430
8,581,830
17,535,757
41,668,586
Customer accounts
50,122,815 129,873,418
31,673,667 161,547,085
9,415,280
7,051,724
30,049,949
16,452,031
195,146
76,695,060
0
0
2,304,266
1,403,900
432,060
23,978,182
0
28,118,408
0
28,118,408
Capital market
0
1,827,776
3,235,628
7,122,870
21,604,703
6,522,585
40,313,562
0
40,313,562
Other liabilities
0
0
0
0
0
0
0
16,420,055
16,420,055
Total liabilities
13,530,930
13,547,322
11,691,252
37,604,879
62,034,916
(13,530,930)
(1,582,892)
(3,109,422) (20,069,122) (20,366,330)
Liquidity gap
6,717,731 145,127,030
43,405,084
(15,253,612)
76,695,060
16,420,055 161,547,085
15,253,612
0
13,530,930
Money market
€’000
Payable
at sight
1 month
or less
From 1 to
3 months
From 3 to
12 months
From 1 to
5 years
More than
5 years
Sub-total
No fixed
maturity
Total
Loans and advances
0
4,331,561
5,907,057
13,982,418
20,376,612
26,220,395
70,822,043
181,575
71,003,618
0
151,763
245,914
975,435
445,529
232,604
2,051,245
181,575
2,232,820
Money market
0
1,037,256
312,545
811,967
306
0
2,162,075
31,961
2,194,035
31.12.2011
0
72,857
292,398
809,840
306
0
1,175,401
0
1,175,401
Capital market
0
1,765,559
459,774
1,328,944
5,404,847
4,546,750
13,505,873
10,278
13,516,152
0
0
3,865
826,304
1,571,205
3,337,239
5,738,613
0
5,738,613
Other assets
0
1,534,302
0
0
0
0
1,534,302
12,189,274
13,723,575
Total assets
0
8,672,678
6,679,375
16,123,329
25,781,765
30,767,145
88,024,292
8,579,090
6,780,970
4,918,577
18,086,693
12,243,543
632,938
51,241,810
0
Money market
0
6,398,555
1,846,371
312,255
4,476,267
0
13,033,449
1,588
13,035,037
Capital market
0
1,029,485
2,214,622
4,196,751
11,776,349
6,145,224
25,362,430
0
25,362,430
Other liabilities
0
0
0
0
0
0
0
10,798,104
10,798,104
Total liabilities
8,579,090
14,209,010
8,979,570
22,595,699
28,496,158
6,778,162
89,637,689
(8,579,090)
(5,536,332)
(2,300,194)
(6,472,370)
(2,714,393)
23,988,982
(1,613,397)
Liquidity gap
51,241,810
10,799,692 100,437,380
1,613,397
0
In this analysis the very short-term end of the range is typically where refinancing is most required. This is due to
continually maturing short-term liabilities which, in banking, tend to have a higher turnover than assets. In practice,
however, these short-term liabilities are continually being rolled over and therefore their funding requirements, even
where debt volumes are increasing, can be accommodated.
Even so, group policy is to maintain a safety margin to cover financing needs in any circumstances. This
means, inter alia, maintaining a reserve of liquid assets considered as eligible collateral by the European Central
Bank that is sufficient to provide funding for maturing debt issued on the capital markets for a 12-month period.
The group has commitments of a contingent nature which may also affect its cash requirements. Most of these
relate to credit facilities with agreed limits which were undrawn at the close of the reporting year. Limits on these
commitments are also set by the Board of Directors and are constantly monitored.
Systematic checks are made to verify that the group’s ability to raise funds on the capital markets is sufficient to
satisfy its requirements in the short, medium and long term. The Banco Sabadell group meets its cash needs in a
number of ways and has programmes in place to raise finance on the capital markets to ensure diversified sources
of funds. Some of these funding programmes are described below.
• Nonparticipating Securities Issuance Programme: the programme has been filed with Spain’s stock market
regulator, the CNMV, and covers issuance of straight and subordinated bonds and mortgage and public
sector covered bonds subject to Spanish law through CNMV supervision. These are offered to investors
on the domestic and global markets. The available limit for issues under the Banco Sabadell 2012 nonparticipating securities issuance programme at 31 December 2012 was €8,575.95 million (€7,000 million
at 31 December 2011).
Customer accounts
12,413,088 100,437,380
253
• Commercial Paper Issuance Programme: this covers the issuance of corporate notes [pagarés] and is directed
at both institutional and retail investors. On 8 March 2012 the Banco Sabadell 2012 corporate note issuance
programme was filed with the CNMV with an upper limit of €3,750 million, extended to €5,000 million on 12
July 2012. As of 31 December 2012 the value of notes in circulation under the Banco Sabadell programme
was €3,259 million (€2,302 million at 31 December 2011). In addition, Banco Sabadell operates a Euro
Commercial Paper (ECP) programme for up to a nominal amount of €3,500 million. The programme is directed
at institutional investors and provides for issues of short-term securities in a variety of currencies: euros, US
dollars and sterling.
Other funding measures to improve the group’s liquidity position include:
• Medium- and long-term bilateral loans with financial and other institutions.
• Issues of asset-backed securities: Since 1993 the group has participated in a number of securitization funds,
on some occasions in partnership with other highly creditworthy institutions, for the transfer of mortgage loans,
SME business finance loans, personal loans and finance lease receivables. A portion of the bonds issued by
the securitization funds have been sold on the capital markets and the remainder are held by Banco Sabadell.
Most of the mortgage bonds held by Banco Sabadell are pledged as security on a credit facility held by the
Bank with the Bank of Spain for the management of short-term liquidity.
In 2012, following the introduction of broader eligibility criteria for assets acceptable as collateral in monetary
policy operations approved by the Bank of Spain on 9 February, Banco Sabadell strengthened its liquid asset base
by incorporating new eligible loans into its facility agreement with the Bank of Spain, in a total amount of more than
€4,150 million.
254
Risk concentrations
Credit risk is undoubtedly the main business risk faced by the Banco Sabadell group. As an active player in
the global banking industry the group has a sizeable concentration of exposures to other financial institutions.
Managing these exposures involves the setting of limits by the Board of Directors and the monitoring of these limits
on a day-to-day basis. As mentioned earlier, specific measures are also in place to mitigate risk, including netting
agreements with the majority of counterparties with which derivatives are traded.
As of 31 December 2012 only two borrowers (seven borrowers at 31 December 2011) represented individual
exposures of more than 10% of the group’s capital; none of these borrowers (six borrowers at 31 December 2011)
represented an exposure of more than 15% of the group’s capital. The group’s overall exposure to these borrowers
amounted to €2,024,421,000 (€6,015,463,000 at 31 December 2011).
Capital management
The group’s general policy on capital management is to ensure that its available capital is sufficient to cover the
overall levels of risk being incurred.
This involves setting up sophisticated systems to measure each type of risk incurred by the group and
methodologies capable of integrating all of them. Such an approach requires a broad perspective of risk that takes
account of possible stress scenarios and suitable financial planning in each case. The risk assessment systems
used are in line with current best practice.
Each year the group carries out its own capital assessment process as prescribed by the new Basel Capital
Accord and, in greater detail, by the Bank of Spain’s capital adequacy regulations, and reports the results to the
supervisory authority.
The process starts from a broad spectrum of previously identified risks and a qualitative internal evaluation
of policies, procedures and systems for originating, measuring and controlling each type of risk and appropriate
mitigation techniques.
The next stage is to carry out a comprehensive quantitative assessment of the group’s capital requirement.
This will be based on internal parameters and use the group’s own models (such as borrower credit rating or
scoring systems) and other internal estimates appropriate to each type of risk. The assessments for each
type of risk are then integrated and a figure is set under an indicator in terms of assigned capital. In addition,
the group’s business and financial objectives and stress testing exercises are reviewed to reach a final
determination as to whether certain business developments or extreme but nevertheless possible scenarios
could pose a threat to the Bank’s solvency, having regard to its available capital resources.
Nota 38. The environment
All group operations are subject to legal requirements on environmental protection and health and safety at work.
The group considers that it substantially complies with these legal requirements and has procedures in place to
ensure such compliance.
The group has taken appropriate action on environmental protection and improvement and to minimize possible
environmental impacts, as required by law. A number of group-wide waste treatment, consumable recycling
and energy saving schemes were continued during the year. Given the absence of any environment-related
contingencies, it was not thought necessary to make any provision for liabilities or charges of this nature.
Nota 39. Related party transactions
No significant transaction took place with any major shareholder during the years 2012 and 2011; those
transactions that did take place were in the normal course of business and on an arm’s length basis.
No transactions that could be described as significant were entered into with directors or senior managers of the
Bank. Those that did take place were in the normal course of the group’s business or were done at market prices
or on the terms normally applicable to employees.
The group is not aware of any transaction, other than on an arm’s length basis, involving any person or entity
connected in any way to a director or senior manager.
The most significant balances recorded by the group in its dealings with related parties, and the effect on the
income statement of transactions entered into with them, are shown in the following table:
€’000
2012
Entities jointly
controlled or
subject to Associated
significant influence undertakings
Joint
ventures
Key
personnel
Other
related
parties (1)
Total
Total
1
1,012,685
89,565
18,977
842,039
1,963,267
1,460,641
Liabilities:
166
3,144,189
30,911
9,038
349,492
3,533,796
3,837,213
Memorandum accounts:
650
0
68,972
18,802
36,815
9,945
12
2,901
302,745
261,450
409,194
293,098
615,034
357,661
17
(1)
0
30
0
26,500
(74,897)
0
33,004
2,635
2,449
(23)
0
321
1
254
(232)
0
52
0
27,461
(9,370)
0
4,463
6
56,681
(84,523)
0
37,870
2,642
49,403
(85,134)
0
46,731
2,192
Income statement:
Interest and similar income
Other operating income
Assets:
2011
(1) Includes pension arrangements with employees.
255
Nota 40. Agents
For the purposes of article 22 of Royal Decree 1245/1995 of 14 July drafted by the Finance Ministry, the group has
not entered into or continued any agency agreements authorizing agents to deal with customers on a regular basis
on behalf of the Bank, for the purpose of arranging or formally agreeing business transactions of the type normally
engaged in by a bank.
Nota 41. Customer service department
As required by the Spanish Finance Ministry’s Order 734/2004, a report on the group’s Customer Service
Department has been provided in the Report of the Directors that follows these notes to the annual accounts.
Nota 42. Remuneration paid to directors and senior management
The following table shows, for the years to 31 December 2012 and 2011, the amounts paid to directors in fees
and in contributions to meet directors’ pension commitments for services rendered by them in that capacity:
€’000
Remuneration
2012
2011
José Oliu Creus *
Isak Andic Ermay (1)
José Manuel Lara Bosch (2)
José Javier Echenique Landiribar (3)
Jaime Guardiola Romojaro *
Miguel Bósser Rovira
Joan Llonch Andreu
José Ramón Martínez Sufrategu
Antonio Vitor Martins Monteiro (4)
José Luis Negro Rodríguez * (5)
Carlos Jorge Ramalho dos Santos Ferreira
Total
Pension commitments
2012
2011
Total
2012
2011
252.0
162.0
162.0
144.0
108.0
126.0
144.0
126.0
144.0
135.0
162.0
108.0
38.0
61.0
144.0
-
252.0
162.0
162.0
144.0
108.0
108.0
126.0
144.0
126.0
144.0
153.0
153.0
108.0
144.0
108.0
37.8
18.9
18.9
18.9
18.9
18.9
-
37.8
18.9
18.9
18.9
18.9
18.9
18.9
-
289.8
162.0
162.0
144.0
108.0
144.9
162.9
126.0
162.9
135.0
180.9
108.0
38.0
61.0
162.9
-
289.8
162.0
162.0
144.0
108.0
126.9
144.9
162.9
126.0
162.9
153.0
171.9
108.0
162.9
108.0
2,016.0
2,142.0
132.3
151.2
2,148.3
2,293.2
*
(1)
(2)
(3)
Executive Directors
Appointed First Deputy Chairman by the Board of Directors on 25 November 2010.
Appointed Second Deputy Chairman by the Board of Directors on 25 November 2010.
Appointed to the Board of Directors by a resolution of an Extraordinary General Meeting on 18 September 2010. Mr Echenique will serve as a NonExecutive Director. On 25 November 2010 he was appointed by the Board to the office of Third Deputy Chairman.
(4) Appointed to the Board by the Board of Directors on 20 September 2012 Mr Martins will serve as an Non-Executive Director.
(5) Appointed to the Board of Directors by a resolution of an Extraordinary General Meeting on 31 May 2012.
256
Amounts paid in salaries and other emoluments paid to directors for performing executive functions during the
year 2012 totalled €3,224,000 and €512,000 respectively (2011: €3,225,000 and €440,000 respectively).
Payments of life assurance premiums covering contingent pension commitments in respect of pension
rights accruing in 2012 amounted to a further €2,505,000 (2011: €3,224,000), of which €2,373,000 (2011:
€3,073,000 was paid in respect of directors for the performance of executive functions.
Loan and guarantee risks undertaken by the Bank and consolidated undertakings for the senior management
group (other than executive directors, for whom details are provided above) totalled €14,666,000 at 31 December
2012. Of this amount €11,953,000 comprised loans and €2,713,000 related to avals and documentary credits
(2011: 14,390,000, consisting of €10,028,000 in loans and €4,362,000 in avals and documentary credits).
The average rate of interest charged was 1.26% (2011: 3.16%). Deposits held by directors in 2012 totalled
€9,134,000 (2011: €3,971,000).
Salary payments to members of the senior management group (other than those sitting on the Board as executive
directors, for whom details are given above) amounted to €2,609,000 in 2012 (2011: €8,771,000). Premiums paid
in respect of accrued pension entitlements of senior managers totalled €2,209,000 in 2012 (2011: €3,335,000).
Loan and guarantee risks undertaken by the Bank and consolidated undertakings for the senior management
group (other than executive directors, for whom details are provided above) totalled €7,225,000 at 31 December
2012. This amount was comprised of €7,025,000 in loans and €199,000 in avals and documentary credits.
Deposits held by senior managers totalled €780,000.
Share appreciation rights granted to members of the senior management group, including executive directors,
under the new “Plan 2010” incentive scheme (see note 34(f)) resulted in personnel expenses of €2,231,000
during the year (2011: €3,189,000).
Details of existing agreements between the company and members of the Board and senior managers with
regard to compensation on severance of contract are set out in the Annual Report on Corporate Governance that
follows these annual accounts.
The members of the senior management group and their areas of responsibility at 31 December 2012 are set
out below:
José Oliu Creus
Miquel Montes Güell
Ramón de la Riva Reina
Tomás Varela Muiña
Carlos Ventura Santamans
Chairman
Managing Director
Executive Director - Comptroller General
Deputy Secretary to the Board & General Secretary
Asset Management and Corporate Development
Markets and Private Banking
Finance Director
Commercial Banking
Pursuant to article 229 of the consolidated text of the Companies Act [Ley de Sociedades de Capital] as approved
by Royal Legislative Decree I/2010 of 2 July, the Directors, in the interests of corporate transparency, have made
the following statement to the Company:
Nota 43. Directors’ duty of loyalty
a. No Director is in a situation that would give rise to a direct or indirect conflict of interest vis-à-vis the Company.
b. No Director or any related person within the meaning of article 231 of the consolidated text of the Companies Act
holds equity interests in any company whose objects are identical, similar or ancillary to those of the Company,
with the following exceptions:
Company
Maria Teresa Garcia-Milà Lloveras
José Oliu Creus
Banco Santander, S.A.
Banco Bilbao Vizcaya Argentaria, S.A.
Banco Comercial Português, S.A.
Caixabank
Banco Bilbao Vizcaya Argentaria, S.A.
Proportional shareholding (%)
0.00004
0.0000059
0.00104
0.00013
0.000572
0.00026
0.00097
0.00017
c. The Directors have also confirmed that none of them or any party related to them holds any office or position of
responsibility or performs any services, either for their own account or for the account of any other person, in
any company whose objects are identical, similar or complementary to those of the Company, with the following
exceptions:
Director
Company
Position/office held
José Oliu Creus
Member of General Supervisory Board
José Oliu Creus
BanSabadell Holding, S.L., Sociedad Unipersonal
Chairman
Joan Llonch Andreu
Director
Joan Llonch Andreu
Director
Joan Llonch Andreu
Sociedad de Cartera del Vallés, S.I.C.A.V., S.A.
Deputy Chairman
Antonio Vitor Martins Monteiro
Chairman
Banco Privado Atlántico, S.A.
Director
Soco International. PLC
Director
Director
Chairman
BanSabadell Inversió Desenvolupament, S.A., Sociedad Unipersonal
Chairman
Sinia Renovables, S.C.R. de Régimen Simplificado
Chairman
Director
BanSabadell Financiación, E.F.C., S.A.
Chairman
Sociedad Rectora de la Bolsa de Valores de Barcelona
Director
Nota 44. Post-balance sheet events
Since 31 December 2012 there have been no significant events worthy of mention.
Director
257
Annex I: Companies in the Banco Sabadell group at 31 December 2012
258
Name of undertaking
Fully consolidated companies
Principal business
Registered office
Alfonso XII, 16 Inversiones, S.L.
Assegurances Segur Vida, S.A.
Aurica XXI, S.C.R., S.A.U.
Ballerton Servicios, S.L.
Banco Atlantico Bahamas Bank & Trust, Ltd.
Banco Atlantico Mónaco S.A.M.
BanSabadell Consulting, S.L.
BanSabadell Correduría de Seguros, S.A.
Bansabadell Factura, S.L.
BanSabadell Financiación, E.F.C., S.A
Bansabadell Fincom, E.F.C., S.A.U.
BanSabadell Holding, S.L.
BanSabadell Information System S.A.
BanSabadell Inversió Desenvolupament, S.A.
BanSabadell Inversión, S.A.U., S.G.I.I.C.
BanSabadell Renting, S.L.
BanSabadell Securities Services, S.L
Bitarte S.A.
BlueSky Property Development, S.L.
CAM Capital, S.A.U.
CAM Global Finance
CAM US Finance, S.A.U.
Compañía de Cogeneración del Caribe Dominicana, S.A.
Compañía de Cogeneración del Caribe, S.L.
Easo Bolsa, S.A.
Ederra, S.A.
Europa Invest, S.A.
Europea Pall Mall Ltd.
Explotaciones Energéticas SINIA XXI, S.L.
G.I. Cartera, S.A.
Gazteluberri Gestión S.L.
Gazteluberri S.L.
Grao Castalia S.L.
Guipuzcoano Capital, S.A. Unipersonal
Guipuzcoano Promoción Empresarial, S.L.
Guipuzcoano Valores, S.A.
Guipuzcoano, Correduría de Seguros del Grupo Banco Guipuzcoano, S.A.
Hansa Cabo, S.A. de C.V.
Hansa México S.A. DE C.V.
Other financial serv.
Real estate
Residential lettings
Holding company
Insurance
Venture capital company
Holding company
Banking
Banking
Banking
Banking
Services
Insurance brokers
Electronic billing services
Finance company
Finance company
Holding company
Computer services
Holding company
Investment fund managers
Equipment leasing
Services
Nominee company
Real estate
Holding company
Preference share issues
Ord. bond issuer
Ord. bond issuer
Ord. bond issuer
Ord. bond issuer
Real estate developers
Electricity utility
Holding company
Property management
Real estate
Nominee company
Real estate
Real estate
Holding company
Telephone services
Real estate
Real estate
Real estate
Holding company
Environmental projects
Mutual fund managers
Real estate
Nominee company
Real estate
Insurance
Real estate development
Mexico
Sant Cugat del Vallès
Alicante
Elche
Andorra la Vella
Barcelona
Nassau, Bahamas
Monaco
Sabadell
Andorra la Vella
Sabadell
Sabadell
Barcelona
Sabadell
San Sebastián
Alicante
Alicante
George Town
Alicante
Alicante
Alicante
Valencia
Santo Domingo (Dom. Rep.)
Barcelona
Amsterdam
Madrid
Elche
San Sebastián
San Sebastián
Elche
Luxembourg
London
Barcelona
Alicante
Alicante
San Sebastián
Madrid
Alicante
Alicante
Alicante
San Sebastián
San Sebastián
San Sebastián
San Sebastián
Mexico
Cancún
Proportional holding (%)
Direct
Indirect
99.80
100.00
100.00
99.99
100.00
100.00
50.97
100.00
100.00
100.00
100.00
100.00
100.00
81.00
100.00
100.00
100.00
100.00
99.99
100.00
100.00
100.00
100.00
100.00
99.99
97.85
22.00
100.00
99.97
100.00
100.00
99.00
100.00
99.99
59.40
-
0.20
100.00
100.00
50.97
100.00
0.01
0.01
100.00
50.00
100.00
100.00
100.00
100.00
95.00
100.00
0.01
100.00
78.00
100.00
0.03
100.00
100.00
95.00
1.00
100.00
100.00
100.00
0.01
0.60
27.81
48.15
Name of undertaking
Principal business
Registered office
Haygon La Almazara, S.L.
Herrero Internacional Gestión, S.L.
Hobalear, S.A.
Hondarriberri, S.P.E., S.L.
Hotelera H.M., S.A. de C.V.
Hotelera Marina, S.A, de C.V.
Interstate Property Holdings, LLC
La Rivera Desarrollos BCS, S. de R.L. de C.V. (a)
Mariñamendi S.L.
Real estate
Holding company
Real estate
Business start-ups
Holding company
Holding company
Holding company
Real estate
Estate agents
San Vicente del Raspeig
Barcelona
San Sebastián
Cancún
Cancún
Miami
Alicante
Mexico City
Elche
Alicante
Alicante
Life insurance
Advisory services
Administrative services
Electricity utility
Holding company
Holding company
Holding company
Real estate
Construction
Holding company
Computer services
Real estate
Services
Representative office
Holding company
Financial advisers
Finance company
Services
Banking
Services
Holding company
Services
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate project management
Valuers
Holding company
Real estate
Holding company
Holding company
Administrative services
Dormant
Nominee company
Alicante
Barcelona
Mexico
Churriana de la Vega
Ámsterdam
Ámsterdam
Ámsterdam
Cancún
Elche
Elche
Isla Mujeres
Oviedo
Cancún
Hong Kong
Brazil
Luxembourg
Madrid
Andorra la Vella
George Town
Miami
Miami
Andorra la Vella
Madrid
Sabadell
Elche
Barcelona
Miami
Alicante
Alicante
Alicante
Alicante
Alicante
Alicante
San Sebastián
Madrid
San Sebastián
75.00
100.00
100.00
0.01
86.67
100.00
38.18
66.66
100.00
-
-
100.00
100.00
100.00
100.00
99.99
54.26
100.00
100.00
100.00
94.78
100.00
100.00
100.00
100.00
100.00
100.00
99.88
100.00
100.00
100.00
99.98
-
50.00
50.00
38.18
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
0.01
50.97
50.97
100.00
100.00
100.00
100.00
0.12
100.00
100.00
0.02
100.00
100.00
Insurance brokers
Meserco, S.L.U.
Operadora Cabo De Cortes S. de R.L. de C.V.
Playa Marina, S.A, de C.V.
Promociones y Desarrollos Creaziona Levante S.L.
Promociones y Desarrollos Ribera Mujeres S.A, de C.V.
Promociones y Financiaciones Herrero, S.A.
Proteo Banking Software, S.L.
Residencial Kataoria S.L.
Sabadell Asia Trade Services, Ltd.
Sabadell Brasil Trade Services - Ass.Cial Ltda.
Sabadell BS Select Fund of Hedge Funds, S.I.C.A.V S.A.
Sabadell d’Andorra Inversions S.G.O.I.C., S.A.U.
Sabadell International Equity, Ltd.
Sabadell Securities USA, Inc.
Serveis d’Assessorament BSA, S.A.U.
Servicio de Administración de Inversiones, S.A.
Servicios Reunidos, S.A.
Simat Banol, S.L.
Sinia Renovables, S.C.R. de R.S., S.A.U.
Solvia Development, S.L
Solvia Hotels, S.L.
Solvia Housing, S.L.
Son Blanc Caleta S.L.
Tierras Vega Alta del Segura S.L.
Urdin Oria, S.A.
Urquijo Gestión, S.A.U., S.G.I.I.C.
Urumea Gestión, S.L.
99.99
100.00
100.00
100.00
Mediterráneo Mediación, S.A., Operador de Banca-Seguros Vinculado del Grupo Caja
de Ahorros del Mediterráneo
Direct
Indirect
(a) On 3 August 2012, Hansa Baja Investments, S. de R.L. de C.V. changed its name to La Rivera Desarrollos BCS, S. de R.L. de C.V.
259
€’000
Contribution
to reserves
or losses of
consolidated
undertakings
Contribution to
consolidated
profit
0
10,740
16,973
25,574
602
17,492
3,140
2,439
19,498
0
(6,333)
0
0
128
31,306
(119)
751
4,815
(3,739)
(10,764)
(2,451)
(1,779)
252
(8,412)
0
(70)
138
No
No
Yes
Yes
No
Yes
Yes
No
No
Financial data (1)
Name of undertaking
Capital
Reserves
Results (2)
3,129
11,400
100
29,026
602
14,200
50
1,516
11,250
(39,253)
(20,285)
17,304
1,283
251
26,289
24,326
780
13,027
(9,361)
(10,764)
(2,493)
(2,025)
252
(7,901)
(0)
38
138
369,944
7,623,752
Bitarte S.A.
CAM Capital, S.A.U.
CAM Global Finance
CAM US Finance, S.A.U.
Easo Bolsa, S.A.
Ederra, S.A.
Europa Invest, S.A.
G.I. Cartera, S.A.
Gazteluberri S.L.
Grao Castalia S.L.
30,069
3
60
100
24,040
35,520
330,340
240
15,025
601
2,000
2,500
6,506
2,500
85,000
61
1
61
61
61
2,000
6,063
49
18
15,533
1,942
15,150
2,036
5,953
125
18,964
1,352
180
13,523
1,460
44,315
33,850
13,000
60
601
700
60
32,314
4,514
22,499
11
18
(3,382)
26,382
4,550
(377,950)
16,348
18,599
80,421
8,732
6,438
4,705
(8,926)
503,621
135
439
69
174
(2)
(952)
(5,428)
69,551
876
(4,185)
(15,263)
23,760
29,025
(21,814)
59
(4,957)
14,266
57
9,482
(13,957)
(63,648)
(8,741)
34,180
(540)
2,613
(2,473)
1
(33,013)
6,437
Dividends
paid (3)
Total
assets
Group net
investment
Treated as
consolidated
for tax
purposes
Guipuzcoano, Correduría de Seguros del Grupo Banco
Guipuzcoano, S.A.
Hansa Cabo, S.A. de C.V. (a)
Hansa México S.A. DE C.V. (a)
260
0
0
0
0
200
0
0
0
0
52,993
8,068
15,106
37,993
163,751
141,524
24,376
2,915
24,550
45,204
0
157,841,285
0
8,812,413
45,204
Yes
5,927
12
62
113
1,162
9,021
(11,451)
6,548
(2,903)
7,936
3,809
3,668
(86)
(3,839)
8,843
1,625
0
120
38,357
(5)
(424)
0
(37)
(6,341)
(5,109)
(15,500)
662
(3,033)
(3,257)
90
(164)
(29,261)
21
(42)
(6,825)
(9,550)
(6,627)
9,678
(289)
(124)
(190)
7
(32,543)
(1,987)
1,084
0
325
0
0
0
0
0
0
0
0
2,979
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
64
0
0
0
0
0
0
162
0
0
0
0
611,878
380
366
535
742,273
577,492
265,085
198,314
80,100
121,011
169,530
14,212
12,205
4,505
664,743
52,217
440
699,764
231,664
74
627
646
104
41,399
9,350
95,368
38,761
29,909
4,540
310
13,742
35,801
677
49,397
10,638
25,663
25,266
143,854
799
3,493
1,164
19,294
51,275
9,037
15,326
3
588
299
24,040
72,232
239,544
3,687
19,368
607
3,861
2,500
9,272
1,400
68,276
80
440
74
34,346
88
800
63
5,133
0
10,684
0
38,311
36,062
0
336
20,843
4,672
194
14,985
1,460
44,315
23,629
299,389
0
3,213
700
59
32,314
10,833
9,169
11
(612)
(3,581)
26,382
(27,240)
(318,762)
12,662
23,641
80,411
6,605
6,220
61
(9,326)
0
0
0
0
0
0
0
103
(768)
0
0
0
605
(11,133)
0
(166)
(1,425)
28,537
0
0
(11,263)
(58,602)
0
0
0
0
(1,039)
3
(11,158)
120
5,927
12
62
113
1,162
9,021
(11,451)
6,548
(2,901)
7,936
3,809
3,668
(86)
(3,839)
5,057
605
0
64
8,030
(2)
(424)
0
(37)
(4,941)
(5,065)
(14,048)
662
(3,033)
(3,005)
90
(164)
(29,261)
18
(2,308)
(6,825)
(9,550)
(6,514)
6,076
(97)
(9)
(190)
7
(32,543)
(1,987)
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
No
No
Yes
No
No
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
No
No
No
No
100
670
608
140
3,320
751
(295)
608
No
3,745
17,080
(23,646)
(23,249)
5,082
3,921
0
0
114
1,543
11
0
0
0
5,082
5,532
No
No
€’000
Financial data (1)
Name of undertaking
Capital
Reserves
Results (2)
170
3,761
585
(226,496)
656
(5,259)
(14,499)
182,052
(41,593)
(3)
(0)
25
(109,369)
2,009
(175)
(3,689)
3,147
11,599
Dividends
paid (3)
Total
assets
Group net
investment
Contribution
to reserves
or losses of
consolidated
undertakings
Contribution to
consolidated
profit
(483)
63
585
(8,190)
0
0
(17,723)
0
0
(3)
0
25
(109,369)
121
(581)
(2,582)
879
11,599
Treated as
consolidated
for tax
purposes
Haygon La Almazara, S.L. (a)
Hobalear, S.A.
Hotelera H.M., S.A. de C.V. (a)
Hotelera Marina, S.A, de C.V. (a)
La Rivera Desarrollos BCS, S. de R.L. de C.V. (a)
Mediterráneo Mediación, S.A., Operador de Banca-Seguros
Vinculado del Grupo Caja de Ahorros del Mediterráneo
(1)
(2)
(3)
(a)
227
4,114
677
56,830
64,795
75,192
55,463
510,164
140,791
45
1,139
414
237,684
19,567
80,832
3,142
507,674
3,778
No
Yes
Yes
No
No
No
No
Yes
No
3,405
(498)
(326)
0
5,608
1,970
0
(328)
No
55,013
660
(64,118)
2,112
(24,364)
1,065
0
2,790
47,025
37,790
55,013
1,601
(83,844)
0
(24,364)
1,454
No
Yes
301
297
4,185
4,568
28,596
524
0
2,407
Yes
102,044
3
0
3,124
27
27
27
2,828
12,500
17,666
8,740
43,833
3,456
3
18,105
3,250
0
1,265
30,223
70
300
1
606
2,728
60
6,010
60
1,482
15,000
9,986
19,071
500
2,073
4,000
3
1,000
296,092
4,550
29,111
3
3,003
60
3,606
9
147,021
236
(132)
(215)
28,836
398
(5,374)
(470)
(73,099)
(45,369)
(9,830)
(149)
269
(1)
(3,062)
(6,281)
757
(1,109)
1,599
838
733
94
937
331,601
15
755
18
(4,649)
5,583
(467)
(263,064)
(5,619)
1,575
(8,946)
384
3,185
58,237
(10,041)
22,692
(1)
(584)
2
2,092
8
41,962
85
(61)
0
(3,063)
(141)
(2,490)
(91)
(5,740)
(15,304)
(2,112)
(143)
(0)
(1)
(816)
(3,876)
70
(9)
1,421
566
1,112
(17)
(34)
22,750
12
(2)
(0)
(1,010)
(3,041)
(1,017)
(517,006)
(2,498)
(11,666)
(4,214)
(299)
941
(497,640)
(10,169)
(20,868)
0
629
(0)
450
(0)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,000
0
0
0
0
0
0
0
0
0
0
0
0
0
165
483
0
0
0
0
0
0
0
0
13,960
2,220,659
382
222
54,461
82,203
3,135
12,179
2,522
39,713
64,242
3,239
43,555
3,725
2
14,391
1,490
827
162
33,243
1,976
1,580
21,546
1,581
2,823,325
952
6,764
78
1,333
66,746
8,507
3,013,894
30,483
28,151
1,682
545
6,163
3,618,756
9,135
64,936
2
3,518
62
9,255
17
127,827
0
0
2,904
33,175
826
0
2,958
0
0
12,689
44,512
24,185
3
13,083
3,894
0
250
16,400
9,373
300
1
551
314,272
60
16,690
67
0
15,000
10,200
597,442
500
4,292
4,088
3
2,882
0
5,123
23,064
3
369
63
5,286
9
3,346,973
0
0
0
(82)
0
0
0
0
0
0
(8,222)
0
8
(1)
0
(7,718)
721
(139)
617
(605)
374
13
939
11,643
10
(6,101)
12
0
4,052
0
(838,002)
(5,706)
(644)
(7,624)
0
0
0
(5,140)
0
0
0
(1)
328
1
7,611,262
23,084
107
(61)
0
(1,472)
(86)
(1,663)
(87)
(4,709)
(14,281)
(2,112)
(120)
(0)
(1)
(716)
(3,876)
70
(9)
1,421
566
1,112
(17)
(34)
22,750
12
(2)
(0)
(932)
(3,041)
(1,017)
(517,006)
(2,498)
(11,666)
(4,214)
(185)
51
(469,018)
(10,169)
(20,976)
0
56
(0)
450
0
(1,190,843)
No
No
No
Yes
No
No
No
No
Yes
Yes
No
No
Yes
Yes
No
No
No
No
No
Yes
No
No
No
No
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Yes
No
Foreign-registered companies have been translated into euros at the exchange rate ruling on 31 December 2012
Results are subject to approval by the Annual General Meeting of each company.
Includes final dividends for the previous year and interim dividends paid to the group during the year.
Data are correct as of 30 November 2012.
Meserco, S.L.U. (a)
Operadora Cabo De Cortes S. de R.L. de C.V. (a)
Parque Eólico Loma del Capón, S.L. (a)
Playa Marina, S.A, de C.V. (a)
Promociones y Desarrollos Ribera Mujeres S.A, de C.V. (a)
Sabadell BS Select Fund of Hedge Funds, S.I.C.A.V S.A. (a)
Sabadell d’Andorra Inversions S.G.O.I.C., S.A.U
Simat Banol, S.L.
Solvia Hotels, S.L.
Urdin Oria, S.A.
Total
0
0
0
0
0
0
0
0
0
Mariñamendi S.L.
60
354
60
259,561
17,451
76,677
6,063
308,000
30,608
261
262
Direct
Indirect
Name of undertaking
Proportionally consolidated undertakings
Alma Gestión de Hoteles, S.L.U.
Alma Hotelmanagement GMBH
B2B Salud, S.L.U.
Can Parellada Parc, S.L.
Cartera de Investments Empresariales, C.V., S.L.
Datolita Inversiones 2010, S.L.
Dreamview, S.L.
Ecamed Barcelona, S.L.U
Ecamed Pamplona, S.L.U
Eco Resort San Blas, S.L.
Emte Renovables, S.L.
Erbisinia Renovables, S.L.
Espais Catalunya Mediterráneo, S.A.
Fbex del Mediterráneo, S.L.
Financiera Iberoamericana, S.A.
Hantinsol Resorts, S.A.
Inerzia Mediterráneo, S.L.
Inmobiliaria Ricam 2005, S.L.
Jerez Solar, S.L.
La Ermita Resort, S.L.
Mankel System, S.L.U.
Market Inmobiliario de Futuro, S.L.
Plaxic Estelar, S.L.
Ribera Salud Infraestructuras, S.L.U
Ribera Salud Proyectos, S.L.U.
Ribera Salud Tecnologías, S.L.U.
Ribera Salud, S.A.
Torrevieja Salud, S.L.U.
Principal business
Registered office
Hotel operators
Hotel operators
Health care products
Holding company
Business consultants
Hotel operators
Hotel operators
Hotel operators
Health care services
Holding company
Electricity utility
Holding company
Holding company
Finance company
Hotel operators
Electricity utility
Financial services
Residential lettings
Real estate
Health care
Health care
Health care
Health care management
Barcelona
Berlin
Alicante
Tarrassa
Valencia
Alicante
Alicante
Barcelona
Pamplona
Santa Cruz de Tenerife
Valencia
Alicante
Barcelona
Palencia
León
Barcelona
Barcelona
Havana
Palma de Mallorca
Alicante
Tarragona
Sant Joan Despí
San Javier
Madrid
Barcelona
Valencia
Barcelona
Valencia
Valencia
Valencia
Valencia
Torrevieja
50.00
50.00
50.00
13.33
-
49.72
49.72
50.00
25.00
49.00
49.72
49.72
50.00
30.00
50.00
62.11
50.00
49.00
49.72
25.00
33.33
40.00
40.00
62.11
29.49
49.72
49.14
45.01
50.00
50.00
50.00
50.00
50.00
Undertakings accounted for by the equity method (1)
6350 Industries, S.L.
Adelanta Corporación, S.A.
Air Miles España, S.A. (a)
Alquezar Patrimonial, S.L.
Altavista Hotelera, S.L.
Alze Mediterráneo, S.L.
Amci Habitat Mediterráneo, S.L.
Anara Guipuzcoa, S.L.
Aviación Regional Cántabra, A.I.E.
Aviones Alfambra CRJ-900, A.I.E.
Aviones Cabriel CRJ-900, A.I.E.
Aviones Ccarraixet CRJ-200 II A.I.E.
Aviones Gorgos CRJ-900, A.I.E.
Aviones Portacoli CRJ-200 III A.I.E.
Aviones Sella CRJ-900, A.I.E.
Aviones Turia CRJ-200 I, A.I.E.
Balam Overseas BV
BanSabadell Pensiones, E.G.F.P., S.A.
BanSabadell Seguros Generales, S.A. de Seguros y Reaseguros
BanSabadell Vida, S.A. de Seguros y Reaseguros
Biodiésel Aragón, S.L.
Blue-Lor, S.L.
Casas del Mar levante, S.L.
C-Cuspide 6, S.A.
Centro Financiero B.H.D., S.A.
Costa Marina Mediterráneo, S.A.
Desarrollos Inmobiliarios Pronegui, S.L.
Dexia Sabadell, S.A.
Diana Capital S.G.E.C.R., S.A.
Dime Habitat, S.L.
E.B.N. Banco de Negocios, S.A.
Energias Renovables Sierra Sesnández, S.L. (b)
Espazios Murcia, S.L.
ESUS Energía Renovable, S.L.
Eurofragance, S.L.
Gate Solar, S.L. SPE
Gaviel, S.A.
GDSUR Alicante, S.L.
General de Biocarburantes, S.A.
Gesta Aparcamientos, S.L.
Real estate
Services
Services
Explotación hotelera
Real estate
Wind power generation
Services
Services
Services
Aircraft operation
Services
Aircraft operation
Services
Aircraft operation
Pension fund managers
Insurance
Insurance
Chemicals
Real estate
Real estate
Financial services
Real estate
Banking
Financial intermediary
Nominee company
Real estate
Electricity utility
Fabricación de Perfumes & cosmetics
Solar energy
Real estate investment
Chemicals
Barcelona
Ourense
Madrid
Paterna
Barcelona
Girona
Barcelona
Alicante
Ourense
Boadilla del Monte
Madrid
Madrid
Madrid
Madrid
Madrid
Madrid
Madrid
Netherlands
Altorricón
Barcelona
Alicante
Guadalajara
Santo Domingo (Dominican Republic)
Alicante
Madrid
Madrid
Madrid
Barcelona
Madrid
Valladolid
Murcia
Vigo
Rubí
Vitoria
Barcelona
Elda
Marina de Cudeyo
Elche
25.00
26.42
25.00
25.00
25.00
25.00
25.00
25.00
25.00
50.00
50.00
50.00
20.00
20.99
20.66
20.00
50.00
50.00
-
37.50
25.00
33.33
40.00
45.00
40.00
40.00
25.00
40.00
49.78
27.62
33.33
33.00
33.33
40.00
40.00
40.00
45.00
45.00
25.00
20.00
25.00
40.00
Registered office
Parking services
Graphic arts
Lighting products
Real estate
Real estate
Real estate
Services
Real estate
Chemicals
Securities services
Hotel operators
Real estate
Real estate
Real estate
Real estate
Non-life insurance
Residential letting
Arrendadora bienes muebles
Real estate
Real estate
Real estate
Real estate
Real estate
Electricity utility
Real estate
Real estate
Electricity utility
Technology park developers
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Business services
Receivables management
Electricity utility
Investment company
Holding company
Real estate
Real estate
Real estate
Hotel operators
Real estate
Alicante
Cartagena
Barcelona
Canovelles
Abanto y Zierbena
Alicante
Mutilva Baja
Vitoria
Buenos Aires (Argentina)
Pamplona
Llinars del Vallès
Vigo
Puerto De La Cruz
Banos y Mendigo
Abanto y Zierbena
Abanto y Zierbena
Madrid
Denia
Alicante
Alicante
Madrid
Benalmadena
Murcia
Murcia
Pamplona
Murcia
Benalmadena
Barcelona
Benidorm
Benalmadena
Magaz de Pisuerga
Fuente Álamo
Catllar
Varsovia
Burgos
Granada
Murcia
Alicante
Pamplona
Ibiza
Valencia
Elda
Sabadell
Alicante
Alicante
Madrid
Granada
Barcelona
Tangier
Zarautz
Zarautz
Madrid
Benalmadena
Direct
Indirect
22.65
20.00
75.00
12.35
32.50
22.54
23.01
20.00
20.00
43.26
-
40.00
49.00
45.00
20.00
40.00
7.96
50.00
50.00
20.00
35.00
20.00
45.00
40.00
20.00
40.00
20.00
17.50
50.00
37.15
49.70
45.00
40.00
49.50
40.00
33.00
32.20
49.00
25.00
35.00
25.00
40.00
40.00
40.00
50.00
25.00
36.09
20.00
45.00
30.01
46.88
32.21
40.00
40.00
35.00
30.00
30.00
38.48
(1)
(a)
(b)
(c)
Principal business
Name of undertaking
Gestora de Aparcamientos del Mediterráneo, S.L.
Gradiente Entrópico, S.L.
Grafos, S.A. Arte sobre Papel
Grupo Luxiona S.L. (c)
Guisain, S.L.
Hansa Urbana S.A.
Harugui Promocion y Gestión Inmobiliaria, S.L.
Hidrophytic, S.L.
IFOS, S.A.
Improbal Norte, S.L.
Intermas Nets, S.A.
Inversiones Hoteleras La Jaquita, S.A.
Key Vil I, S.L.
Kosta Bareño, S.A.
Lizarre Promociones, A.I.E.
Loalsa Inversiones Castilla la Mancha, S.L.
Marina Salud, S.A.
Mediterráneo Seguros Diversos, Compañía de Seguros y Reaseguros, S.A.
Mercurio Alicante Sociedd de Arrendamientos 1, S.L.U.
Metrovacesa, S.A.
Mirador del Segura 21, S.L.
Murcia Emprende, S.C.R., S.A.
Mursiya Golf, S.L.
Naguisa Promociones, S.L.
NF Desarrollos, S.L.
Norfin 21, S.L.
Parc Eòlic Veciana-Cabaro, S.L.
Parque Boulevard Finestrat, S.L.
Parque del Segura, S.L.
Parque Eólico Magaz, S.L.
Parque Tecnológico Fuente Álamo, S.A.
Planificación TGN 2004, S.L.
Prat Spolka, Z.O.O.
Proburg BG XXI, S.L.
Promociones Abaco Costa Almeria, S.L.
Promociones Aguiver, S.L.
Promociones Florida Casas, S.L.
Promociones y Desarrollos Urbanos Oncineda, S.L.
Residencial Haygon, S.L.
Rocabella, S.L.
Ros Casares Espacios, S.A.
Saprosin Promociones, S.L.
SBD Creixent, S.A.
Sercacín, S.A.
Servicio de Recuperación de Créditos, S.A.
Servicios Inmobiliarios Trecam, S.L.
Sistema Eléctrico de Conexión Valcaire, S.L.
Societat d’Inversió dels Enginyers, S.L.
Torre Sureste, S.L.
Tremon Maroc Services Inmobiliers S.A.R.L.
Txonta Egizastu Promozioak, S.L.
Urtago Promozioak, A.I.E.
Valfensal, S.L.
Vistas del Parque 21, S.L.
Accounted for by the equity method since the parent company does not have managerial control.
25% of the voting rights are held by the parent company.
Energías Renovables Sierra Sesnández, S.L. has been accounted for by the equity method since February 2012,
On 6 July 2011 J. Feliu de la Penya, S.L. changed it name to Grupo Luxiona, S.L.
263
€’000
Dividends
paid (4)
Total
assets
Group net
investment
Contribution
to reserves
or losses of
consolidated
undertakings
Financial data (2)
Name of undertaking
264
Alma Gestión de Hoteles, S.L.U. (a)
Alma Hotelmanagement GMBH (a)
B2B Salud, S.L.U. (a)
Can Parellada Parc, S.L. (b)
Cartera de Investments Empresariales, C.V., S.L.
Datolita Inversiones 2010, S.L. (a)
Dreamview, S.L. (e)
Ecamed Barcelona, S.L.U (a)
Ecamed Pamplona, S.L.U (a)
Eco Resort San Blas, S.L. (b)
Elche-Crevillente Salud S.A. (a)
Emporio Mediterráneo, S.L. (d)
Emte Renovables, S.L. (a)
Eólica Mirasierra, S.L. (a)
Erbisinia Renovables, S.L. (b)
Espais Catalunya Mediterráneo, S.A. (a)
Fbex del Mediterráneo, S.L. (c)
Hantinsol Resorts, S.A. (f)
Inerzia Mediterráneo, S.L. (a)
Inmobiliaria Ricam 2005, S.L. (a)
Jerez Solar, S.L. (a)
La Ermita Resort, S.L. (c)
Mankel System, S.L.U. (a)
Market Inmobiliario de Futuro, S.L. (d)
Ribera Salud Infraestructuras, S.L.U (a)
Ribera Salud Proyectos, S.L.U. (a)
Ribera Salud Tecnologías, S.L.U. (a)
Ribera Salud, S.A. (k)
Torrevieja Salud, S.L.U. (a)
Total
6350 Industries, S.L. (a)
Adelanta Corporación, S.A. (c)
Alquezar Patrimonial, S.L. (b)
Altavista Hotelera, S.L. (a)
Alze Mediterráneo, S.L. (i)
Amci Habitat Mediterráneo, S.L. (a)
Atalanta Catalunya 2011, S.L. (d)
Aviones Carraixet CRJ-200 II A.I.E. (a)
Aviones Portacoli CRJ-200 III A.I.E. (a)
Aviones Turia CRJ-200 I, A.I.E. (a)
Balam Overseas BV (a)
Biodiésel Aragón, S.L. (e)
Blue-Lor, S.L. (j)
Casas del Mar levante, S.L. (a)
C-Cuspide 6, S.A. (a)
Centro Financiero B.H.D., S.A. (f)
Costa Marina Mediterráneo, S.A. (c)
Desarrollos Inmobiliarios Pronegui, S.L. (b)
Dexia Sabadell, S.A. (c)
Diana Capital Inversion S.G.E.C.R. S.A. (g)
Dime Habitat, S.L. (a)
E.B.N. Banco de Negocios, S.A. (c)
Energias Renovables Sierra Sesnández, S.L. (c)
Espazios Murcia, S.L. (a)
ESUS Energía Renovable, S.L. (a)
Eurofragance, S.L. (a)
Gaviel, S.A. (c)
GDSUR Alicante, S.L. (k)
General de Biocarburantes, S.A. (a)
Gesta Aparcamientos, S.L. (a)
Contribution to
consolidated
profit
Treated as
consolidated
for tax
purposes
Capital
Reserves
Results (3)
4,073
25
30
1,981
52,000
30,003
2,499
12,003
4,503
26,003
4,050
16,383
7,050
64
3
63,672
18,096
21,358
61
1,453
5,735
3,050
32,664
130,800
9,003
6,382
3
3
3
3
9,518
3
(11,400)
537
506
(3,932)
16,253
0
(7,878)
(21,925)
(2,920)
(18,152)
1,539
(13,282)
(277)
7,428
0
(30,847)
(4,724)
1,182
(3)
(2,148)
(345)
(1,813)
(14,052)
(54,104)
(4,364)
4,735
(14,365)
0
0
0
40,536
0
(678)
(1,285)
1,096
(644)
922
(240)
0
(457)
(1,327)
(1,888)
506
(154)
(132)
9
(8)
10
(8)
2,251
0
(20)
(53)
(429)
(115)
(9,760)
(26)
0
(439)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
28
0
0
0
0
0
0
0
0
0
0
0
0
0
0
28
7,365
2,347
2,296
14,456
77,666
60,032
2,878
55,501
22,786
76,592
221,354
11,168
6,847
74,775
1
33,425
13,540
49,458
60
7,395
33,245
50,871
23,516
80,450
21,148
16,032
38,919
2
2
4
439,810
6
0
858
5
0
20,902
14,980
0
0
693
0
4,050
0
4,379
2,586
1
6,497
0
8,664
19
0
0
1,894
5,454
7,896
1,601
4,637
1
2
2
2
23,978
2
109,103
0
0
0
0
0
0
0
0
0
0
0
0
(95)
(44)
0
0
0
68
0
0
0
43
0
0
0
0
(198)
0
0
0
0
0
(226)
(217)
(315)
305
(132)
382
(120)
0
29
(378)
(623)
(101)
(77)
(82)
(829)
(4)
(1)
(1)
815
0
(8)
(21)
(62)
(17)
(1,495)
(78)
0
(198)
0
0
0
(20,556)
0
(23,784)
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
230
301
72
450
35,990
2,102
1,464
150
40
29,606
4,496
4,495
1
4,495
1
4,495
1
20,084
7,813
10,000
43,858
5,911
1,858
892
1,000
171,988
5,130
1,756
254,061
606
400
39,281
1,903
4,500
50
667
3,005
1,203
15,000
6,000
430
721
43,174
6,983
(905)
(17,620)
(699)
(3,897)
2,640
(0)
141
(1,485)
(1,483)
3,977
(1,482)
3,990
(1,481)
3,985
1,052
7,694
4,895
260,751
293
(1,930)
25
11
58,993
(75)
659
196,376
1,825
(8,403)
25,056
(15)
10
(2)
10,072
763
106
(20,847)
1,789
(466)
(49)
1,312
(286)
(76)
(5,641)
0
(767)
(66)
(3)
1,858
111
110
362
109
364
109
363
(5)
4,872
4,076
53,320
(5,049)
0
(324)
(690)
38,872
(669)
(468)
(7,124)
176
(999)
(5,455)
(35)
(49)
(21)
4,633
26
(11)
0
(47)
(117)
0
75
0
0
0
0
0
0
0
29
0
0
0
0
0
0
0
0
6,498
1,959
15,000
0
0
0
0
14,556
0
0
0
0
0
0
0
0
0
309
0
0
0
0
0
2,674
129,212
106,456
3,147
108,177
23,637
1,011
12,775
189
93,779
18,989
18,957
13,092
18,919
13,155
18,883
13,127
21,189
31,667
61,700
5,593,629
37,230
42,858
15,515
17,618
2,408,553
10,382
13,181
17,912,091
3,866
26,765
1,131,682
8,005
7,749
1,213
26,406
3,836
1,282
49,928
10,314
7,920
86
37,202
2,140
0
4,430
0
0
60
10
7,824
1,060
1,060
894
1,060
897
1,060
896
6,669
9,378
5,000
27,106
2,820
0
297
330
52,214
469
1,362
104,789
521
0
3,890
1
2,025
23
9,050
1,503
630
0
2,250
0
(34)
0
231
0
0
0
0
56
0
805
(298)
(297)
0
(298)
0
(298)
0
0
(833)
2,586
126,614
(2,820)
0
0
3
2,315
0
(341)
77,843
44
0
0
(4)
(60)
(23)
1,081
13
43
0
(130)
0
(18)
0
(193)
0
0
0
0
(26)
(1)
518
27
27
100
26
101
26
101
(828)
2,436
2,038
26,660
0
112
0
(189)
18,741
0
(187)
(14,049)
37
6
(11,028)
(19)
(22)
0
1,125
(13)
(8)
1
0
12
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
€’000
Financial data (2)
Assets total
Group net
investment
Contribution to
consolidated
profit
Treated as
consolidated
for tax
purposes
0
0
293
(880)
(82)
0
(180)
5
3
0
2,111
0
0
(67)
0
10
33
0
354
(1)
0
(1,590)
(90)
(24,718)
0
7
51
0
130
0
0
(265)
123
(1)
(111)
(1,414)
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Capital
Reserves
Results (3)
Gestora de Aparcamientos del Mediterráneo, S.L. (g)
Gradiente Entrópico, S.L. (a)
Grafos, S.A. Arte sobre Papel (h)
Grupo Luxiona, S.L (a)
Guisain, S.L. (b)
Hansa Urbana S.A. (k)
Harugui Promoción y Gestion Inmobiliaria, S.L. (a)
Hidrophytic, S.L. (a)
IFOS, S.A. (a)
Improbal Norte, S.L. (a)
Intermas Nets, S.A. (b)
Inversiones Hoteleras La Jaquita, S.A. (a)
Key Vil I, S.L. (a)
Kosta Bareño, S.A. (a)
Lizarre Promociones, A.I.E. (b)
Loalsa Inversiones Castilla la Mancha, S.L. (a)
Marina Salud, S.A. (a)
10,368
4
1,800
851
4,200
44,889
593
186
20
300
846
20,134
32,685
3,574
1,500
835
180
4,000
(5,171)
2
8,444
14,359
0
235,101
(380)
34
126
(1)
27,157
2,024
(8,821)
107
0
0
659
3,071
(471)
2
(226)
(5,221)
(226)
0
(339)
13
75
0
2,872
(11,215)
(5,284)
(3,211)
613
(3)
(1,203)
6,876
0
566
0
0
0
0
0
0
0
0
561
0
0
0
0
0
0
0
36,964
39
33,531
60,714
10,071
607,229
1,528
452
6,017
1,569
73,101
10,948
192,296
39,794
29,870
822
12,625
151,107
4,132
2
3,781
8,708
1,680
0
297
93
1
105
22,213
11,174
0
3,125
300
334
36
2,450
11,600
8,207
5,378
1,160
48,249
5,800
0
1,777
No
795
1,482,200
164
6,000
300
300
160
10
6,847
801
1,752
1,500
4,128
7,176
1,043
4,000
5,000
5,000
120
300
541
40
10,000
2,604
14,686
236
60
3,436
175
4,818
490
300
448
600
100
56,402
164
115
468,200
0
(817)
0
22
1,140
(4)
(177)
(2)
45
5
(745)
(5,080)
(1,704)
0
(124)
20
555
0
26
116
(13,462)
8,683
(89)
(45)
12
(67)
0
4,168
(5)
943
(368)
0
0
3,422
0
111
(193,200)
0
93
(7)
(3)
(4)
0
(387)
(94)
0
0
(207)
(394)
(350)
(44)
(4,506)
0
(311)
0
(253)
0
(6,330)
(3,117)
(3,082)
(6)
1,399
0
(3)
(312)
(48)
557
0
(2)
(1)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
322
0
0
0
0
0
0
0
0
0
0
41,035
8,379
7,546,800
5,938
5,291
8,295
6,431
2,571
5,111
43,313
38,866
26,514
42,761
3,398
26,161
8,719
14,137
20,379
26,947
4,685
6,935
7,244
199
200,273
21,139
20,446
208
2,163
30,809
6,972
4,866
355
15,938
9,438
16,180
64
276,567
5,864
601
419,869
53
882
264
270
64
5
2,739
264
564
6,582
729
0
1,162
1,000
2,000
2,000
48
150
135
7
0
2,329
3,524
20
103
0
82
422
313
120
0
420
30
10,921
33
810,942
0
0
4
0
(71)
(3)
(2)
0
(1,247)
19
18
(402)
0
0
0
(4)
(113)
(1)
(47)
0
(80)
0
0
(2,143)
(191)
0
0
0
0
1,891
(42)
(199)
0
0
2
0
6
204,839
(31)
(18,684)
0
(624)
36
(1)
(2)
0
(168)
(31)
0
98
(15)
125
294
(11)
(777)
0
(124)
0
(3)
0
4
0
(851)
(23)
160
0
0
(135)
(114)
223
(32)
(1)
0
787
0
(20,135)
Yes
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
4,267,018
7,815,875
1,316,653
81,891
Mediterráneo Seguros Diversos, Compañía de Seguros y
Reaseguros, S.A. (a)”
Mercurio Alicante Sociedd de Arrendamientos 1, S.L.U. (a)”
Metrovacesa, S.A. (c)
Mirador del Segura 21, S.L. (a)
Murcia Emprende, S.C.R., S.A. (b)
Mursiya Golf, S.L. (a)
Naguisa Promociones, S.L. (a)
NF Desarrollos, S.L. (a)
Norfin 21, S.L. (a)
Parc Eòlic Veciana-Cabaro, S.L. (a)
Parque Boulevard Finestrat, S.L. (a)
Parque del Segura, S.L. (f)
Parque Eólico Magaz, S.L. (a)
Parque Tecnológico Fuente Álamo, S.A. (a)
Planificación TGN 2004, S.L. (b)
Prat Spolka, Z.O.O. (a)
Proburg BG XXI, S.L. (a)
Promociones Abaco Costa Almeria, S.L. (c)
Promociones Aguiver, S.L. (c)
Promociones Florida Casas, S.L. (a)
Promociones y Desarrollos Urbanos Oncineda, S.L. (k)
Residencial Haygon, S.L. (c)
Rocabella, S.L. (a)
Ros Casares Espacios, S.A. (c)
Saprosin Promociones, S.L. (a)
SBD Creixent, S.A. (b)
Sercacín, S.A.
Servicio de Recuperación de Créditos, S.A. (a)
Servicios Inmobiliarios Trecam, S.L. (l)
Societat d’Inversió dels Enginyers, S.L. (f)
Torre Sureste, S.L. (e)
Tremon Maroc Services Inmobiliers S.A.R.L. (l)
Txonta Egizastu Promozioak, S.L. (a)
Urtago Promozioak, A.I.E. (a)
Valfensal, S.L. (l)
Vistas del Parque 21, S.L. (a)
Total
Total
55,023
(1) Accounted for by the equity method because the parent company does not have managerial control.
(2) Foreign-registered companies have been translated into euros at the exchange rate ruling on 31 December 2012.
(3) Results are subject to approval by the Annual General Meeting of each company.
(4) Includes final dividends for the previous year and interim dividends paid to the group during the year.
Data for the companies to which the following notes refer have been made up to a month other than December as more up-to-date information is not available.
(a) Data shown for these undertakings under “Financial data” are correct as of 30 November 2012.
(b) Data shown for these undertakings under “Financial data” are correct as of 31 October 2012.
(c) Data shown for these undertakings under “Financial data” are correct as of 30 September 2012.
(d) Data shown for these undertakings under “Financial data” are correct as of 31 August 2012.
(e) Data shown for these undertakings under “Financial data” are correct as of 31 July 2012.
(f) Data shown for these undertakings under “Financial data” are correct as of 30 June 2012.
(g) Data shown for these undertakings under “Financial data” are correct as of 31 May 2012.
(h) Data shown for these undertakings under “Financial data” are correct as of 29 February 2012.
(i) Data shown for these undertakings under “Financial data” are correct as of 31 October 2011.
(j) Data shown for these undertakings under “Financial data” are correct as of 30 November 2011.
(k) Data shown for these undertakings under “Financial data” are correct as of 31 December 2011.
(l) Data shown for these undertakings under “Financial data” are correct as of 31 December 2010.
Total revenues of associated undertakings accounted for by the equity method were €1,700,212,000 in the
year to 31 December 2012. The total liabilities of associated undertakings at the close of 2011 amounted to
€34,030,943,000.
Name of undertaking
Dividends
paid (4)
Contribution
to reserves
or losses of
consolidated
undertakings
265
266
Name of undertaking
Axel Group, S.L.
Ballerton Servicios, S.L. (a)
Banco Guipuzcoano, S.A.
BanSabadell Professional, S.A.
Bitarte S.A.
Easo Bolsa, S.A.
Ederra, S.A.
Europa Invest, S.A.
Gazteluberri S.L.
Grao Castalia S.L.
Guipuzcoano, Correduría de Seguros del Grupo Banco Guipuzcoano, S.A.
Guipuzcoano, S.G.I.I.C., S.A.
Herrero Internacional Gestión, S.L. (a)
Principal business
Registered office
Real estate
Insurance
Financial advisers
Holding company
Banking
Banking
Banking
Banking
Banking
Banking
Services
Insurance brokers
Electronic billing services
Finance company
Finance company
Holding company
Computer services
Holding company
Services
Equipment leasing
Services
Nominee company
Real estate
Electricity utility
Holding company
Nominee company
Real estate
Real estate
Holding company
Real estate
Real estate
Real estate
Nominee company
Real estate
Insurance
Fund Managers
Real estate
Holding company
Barcelona
Andorra la Vella
Barcelona
Madrid
Nassau, Bahamas
Monaco
Sabadell
San Sebastián
Madrid
Andorra la Vella
Sabadell
Sabadell
Barcelona
Sabadell
Sabadell
San Sebastián
Murcia
Barcelona
San Sebastián
San Sebastián
Luxembourg
London
Barcelona
Madrid
San Sebastián
Valencia
San Sebastián
San Sebastián
San Sebastián
San Sebastián
San Sebastián
Alicante
Direct
Indirect
100.00
100.00
99.99
100.00
100.00
100.00
100.00
50.97
100.00
100.00
100.00
100.00
100.00
100.00
81.00
100.00
100.00
100.00
100.00
100.00
22.00
100.00
-
100.00
50.97
100.00
0.01
100.00
100.00
100.00
100.00
100.00
97.85
78.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
75.00
100.00
(a) On 28 March 2011, Ballerton Corporation Serviços, S.A. and Herrerro Internacional, S.A.R.L. moved their registered offices to Sant Cugat del Vallés, Spain, and changed their names
to Ballerton Services, S.L. and Herrero Internacional Gestión, S.L., respectively.
Principal business
Registered office
Real estate
Business start-ups
Holding company
Real estate
Electricity utility
Real estate
Holding company
Computer services
Real estate
Services
Representative office
Holding company
Financial advisers
Finance company
Services
Banking
Services
Holding company
Services
Real estate
Real estate
Real estate
Property rentals
Real estate
Real estate
Real estate
Real estate
Real estate
Dormant
Nominee company
Barcelona
San Sebastián
Miami
Madrid
Churriana de la Vega
Valencia
Oviedo
Valencia
Hong Kong
Brazil
Luxembourg
Madrid
Andorra la Vella
George Town
Miami
Miami
Andorra la Vella
Madrid
Sabadell
Barcelona
Miami
Madrid
Valencia
Alicante
San Sebastián
Madrid
San Sebastián
Direct
Indirect
100.00
100.00
100.00
100.00
99.99
49.11
30.00
100.00
100.00
94.78
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
0.01
70.00
50.67
50.67
100.00
100.00
100.00
100.00
100.00
Name of undertaking
Hobalear, S.A.
Mariñamendi S.L.
Sabadell d’Andorra Inversions S.G.O.I.C., S.A.U.
Solvia Estate, S.L.
Solvia Gestió Immobiliària, S.L.
Solvia Hotels, S.L.
Solvia Properties, S.L.
Urdin Oria, S.A.
267
€’000
Financial data (1)
Name of undertaking
Capital
Total
assets
Group net
investment
Contribution to
reserves
or losses of
consolidated
undertakings
Contribution to
consolidated
profit
Treated as
consolidated
for tax
purposes
Reserves
Results (2)
Dividends
paid (3)
0
868
0
0
0
0
0
69,516
0
24,324
174,206
185,310
1,040
24,376
3,009
25,766
94,214,316
7,551,457
0
602
17,492
9,079
3,140
2,439
19,498
0
613,479
(3,795)
107
19,213
959
(95)
900
4,592
5,665,921
41,717
(1,404)
463
6,128
(4)
(23)
(121)
235
197,983
1,196
No
No
Yes
Yes
Yes
No
No
Yes
No
268
Axel Group, S.L.
Banco Guipuzcoano, S.A.
11,400
602
14,200
26
50
1,546
11,250
173,881
37,378
(18,880)
210
21,545
1,018
24,350
914
12,727
4,965,422
581,047
(1,404)
908
6,128
(4)
(23)
(121)
235
197,983
1,196
73,148
147,679
13,597
0
1,452,873
143,030
92,099
13,597
Yes
30,069
3
60
100
24,040
35,520
330,340
240
15,025
601
60
2,000
2,500
6,506
2,500
6,183
49
15,150
2,036
125
18,528
1,352
1,460
44,315
700
60
32,314
4,514
18,380
0
18
(3,155)
26,993
(4,998)
(303,933)
12,330
17,287
71,678
516
5,439
6,438
6,691
(4,728)
(5,471)
(1,993)
23,206
33,602
46
(4,665)
15,955
(8,588)
(38,541)
(2,063)
(4)
(9,934)
6,330
6,246
11
325
(228)
1,020
0
520
0
1,537
0
0
0
0
11,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
611,878
188
850
718
665,480
524,508
257,265
138,678
79,758
119,097
886
185,415
12,388
14,361
7,968
648
163
38,961
32,902
206
13,917
52,184
17,655
45,505
1,352
100,594
92,501
11,004
15,326
3
588
299
24,040
28,920
0
3,687
19,368
607
1,130
3,861
2,500
10,735
0
0
3,007
38,914
19,485
336
16,880
3,797
0
15
0
58
15,753
3,076
7,186
0
(519)
(3,353)
31,790
(31,258)
(244,745)
3,356
22,645
71,668
189
3,485
6,372
23
(703)
170
(727)
(524)
(13)
(173)
(1,408)
29,163
(1,901)
(12,091)
(280)
(3)
(521)
13
3,184
11
325
(228)
(611)
9,548
(74,017)
4,018
1,312
8,743
16
3,293
2,760
81
(4,197)
(64)
(63)
554
(4,476)
7
(175)
(1,688)
(5,369)
(25,107)
(410)
6
(6,623)
106
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
No
No
No
No
Yes
No
No
No
No
No
No
BancSabadell d'Andorra, S.A.
Bansabadell Fincom, E.F.C., S.A.
BanSabadell Inversión, S.A., S.G.I.I.C.
BanSabadell Professional, S.A.
Bitarte S.A.
Easo Bolsa, S.A.
Ederra, S.A.
Europa Invest, S.A.
Gazteluberri S.L.
Grao Castalia S.L.
(611)
9,548
(74,017)
4,018
1,312
8,743
16
3,293
2,760
81
(4,197)
(64)
(63)
554
(4,574)
7
(175)
(1,688)
(5,369)
(25,107)
(410)
6
(6,623)
106
(1) Foreign-registered companies have been translated to euros at the exchange rate ruling on 31 December 2010.
(3) Includes final dividends for the previous year and interim dividends paid to the group during the year.
€’000
Financial data (1)
Name of undertaking
Capital
Reserves
Results (2)
Dividends
paid (3)
Total
assets
Group net
investment
Contribution to
reserves
or losses of
consolidated
undertakings
Contribution to
consolidated
profit
Treated as
consolidated
for tax
purposes
Guipuzcoano, Correduría de Seguros del Grupo Banco
Guipuzcoano, S.A.
669
597
273
2,155
263
(295)
358
No
7,599
200
3,632
545
(103,102)
(9,903)
(19,094)
(0)
(6,879)
270
0
(3,460)
695
(1,213)
871
357
568
57
400
322,048
14
757
19
(826)
0
452
0
7,994
(13)
1,346
278
(4,898)
(8,346)
2
2,042
9
(327)
(43)
129
40
(100,750)
(2,001)
(45,025)
0
(2,952)
(0)
(1)
(2,822)
77
(28)
(21)
481
1,064
27
540
14,802
2
(1)
(0)
2,019
0
(231,653)
(38,993)
(359)
(5,693)
229
(784)
(3,650)
(1,695)
(0)
51
(1)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
898
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9,442
217
4,115
673
64,256
64,091
68,505
18,812
7,135
3,725
2
9,368
780
195
36,082
1,385
1,474
252,953
1,591
2,720,846
77
6,765
79
91,943
10,183
2,381,220
221,085
10,361
27,939
12,893
31,766
9,493
18,743
63
9,635
18
3,014
45
1,139
60
51,674
0
0
2,904
0
24,185
3
0
0
250
16,400
358
300
1
551
317,046
60
6,793
67
15,000
10,200
0
0
2,784
0
3,356
0
0
0
60
5,286
9
(16)
(442)
159
545
4,903
(14,033)
(12,406)
0
(2,495)
8
0
(2,400)
644
(115)
628
(888)
289
13
369
(16,167)
7
(6,099)
12
(244)
0
(520,843)
(50,921)
7,912
(13)
(873)
(2,511)
(715)
(2,478)
(1)
277
2
(327)
(32)
129
40
(100,750)
(2,001)
(45,025)
0
(2,952)
(0)
(1)
(2,822)
77
(28)
(10)
481
539
27
540
14,029
1
(1)
(0)
2,019
0
(231,653)
(38,993)
(359)
(5,693)
229
(784)
(3,650)
(1,695)
(0)
51
(1)
No
No
Yes
Yes
No
No
No
No
No
Yes
Yes
No
No
No
No
Yes
No
No
No
No
No
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
No
1,482,952
5,081,272
(289,269)
85,632
(1) Foreign-registered companies have been translated to euros at the exchange rate ruling 31 December 2010.
(3) Includes final dividends for the previous year and interim dividends paid to the group during the year.
Total
100
1,503
60
354
60
259,561
6,183
55,013
3,124
8,740
3,456
3
3,250
0
1,416
33,394
70
300
1
618
2,770
60
6,010
60
15,000
10,183
15,807
60
2,705
500
2,073
500
4,000
4,550
60
3,606
9
Guipuzcoano, S.G.I.I.C., S.A.
Hobalear, S.A.
Mariñamendi S.L.
Sabadell d'Andorra Inversions Societat Gestora, S.A.
Serveis d'Assessorament BSA, S.A.U.
Sinia Renovables, S.C.R. de R.S., S.A.
Solvia Estate, S.L.
Solvia Gestió Immobiliària, S.L.
Solvia Hotels, S.L.
Solvia Properties, S.L.
Urdin Oria, S.A.
Urquijo Gestión, S.G.I.I.C., S.A.
269
Principal business
Registered office
Holding company
Holding company
Electricity utility
Electricity utility
Holding company
Finance company
Real estate
Electricity utility
Real estate
Barcelona
Valladolid
Palencia
Madrid
León
Havana
Alicante
Sant Joan Despí
Barcelona
50.00
-
62.11
62.10
50.00
62.10
49.00
50.00
100.00
45.01
6350 Industries, S.L.
Aldoluz, S.L.
Banco del Bajío, S.A.
Biodiésel Aragón, S.L.
Casas del Mar levante, S.L.
C-Cuspide 6, S.A.
Centro Financiero B.H.D., S.A.
Cepric Imobiliária, Lda.
Desarrollos Inmobiliarios La Serreta, S.L.
Desarrollos Inmobiliarios Pronegui, S.L.
Dexia Sabadell, S.A.
Diana Capital Inversion S.G.E.C.R. S.A.
Egumar Gestion, S.L.
Espazios Murcia, S.L.
ESUS Energía Renovable, S.L.
Eurofragance, S.L.
FS Colaboración y Asistencia, S.A.
Garnova, S.L.
Gaviel, S.A.
General de Biocarburantes, S.A.
Grafos, S.A. Arte sobre Papel
Guisain, S.L.
Harinera Ilundain, S.A.
Harugui Gestion y Promoción Inmobiliaria, S.L.
Hidrodata, S.A.
Hidrophytic, S.L.
IFOS, S.A.
Improbal Norte, S.L.
Intermas Nets, S.A.
J. Feliu de la Penya, S.L
Key Vil I, S.L.
Kosta Bareño, S.A.
Real estate
Services
Wind farms
Services
Real estate
Real estate
Services
Services
Services
Services
Services
Banking
Pension fund managers
Insurance
Insurance
Chemicals
Real estate
Real estate
Financial services
Real estate
Real estate
Real estate
Banking
Venture capital
Real estate
Real estate
Electricity utility
Perfumes and cosmetics
Services
Food products
Solar energy
Real estate investment
Chemicals
Graphic artists
Real estate
Real estate
Real estate
Hydro-electric power generation
Real estate
Services
Real estate
Chemicals
Lighting
Real estate
Real estate
Barcelona
Ourense
Ourense
Madrid
Almeria
Alicante
Boadilla del Monte
Madrid
Madrid
Madrid
Madrid
León (Mexico)
Altorricón
Alicante
Guadalajara
Lisbon
Madrid
Madrid
Madrid
Madrid
Madrid
Murcia
Vigo
Rubí
Barcelona
Granollers
Vitoria
Barcelona
Marina de Cudeyo
Barcelona
Abanto y Zierbena
Pamplona
Mutilva Baja
Barcelona
Vitoria
Buenos Aires (Argentina)
Pamplona
Llinars del Vallès
Canovelles
Banos y Mendigo
Abanto y Zierbena
25.00
26.42
25.00
25.00
25.00
25.00
20.00
50.00
50.00
50.00
20.00
40.00
50.00
-
37.50
25.00
25.00
30.06
40.00
49.78
33.33
33.00
45.00
25.00
40.00
41.23
30.00
45.00
45.00
25.00
35.00
25.00
50.00
25.00
45.00
40.00
45.00
50.00
45.75
50.00
20.00
35.00
20.00
20.00
40.00
20.00
(a) 25% of the voting rights are held by the parent company.
270
Direct
Indirect
Name of undertaking
Emte Renovables, S.L.
Energias Renovables Sierra Sesnández, S.L.
Eólica Sierra Sesnández, S.L.
Jerez Solar, S.L.
Principal business
Registered office
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Electricity utility
Real estate
Real estate
Electricity utility
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Real estate
Electricity utility
Investment company
Holding company
Holding company
Real estate
Real estate
Real estate
Real estate
Real estate
Malaga
Abanto y Zierbena
Madrid
Benidorm
Benalmadena
Murcia
Pamplona
Murcia
Benalmadena
Barcelona
Benidorm
Benalmadena
Magaz de Pisuerga
Burgos
Granada
Murcia
Alicante
Madrid
Pamplona
Elda
Sabadell
Granada
Esplugues de Llobregat
Barcelona
Zarautz
Zarautz
Noain
Benalmadena
Direct
Indirect
23.01
43.08
-
33.78
40.00
20.00
42.00
34.55
49.70
45.00
40.00
49.50
40.00
33.00
32.20
49.00
25.00
40.00
40.00
40.00
20.00
50.00
25.00
45.00
46.88
20.00
28.79
40.00
35.00
30.00
45.00
35.91
Name of undertaking
Lagar de Tasara, S.L.
Lizarre Promociones, A.I.E.
Loalsa Inversiones Castilla la Mancha, S.L.
M.P. Costablanca, S.L.
Mirador del Segura 21, S.L.
Mursiya Golf, S.L.
Naguisa Promociones, S.L.
NF Desarrollos, S.L.
Norfin 21, S.L.
Parc Eòlic Veciana-Cabaro, S.L.
Parque Boulevard Finestrat, S.L.
Parque del Segura, S.L.
Parque Eólico Magaz, S.L.
Proburg BG XXI, S.L.
Promociones Abaco Costa Almeria, S.L.
Promociones Aguiver, S.L.
Promociones Florida Casas, S.L.
Promociones y Desarrollos Creaziona Castilla la Mancha, S.L.
Promociones y Desarrollos Urbanos Oncineda, S.L.
Residencial Haygon, S.L.
Saprosin Promociones, S.L.
SBD Creixent, S.A.
Sistema Eléctrico de Conexión Valcaire, S.L.
Societat d'Inversió dels Enginyers, S.L.
Torre Sureste, S.L.
Txonta Egizastu Promozioak, S.L.
Urtago Promozioak, A.I.E.
Vera Munain, S.L.
Vistas del Parque 21, S.L.
271
€’000
Financial data (2)
Name of undertaking
Emte Renovables, S.L. (a)
Energias Renovables Sierra Sesnández, S.L. (f)
Eólica Mirasierra, S.L. (c)
Eólica Sierra Sesnández, S.L. (f)
Jerez Solar, S.L. (a)
Plaxic Estelar, S.L. (a)
Total
272
6350 Industries, S.L. (c)
Atalanta Catalunya 2011, S.L. (d)
Air Miles España, S.A. (b)
Aldoluz, S.L. (h)
Anara Guipuzcoa, S.L. (a)
Aviación Regional Cántabra, A.I.E. (a)
Aviones Alfambra CRJ-900, A.I.E. (a)
Aviones Cabriel CRJ-900, A.I.E. (a)
Aviones Gorgos CRJ-900, A.I.E. (a)
Aviones Sella CRJ-900, A.I.E. (a)
Banco del Bajío, S.A. (a)
BanSabadell Pensiones, E.G.F.P., S.A. (a)
BanSabadell Seguros Generales, S.A. de Seguros y Reaseguros (a)
BanSabadell Vida, S.A. de Seguros y Reaseguros (a)
Biodiésel Aragón, S.L. (e)
Casas del Mar levante, S.L. (a)
C-Cuspide 6, S.A. (g)
Centro Financiero B.H.D., S.A. (f)
Cepric Imobiliária, Lda. (g)
Desarrollos Inmobiliarios La Serreta, S.L. (d)
Desarrollos Inmobiliarios Pronegui, S.L. (g)
Dexia Sabadell, S.A. (a)
Diana Capital Inversion S.G.E.C.R. S.A. (e)
Egumar Gestion, S.L. (a)
Espazios Murcia, S.L. (a)
ESUS Energía Renovable, S.L. (a)
Eurofragance, S.L. (a)
FS Colaboración y Asistencia, S.A. (c)
Garnova, S.L. (b)
Gate Solar, S.L. SPE (c)
Gaviel, S.A. (d)
General de Biocarburantes, S.A. (f)
Grafos, S.A. Arte sobre Papel (a)
Guisain, S.L. (d)
Capital
Dividends
paid (4)
Total
assets
Group net
investment
Contribution
to reserves
or losses of
consolidated
undertakings
Contribution to
consolidated
profit
Treated as
consolidated
for tax
purposes
Reserves
Results (3)
8,050
3
64
4
3
18,669
1,000
3,050
3
(163)
(1)
7,488
(1)
(3)
1,197
588
(1,358)
(9,782)
(115)
0
(21)
0
(3)
63
(176)
(338)
(28)
0
0
0
0
0
1,199
0
0
0
1,199
15,073
(7,186)
(26,160)
(9,483)
(8)
52,383
(9,779)
59,586
38,542
4,379
1
3,776
2
1
8,616
500
1,894
0
19,169
(95)
0
0
0
(2)
177
(13)
43
(6,153)
(6,043)
(533)
0
(10)
0
(1)
32
(153)
(210)
(447)
(1,323)
No
No
No
No
No
No
No
No
No
230
301
40
72
6,628
150
29,606
4,496
4,495
4,495
4,495
134,453
7,813
10,000
43,858
5,911
892
1,000
158,876
7
1,756
2,004
254,061
606
600
4,500
50
667
600
48,072
3,005
1,203
6,000
1,800
4,200
664
39,056
(0)
5,214
(6,628)
2,429
(711)
(1,514)
(1,511)
(1,510)
(1,508)
364,100
16,694
4,895
236,301
(6,456)
(5,277)
(105)
58,536
(521)
504
(1,437)
194,477
1,826
(488)
(175)
(64)
8,367
2,050
16,792
766
92
(3,019)
8,444
(2,176)
(33)
1,426
0
(493)
0
137
835
24
24
23
23
42,523
3,676
3,723
49,736
(884)
(605)
(1)
37,874
(723)
(258)
(722)
26,184
302
(102)
(90)
(150)
5,035
(19)
5,508
(25)
(2)
(134)
278
(148)
0
75
0
0
0
0
41
0
0
0
0
20,243
3,233
0
7,500
0
0
0
12,486
0
0
0
0
0
0
0
0
608
0
520
0
0
0
0
0
2,673
133,782
40
108,290
0
12,240
103,202
20,064
20,049
20,024
20,000
4,995,703
48,038
63,815
6,370,826
47,049
17,351
17,592
2,298,120
8,833
13,598
8,928
18,146,719
3,290
6,312
7,965
580
24,472
4,190
106,039
3,870
1,296
10,468
33,494
10,052
0
37,202
10
2,140
0
0
7,824
1,060
1,060
1,060
1,060
96,900
9,378
5,000
27,106
2,820
0
0
44,936
0
0
0
108,026
457
0
0
23
9,050
887
42,814
1,503
630
0
2,626
0
0
1,217
0
88
0
0
581
(306)
(305)
(306)
(306)
14,837
3,667
2,586
114,391
(2,820)
0
0
3,212
(1)
0
0
77,457
(10)
0
(20)
0
355
20
5,885
24
43
(130)
315
(11)
(12)
475
0
(134)
0
55
241
7
7
6
6
9,728
1,998
1,959
27,225
0
(202)
0
13,502
(325)
(103)
(181)
0
125
(31)
(41)
(23)
1,220
(9)
1,425
(13)
(1)
0
0
(59)
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
€’000
Financial data (2)
Name of undertaking
Capital
Results (3)
91
(379)
(6,658)
21
23
(1)
27,157
21,897
(833)
(18)
(4,533)
0
628
(141)
(2)
(285)
320
1,091
0
(2,197)
(233)
(1,185)
(566)
(593)
(299)
20
555
(892)
(7)
(252)
(5,168)
(452)
(15)
4,152
232,468
0
792
568
190
(2)
(2)
(4)
(214)
(3,397)
13
9
0
3,205
(3,296)
(241)
0
922
(7)
(70)
(29)
0
(87)
(5)
(4)
0
(2,017)
(57)
6
(252)
(11)
(420)
0
(110)
(416)
0
(93)
(2,203)
(173)
(2)
52
(2,845)
(145)
(268)
1
(1)
0
0
Total
0
0
0
0
0
0
505
0
0
0
0
61
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,354
3,398
242,378
471
491
1,556
72,454
66,541
41,581
24,838
24,587
828
15,367
53,964
5,804
7,871
6,436
2,506
5,000
43,523
38,448
25,779
44,370
13,849
30,526
25,849
6,398
15,786
6,935
7,624
83,600
20,308
383
5,117
244,223
251
18,628
16,007
263
1,910
5,699
45,272
Group net
investment
0
0
4,974
93
0
0
22,213
10,501
0
0
0
311
0
0
0
0
168
0
0
2,739
0
0
6,582
0
0
0
0
0
0
0
0
2,968
82
422
47,302
55
0
0
30
0
0
(12)
(152)
1,859
12
0
0
1,620
(15)
0
0
(1)
0
54
0
0
(1)
0
(1)
0
(546)
21
0
(418)
0
34
(1)
13
(53)
0
103
(249)
(117)
0
1,868
0
0
0
0
2
0
0
502,012
224,483
Ajustes de consolidación
Total
(1)
(2)
(3)
(4)
Contribution to
consolidated
profit
(2)
(107)
0
7
0
1,039
(720)
(96)
0
311
(3)
(14)
(13)
0
(43)
(2)
(2)
0
(600)
(19)
2
(137)
(3)
(168)
0
(44)
(83)
0
(23)
(992)
(14)
0
22
0
(42)
(107)
0
0
0
0
54,992
467,502
132,103
2,004,133
5,299,712
231,902
Accounted for by the equity method because the parent company does not have manaagerial control.
Foreign-registered companies have been translated into euros at the exchange rate ruling on 31 December 2011.
Results are subject to approval by the Annual General Meeting of each company.
Includes final dividends for the previous year and interim dividends paid to the group during the year.
Treated as
consolidated
for tax
purposes
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
60
593
3,720
186
4
300
846
851
3,574
1,500
4,441
835
180
5,000
164
300
300
160
10
6,847
801
1,752
1,500
4,000
5,000
5,000
120
2,743
300
541
2,604
12,895
175
4,818
15,127
390
300
600
100
60
164
Reserves
Total
assets
Harinera Ilundain, S.A.
Harugui Gestion y Promoción Inmobiliaria, S.L.
Hidrodata, S.A. (c)
Hidrophytic, S.L.
IFOS, S.A. (a)
Improbal Norte, S.L. (a)
Intermas Nets, S.A. (a)
J. Feliu de la Penya, S.L (b)
Key Vil I, S.L. (d)
Kosta Bareño, S.A. (a)
Lagar de Tasara, S.L. (a)
Lizarre Promociones, A.I.E. (d)
Loalsa Inversiones Castilla la Mancha, S.L. (e)
M.P. Costablanca, S.L. (a)
Mirador del Segura 21, S.L. (a)
Mursiya Golf, S.L. (a)
Naguisa Promociones, S.L. (a)
NF Desarrollos, S.L. (a)
Norfin 21, S.L. (a)
Parc Eòlic Veciana-Cabaro, S.L. (a)
Parque Boulevard Finestrat, S.L. (a)
Parque del Segura, S.L. (a)
Parque Eólico Magaz, S.L. (a)
Proburg BG XXI, S.L. (a)
Promociones Abaco Costa Almeria, S.L. (c)
Promociones Aguiver, S.L. (f)
Promociones Florida Casas, S.L. (a)
Promociones y Desarrollos Creaziona Castilla la Mancha, S.L. (a)
Promociones y Desarrollos Urbanos Oncineda, S.L. (a)
Residencial Haygon, S.L. (a)
Saprosin Promociones, S.L. (a)
SBD Creixent, S.A. (a)
Societat d'Inversió dels Enginyers, S.L.
Torre Sureste, S.L. (a)
Txonta Egizastu Promozioak, S.L. (a)
Urtago Promozioak, A.I.E. (a)
Vera Munain, S.L. (i)
Vistas del Parque 21, S.L. (a)
Dividends
paid (4)
Contribution
to reserves
or losses of
consolidated
undertakings
Data for the companies to which the following notes refer have been made up to a month other than December as more up-to-date information is not available.
(a) Data shown for these undertakings under “Financial data” are correct as of 30 November 2011.
(b) Data shown for these undertakings under “Financial data” are correct as of 31 October 2011.
(c) Data shown for these undertakings under “Financial data” are correct as of 30 September 2011.
(d) Data shown for these undertakings under “Financial data” are correct as of 31 August 2011.
(e) Data shown for these undertakings under “Financial data” are correct as of 31 July 2011.
(f) Data shown for these undertakings under “Financial data” are correct as of 30 June 2011
(g) Data shown for these undertakings under “Financial data” are correct as of 31 December 2010.
(h) Data shown for these undertakings under “Financial data” are correct as of 31 May 2010.
(i) Data shown for these undertakings under “Financial data” are correct as of 31 December 2008.
Total revenues of associated undertakings accounted for by the equity method were €2,616,013,000 in the
year to 31 December 2011. The total liabilities of associated undertakings at the close of 2011 amounted to
€31,805,166,000.
273
Annex II: Consolidated balance sheet of the Banco CAM group
At 1 June 2012
€’000
Assets
01/06/12
1,376,443
Debt securities
Equity instruments
Trading derivatives
148,325
0
0
7,815
802
139,708
0
Debt securities
Equity instruments
21,526
0
0
12,674
8,852
0
Debt securities
Equity instruments
6,989,617
6,204,191
785,426
661,885
Debt securities
43,442,454
1,637,464
41,410,370
394,620
0
3,928,429
1,276,044
Hedging derivatives
4,073,493
1,084,538
Investments
Associates
200,196
200,196
0
Insurance contracts linked to pensions
0
Reinsurance assets
0
Tangible assets
Property, plant and equipment
For own use
Investment property
Intangible assets
Goodwill
1,340,450
622,470
621,915
555
717,980
0
219,095
0
219,095
Tax assets
Current
Deferred
2,989,683
78,104
2,911,579
Other assets
Inventories
Other
1,851,678
1,739,901
111,777
Total assets
274
0
67,665,927
At 1 June 2012
€’000
Liabilities
Held for trading
Trading derivatives
Short positions
Changes in fair value of hedged items in portfolio hedges of interest rate risk
Hedging derivatives
173,051
0
0
0
0
173,051
0
0
0
0
0
0
0
0
0
59,331,336
14,283,742
5,203,707
31,984,393
5,108,218
1,946,827
804,449
0
341,300
0
2,005,153
Provisions
Other provisions
1,222,709
119,329
25,231
107,762
970,387
Tax liabilities
Current
Deferred
01/06/12
510,029
51,578
458,451
193,294
Total liabilities
63,776,872
Other liabilities
275
At 1 June 2012
€’000
Equity
Capital
Authorized
Reserves
Profit or loss for the period attributable to the parent company
Cash flow hedges
Other
Total equity
01/06/12
3,500,878
5,249,000
5,249,000
0
1,000,172
(1,901,297)
(1,899,621)
(1,676)
0
0
0
0
(846,997)
0
(273,253)
(270,891)
(6,583)
0
(2,352)
0
7,309
(736)
661,430
16,994
644,436
3,889,055
67,665,927
Memorandum item
276
1,447,758
3,450,448
Annex III: Balance sheet of Banco Guipuzcoano, S.A.
At 31 December 2011
€’000
Assets
31/12/11
51,172
Debt securities
Equity instruments
Trading derivatives
38,225
0
0
0
0
38,225
0
0
0
0
0
0
0
Debt securities
Equity instruments
2,290,787
2,273,086
17,701
1,037,559
Debt securities
4,794,616
1,130,731
3,663,885
0
1,009
0
0
0
Hedging derivatives
13,040
83,368
Investments
Associates
Group undertakings
114,222
456
1,503
112,263
0
Reinsurance assets
0
Intangible assets
Intangible assets
Tax assets
Current
Deferred
60,052
52,042
52,042
0
8,010
0
0
0
0
Tangible assets
For own use
Investment property
Debt securities
Equity instruments
98,442
54,851
43,591
Other assets
7,533
Total assets
7,551,457
277
At 31 December 2011
€’000
Liabilities
Financial liabilities held for trading
Trading derivatives
Short positions
36,002
0
0
0
0
36,002
0
0
0
0
0
0
0
0
0
6,856,289
0
2,429,685
3,376,339
725,217
306,325
18,723
6,456
Hedging derivatives
1,508
Provisions
Other provisions
Tax liabilities
Current
Deferred
278
31/12/11
0
42,854
20,750
13,915
1,959
6,230
6,257
466
5,791
Other liabilities
11,866
Total liabilities
6,961,232
At 31 December 2011
€’000
Equity
31/12/11
619,622
37,378
37,378
0
209,970
371,078
0
0
0
0
0
1,196
0
Cash flow hedges
(29,397)
(29,397)
0
0
0
0
0
Total equity
590,225
Capital
Authorized
Reserves
Non-voting equity units and associated funds
Profit (loss) for the year
Less: Dividend and similar payments
7,551,457
Memorandum items
151,462
239,664
279
Annex III: Balance sheet of Banco Urquijo Sabadell Banca Privada, S.A.
At 31 December 2011
€’000
Assets
9,424
Debt securities
Equity instruments
Trading derivatives
8,753
0
0
0
0
8,753
0
Debt securities
Equity instruments
0
0
0
0
0
0
Debt securities
Equity instruments
319,585
316,592
2,993
145,214
Debt securities
979,501
200,999
778,502
0
32,603
0
0
0
Hedging derivatives
0
0
Investments
Associates
Group undertakings
0
0
0
0
0
Reinsurance assets
0
Tangible assets
For own use
Investment property
35,737
35,737
35,737
0
0
0
Intangible assets
Goodwill
84,345
60,384
23,961
Tax assets
Current
Deferred
280
31/12/11
5,888
27
5,861
Other assets
9,640
Total assets
1,452,873
At 31 December 2011
€’000
Liabilities
Trading derivatives
Short positions
Hedging derivatives
Provisions
Other provisions
Tax liabilities
Current
Deferred
Other liabilities
Total liabilities
0
0
0
0
0
0
1,192,498
0
463,626
723,821
0
0
5,051
0
1,221
0
791
0
0
791
0
10,944
49
10,895
4,251
0
1,218,326
Capital repayable on demand
8,621
0
0
0
0
8,621
0
0
31/12/11
281
At 31 December 2011
€’000
Equity
Capital
Authorized
Uncalled capital (-)
Reserves
Treasury shares (-)
Dividend and similar payments (-)
Cash flow hedges
Total equity
31/12/11
234,424
73,148
73,148
0
69,912
77,767
0
0
0
0
0
13,597
0
123
123
0
0
0
0
0
234,547
1,452,873
Memorandum items
282
87,696
182,198
Annex III: Balance sheet of Axel Group, S.L.
At 31 December 2011
€’000
Assets
31/12/11
990
0
0
0
0
0
0
0
Debt securities
Equity instruments
0
0
0
0
0
0
Debt securities
Equity instruments
0
0
0
0
Debt securities
0
0
0
0
0
0
0
0
Hedging derivatives
0
0
Investments
Associates
Group undertakings
49
0
0
49
0
Reinsurance assets
0
Tangible assets
For own use
Investment property
0
0
0
0
0
0
Intangible assets
Goodwill
0
0
0
Tax assets
Current
Deferred
1
1
0
Other assets
Inventories
Other
0
0
0
Total assets
Debt securities
Equity instruments
Trading derivatives
1.040
283
At 31 December 2011
€’000
Liabilities
284
31/12/11
Trading derivatives
Short positions
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Hedging derivatives
0
0
0
Provisions
Other provisions
0
0
0
0
0
Tax liabilities
Current
Deferred
0
0
0
Other liabilities
0
Total liabilities
0
At 31 December 2011
€’000
Equity
Capital
Authorized
Reserves
Treasury shares (-)
1,040
26
26
0
0
1,018
0
0
0
0
0
(4)
0
0
0
0
0
0
0
0
Total equity
1,040
1,040
Cash flow hedges
31/12/11
Memorandum items
0
182,198
285
Annex III: Balance sheet of BS Profesional, S.A.
At 31 December 2011
€’000
Assets
286
31/12/11
681
Debt securities
Equity instruments
Trading derivatives
0
0
0
0
0
0
0
Debt securities
Equity instruments
0
0
0
0
0
Debt securities
Equity instruments
1
0
1
0
Debt securities
43
0
43
0
0
0
0
0
Hedging derivatives
0
0
Investments
Associates
Group undertakings
0
0
0
0
0
Tangible assets
For own use
Investment property
0
0
0
0
0
0
Intangible assets
Goodwill
2
0
2
Tax assets
Current
Deferred
88
88
0
Other assets
0
Total assets
815
At 31 December 2011
€’000
Liabilities
31/12/11
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
222
0
0
0
0
0
222
0
Hedging derivatives
0
0
Provisions
Other provisions
0
0
0
0
0
Tax liabilities
Current
Deferred
0
0
0
Other liabilities
0
Total liabilities
0
222
Capital repayable on demand
Trading derivatives
Short positions
287
At 31 December 2011
€’000
Equity
Capital
Authorized
Reserves
Treasury shares (-)
Cash flow hedges
31/12/11
593
60
60
0
0
516
0
0
0
0
0
17
0
0
0
0
0
0
0
0
Total equity
593
815
Memorandum items
288
0
0
Annex III: Balance sheet of Banco CAM, S.A.U.
At 1 June 2012
€’000
Assets
01/06/12
1,376,351
134,701
0
0
33,742
802
100,157
0
Debt securities
Equity instruments
12,674
0
0
12,674
0
0
Debt securities
Equity instruments
5,779,974
5,147,296
632,678
661,885
Debt securities
45,804,075
1,767,559
43,642,037
394,479
0
2,750,701
1,276,044
0
Hedging derivatives
4,073,493
1,075,128
Investments
Associates
Group undertakings
1,590,456
105,124
43,696
1,441,636
0
Reinsurance assets
0
Intangible assets
Intangible assets
Tax assets
Current
Deferred
Other assets
Inventories
Other
Total assets
1,076,207
546,646
546,091
555
529,561
0
207,562
0
207,562
Tangible assets
For own use
Investment property
Debt securities
Equity instruments
Trading derivatives
3,232,140
21,722
3,210,418
97,672
0
97,672
67,211,134
289
At 1 June 2012
€’000
Liabilities
Trading derivatives
Short positions
Hedging derivatives
173,051
0
0
0
0
173,051
0
0
0
0
0
0
0
0
0
61,003,744
14,283,742
5,072,695
35,171,778
4,073,370
1,872,294
529,865
0
341,224
0
0
Provisions
Other provisions
Tax liabilities
Current
Deferred
290
01/06/12
1,153,395
119,329
12,226
107,762
914,078
752,429
428,800
323,629
Other liabilities
171,123
Total liabilities
63,594,966
At 1 June 2012
€’000
Equity
Capital
Authorized
Reserves
Reserves (losses) of equity-accounted undertakings
Profit (loss) for period attributable to parent company
Other
Total equity
3,890,916
5,249,000
5,249,000
0
1,000,172
(1,615,384)
(1,615,384)
0
0
0
0
0
(742,872)
0
(274,748)
(277,474)
(6,575)
0
9,301
0
0
0
Cash flow hedges
01/06/12
0
0
0
3,616,168
67,211,134
Memorandum items
1,447,758
2,121,473
291
Annex III: Balance sheet of CAMGE Holdco, S.L.
At 31 December 2011
€’000
Assets
0
Debt securities
Equity instruments
Trading derivatives
0
0
0
0
0
0
0
Debt securities
Equity instruments
0
0
0
0
0
0
Debt securities
Equity instruments
2
2
0
0
Debt securities
479
479
0
0
0
0
0
0
Hedging derivatives
0
0
Investments
Associates
Group undertakings
1,580
0
0
1,580
0
Reinsurance assets
0
Tangible assets
For own use
Investment property
0
0
0
0
0
0
Intangible assets
Goodwill
0
0
0
Tax assets
Current
Deferred
Other assets
Inventories
Other
Total assets
292
31/12/11
57
57
0
0
0
0
2,118
At 31 December 2011
€’000
Liabilities
31/12/11
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Hedging derivatives
0
0
0
Provisions
Other provisions
0
0
0
0
0
Tax liabilities
Current
Deferred
0
0
0
Other liabilities
0
Total liabilities
0
0
0
0
0
0
0
0
0
Trading derivatives
Short positions
293
At 31 December 2011
€’000
Equity
Capital
Authorized
Reserves
Reserves (losses) of equity-accounted undertakings
31/12/11
(2,118)
(1,580)
(1,580)
0
0
(538)
(538)
0
0
0
0
0
0
0
Cash flow hedges
0
0
0
0
0
0
0
0
Other
0
0
0
Total equity
(2,118)
(2,118)
Memorandum items
294
0
0
Annex III: Balance sheet of CAMGE Financiera E.F.C., S.A.
At 31 December 2011
€’000
Assets
31/12/11
0
Debt securities
Equity instruments
Trading derivatives
0
0
0
0
0
0
0
Debt securities
Equity instruments
0
0
0
0
0
0
Debt securities
Equity instruments
0
0
0
0
Debt securities
994,661
54,740
939,921
0
0
0
0
0
Hedging derivatives
0
37
0
0
0
0
0
Reinsurance assets
0
Tangible assets
For own use
Investment property
38
38
38
0
0
0
Intangible assets
Goodwill
30
0
30
Other assets
Inventories
Other
Total assets
Investments
Associates
Group undertakings
Tax assets
Current
Deferred
6,208
0
6,208
166
0
0
1,001,140
295
At 31 December 2011
€’000
Liabilities
Trading derivatives
Short positions
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
406,961
0
108,626
102,767
0
195,058
510
0
Hedging derivatives
0
0
0
Provisions
Other provisions
0
0
0
0
0
Tax liabilities
Current
Deferred
296
31/12/11
4,716
4,716
0
Other liabilities
24,306
Total liabilities
435,983
At 31 December 2011
€’000
Equity
Capital
Authorized
Reserves
31/12/11
565,157
158,000
158,000
0
309,740
97,417
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Other
0
0
0
Total equity
Cash flow hedges
565,157
1,001,140
Memorandum items
0
1,269,013
297
Consolidated report of the directors for the year 2012
Macroeconomic environment
298
The sovereign debt crisis in the eurozone worsened in the first half of the year, with particularly virulent effects on
countries like Spain and Italy. The complex situation that prevailed was reflected in an increasingly fragmented
capital market, threatening the very existence of the single European currency. This coincided with a social and
political situation in Greece that continued to be especially critical, giving rise to a significant risk that the country
would finally have to leave the euro. Two general elections were required before the country was able to establish
a government, and Greece became the first developed country since the Second World War to restructure its
sovereign debt, forcing private creditors to take a debt haircut.
The actions taken in response to the crisis by the European authorities halfway through the year brought about
a considerable improvement in the situation, producing an incipient reversal in the disintegration of the eurozone
capital market and some improvement in the funding position of the systemic countries on the European periphery.
Moreover, the fears of a possible exit by Greece were gradually allayed by the European authorities’ determination
to keep the country within the single currency.
In Europe the decision was taken to move more resolutely towards European integration. A road map was
produced setting out the basic building blocks of financial union, with proposals for greater economic and fiscal
integration being left for implementation in 2013. The first step in building this financial framework will be to
establish a single banking supervisor which will make it possible for the European Stability Mechanism (ESM)
to recapitalize the banks directly, thus breaking the link between financial risk and sovereign risk. On the fiscal
front, another significant aspect was a certain shift in the European stance with respect to fiscal consolidation.
In particular, more importance was given to measures to correct fiscal imbalances, and less on commitments to
numerical targets, given that these were being affected by the difficult economic conditions then prevailing.
Meanwhile, the European Central Bank (ECB) decided to implement a new programme of bond purchases
(outright monetary transactions, OMT), linked to requests to the ESM by countries in difficulty for a programme of
financial assistance. The bond purchases will mainly be of short-dated government bonds and will not be subject
to any ex-ante quantitative limits. This decision brought about a fundamental change in the sovereign debt crisis.
By taking this step, the ECB was practically guaranteeing that no systemic eurozone country would be frozen out
of the primary market for government debt, provided that the conditionality attaching to the provision of financial
assistance by the ESF was fulfilled.
In late June the Spanish authorities made a request for external financial assistance for the banking sector as
part of their efforts to restructure and recapitalize the country’s banks. The amount of financial assistance could
be as much as €100 billion and the conditions on which it would be provided included: (i) determining the capital
requirements of each institution; (ii) recapitalizing, restructuring and/or resolving the less viable banks; and (iii)
transferring the impaired assets of banks requiring government support to an asset management company (Sareb).
Despite a more benign financial environment in the second half of the year the global economy remained weak
all through 2012, especially in the eurozone and most particularly in countries on the European periphery, with
countries like Spain and Italy suffering the consequences of tight credit conditions. In Spain, fiscal tightening and
private sector deleveraging also affected economic activity. In the United States the economic environment was
affected by uncertainties caused by the difficulty in reaching an agreement over the fiscal cliff. In Japan, the conflict
with China over the Sendaku islands deepened the economic gloom. The emerging economies provided yet another
headwind to global growth, with contagion from other countries adding to the effects of domestic tightening in the
main economies as they strove for more balanced growth.
Against this background, the monetary policies of the world’s main central banks remained highly
accommodative, with large amounts of liquidity being injected into the economy. In the USA, the Federal
Reserve continued its programme of asset purchases and took a decision to make the setting of interest rates
dependent on numerical threshold levels of unemployment and inflation. The ECB, in addition to its new bond
purchasing programme (OMT) and its second three-year funding operation, continued to provide full allotment in
its refinancing operations, relaxed its rating requirements for collateral and reduced its key rate to historically
low levels (0.75%). This highly accommodative monetary policy and the prevailing risk-adverse conditions ensured
that government bond yields in the core eurozone countries remained close to zero in the second half of the
year, and even entered negative territory in some cases. The Bank of Japan expanded its unorthodox monetary
programmes and was especially concerned to increase purchases of government bonds. It also established an
inflation target. Finally, the Bank of England increased its holdings of assets acquired under its programme of
asset purchases and introduced further unconventional measures (such as providing liquidity to banks linked to
their lending to the private sector).
In the long-term public debt markets US and German bond yields remained at historically low levels thanks to
their status as refuges for the huge amounts of cash circulating in the market. Spanish and Italian government
debt remained under pressure throughout the first half of the year, reaching levels which threatened to exclude
Spain and Italy (especially the former) from obtaining funding from the capital markets,. The second half of the
year, however, saw a substantial improvement, especially after the ECB took a more prominent role in addressing
the sovereign debt crisis. Yields on the debt of other peripheral countries ended the year at levels considerably
below those prevailing at the beginning of the year. Ireland benefited from expectations of possible restructuring
as a result of the government’s bail-out plan for the financial system, which would ease pressure on the public
accounts in that country. Greek debt found support in factors such as the reduced likelihood of the country
exiting the eurozone, the offer of more generous bail-out terms, and the relative success of its debt repurchasing
programme. Finally, Portuguese debt benefited from Europe’s support for its policy of fiscal tightening and
subsequent easing.
On the currency markets the euro fell against the dollar on uncertainties over the single currency. As the year
progressed, measures taken to address European instability and the Fed’s decision to take further unconventional
measures helped the euro to regain lost ground and to finish the year higher against the dollar. During the year
the yen suffered two major bouts of weakness. The currency fell between February and March in response to the
Bank of Japan’s more accommodating monetary stance, while in the final part of the year it was undermined by
worsening macroeconomic data in Japan and the new government’s interventionist approach.
Equity markets in the USA and most of the main eurozone countries registered positive returns at the end of
the year despite the reverses suffered by European stocks in the second quarter as a result of renewed financial
instability in the region. Over the year as a whole, the Euro Stoxx 50 index rose by 13.8%, while the Spanish IBEX
fell by 4.7%. In the USA, the S&P managed to end the year with an 11.4% rise in euro terms.
Balance Sheet
On 1 June 2012 Banco Sabadell completed its acquisition of 100% of the shares of Banco CAM. A few months
later, on 5 December, the merger of Banco CAM by absorption into Banco Sabadell was officially registered. The
effective date of the merger for accounting purposes was 1 June 2012. The changes in the group’s financial data
for the year 2012 compared with 2011 therefore reflect the wide-ranging impact of the integration of Banco CAM
data during the year.
At the end of the fiscal year 2012, total assets for the Banco Sabadell group had reached €161,547.1 million,
€61,109.7 million higher than at the end of 2011. The percentage increase over the period was 60.8%
Gross loans and advances to customers excluding reverse repos totalled €115,392.4 million at 31 December
2012, up from €73,635.3 million at the close of 2011, a 56.7% increase. Of the different components of gross
loans and advances, mortgage loans showed the strongest growth, increasing by €21,191.9 million, a rise of
61.7%.
The loan loss ratio (bad and doubtful loans as a proportion of total qualifying loans and advances) at the close of
the year stood at 9.33% — a figure from which assets subject to the Asset Protection Scheme were excluded. Once
again, the ratio was below the average for the Spanish financial sector as a whole.
On-balance sheet customer funds at 31 December 2012 stood at €80,179.4 million, up from €53,354.0 million
at the end of 2011 (+50.3%). Time deposits showed particularly good growth and reached a year-end total of
€53,526.1 million (+63.1%). Current account balances also showed a notable 44.5% increase.
The group’s performance in both lending and on-balance sheet deposits and issued securities made it possible
to generate a positive funding gap of €15,451.5 million in the course of 2012.
Debt certificates including bonds plus subordinated liabilities totalled €26,492.9 million compared with the
previous year’s figure of €19,502.5 million, a 35.8% rise.
The value of assets in collective investment schemes (CIS’s) at the end of the year was €8,584.8 million, up
7.0% on the corresponding figure for 2011.
Assets held in pension funds distributed by the group amouned to €3,708.9 million, while sales of insurance
policies increased to €7,313.2 million, a rise of 23.4% on the previous year.
Overall, customer deposits and assets under management amounted to €131,654.6 million at the close of the
year, compared with €96,062.0.million the year before, a 37.1% increase.
299
Income and profit performance
300
Despite challenging economic and financial conditions, the Banco Sabadell group ended the year 2012 with a net
attributable profit of €81.9 million after setting aside €2,540.6 million in provisions for loan defaults, securities
revaluations and real estate writedowns. In the year 2011, for which the net attributable profit was €231.9 million,
net provisions and impairment charges were considerably lower, at €1,048.9 million.
At the close of 2012 net interest income totalled €1,868.0 millon, rising by 21.5% on the year. The additional
income provided by Banco CAM from June 2012 onwards, a firm hand in managing interest rate differentials, and
an increased contribution from the group’s fixed-income investments helped to offset the negative effect of the
amount and rising cost of capital market funding.
Dividends received amounted to €9.9 million, up 12.7% on 2011’s figure of €8.8 million. Profits of equityaccounted undertakings, on the other hand, were down on the previous year, partly as a result of the divestment of
a number of equity holdings (Banco del Bajío, for example) that had been returning good results.
Net fee and commission income was €628.7 million, increasing by €55.1 million (up 9.6%) on the year. Income
categories showing particularly good growth were credit card fees, current account charges and charges for other
services.
Net income from trading in 2012 was €546.2 million. Key contributors to this result included profits of €270.3
million on disposals of fixed-income assets available for sale, €166.3 million on buybacks of asset-backed
securities and redemptions of securites issued by the group, and €132.2 from trading in securities. In 2011 net
income from trading had included profits of €139.0 from securities trading and €87.1 million on a debt-for-equity
swap offer in the first quarter of the year (the issue and sale of 126 million Banco Sabadell shares as part of an
offer to buy back preferred securities and subordinated debt at a discount).
Other operating income and expenses showed a net outflow of €142.5 million compared with a net inflow of
€8.2 million the previous year. A major expenditure item in 2012 was the group’s €220.3 million contribution to the
Bank Deposit Guarantee Fund, a far higher amount than the €29.8 million paid to the Fund in the previous year.
Operating expenses for 2012 were €1,511.6 million, of which €22.2 million were non-recurring. Recurring costs
in 2012 were down 5.9% on a like-for-like basis compared with 2011. The cost: income ratio with non-recurring
costs excluded was 50.34% at the close of the year.
The resulting operating profit (before impairment and other provisions) for the year was €1,289.9 million, up
4.8% on the previous year.
Net provisions for loan losses totalled €1,405.7 million, a sharp rise on the 2011 figure of €512.4 million.
Additional provisions of €1,134.9 million were also set aside to cover impairment losses on real estate and
financial assets.
Gains realized on asset disposals during the year totalled €15.4 million. This included the profit fom the sale of
the Bank’s shareholding in Banco del Bajío. Profits on asset disposals in 2011, at €5.7 million, were considerably
lower.
The group’s income statement for 2012 includes an income item of €933.3 million in negative goodwill arising
on the acquisition of Banco CAM.
After deducting income tax and the share of profits attributable to non-controlling interests, this leaves a net
attributable group profit for the year of €81.9 million, down from €231.9 million in 2011. At the close of 2012 the
Tier I capital and core capital ratios stood at 10.42%, both ratios having increased from their year-end levels in
2011 (9.94% and 9.01% respectively).
Branch network
At the end of the year Banco Sabadell was operating 1,898 branches, 516 more than at the end of 2011. The
increase was due to the acquisition of the Banco CAM and the incorporation of its branches into the network.
Of the total number of Banco Sabadell group branches and offices, 903 were operating under the
SabadellAtlántico name (including 42 specialist business banking and 2 specialist corporate banking branches);
523 were trading under the SabadellCAM name; 179 (including 5 business banking branches) made up the
Banco Herrero network in Asturias and León; 128 were SabadellGuipuzcoano branches; 12 were operating under
the SabadellUrquijo name; 106 were Solbank branches; and the remaining 45 formed the group’s international
network, including the 23 operated by Sabadell United Bank. Two AssetsBank customer service centres completed
the group’s branch network.
Business Review
Commercial Banking
€’000
2011
Change y.o.y. (%)
1,531,259
1,279,557
19.7
450,652
(90,640)
372,335
26,570
21.0
(441.1)
1,891,271
1,678,462
12.7
(1,151,999)
(883,867)
30.3
739,272
794,595
(7.0)
(587,574)
(352,364)
66.8
151,698
442,231
(65.7)
3.1%
60.9%
10.9%
74.1%
12.2%
52.7%
6.6%
48.0%
Business volumes (€Mn.)
Loans and advances
Customer accounts
Securities
91,975
69,514
7,898
53,203
41,600
5,469
72.9
67.1
44.4
Other information
Employees
Branches in Spain
10,924
1,839
7,259
1,322
50.5
39.1
Net interest income
Other income
Gross income
Operating expenses
Impairment losses
Ratios (%):
ROE
Cost:income ratio
Loan loss ratio
2012
(1) Figures for 2012 include performance data for Banco CAM from 1 June onwards.
Corporate Banking and Global Businesses
Corporate Banking and Global Businesses offers a range of products and services to large corporates and financial
institutions in Spain and abroad. Its activities embrace corporate banking, structured finance, corporate finance,
development capital, international trade and consumer finance.
Corporate Banking
Banco Sabadell continued to be one of the major banks actively operating in this market, with a loan loss ratio
of just 1.1%. Since these major corporate clients have a smaller exposure to the business cycle and to market
conditions and a relatively large share of their output is for export, activity within this customer segment has
continued at a high level and enabled us to grow in step with our customers. Thanks to the resilience of this
market, Corporate Banking was able to end the year with a 19.1% rise in operating income, sufficient to absorb the
increase in provisions compared with the previous year, when loan loss charges were covered by a net release of
provisions. All this helped Corporate Banking to keep its ROE for 2012 in double digits (14.1%).
Commercial Banking is the largest of the group’s business lines. It focuses on providing financial products
and services to large and medium-sized businesses, SMEs, retailers and individuals — including private banking,
personal banking and mass market services — and to non-residents and professional groupings. A strong focus
on market specialization ensures that customers receive a personalized service to suit their needs, whether from
expert staff assigned to branches operating under the various group brands, or via other channels that support the
customer relationship and provide access to remote banking services.
In 2012, despite a difficult operating environment, a major promotional effort aimed at attracting new customers
and deposits was key to achieving increased market shares for the Bank. A landmark development was the
integration of Banco CAM, significantly increasing the group’s footprint in the Valencia and Murcia regions.
Net interest income attributable to Commercial Banking totalled €1,531.2 million in 2012, with pre-tax profits
reaching €151.7 million. The ROE was 3.1% and the cost: income ratio was 60.9%. Loans and advances totalled
€91,975 million and customer funds stood at €69,514 million.
301
€’000
2012
2011
Change y.o.y. (%)
213,623
170,711
25,1
32,721
1,452
28,539
9,882
14.7
(85.3)
Gross income
247,796
209,132
18.5
Operating expenses
(25,708)
(22,735)
13.1
222,088
186,397
19.1
Impairment losses
Other gains/losses
(58,462)
0
3,221
0
(1,915.0)
0.0
163,626
189,618
(13.7)
Ratios (%):
ROE
Cost:income ratio
Loan loss ratio
14.1%
10.4%
1.1%
123.3%
19.3%
10.9%
0.7%
86.7%
Loans and advances
Customer accounts
Securities
12,792
4,079
531
11,239
4,159
444
13.8
(1.9)
19.7
95
2
2
94
2
2
1.1
0.0
0.0
Net interest income
Other income
Other information
Employees
Branches in Spain
Branches abroad
302
Purely from a marketing perspective, the emphasis continued to be on strengthening customer relationships and
boosting income from fee-earning services that use up less capital, while contining to apply the same rigourous
standards to the approval and renewal of loans.
Towards the end of the year a design was produced for a restructured Corporate Banking division to be based
on a prior segmentation exercise. This will ensure that business development and risk policies are more closely
adapted to the needs of each customer segment and more targeted on core customers. As in previous years, this
will be implemented in coordination with our Corporate Banking teams in Spain (Madrid and Barcelona) as well as in
Paris, London and Miami.
Private Banking
A major milestone during the year 2012 was the integration of Banco Urquijo into Sabadell Banca Privada under the
single brand name of “SabadellUrquijo Banca Privada”. Bringing together these two business approaches produced
customer service benefits in the form of better access via the Banco Sabadell branch network and the 360-degree
relationship, which in combination are able to guarantee a totally personalized approach across the full range of
private banking services.
This highly strategic development gave a major boost to the effectiveness of the group’s marketing by
strengthening Banco Sabadell’s position as a key player in serving high net worth individuals and managing large
fortunes, as well as through the synergies released by a simpler, leaner organizational structure.
€’000
2011
Change y.o.y. (%)
Net interest income
16,753
15,599
7.4
Other income
39,422
669
42,180
5,036
(6.5)
(86.7)
Gross income
56,844
62,815
(9.5)
(41,446)
(46,520)
(10.9)
15,398
16,295
(5.5)
Impairment losses
Other gains/losses
0
(2,712)
0
0
91
0
----
12,686
16,386
(22.6)
Ratios (%):
ROE
Cost:income ratio
Loan loss ratio
22.5%
72.9%
3.4%
93.1%
26.9%
74.1%
0.6%
152.2%
3,192
15,667
6,519
3,425
15,684
5,854
(6.8)
(0.1)
11.4
268
12
298
11
(10.1)
9.1
Operating expenses
Loans and advances
Customer accounts
Securities
Other information
Employees
Branches in Spain
The gross income attributable to Private Banking totalled €56.8 million in 2012 and a pre-tax profit was posted
of €12.7 million. The ROE was 22.5% and the cost:income ratio was 72.9%. Overall, the volume of customer
business handled by the Private Banking division was €25,378 million.
2012
Investment, Products and Research
Banco Sabadell has a team of specialists in financial market research and analysis and in drawing up asset
allocation strategies to guide investment decisions, planning and developing investment products, and carrying out
research into the various types of asset in which customers might wish to invest.
€’000
2012
2011
Change y.o.y. (%)
29.946
29.155
2.7
(18,712)
(18,762)
(0.3)
11,234
10,393
8.1
(6)
0
--
11,228
10,393
8.0
Ratios (%):
ROE
Cost:income ratio
25.8%
62.5%
15.7%
64.4%
Assets under management in CIS’s
Total assets in CIS’s including schemes sold but not managed
6,997
8,585
6,737
8,024
3.9
7.0
148
--
153
--
(3.3)
--
Gross income
Operating expenses
Other gains/losses
Other information
Employees
Branches in Spain
303
The group’s Invesment Management business is carried on by the units responsible for managing collective
investment schemes (CIS’s), and combines investment management with the distribution and operation of CIS’s.
The team also manages investments on behalf other Banco Sabadell businesses that hold portfolios of assets.
At the close of 2012 total assets under management by the Spanish-domiciled mutual fund industry as a whole,
including real estate investment funds, totalled €126,529.6 million, 4.3% below the figure for the year before. Net
redemptions registered during the year by mutual funds investing in financial assets totalled €10,273.8 million.
The total value of assets held in Spanish-domiciled mutual funds under management by the Banco Sabadell
group was €5,423.5 million at the close of the year. This was 4.4% above the figure for the previous year and
included the mutual funds added as a result of the integration of Banco CAM.
The group’s offering of guaranteed return funds continued to be very actively promoted during the year and
return guarantees were issued in respect of six guaranteed funds totalling €616.1 million at 31 December
2012. Guaranteed funds as a whole accounted for €2,370.8 million worth of assets at the close of the year.
The proportion of assets held in guaranteed funds increased relative to the total value of financial assets under
management in funds subject to Spanish jurisdiction, rising to 53.4% from 48.3% the year before.
Sabadell BS Inmobiliario FII, a real estate fund launched in early 2004, ended the year with assets of €980.2
million and 17,163 fundholders, the latter increasing by 4.7% on the previous year. This fund remains an industry
leader for collective investment in real estate assets on the Spanish market.
The gross income attributable to Private Banking totalled €29.9 million in 2012 and a pre-tax profit was posted
of €11.2 million. The ROE was 25.8% and the cost: income ratio was 62.5%.
Research and development
304
A number of group-level merger and integration projects were carried out during the year, requiring a high degree of
involvement on the part of the project teams.
In the first four months of the year Banco Guipuzcoano and Banco Urquijo were merged into Banco Sabadell and
are now operating under their separate brand names within the Bank.
At the same time functional dossiers for the integration of Banco CAM were prepared and applied in the third
quarter. Functional tests were carried out in the fourth quarter until all data had been migrated, with full technical
and operational integration being completed on 8 December.
In tandem with the integration of Banco CAM, a related project (“project XXL”) was carried out to upgrade all
systems and equipment to ensure that they would be able to handle the increased volumes and operating loads
caused by integration without any disruption in service or changes in operating hours. The integration project also
required software upgrades to boost performance. This was implemented according to an inventory of 40 standard
upgrade templates.
During the year a System Plan was carried out which was more restricted than in recent years, with priority
being given to the aims set out in the 2011-2013 Master Plan with Growth, Profitability, Efficiency, Ambition as its
keywords.
Key aspects of the System Plan were:
Remote access channels: The capabilities of the “Branch Direct” facility were expanded by upgrading the
telephony and CRM platforms, thus boosting service levels and call response rates. Other areas in whicn
improvements were made were email servicing and social network participation. This led to enhanced capabilities in
new business generation and promotional campaigns.
Self-service facilities were improved and ease of navigation enhanced on the smartphone platform, as with the
“Instant Money” function, with a broader range of functions being made available on the new market platforms.
Messaging 2.0 was also added and will help to reduce the volume of SMS messages. An internet TV channel was
also set up for the Bank.
Sales support and business productivity: A number of actions were taken to enhance Branch Terminal functionality
with the aim of optimizing usability, particularly in the most frequently used operations (such as “add new
customer”) and providing service metrics. Some system adaptations were also made to facilitate higher levels
of homeworking via the virtualized branch platform, which lets business development personnel work remotely
using mobile devices. The principal action on the technology front that made it possible to bring about these
improvements was the completion of the roll-out of the PROTEO 3.0 front end, which gives access to the corporate
Intranet and incorporates new business simulation tools. The sales incentive system was also altered in certain
ways based on the special needs of Branch Direct and a system of rewards for the agent network was developed.
Active risk management: Further progress was made in the development of the ARGENT system for managing
individual customers. This is concerned with autonomy levels in setting charge rates, managing risk and setting
final prices of products according to the risk-value model.
Improvements were made in non-contentious collection and recovery processes; in the handling of disputes; in
keeping records of legal proceedings, and in related documentation management systems.
Treasury, markets and asset management: During the year a number of actions were put in hand as part of the
“volatility” programme, including the development of the new FX and IR products supported on the MUREX and
Adaptive platforms.
Another project carried out in 2012 was the development of a new fixed-income back office system, although the
integration of Banco CAM made it necessary to postpone roll-out of the system until the second quarter of 2013.
In addition to the ongoing activity related to the Bank’s own securities (such as shareholders’ meetings,
increases in capital, new issues and corporate operations by the Bank and others), development work was
completed to ensure compliance with new CNMV, MiFID and other regulations.
Corporate administration systems: Key developments under this heading during the year were improvements in
systems for cash management and risk monitoring. A study was also commenced on new procedures for sending
returns to the Bank of Spain’s register of risk (Spanish initials: CIRBE) — implementation of which must be
completed by the end of 2013.
On the management information front, progress was made in setting up the Single Database (SDB) Project which
provides a detailed inventory of all financial products in a standardized form, a resource from which a number of
different officially-required reports will be able to be generated.
Improvements were also made to the group’s Information Portal, including new reports and key indicators for the
use of business development personnel.
Outlook
2012 saw Banco Sabadell being confirmed as one of the most financially solvent banks in the Spanish banking
industry, as the stress test excercise conducted by Oliver Wyman clearly demonstrated. It is now the fourth largest
privately owned bank in Spain following the acquisition and integration of Banco CAM. The work done to build up the
Bank’s capital strength and the continuous improvement in its “commercial gap” (the difference between lending
and deposits plus capital market funds) were key themes in a year that remained challenging and in which Banco
Sabadell made use of its income-generating capacity to reinforce its provisioning level. The increase in the Bank’s
market share and its success in expanding its customer base provided further proof of its resilience in difficult
conditions during which it continued to apply exacting standards of service quality. For Banco Sabadell in 2013,
the focus will be on continued strong income generation, unlocking cost and income synergies from the integration
of Banco CAM, increasing market share in terms of customers and business volumes, and actively managing the
disposal of its real estate assets.
Risk management
A full description of risk management policy in the Banco Sabadell group can be found in Note 37.
305
Customer Service Department
The Customer Service Department is part of the control function within the Banco Sabadell group. The head of the
Department is appointed by the Board of Directors and reports directly to the Comptroller General. The Department
is responsible for looking into and resolving claims and complaints from customers and other users of the group’s
financial services that relate to their legal rights and interests under contracts or as protected by disclosure
requirements, customer protection legislation and financial services industry best practice.
In addition to this primary function, the Department provides assistance and information to customers and
users on matters that do not amount to complaints within the meaning of the Spanish Economics Ministry’s Order
734/2004 of 11 March or the group’s own Regulations for the Protection of Customers and Users. A total of 756
cases of this type were handled by the Department in 2012, down from 973 in 2011.
Average response times in dealing with claims and complaints were 31.52 days in highly complex cases (23.68
days in 2011); 8.02 days for cases of medium complexity (11.51 days in 2011); and 2.62 days in cases of low
complexity (2.37 days in 2011). This compares with the maximum response time of 60 days under the Economics
Ministry’s Order and the group’s own Regulations for the Protection of Customers and Users.
Cases handled
In 2012 the Customer Service Department received 5,901 cases (3,245 in 2011), of which 5,794 (3,212 in 2011)
were looked into according to the procedure established by the Economics Ministry’s Order 734/2004. A total of
4,435 were resolved or otherwise dealt with (3,212 in 2011), of which 40% were complaints (54% in 2011) and
60% were claims (46% in 2010). At the end of the year 1,521 cases remained unresolved (186 in 2012).
Of the total number of cases examined by the Customer Service Department, 22% resulted in a decision
favourable to the customer or user (21% in 2011); 4% were settled by agreement with the customer or user (4%
in 2011), and 7% were resolved partly in the customer or user’s favour (9% in 2011). The remaining 67% of cases
resulted in a decision favourable to the group (66% in 2011).
Customer and Stakeholder Ombudsman
The group has a Customer and Stakeholder Ombudsman, a role which, until 8 December 2012, was being
performed by Esteban María Faus Mompart. From 8 December onwards the Ombudsman’s duties were undertaken
by José Luís Gómez-Dégano y Ceballos-Zúñiga.
The Ombudsman deals with claims or complaints referred to him by customers or users of the Banco Sabadell
group, either directly or on appeal from a prior procedure. He also adjudicates on cases referred to him by the
Customer Service Department.
A total of 596 cases were received by the Ombudsman directly (415 in 2011) and another 108 were referred to
him by the Customer Service Department (27 in 2011). Of the 704 claims received (442 in 2011), 604 were looked
into and resolved by the Ombudsman (442 in 2011), with 49% being decided in the group’s favour (48% in 2011)
and 16% in the customer’s favour (5% in 2011). Of the other cases where a decision or other settlement was
reached, the Bank accepted the claim or complaint in 20% of cases (26% in 2011) and 10% resulted in decisions
only partly favourable to the group (9% in 2011). In 2% of cases (5% in 2011), the Ombudsman declared the matter
to be beyond his competence (without prejudice to the claimant’s right to take his claim elsewhere) and a further
3% were settled by agreement with the customer or user (7% in 2011).
Complaints to supervisory authorities
Under Spanish law customers and other users of financial services are entitled to submit complaints or claims to
the Bank of Spain’s complaints department, to the stock market regulator (CNMV), or to the Directorate-General for
Insurance and Pension Plans. To do so, however, they must first have sought a resolution of the issue by raising it
directly with the bank or other institution involved.
As required by Article 61bis of the Stock Market Law, the Banco Sabadell group has prepared an Annual Report on
Corporate Governance for the year 2012, which forms part of this Report of the Directors and has been provided as
a separate document. This includes a section on the extent to which the Bank is following the recommendations on
corporate governance that currently exist in Spain.
306
For information on purchases of the Bank’s own shares and post-balance sheet events, see notes 28 and 44
respectively.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—Banco
Sabadell
group contact
details
—
—
—
—
—
—Banco Sabadell
Plaza Sant Roc, 20
08201 Sabadell
Barcelona
—www.grupbancosabadell.com
—Barcelona
Av. Diagonal, 407 bis
08008 Barcelona
+34 902 030 255
—General enquiries
+34 902 323 555
info@bancsabadell.com
—Catalonia
Plaza Catalunya, 1
08201 Sabadell
+34 902 030 255
Banco Sabadell group
contact details
—Shareholder relations
+34 937 288 882
accionista@bancsabadell.com
—Investor relations
+34 902 030 255
InvestorRelations@bancsabadell.com
—Communication and
institutional relations
+34 902 030 255
BSpress@bancsabadell.com
—Compliance, CSR
and Corporate Governance
+34 902 030 255
rsc@bancsabadell.com
Banc Sabadell Informe anual 2012
310
—Regional Divisions
—SabadellCAM
Av. Óscar Esplá, 37
03007 Alicante
+34 902 030 255
—Madrid and Castile
Príncipe de Vergara, 125
28002 Madrid
+34 913 217 159
—Northern Region
Ercilla, 24
48011 Bilbao
+34 944 232 100
—Southern Region & Canary Islands
Martínez, 11
29005 Málaga
+34 952 122 350
—Northwest Region
Fruela, 11
33007 Oviedo
+34 985 968 020
—
—Credits
—
—
—Creative Director
Mario Eskenazi
—Photography
Maria Espeus
Legal deposit: 17201-2013

Annual report 2012

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