Banco Bilbao Vizcaya Argentaria (BBVA) 20-F 2009 FY Annual report (foreign)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to
OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	Date of event requiring this shell company report

Commission filenumber: 1-10110

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

(Exact name of Registrant as specified in its charter)

BANK BILBAO VIZCAYA ARGENTARIA, S.A.

(Translation of Registrant’s name into English)

Kingdom of Spain
(Jurisdiction of incorporation or organization)

Plaza de San Nicolás, 4
48005 Bilbao
Spain

(Address of principal executive offices)

Javier Malagón Navas
Paseo de la Castellana, 81
28046 Madrid
Spain
Telephone number +34 91 537 7000
Fax number +34 91 537 6766
(Name, Telephone,E-mail and /or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of Each Class	Name of Each Exchange on Which Registered
American Depositary Shares, each representing	New York Stock Exchange
the right to receive one ordinary share,
par value €0.49 per share
Ordinary shares, par value €0.49 per share	New York Stock Exchange*
Guarantee of Non-Cumulative Guaranteed	New York Stock Exchange**
Preferred Securities, Series C, liquidation preference $1,000 each, of
BBVA International Preferred, S.A. Unipersonal

*	The ordinary shares are not listed for trading, but are listed only in connection with the registration of the American Depositary Shares, pursuant to requirements of the New York Stock Exchange.
**	The guarantee is not listed for trading, but is listed only in connection with the registration of the corresponding Non-Cumulative Guaranteed Preferred Securities of BBVA International Preferred, S.A. Unipersonal (a wholly-owned subsidiary of Banco Bilbao Vizcaya Argentaria, S.A.).

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

The number of outstanding shares of each class of stock of the Registrant as of December 31, 2009, was:

Ordinary shares, par value €0.49 per share — 3,747,969,121

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  þ            No  o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes  o          No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  þ          No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  o          No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o International Financial Reporting Standards as
Issued by the International Accounting Standards
Board  o Other þ

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17  o          Item 18  þ

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).

Yes  o          No  þ

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

TABLE OF CONTENTS

			Page
PART I
	ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		6
	A.	Directors and Senior Management		6
	B.	Advisers		6
	C.	Auditors		6
	ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE		6
	ITEM 3.	KEY INFORMATION		7
	A.	Selected Financial Data		7
	B.	Capitalization and Indebtedness		10
	C.	Reasons for the Offer and Use of Proceeds		10
	D.	Risk Factors		10
	ITEM 4.	INFORMATION ON THE COMPANY		17
	A.	History and Development of the Company		17
	B.	Business Overview		19
	C.	Organizational Structure		41
	D.	Property, Plants and Equipment		42
	E.	Selected Statistical Information		43
	F.	Competition		62
	ITEM 4A.	UNRESOLVED STAFF COMMENTS		64
	ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		64
	A.	Operating Results		70
	B.	Liquidity and Capital Resources		101
	C.	Research and Development, Patents and Licenses, etc.		103
	D.	Trend Information		103
	E.	Off-Balance Sheet Arrangements		104
	F.	Tabular Disclosure of Contractual Obligations		105
	ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		105
	A.	Directors and Senior Management		106
	B.	Compensation		111
	C.	Board Practices		114
	D.	Employees		118
	E.	Share Ownership		121
	ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		121
	A.	Major Shareholders		121
	B.	Related Party Transactions		122
	C.	Interests of Experts and Counsel		122
	ITEM 8.	FINANCIAL INFORMATION		122
	A.	Consolidated Statements and Other Financial Information		122
	B.	Significant Changes		125
	ITEM 9.	THE OFFER AND LISTING		125
	A.	Offer and Listing Details		125
	B.	Plan of Distribution		132

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			Page
	C.	Markets		132
	D.	Selling Shareholders		132
	E.	Dilution		132
	F.	Expenses of the Issue		132
	ITEM 10.	ADDITIONAL INFORMATION		132
	A.	Share Capital		132
	B.	Memorandum and Articles of Association		132
	C.	Material Contracts		135
	D.	Exchange Controls		135
	E.	Taxation		136
	F.	Dividends and Paying Agents		141
	G.	Statement by Experts		141
	H.	Documents on Display		141
	I.	Subsidiary Information		141
	ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		141
	ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		162
	A.	Debt Securities		162
	B.	Warrants and Rights		162
	C.	Other Securities		162
	D.	American Depositary Shares		163
PART II
	ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		164
	ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		164
	ITEM 15.	CONTROLS AND PROCEDURES		164
	ITEM 16.	[RESERVED]		166
	ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT		166
	ITEM 16B.	CODE OF ETHICS		166
	ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		167
	ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		168
	ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		168
	ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT		168
	ITEM 16G.	CORPORATE GOVERNANCE		168
PART III
	ITEM 17.	FINANCIAL STATEMENTS		171
	ITEM 18.	FINANCIAL STATEMENTS		171
	ITEM 19.	EXHIBITS		171

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CERTAIN TERMS AND CONVENTIONS

The terms below are used as follows throughout this report:

•  “BBVA”, “Bank”,the“Company”or“Group”means Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

•  “BBVA Bancomer” means Bancomer S.A. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

•  “BBVA Compass”means Compass Bancshares, Inc. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

•  “Consolidated Financial Statements”means our audited consolidated financial statements as of and for the years ended December 31, 2009, 2008 and 2007 prepared in accordance with the International Financial Reporting Standards adopted by the European Union(“EU-IFRS”)required to be applied under the Bank of Spain’s Circular 4/2004.

•  “Latin America”refers to Mexico and the countries in which we operate in South America and Central America.

First person personal pronouns used in this report, such as“we”,“us”, or“our”, mean BBVA. In this report,“$”,“U.S. dollars”, and“dollars” refer to United States Dollars and“€” and“euro” refer to Euro.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include words such as “believe”, “expect”, “estimate”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “target”, “goal”, “objective” and similar expressions or variations on such expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. The accompanying information in this Annual Report, including, without limitation, the information under:

•  “Item 3. Key Information — Risk Factors”;

•  “Item 4. Information on the Company”;

•  “Item 5. Operating and Financial Review and Prospects”; and

•  “Item 11. Quantitative and Qualitative Disclosures about Market Risk”

identifies important factors that could cause such differences.

Other important factors that could cause actual results to differ materially from those in forward-looking statements include, among others:

•  general political, economic and business conditions in Spain, the European Union(“EU”), Latin America, the United States and other regions, countries or territories in which we operate;

•  changes in applicable laws and regulations, including taxes;

•  the monetary, interest rate and other policies of central banks in Spain, the EU, the United States, Mexico and elsewhere;

•  changes or volatility in interest rates, foreign exchange rates (including the euro to U.S. dollar exchange rate), asset prices, equity markets, commodity prices, inflation or deflation;

•  ongoing market adjustments in the real estate sectors in Spain, Mexico and the United States;

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•  the effects of competition in the markets in which we operate, which may be influenced by regulation or deregulation;

•  changes in consumer spending and savings habits, including changes in government policies which may influence investment decisions;

•  our ability to hedge certain risks economically;

•  our success in managing the risks involved in the foregoing, which depends, among other things, on our ability to anticipate events that cannot be captured by the statistical models we use; and

•  force majeureand other events beyond our control.

Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

PRESENTATION OF FINANCIAL INFORMATION

Accounting Principles

Under Regulation (EC) no.1606/2002 of the European Parliament and of the Council of 19 July 2002, all companies governed by the law of an EU Member State and whose securities are admitted to trading on a regulated market of any Member State must prepare their consolidated financial statements for the years beginning on or after January 1, 2005 in conformity with EU-IFRS. The Bank of Spain issued Circular 4/2004 of December 22, 2004 on Public and Confidential Financial Reporting Rules and Formats(“Circular 4/2004”), which requires Spanish credit institutions to adapt their accounting system to the principles derived from the adoption by the European Union of EU-IFRS.

On November 26, 2008, the Bank of Spain issued Circular 6/2008(“Circular 6/2008”), modifying the presentation format for consolidated financial statements from the format stipulated in Circular 4/2004. Unless otherwise indicated herein, as used hereafter, “Circular 4/2004” refers to Circular 4/2004 as amended or supplemented from time to time, including by Circular 6/2008. The Group prepares its consolidated annual financial information in accordance with EU-IFRS required to be applied under Circular 4/2004.

As we describe in Note 2.2.1.b to the Consolidated Financial Statements, a loan is considered to be an impaired loan and, therefore, its carrying amount is adjusted to reflect the effect of its impairment when there is objective evidence that events have occurred which, in the case of loans, give rise to a negative impact on the future cash flows that were estimated at the time the transaction was arranged. The potential impairment of these assets is determined individually or collectively. The quantification of impairment losses is determined on a collective basis in the following two cases:

•  Assets classified as impaired for customers in which the amount of their operations is less than €1 million.

•  An asset portfolio not currently impaired but which presents an inherent loss, as described in more detail below.

Inherent loss, calculated using statistical procedures, is deemed equivalent to the portion of losses incurred on the date that the accompanying consolidated financial statements are prepared that has yet to be allocated to specific transactions.

The Group estimates collective inherent loss of credit risk corresponding to operations realized by Spanish financial entities of the Group (approximately 67% of the loans and receivables of the Group as of December 31, 2009) using the parameters set by Annex IX of Circular 4/2004 on the basis of its experience and the Spanish banking sector information regarding the quantification of impairment losses and provisions for insolvencies for credit risk.

4

Notwithstanding the above, the Group has historic statistical data which it used in its internal ratings models (“IRBs”) that were approved by the Bank of Spain for some portfolios in 2009, albeit only for the purpose of estimating regulatory capital under the new Basel Accord (BIS II). It uses these internal models to calculate the economic capital required in its activities and uses the expected loss concept to quantify the cost of credit risk for incorporation in its calculation of the risk-adjusted return on capital of its operations.

To estimate the collective loss of credit risk corresponding to operations with non-Spanish residents registered in foreign subsidiaries of the Group, the Group applies similar methods and criteria, using the Bank of Spain’s parameters but adapting the default calendars to the particular circumstances of the country. Additionally, in Mexico for consumer loans, credit cards and mortgages portfolios, as well as for credit investment maintained by the Group in the United States (which in the aggregate represent approximately 14% of the loans and receivables of the Group as of December 31, 2009), internal models are used to calculate impairment losses based on the historical experience of the Group. In both of these cases, the provisions required under Circular 4/2004 standards fall within the range of provisions calculated using the Group’s internal ratings models.

For 2007, the provisions required under Bank of Spain’s EU-IFRS required to be applied under Circular 4/2004 standards represented the outermost range of acceptable estimates which were calculated using our historical experience. Therefore, those provisions did not represent the best estimate of allowance for loan losses under U.S. GAAP, which provided a more moderate estimate within the acceptable range. As a consequence, there was an adjustment in the reconciliation to U.S. GAAP in order to reflect in net income the reversal of the difference of estimates of the provisions recorded under both GAAPs in each year and in stockholders’ equity the differences of estimates of the accumulated allowance for loan losses under both GAAPs.

For the years ended December 31, 2009 and 2008, there are no substantial differences in the calculations made under both EU-IFRS required to be applied under Circular 4/2004 and U.S. GAAP because the allowance for loan losses for such years calculated under EU-IFRS required to be applied under Circular 4/2004 are similar to the best estimates of allowance for loan losses under U.S. GAAP, which is the central scenario determined using internal risk models based on our historical experience. We included an adjustment in the reconciliation of net income for 2008, and thereinafter, following such adjustment, the amounts of the allowance for loan losses estimated under both GAAPs were similar

Note 60 to our Consolidated Financial Statements provides additional information about this reconciliation.

Statistical and Financial Information

The following principles should be noted in reviewing the statistical and financial information contained herein:

•  Average balances, when used, are based on the beginning and the month-end balances during each year. We do not believe that such monthly averages present trends that are materially different from those that would be presented by daily averages.

•  The book value of BBVA’s ordinary shares held by its consolidated subsidiaries has been deducted from equity.

•  Unless otherwise stated, any reference to loans refers to both loans and leases.

•  Interest income figures include interest income on non-accruing loans to the extent that cash payments have been received in the period in which they are due.

•  Financial information with respect to subsidiaries may not reflect consolidation adjustments.

•  Certain numerical information in this Annual Report may not sum due to rounding. In addition, information regardingperiod-to-period changes is based on numbers which have not been rounded.

5

PART I

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A.   Directors and Senior Management

Not Applicable.

B.   Advisers

Not Applicable.

C.   Auditors

Not Applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

6

ITEM 3.   KEY INFORMATION

A.   Selected Consolidated Financial Data

The historical financial information set forth below has been selected from, and should be read together with, the Consolidated Financial Statements included herein. For information concerning the preparation and presentation of financial information contained herein, see “Presentation of Financial Information”. Also see Note 60 of the Consolidated Financial Statements for a presentation of our stockholders’ equity and net income reconciled to U.S. GAAP.

	Year Ended December 31,
EU-IFRS(*)	2009			2008			2007			2006			2005
	(In millions of euros, except per share/ADS data (in euros) or as otherwise indicated)
Consolidated Income Statement data
Interest and similar income		23,775			30,404			26,176			20,042			16,584
Interest and similar expense		(9,893	)		(18,718	)		(16,548	)		(11,904	)		(9,500	)
Net interest income		13,882			11,686			9,628			8,138			7,084
Dividend income		443			447			348			380			295
Share of profit or loss of entities accounted for using the equity method		120			293			241			308			121
Fee and commission income		5,305			5,539			5,603			5,133			4,681
Fee and commission expenses		(875	)		(1,012	)		(1,043	)		(943	)		(849	)
Net gains (losses) on financial assets and liabilities		892			1,328			1,545			1,261			885
Net exchange differences		652			231			411			376			290
Other operating income		3,400			3,559			3,589			3,413			3,812
Other operating expenses		(3,153	)		(3,093	)		(3,051	)		(2,923	)		(3,510	)
Gross income		20,666			18,978			17,271			15,143			12,810
Administration costs(**)		(7,662	)		(7,756	)		(7,253	)		(6,330	)		(5,763	)
Depreciation and amortization		(697	)		(699	)		(577	)		(472	)		(449	)
Provisions (net)		(458	)		(1,431	)		(235	)		(1,338	)		(454	)
Impairment losses on financial assets (net)		(5,473	)		(2,941	)		(1,903	)		(1,457	)		(821	)
Net operating income		6,376			6,151			7,303			5,545			5,323
Impairment losses on other assets (net)		(1,618	)		(45	)		(13	)		(12	)		—
Gains (losses) on derecognized assets not classified as non-current assets held for sale		20			72			13			956			51
Negative goodwill		99			—			—			—			—
Gains (losses) in non-current assets held for sale not classified as discontinued operations		859			748			1,191			541			217
Income before tax		5,736			6,926			8,494			7,030			5,592
Income tax		(1,141	)		(1,541	)		(2,079	)		(2,059	)		(1,521	)
Income from continuing transactions		4,595			5,385			6,415			4,971			4,071
Income from discontinued transactions (net)		—			—			—			—			—
Net income		4,595			5,385			6,415			4,971			4,071
Net income attributed to parent company		4,210			5,020			6,126			4,736			3,806
Net income attributed to non-controlling interest		385			365			289			235			264
Per share/ADS(1) Data
Net operating income(2)		1.71			1.66			2.03			1.63			2.68
Numbers of shares outstanding (at period end)		3,747,969,121			3,747,969,121			3,747,969,121			3,551,969,121			3,390,852,043
Net income attributed to the parent company(2)		1.12			1.35			1.70			1.39			1.12
Dividends declared		0.420			0.501			0.733			0.637			0.531

(*) EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

(**) Also referred to as Administrative costs or expenses.

(1)	Each American Depositary Share (“ADS” or “ADSs”) represents the right to receive one ordinary share.
(2)	Calculated on the basis of the weighted average number of BBVA’s ordinary shares outstanding during the relevant period (3,719 million, 3,706 million, 3,594 million, 3,406 million and 3,391 million shares in 2009, 2008, 2007, 2006 and 2005, respectively).

7

	At and for Year Ended December, 31
EU-IFRS(*)	2009			2008			2007			2006			2005
				(In millions of euros, except %)
Consolidated balance sheet data
Total assets		535,065			542,650			501,726			411,663			392,389
Common stock		1,837			1,837			1,837			1,740			1,662
Loans and receivables (net)		346,117			369,494			337,765			279,658			249,397
Customers deposits		254,183			255,236			219,610			186,749			183,375
Debt certificates and subordinated liabilities		117,817			121,144			117,909			100,079			76,565
Total Equity		30,763			26,705			27,943			22,318			17,302
Consolidated ratios
Profitability ratios:
Net interest income(1)		2.56	%		2.26	%		2.09	%		2.06	%		1.68	%
Return on average total assets(2)		0.85	%		1.04	%		1.39	%		1.26	%		1.12	%
Return on average equity(3)		16.0	%		21.5	%		34.2	%		37.6	%		37.0	%
Credit quality data
Loan loss reserve(4)		8,805			7,505			7,144			6,424			5,589
Loan loss reserve as a percentage of total loans and receivables (net)		2.54	%		2.03	%		2.12	%		2.30	%		2.24	%
Substandard loans(5)		15,312			8,540			3,366			2,500			2,347
Substandard loans as a percentage of total loans and receivables (net)(5)		4.42	%		2.31	%		1.00	%		0.89	%		0.94	%

(*)	EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.
(1)	Represents net interest income as a percentage of average total assets.
(2)	Represents net income as a percentage of average total assets.
(3)	Represents net income attributed to parent company as a percentage of average equity.
(4)	Includes loan loss reserve and contingent liabilities reserve.
(5)	As of December 31, 2009, 2008 and 2007, non-performing assets, which include substandard loans and other non-performing assets, amounted to €15,928 million, €8,859 million and €3,418 million, respectively. As of December 31, 2009, 2008 and 2007, the non-performing assets ratios (which we define as substandard loans and other non-performing assets divided by loans and advances to customers and contingent liabilities) were 4.3%, 2.3% and 0.9%, respectively.

8

	At and for Year Ended December 31,
U.S. GAAP Information(*)	2009		2008		2007		2006		2005
	(In millions of euros, except per share/ADS data
	(in euros) or as otherwise indicated)
Consolidates Statement of income data
Net income(1)		4,210		4,435		5,698		5,212		2,346
Net income attributed to parent company		3,825		4,070		5,409		4,972		2,018
Net income attributed to the non controlling interest		385		365		289		240		329
Basic earnings per share/ADS(2)(3)		1.028		1.098		1.505		1.460		0.595
Diluted earnings per share/ADS(2)(3)		1.022		1.098		1.505		1.460		0.595
Dividends per share/ADS (in dollars)(2)(3)(4)		0.586		0.652		1.011		0.807		0.658
Consolidated Balance sheet data
Total assets		544,098		549,574		510,569		420,971		401,799
Total equity		37,467		33,630		36,076		31,229		26,346
Basic shareholders’ equity per share/ADS(2)(3)		9.73		8.84		9.85		8.94		7.48
Diluted shareholders’ equity per share/ADS(2)(3)		9.73		8.84		9.85		8.94		7.48

(*)	In 2009, BBVA is availing itself of the accommodation in Item 17(c)(2)(iv) ofForm 20-F with respect to the application of IAS 21 for highly inflationary economies (Venezuela). Therefore, this reconciliation has been prepared in accordance with Item 18 ofForm 20-F which is different from that required by US GAAP. See Note 60 to our Consolidated Financial Statements for additional information.
(1)	Includes “Net income attributed to parent company” and “Net income attributed to non controlling interest”.
(2)	Calculated on the basis of the weighted average number of BBVA’s ordinary shares outstanding during the relevant period.
(3)	Each ADS represents the right to receive one ordinary share.
(4)	Dividends per share/ADS are converted into dollars at the average exchange rate for the relevant period, calculated based on the average of the noon buying rates for euro from the Federal Reserve Bank of New York on the last date in respect of which such information is published of each month during the relevant period.

Exchange Rates

Spain’s currency is the euro. Unless otherwise indicated, the amounts that have been converted to euro in this Annual Report have been done so at the corresponding exchange rate published by the ECB on December 31 of the relevant year.

For convenience in the analysis of the information, the following tables describe, for the periods and dates indicated, information concerning the noon buying rate for euro, expressed in dollars per €1.00. The term“noon buying rate” refers to the rate of exchange for euros, expressed in U.S. dollars per euro, in the City of New York for cable transfers payable in foreign currencies as certified by the Federal Reserve Bank of New York for customs purposes.

Year Ended December 31	Average(1)
2005		1.2400
2006		1.2661
2007		1.3797
2008		1.4695
2009		1.3955
2010 (through March 19, 2010)		1.3687

(1)  The average of the noon buying rates for the euro on the last published date in respect of which such information is in each month during the relevant period.

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Month Ended	High		Low
June 30, 2009		1.4270		1.3784
July 31, 2009		1.4279		1.3852
August 31, 2009		1.4416		1.4075
September 30, 2009		1.4795		1.4235
October 31, 2009		1.5029		1.4532
November 30, 2009		1.5085		1.4658
December 31, 2009		1.5100		1.4243
January 31, 2010		1.4536		1.3870
February 28, 2010		1.3955		1.3476
March 31, 2010 (through March 19, 2010)		1.3758		1.3516

The noon buying rate for euro from the Federal Reserve Bank of New York, expressed in dollars per €1.00, on March 19, 2010, was $1.3530.

As of December 31, 2009, approximately 33% of our assets and approximately 44% of our liabilities were denominated in currencies other than euro. See Note 2.2.16 to our Consolidated Financial Statements.

For a discussion of our foreign currency exposure, please see “Item 11. Quantitative and Qualitative Disclosures About Market Risk — Market Risk in Non-Trading Activities in 2009 — Structural Exchange Rate Risk”.

B.   Capitalization and Indebtedness

Not Applicable.

C.   Reasons for the Offer and Use of Proceeds

Not Applicable.

D.   Risk Factors

Risks Relating to Us

Since our loan portfolio is highly concentrated in Spain, adverse changes affecting the Spanish economy could have a material adverse effect on our financial condition.

We have historically developed our lending business in Spain, which continues to be our main place of business. As of December 31, 2009, business activity in Spain accounted for 61% of our loan portfolio. See “Item 4. Information on the Company — Selected Statistical Information — Loans and Advances to Customer — Loans by Geographic Area”. After rapid economic growth of 3.9% and 3.7% in 2006 and 2007, respectively, Spanish gross domestic product grew by 0.9% in 2008 and contracted by 3.8% in 2009. Our Economic Research Department estimates that the Spanish economy, in terms of gross domestic product, will contract by a further 1.2% in 2010. As a result of this continued contraction, it is expected that economic conditions and employment in Spain will continue to deteriorate in 2010. Growth forecasts for the Spanish economy could be further revised downwards due to lower domestic demand and the continued impact of the financial crisis. The Spanish economy has also been affected by the slowdown in global growth and is particularly sensitive to economic conditions in the rest of the Euro area, the primary market for Spanish goods and services exports. In addition, the effects of the financial crisis have been particularly pronounced in Spain given Spain’s heightened need for foreign financing as reflected by its high current account and public deficits. Real or perceived difficulties in making the payments associated with these deficits can further damage Spain’s economic situation and increase the costs of financing its public deficit. Moreover, there are two weaknesses of the Spanish economy that may interfere with our business. First, the

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adjustment in the real estate sector, which we expect will continue in the coming years. Second, the slow restructuring process of the Spanish financial system that is underway. This process is distorting competition in some market segments, like the deposits markets.

Our loan portfolio in Spain has been adversely affected by the deterioration of the Spanish economy in 2009 and 2008. For example, substandard loans to other resident sectors in Spain increased in 2009 and 2008 mainly due to the sharp increase in substandard mortgage loans to €3,651 million as of December 31, 2009 from €2,033 million as of December 31, 2008 and €421 million as of December 31, 2007. Substandard loans to real estate and construction customers in Spain also increased substantially in 2009 and 2008 to account for 15.4% and 5.6% of loans in such category as of December 31, 2009 and 2008, respectively. Our total substandard loans to customers in Spain jumped to €11,134 million as of December 31, 2009 from €5,700 million as of December 31, 2008 and €1,590 million as of December 31, 2007, principally due to an increase in substandard loans to customers in Spain generally as a result of the deterioration in the macroeconomic environment. As a result of the increase in total substandard loans to customers in Spain described above, our total substandard loans to customers in Spain as a percentage of total loans and receivables to customers in Spain increased sharply to 5.5% and 2.7% as of December 31, 2009 and 2008, respectively, from 0.8% as of December 31, 2007. Our loan loss reserves to customers in Spain as a percentage of substandard loans to customers in Spain as of December 31, 2009 and 2008 also declined significantly to 34% and 66%, respectively, from 214% as of December 31, 2007.

Given the concentration of our loan portfolio in Spain, any adverse changes affecting the Spanish economy are likely to have a significant adverse impact on our loan portfolio and, as a result, on our financial condition, results of operations and cash flows

A substantial percentage of our customer base is particularly sensitive to adverse developments in the economy, which renders our lending activities relatively riskier than if we lent primarily to higher-income customer segments.

Medium- and small-sized companies and middle- and lower- middle- income individuals typically have less financial strength than large companies and high-income individuals and, accordingly, can be expected to be more negatively affected by adverse developments in the economy. As a result, it is generally accepted that lending to these segments of our existing and targeted customer base represents a relatively higher degree of risk than lending to other groups.

A substantial portion of our loan portfolio consists of residential mortgages and consumer loans to middle- and lower middle-income customers and commercial loans to medium- and small-sized companies. Consequently, during periods of slowdown in economic activity we may experience higher levels of past due amounts, which could result in higher levels of allowance for loan losses. We cannot assure you that we will not suffer substantial adverse effects on our loan portfolio to these customer segments in the event of additional adverse developments in the economy.

Increased exposure to real estate in Spain makes us more vulnerable to developments in this market.

In the years prior to 2008, economic growth, strong labor markets and low interest rates in Spain caused an increase in the demand for housing, which resulted in an increase in demand for mortgage loans. This increased demand and the widespread availability of mortgage loans affected housing prices, which rose significantly. After this buoyant period, demand began to adjust in mid-2006. Since the last quarter of 2008, the supply of new homes has been adjusting sharply downward in the residential market in Spain, but a significant excess of unsold homes still exists in the market. In 2010, we expect housing supply and demand to adjust further, in particular if current adverse economic conditions continue. As Spanish residential mortgages are one of our main assets, comprising 31%, 25% and 26% of our loan portfolio as of December 31, 2009, 2008 and 2007, respectively, we are currently highly exposed to developments in the residential real estate market in Spain. We expect the current problems in the financial markets and the deterioration of economic conditions in Spain to continue in the near future. As a result, we expect housing prices in Spain to decline further in 2010, which along with other adverse changes in the Spanish real estate sector could have a significant adverse impact on our loan portfolio and, as a result, on our financial condition, results of operations and cash flows.

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Highly-indebted households and corporations could endanger our asset quality and future revenues.

Spanish households and businesses have reached, in recent years, a high level of indebtedness, which represents increased risk for the Spanish banking system. The high proportion of loans referenced to variable interest rates makes debt service on such loans more vulnerable to changes in interest rates than in the past. In fact, the average debt burden of Spanish households as a proportion of disposable income has increased substantially from approximately 12% at the end of 2003 to approximately 16% at the end of 2008, before moderating slightly to approximately 14% at the end of 2009. Similarly, the debt burden of Spanish corporations has increased from approximately 16% at the end of 2004 to 29% at the end of 2008, according to the Bank of Spain, before moderating slightly to approximately 26% according to our estimation for 2009. Highly indebted households and businesses are less likely to be able to service debt obligations as a result of adverse economic events, which could have an adverse affect on our loan portfolio and, as a result, on our financial condition and results of operations. In addition, the increase in households’ and businesses’ indebtedness also limits their ability to incur additional debt, decreasing the number of new products we may otherwise be able to sell them and limiting our ability to attract new customers in Spain satisfying our credit standards, which could have an adverse effect on our ability to achieve our growth plans.

Current economic conditions may make it more difficult for us to continue funding our business on favorable terms or at all.

Historically, one of our principal sources of funds has been savings and demand deposits. Time deposits represented 31%, 36% and 27% of our total funding as of December 31, 2009, 2008 and 2007, respectively. Large-denomination time deposits may, under some circumstances, such as during periods of significant interest rate-based competition for these types of deposits, be a less stable source of deposits than savings and demand deposits. The financial crisis triggered by the U.S. subprime market has turned out to be deeper and more persistent than expected. A global economic recovery is subject to significant uncertainty, and there are limited or no signs of recovery in some countries and areas of the economy. In response to the financial crisis, governments around the world implemented ambitious fiscal expansion programs during 2008 and the first half of 2009, trying to limit economic deterioration and boost their economies. However, concerns expressed during 2009 over the effectiveness of fiscal stimulus programs have given way to concerns over the sustainability of public deficits, and governments have announced plans to begin removing the extraordinary fiscal and monetary measures implemented to confront the financial crisis. As public sources of liquidity, such as ECB extraordinary measures, and expansionary economic policies are removed from the market, we cannot assure you that we will be able to continue funding our business or, if so, maintain our current levels of funding without incurring higher funding costs or having to liquidate certain of our assets.

We face increasing competition in our business lines.

The markets in which we operate are highly competitive. Financial sector reforms in the markets in which we operate have increased competition among both local and foreign financial institutions, and we believe that this trend will continue. In addition, the trend towards consolidation in the banking industry has created larger and stronger banks with which we must now compete, some of which have recently received public capital.

We also face competition from non-bank competitors, such as:

•  department stores (for some credit products);

•  automotive finance corporations;

•  leasing companies;

•  factoring companies;

•  mutual funds;

•  pension funds; and

•  insurance companies.

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We cannot assure you that this competition will not adversely affect our business, financial condition, cash flows and results of operations.

Our business is particularly vulnerable to volatility in interest rates.

Our results of operations are substantially dependent upon the level of our net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Interest rates are highly sensitive to many factors beyond our control, including deregulation of the financial sectors in the markets in which we operate, monetary policies pursued by the EU and national governments, domestic and international economic and political conditions and other factors. In Spain, competition distortions in the term deposits market have intensified, and this situation is expected to continue due to the liquidity needs of certain financial institutions, which are offering high interest rates to attract additional deposits.

Changes in market interest rates could affect the spread between interest rates charged on interest-earning assets and interest rates paid on interest-bearing liabilities and thereby negatively affect our results of operations. For example, an increase in interest rates could cause our interest expense on deposits to increase more significantly and quickly than our interest income from loans, resulting in a reduction in our net interest income.

Since approximately 75% of our loan portfolio as of December 31, 2009 consisted of variable interest rate loans maturing in more than one year, our business is particularly vulnerable to volatility in interest rates.

Our financial statements and periodic disclosure under securities laws may not give you the same information as financial statements prepared under U.S. accounting rules and periodic disclosures provided by domestic U.S. issuers.

Publicly available information about public companies in Spain is generally less detailed and not as frequently updated as the information that is regularly published by or about listed companies in the United States. In addition, although we are subject to the periodic reporting requirements of the United States Securities Exchange Act of 1934 (the “Exchange Act”), the periodic disclosure required of foreign issuers under the Exchange Act is more limited than the periodic disclosure required of U.S. issuers. Finally, we maintain our financial accounts and records and prepare our financial statements in conformity EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, which differs in certain respects from U.S. GAAP, the financial reporting standard to which many investors in the United States may be more accustomed. See Note 60 of the Consolidated Financial Statements for the presentation of our stockholders’ equity and net income reconciled to U.S. GAAP.

We have a substantial amount of commitments with personnel considered wholly unfunded due to the absence of qualifying plan assets.

Our commitments with personnel which are considered to be wholly unfunded are recognized under the heading “Provisions — Funds for Pensions and Similar Obligations” in the accompanying consolidated balance sheets. These amounts include “Post-employment benefits”, “Early Retirements” and “Post-employment welfare benefits”, which amounted to €2,536 million, €3,309 million and €401 million, respectively, as of December 31, 2009 (€2,638 million, €3,437 million and €284 million, respectively, as of December 31, 2008, and €2,683 million, €2,950 million and €300 million, respectively, as of December 31, 2007). These amounts are considered wholly unfunded due to the absence of qualifying plan assets.

We face liquidity risk in connection with our ability to make payments on these unfunded amounts which we seek to mitigate, with respect to “Post-employment benefits”, by maintaining insurance contracts which were contracted with insurance companies owned by the Group. The insurance companies have recorded in their balance sheets specific assets (fixed interest deposit and bonds) assigned to the funding of these commitments. The insurance companies also manage derivatives (primarily swaps) to mitigate the interest rate risk in connection with the payments of these commitments. We seek to mitigate liquidity risk with respect to “Early Retirements” and “Post-employment welfare benefits” through oversight by the Group’s Assets and Liabilities Committee (“ALCO”). The Group’s ALCO manages a specific asset portfolio to mitigate the liquidity risk regarding the payments of these commitments. These assets are government and cover bonds (AAA/AA rated) which are issued at fixed interest rates with maturities matching the aforementioned commitments. The Group’s ALCO also manages

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derivatives (primarily swaps) to mitigate the interest rate risk in connection with the payments of these commitments. Should we fail to adequately manage liquidity risk and interest rate risk either as described above or otherwise, it could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Risks Relating to Latin America

Events in Mexico could adversely affect our operations.

We are substantially dependant on our Mexican operations, with approximately 32% and 39% of our net income attributed to parent company in 2009 and 2008, respectively, being generated in Mexico. We face several types of risks in Mexico which could adversely affect our banking operations in Mexico or the Group as a whole. Given the internationalization of the financial crisis, the Mexican economy felt the effects of the global financial crisis and the adjustment process that was underway is accelerating. This process has intensified since the end of the third quarter of 2008 and we expect it to continue at least during the first half of 2010 through a lower growth rate in production and employment. The initial effects are in manufacturing and in those areas with a greater degree of exposure to the international environment, although internal demand is also showing clear signs of moderation. In 2010 we expect that macro economic recovery will only be maintained if there is a sustained US recovery resulting in higher exports and foreign investment. Domestic demand will not recover unless there is a gradual recovery of confidence and employment, interest rates remain low and a expansionary fiscal policy is in place. We cannot rule out the possibility that in a more unfavorable environment for the global economy, and particularly in United States or otherwise growth in Mexico will be negative in 2010.

Beginning in 2008 and through 2009, our mortgage and especially our consumer loan portfolio in Mexico started showing higher delinquency rates. If there is a persistent increase in unemployment rates, which could arise if there is a more pronounced or prolonged slowdown in the United States, it is likely that such rates will further increase. In addition, although the Bank of Mexico (“Banxico”) is expected to maintain its current monetary stance throughout 2010, any tightening of monetary policy could make it more difficult for new customers of our mortgage and consumer loan products in Mexico to service their debts, which could have a material adverse effect on the business, financial condition, cash flows and results of operations of our Mexican subsidiary or the Group as a whole. In addition, price regulation and competition could squeeze the profitability of our Mexican subsidiary. For example, in order to increase competition and to deepen credit, Mexican financial regulators could elect to introduce price distortions not linked to the true risk premium. If this were to occur, the market share of our Mexican subsidiary could decrease given its risk management standards.

Finally, political instability or social unrest could weigh on the economic outlook, which could increase economic uncertainty and capital outflows. Additionally, if the approval of certain structural reforms is delayed, this could make it more difficult to reach potential growth rates in the Mexican economy.

Any of these risks or other adverse developments in laws, regulations, public policies or otherwise in Mexico may adversely affect the business, financial condition, operating results and cash flows of our Mexican subsidiary or the Group as a whole.

Our Latin American subsidiaries’ growth, asset quality and profitability may be affected by volatile macroeconomic conditions, including significant inflation and government default on public debt, in the Latin American countries where they operate.

The Latin American countries in which we operate have experienced significant economic volatility in recent decades, characterized by recessions, foreign exchange crises and significant inflation. This volatility has resulted in fluctuations in the levels of deposits and in the relative economic strength of various segments of the economies to which we lend. Negative and fluctuating economic conditions, such as a changing interest rate environment, also affect our profitability by causing lending margins to decrease and leading to decreased demand for higher-margin products and services. In addition, significant inflation can negatively affect our results of operations as was the case in the year ended December 31, 2009, when as a result of the characterization of Venezuela as a hyperinflationary economy, we recorded a €90 million decrease in our net income attributed to parent company.

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Negative and fluctuating economic conditions in some Latin American countries could result in government defaults on public debt. This could affect us in two ways: directly, through portfolio losses, and indirectly, through instabilities that a default in public debt could cause to the banking system as a whole, particularly since commercial banks’ exposure to government debt is generally high in several Latin American countries in which we operate.

While we seek to mitigate these risks through what we believe to be conservative risk policies, no assurance can be given that our Latin American subsidiaries’ growth, asset quality and profitability will not be further affected by volatile macroeconomic conditions in the Latin American countries in which we operate.

Latin American economies can be directly and negatively affected by adverse developments in other countries.

Financial and securities markets in Latin American countries in which we operate, are, to varying degrees, influenced by economic and market conditions in other countries in Latin America and beyond. Negative developments in the economy or securities markets in one country may have a negative impact on other emerging market economies. These developments may adversely affect the business, financial condition, operating results and cash flows of our subsidiaries in Latin America. These economies are also vulnerable to conditions in global financial markets and especially to commodities price fluctuations, and these vulnerabilities usually reflect adversely in financial market conditions through exchange rate fluctuations, interest rate volatility and deposits volatility. For example, at the beginning of the financial crisis these economies were hit by a simultaneous drop in commodity export prices, a collapse in demand for non-commodity exports and a sudden halting of foreign bank loans. Even though most of these countries withstood the triple shock rather well, with limited damage to their financial sectors, we have seen non performing loan ratios rise as well as contraction in bank deposits and loans. As a global economic recovery remains fragile, there are risks of a relapse. If the global financial crisis continues and, in particular, if the effects on the Chinese and U.S. economies intensify the business, financial condition, operating results and cash flows of our subsidiaries in Latin America are likely to be materially adversely affected.

We are exposed to foreign exchange and, in some instances, political risks as well as other risks in the Latin American countries in which we operate, which could cause an adverse impact on our business, financial condition, results of operations.

We operate commercial banks in ten Latin American countries and our overall success as a global business depends, in part, upon our ability to succeed in differing economic, social and political conditions. We are confronted with different legal and regulatory requirements in many of the jurisdictions in which we operate. These include, but are not limited to, different tax regimes and laws relating to the repatriation of funds or nationalization of assets. Our international operations may also expose us to risks and challenges which our local competitors may not be required to face, such as exchange rate risk, difficulty in managing a local entity from abroad, and political risk which may be particular to foreign investors. For example, on January 8, 2010, the Venezuelan monetary authorities decided to devalue the bolivar fuerte by 50% from a fixed exchange rate of 2.15 per U.S. dollar since its creation to 4.30 per U.S. dollar. Our presence in Latin American markets also requires us to respond to rapid changes in market conditions in these countries. We cannot assure you that we will continue to succeed in developing and implementing policies and strategies that are effective in each country in which we operate or that any of the foregoing factors will not have a material adverse effect on our business, financial condition and results of operations.

We are also a major player in the private pension sector in place in most of these countries and are, therefore, affected by changes in the value of pension fund portfolios under management, as well as general financial conditions and the evolution of wages and employment. For example, most pension fund management companies (“AFPs” for their Spanish acronym) posted negative results in 2008 as a consequence of the fall in the value of their portfolios, since in several countries they have to keep reserves invested in the same portfolios.

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Regulatory changes in Latin America that are beyond our control may have a material effect on our business, financial condition, results of operations and cash flows.

A number of banking regulations designed to maintain the safety and soundness of banks and limit their exposure to risk are applicable in certain Latin American countries in which we operate. Local regulations differ in a number of material respects from equivalent regulations in Spain and the United States.

Changes in regulations that are beyond our control may have a material effect on our business and operations, particularly in Venezuela and Argentina. In addition, since some of the banking laws and regulations have been recently adopted, the manner in which those laws and related regulations are applied to the operations of financial institutions is still evolving. No assurance can be given that laws or regulations will be enforced or interpreted in a manner that will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

Private pension management companies are heavily regulated and are exposed to major risks concerning changes in those regulations in areas such as reserve requirements, fees and competitive conditions. They are also exposed to political risks. For example, at the end of 2008 the government of Argentina passed a law transferring pension funds, including those managed by our subsidiary in Argentina, from private managers to the government entity managing the remainder of the formerly public pension system.

Risks Relating to Other Countries

Our strategic growth in Asia exposes us to increased regulatory, economic and geopolitical risk relating to emerging markets in the region, particularly in China.

In 2008 and 2009, we further increased our ownership interest in members of the CITIC Group, a Chinese banking group, by increasing our stake in CITIC International Financial Holdings Ltd (“CIFH”) to 29.7% and China CITIC Bank (“CNCB”) to 10.07%. CIFH is a banking entity headquartered in Hong Kong and CNCB is a banking entity headquartered in China. On December 3, 2009, we announced the exercise of the option to purchase 1,924,343,862 additional shares of CNCB. After the exercise of this option, which we expect will become effective in April 2010, our stake in CNCB will increase to 15%. See “Item 4. Information on the Company — Business Overview — Wholesale Banking and Asset Management”.

As a result of our expansion into Asia, we are exposed to increased risks relating to emerging markets in the region, particularly in China. The Chinese government has exercised, and continues to exercise, significant influence over the Chinese economy. Chinese governmental actions concerning the economy and state-owned enterprises could have a significant effect on Chinese private sector entities in general, and on CIFH or CNCB in particular.

We also are exposed to regulatory uncertainty and geopolitical risk as a result of our investments in Asia. Changes in laws or regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise, could adversely affect our investments. Moreover, Asian economies can be directly and negatively affected by adverse developments in other countries in the region and beyond.

Any of these developments could have a material adverse effect on our investments in Asia or the business, financial condition, results of operations and cash flows of the Group.

Our continued expansion in the United States increases our exposure to the U.S. market.

Our expansion in the United States makes us more vulnerable to developments in this market, particularly the real estate market. During the summer of 2007, the difficulties experienced by the subprime mortgage market triggered a real estate and financial crisis, which has had significant effects on the real economy and which has resulted in significant volatility and uncertainty in markets and economies around the world. As we have acquired entities or assets in the United States, particularly BBVA Compass and certain deposits and liabilities of Guaranty Bank (“Guaranty”), our exposure to the U.S. market has increased. Adverse changes to the U.S. economy in general, and the U.S. real estate market in particular, resulted in our determination to write down goodwill related to our acquisition of BBVA Compass and record additional loan loss provisions in the year ended December 31, 2009

16

in the aggregate amount of €1,050 million (net of taxes). Similar or worsening economic conditions in the United States could have a material adverse effect on the business, financial condition, results of operations and cash flows of our subsidiary BBVA Compass, or the Group as a whole, and could require us to provide BBVA Compass with additional capital.

Regulatory Risks

Governmental responses to recent market disruptions may be inadequate and may have unintended consequences.

In response to the global financial crisis, legislators and financial regulators have taken a number of steps to stabilize the financial markets. These steps have included various fiscal stimulus programs and the provision of direct and indirect assistance to distressed financial institutions, assistance by banking authorities in arranging acquisitions of weakened banks and broker/dealers, implementation of various programs by regulatory authorities to provide liquidity to various credit markets and temporary prohibitions on short sales of certain financial institution securities. Additional legislative and regulatory measures are under consideration in various countries around the world, including, for example in the United States, where measures with respect to modifications of residential mortgages and an overhaul of the financial regulatory framework are under consideration. In addition to these actions, various regulatory authorities in member states of the European Union and the United States have taken regulatory steps to support financial institutions, to guarantee deposits and to seek to stabilize the financial markets. Premature removal of such support measures as a result of perceived improvement in the financial markets and concerns over the sustainability of public deficits, could result in a prolonged economic downturn and further instability in the financial markets.

In addition, recent regulatory proposals, in the European Union and the United States, point at splitting wholesale and retail activities, increasing minimum capital requirements, establishing a tax for systemic or relevant financial institutions, among other proposals. While these and previous measures are proposed or were taken to support the markets, they may have certain consequences on the global financial system or our businesses, including reducing competition, increasing the general level of uncertainty in the markets or favoring or disfavoring certain lines of business, institutions or depositors. We cannot predict the effect of any regulatory changes resulting from the global financial crisis and any such changes can have a material adverse effect on our business, financial condition, results of operations, cash flow and business plans. Some of the most significant concerns are related to new liquidity standards, an increase of the minimum capital ratio or the regulation of systemic institutions, which may seriously affect our business model.

ITEM 4.   INFORMATION ON THE COMPANY

A.   History and Development of the Company

Our legal name is Banco Bilbao Vizcaya Argentaria, S.A. BBVA’s predecessor bank, (BBV), was incorporated in Spain as a limited liability company (asociedad anónimaor “S.A.”) under the Spanish Corporations Law on October 1, 1988. BBVA is incorporated for an unlimited term. The Company conducts its business under the commercial name “BBVA”. BBVA is registered with the Commercial Registry of Vizcaya (Spain). It has its registered office at Plaza de San Nicolás 4, Bilbao, 48005, Spain, telephone number +34 91 3746201. BBVA’s agent in the U.S. for U.S. federal securities law purposes is José María García Meyer (15 South 20th Street, Birmingham, AL 35233, telephone number + 1(205) 297 -3000 and fax number +1(205)297-3116).

Capital Expenditures

Our principal investments are financial: subsidiaries and affiliates. The main capital expenditures from 2007 to the date of this Annual Report were the following:

2009

On August 21, 2009, through our subsidiary BBVA Compass, we acquired certain assets and liabilities of Guaranty from the U.S. Federal Deposit Insurance Corporation (the “FDIC”) through a public auction for qualified

17

investors. BBVA Compass acquired assets, mostly loans, for $11,441 million (approximately €8,016 million) and assumed liabilities, mostly customer deposits, for $12,854 million (approximately €9,006 million). These acquired assets and liabilities represented 1.5% and 1.8% of our total assets and liabilities on the acquisition date.

In addition, the purchase included a loss-sharing agreement with the FDIC under which the latter undertook to assume 80% of the losses on up to the first $2,285 million of the loans purchased by us and up to 95% of the losses, if any, on the loans exceeding this amount. This commitment has a maximum term of either five or ten years, depending on the portfolios.

Regarding our strategic investment in Asia, on December 3, 2009 we announced our intention to exercise a call option for a total of 1,924,343,862 shares, amounting to 4.93% of CNCB’s capital. The acquisition price will be approximately €0.56 per share, which means that the total amount of the investment resulting from the exercise of the option will be approximately €1,000 million. Once this option is exercised, which we expect to take place in April 2010, our investment in CNCB’s capital will be 15%.

2008

During 2008, there were no significant changes in the Group, except for the merger of our banking subsidiaries in Texas (Laredo National Bank, Inc., Texas National Bank, Inc., and State National Bank, Inc.) into BBVA Compass.

In 2008, we further increased our ownership interest in members of the CITIC Group, a Chinese banking group, by increasing our stake in CIFH up to 29.7% and CNCB up to 10.07%. CIFH is a banking entity headquartered in Hong Kong and previously listed on the Hong Kong stock exchange. Pursuant to an agreement between us and Gloryshare Investments Limited (the controlling shareholder of CIFH), CIFH’s shares were delisted from the Hong Kong Stock Exchange on November 5, 2008.

2007

On February 16, 2007, BBVA entered into a definitive agreement to acquire 100% of the share capital of Compass Bancshares, Inc. (currently referred to as “BBVA Compass”), an American banking group previously listed on NASDAQ, which conducts its main business activity in Alabama, Texas, Florida, Arizona, Colorado and New Mexico. On September 7, 2007, after obtaining the mandatory authorizations, we acquired 100% of the share capital of Compass Bancshares, Inc. The consideration paid to former Compass Bancshares, Inc. stockholders for the acquisition was $9,115 million (€6,672 million). We paid $4,612 million (€3,385 million) in cash and delivered 196 million newly-issued shares.

In September 2007, we increased our ownership interest in Metropolitan Participations, S.L. to 40.67%, with an investment of €142 million.

On January 3, 2007, pursuant to the agreement entered into on June 12, 2006, and after obtaining the mandatory authorizations, we closed the transaction to purchase State National Bancshares Inc., an American banking group based in Texas, with an investment of $488 million (€378 million).

On December 22, 2006, we reached an agreement with CITIC Group to develop a strategic alliance in the Chinese market. In March 2007, in accordance with this agreement we acquired 4.83% of CNCB with an investment of €719 million. We also acquired a purchase option that permitted us to acquire up to 9.9% of the capital of the bank. Additionally we acquired a 14.58% ownership interest in CIFH. The price for this ownership interest was €483 million.

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Capital Divestitures

Our principal divestitures are financial, in subsidiaries and in affiliates. The main capital divestitures from 2007 to the date of this Annual Report were the following:

2009

During 2009, we sold our participations in certain non-strategic associates (including our 22.9% stake in Air Miles España, S.A.) which gave rise to no significant gains.

As a part of the reorganization process in the United States and Mexico, we concluded the liquidation and merger of several affiliates of BBVA Compass and of BBVA Bancomer. For additional detail on these transactions, see Appendix V to the Consolidated Financial Statements.

2008

In March, 2008, we sold our 5.01% interest in the Brazilian bank, Banco Bradesco, S.A. (“Bradesco”) to Bradesco’s principal shareholders, Cidade de Deus — Companhia Comercial de Participaçoes and Fundaçao Bradesco, for a market price of €863 million. This sale gave rise to a gain of €727 million.

2007

In February 2007, we sold our 5.01% capital share in Iberdrola, S.A. This sale gave rise to a gain of €883 million.

B.   Business Overview

BBVA is a highly diversified international financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. We also have investments in some of Spain’s leading companies.

Business Areas

In 2009, we focused our operations on six major business areas, which are further broken down into business units, as described below:

•  Spain and Portugal

•  Wholesale Banking and Asset Management

•  Mexico

•  The United States

•  South America

•  Corporate Activities

The foregoing description of our business areas is consistent with our current internal organization. The financial information for our business areas for 2009, 2008 and 2007 presented below has been prepared on a uniform basis, consistent with our organizational structure in 2009. Unless otherwise indicated, the financial information provided below for each business area does not reflect the elimination of transactions between companies within one business area or between different business areas, since we consider these transactions to be an integral part of each business area’s activities.

During 2009, several factors occurred with respect to the Venezuelan economy that made us reconsider the accounting treatment we applied in the translation of the financial statements of our subsidiaries in that country: the inflation index reached in 2009, the cumulative inflation index over the last three years and restrictions in the official foreign exchange market. Consequently, according to the requirements of the International Accounting Standard IAS 21, we considered the Venezuelan economy as hyperinflationary for 2009. The impacts on the

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Consolidated Financial Statements for the year 2009 are shown in Note 2.2.23 to the Consolidated Financial Statements.

In 2009, the characterization of Venezuela as a hyperinflationary economy, implied a €90 million decrease in our net income attributed to parent company. In order to maintain the comparability of results of operations in our South America area, we have included in the results of operations for the Corporate Activities area as of and for the year ended December 31, 2009, the effects of the classification of Venezuela as a hyperinflationary economy in 2009.

On January 8, 2010, the Venezuelan monetary authorities decided to devalue the bolivar fuerte by 50% from a fixed exchange rate of 2.15 per U.S. dollar since its creation to 4.30 per U.S. dollar. On January 19, 2010 the Venezuelan authorities announced that they would grant a preferential rate of 2.60 bolivar fuerte per dollar for new items, among which payment of dividends is included, as long as the request for Authorization of Acquisition of Foreign Exchange was filed before January 8, 2010.

Despite the uncertainty related to the final exchange rate of Venezuelan currency (Bolivar fuerte) compared to euro we estimate the devaluation will have not significant impact on our consolidated financial statements in 2010 due to the fact that our investments in Venezuela represent approximately 2% of our consolidated assets and a 1% of our consolidated equity as of December 31, 2009.

The following table sets forth information relating to net income attributed to parent company for each of our business areas for the years ended December 31, 2009, 2008 and 2007:

	Net Income/(loss) Attributed								% of Net Income/(loss) Attributed
	to Parent Company								to Parent Company
	Year Ended December 31,
	2009			2008			2007		2009			2008			2007
	(In millions of euros)
Spain and Portugal		2,373			2,565			2,381		56	%		51	%		39	%
Wholesale Banking and Asset Management		1,011			773			896		24	%		15	%		15	%
Mexico		1,359			1,938			1,880		32	%		39	%		31	%
The United States		(1,071	)		211			203		(25	)%		4	%		3	%
South America		871			727			623		21	%		14	%		10	%
Subtotal		4,543			6,255			5,983		108	%		125	%		98	%
Corporate Activities		(333	)		(1,193	)		143		(8	)%		(24	)%		2	%
Net income attributed to parent company		4,210			5,020			6,126		100	%		100	%		100	%

The following table sets forth information relating to net interest income for each of our business areas for the years ended December 31, 2009, 2008 and 2007.

	Net Interest Income
	Year Ended December 31,
	2009		2008			2007
	(In millions of euros)
Spain and Portugal		4,934		4,804			4,391
Wholesale Banking and Asset Management		1,148		746			(7	)
Mexico		3,307		3,716			3,505
The United States		1,514		1,332			763
South America		2,463		2,149			1,746
Subtotal		13,366		12,747			10,398
Corporate Activities		516		(1,061	)		(770	)
Net interest income		13,822		11,686			9,628

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Spain and Portugal

The Spain and Portugal business area focuses on providing banking services and consumer finance to private individuals, enterprises and institutions in Spain and Portugal.

The principal figures relating to this business area as of December 31, 2009 and December 31, 2008 were:

Loans and advances to customers were €199,165 million as of December 31, 2009, a decrease of 1.9% from €203,117 million as of December 31, 2008, reflecting the significant slowdown in lending growth in Spain and our decision during the year to decrease our exposure to certain sectors and higher risk products.

Customers deposits were €91,826 million as of December 31, 2009 compared to €99,849 million as of December 31, 2008, a decrease of 8.0%, primarily due to the drop in term deposits caused by the significant decrease in interest rates and intense competition.

Mutual fund assets under management were €29,842 million as of December 31, 2009, a decrease of 4.6% from €31,270 million as of December 31, 2008, reflecting declines in portfolio volumes and withdrawals of mutual fund assets.

Pension fund assets under management were €10,329 million as of December 31, 2009, an increase of 7.6% from €9,603 million as of December 31, 2008, primarily as a result of an efficient commercial activity.

The main business units included in the Spain and Portugal area are:

•  Spanish Retail Network:  manages individual customers, high net-worth individuals (private banking) and small companies and retailers in the Spanish market;

•  Corporate and Business Banking:  manages business with small and medium enterprises (“SMEs”), large companies, institutions and developers in the Spanish market; and

•  Other units:

•  Consumer Finance:  manages renting and leasing business, credit to individual and to enterprises for consumer products and internet banking;

•  European Insurance:  manages the insurance business in Spain and Portugal; and

•  BBVA Portugal:  manages the banking business in Portugal.

Spanish Retail Network

The Spanish Retail Network unit services the financial and non-financial needs of households, professional practices, retailers and small businesses. This unit has a differentiated business model based on its relationship with customers, prudent risk management, efficient operations and a sound financial and liquidity position. In 2009 we reinforced our commitment to families, companies, the self-employed and public and private institutions within the framework of the current economic situation. To do so, we have increased the range of financial and non-financial solutions we offer adapted to the needs of each of the segments we deal with.

Throughout 2009 we developed a wide number of campaigns. With respect to mortgages for first time home buyers, among the most notable is theHipoteca Blue Protegida(Protected Blue Mortgage) targeted at young people and the re-launch of theVen a Casa(Come Back Home) campaign. In consumer lending, among the most notable campaigns were theCrédito Nómina(Payslip Loan), a new Internet channel forCrédito Coche(Car Loan) applications and the offer of a free 32 inch LCD television for operations of more than €12,000. In deposits, there were two newQuincenas del Libretón (Passbook Fortnights) campaigns and campaigns to win paycheck and pension deposits, as well as high-income paychecks and a newJornada de tu Vida(Day of your Life) campaign. In term deposits, the product catalogue has been completed with another edition ofDepósitos Fortaleza(Strength Deposits), with theDepósitos Fortaleza Nómina(Paycheck Strength Deposits), as well as theMultidepósitos(Multi-deposits) and theDepósito Líder(Leader Deposit) aimed at the preserving and winning new deposits.

Our individual customers have also benefited from the launch of a new line of credit cards with two promotions. These are designed to satisfy three objectives: better adaptation to payment preferences, simpler use

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and increased security. For this purpose, we have simplified our range of credit cards and grouped it into four categories:Antes(Before),Ahora(Now),Después(After) andA tu Ritmo(At Your Pace).

BBVA Banca Privada (Private Banking) is the segment within the Spanish Retail Network unit that manages the former personal banking (nowBanca Privada) and wealth management segments (BBVA Patrimonios). As of December 31, 2009, funds under management stood at €43,056 million, up 7.8% from December 31, 2008. This increase is primarily the result of our new model for added value management and associated improvements in customer service based on innovation, with a new platform of systems that optimize operational processes. We also attribute this increase to product differentiation during the year, with a range of products adapted to each customer profile, such as managed and guided portfolios, Visa Infinite, assured annuities, Family Office products, guidance with the BBVA Broker service (for insurance) and the Planific@ tool, a pioneering asset planning service, the PROA Plan and optimization of synergies with other Group areas. Finally, in order to offer high quality service in Spain, additional wealth management centers were opened in Malaga, Valladolid and Oviedo in 2009.

The small business and retailer segments (which also includes services and products for the self-employed, rural communities and small companies) within the Spanish Retail Network unit had loans and advances to customers of €13,869 million as of December 31, 2009 (€16,166 million as of December 31, 2008). Key events in these segments in 2009 included, among others, an increase in financing associated with the pre-approved loans campaign, the formalization of €574 million in ICO credit lines, the launch ofPlan Choque Comercios(Retail Special Plan) andFactoría de Clientes(Customer Factory) and the signing of several collaboration agreements with various associations, including, the association for the self-employed (ATA, with more than 430,000 members), taxi drivers (UNALT, with more than 58,000 members) and restaurant owners (FEHR, with more than 270,000 proprietors). Also in 2009, financing agreements were signed in the rural industry with agricultural cooperatives and equipment manufacturers. Agricultural subsidies from the European Union were managed and deposited for 43,000 farmers for a total of €185 million during 2009

Corporate and Business Banking

The Corporate and Business Banking unit offers a range of services and products to SMEs, large companies, institutions and developers with specialized branch networks for each segment.

Regarding the SME segment, we handled €11,428 million in factoring assignments and €11,668 in confirming advances and extensions in 2009. In terms of medium and long-term financing in 2009, this unit was one of the most active entities in the distribution of various ICO lines, with the signing of 51,592 transactions for an aggregate value of €2,450 million.

As a result of these developments, despite the unfavorable economic conditions present in 2009, loans and advances to customers for this unit as of December 31, 2009, increased to €89,989 million, a 2.7% increase from December 31, 2008. In turn, customers deposits as of December 31, 2009, amounted to €25,970 million compared to €31,292 million as of December 31, 2008. As of December 31, 2009, this unit has more than 60,000 customers in the SME segment

In the large company segment loans and advances to customers as of December 31, 2009, increased 4.7%year-on-year to €16,568 million and customers deposits remained at €5,237 million, almost the same level as of December 31, 2008. This segment of our Corporate and Business Banking unit assists large companies in maximizing the management of their treasury accounts and offers sophisticated advisory services for the provision of tailor-made solutions and innovative products.

With respect to the institutions segment, loans and advances to customers and customers deposits as of December 31, 2009, stood at €25,380 million and €13,402 million, respectively. Through this segment, our Corporate and Business Banking unit is a leader in the provision of financing to Spanish local and regional authorities as well as to Spanish corporations and their subsidiaries. In 2009, we granted significant loans to AENA (the Spanish Airports and Air Navigation authority) (€300 million), the Government of the Canary Islands (€193 million) and the city of Madrid (€236 million). Through this segment, we have also provided financing to high speed railways projects managed by the SpanishMinisterio de Fomento(Ministry of Public Works), such as: Zaragoza A.V.E. (€70 million) and Barcelona Sagrera A.V.E. (€70 million). Finally, through this segment, the unit

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has been awarded the tender for the comprehensive management of the treasury accounts for the SpanishMinisterio de Defensa(Ministry of Defense),Presidencia(Office of the President) andAdministración Territorial(Local and Regional Public Administrations).

In the real estate developer segment the continued decrease in residential real estate transactions resulted in a 3.5% decline in this unit’s loans and advances to customers as of December 31, 2009 compared to December 31, 2008.

Other Units

Consumer Finance

The Consumer Finance unit manages consumer finance and on-line banking, via Uno-e, BBVA Finanzia S.p.A. (“Finanzia”) and other subsidiaries in Spain, Portugal and Italy.

As of December 31, 2009, loans and advances to customers of the Consumer Finance unit was €6,387 million an increase of 2.9% from December 31, 2008. In the vehicle renting segment of this unit, new transactions in 2009 decreased by 17.8% compared to 2008. Through this unit, we had equipment financing of €225 million as of December 31, 2009, a decrease of 14.3% from December 31, 2008 primarily as a result of a decrease in business investment during the period. New operations of renting equipments increased by 16.6% from 2008 to €361 million in 2009.

As of December 31, 2009, Uno-e’s loans and advances to customers stood at €1,073 million (up 127.0%year-on-year). Customers deposits rose to €1,246 million as of December 31, 2009, an increase of 1.2% from December 31, 2008.

In Portugal, loans and advances to customers increased 12.5% from December 31, 2008 to €493 million as of December 31, 2009. The co-branded credit card business has been consolidated, with the signing of agreements with Repsol Portugal and Liberty Seguros. In Italy, Finanzia’s loans increased 40.6% from December 31, 2008 to €404 million as of December 31, 2009, with total new loans of €228 million (an increase of 128% from the previous year). Our vehicle renting company in Portugal reached a fleet of 14,477 vehicles as of December 31, 2009, an increase of 16.3% from December 31, 2008.

European Insurance

Our European Insurance unit’s activities are conducted through various insurance companies that provide direct insurance, reinsurance and insurance brokering services in Spain and Portugal and market products for different types of customers (private individuals, SMEs, retailers, professional service firms and providers and self-employed individuals) through this unit’s branch offices. This unit contributed €523 million to our consolidated net income in 2009, €497 million from in-house policies and €26 million from brokerage fees received on the sale of third-party policies.

Premiums received on policies issued during 2009 increased 25.0% from 2008 to €1,367 million, of which €1,111 million (an increase of 27.2% in the year) corresponded to premiums received on individual policies (life and non-life) and €256 million to premiums received on collectives (an increase of 16% in the year). Funds under management in private savings policies reached €8,410 million as of December 31, 2009, of which €3,259 million (an increase of 4.7%year-on-year) corresponded to individual clients and the rest to group savings policies.

In order to become a comprehensive provider of insurance solutions (life and non-life), we have expanded the product offering of this unit to include additional products that adapt to the customers’ needs in terms of price and coverage. We have also implemented a specialized telephone platform and include in-branch consultants to provide customers the best solution. In this regard, the launches targeting individuals in 2009 have includedSeguro Coche BBVA Gama Terceros(BBVA Third-Party Range Car Insurance),Seguro Vivienda Plus(Housing Plus Insurance) andSeguros Personales Plus Fidelización(Loyalty Plus Personal Insurance) and for the self-employed segment, the essential range in theMás Cobertura Profesional(More Professional Cover). New unemployment and temporary disability insurance policies have also been developed, such as the policies we distribute through our Consumer Finance unit or which we incorporate,free-of-charge, with the younger-customer directedHipoteca Blue Protegida

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BBVA. BBVA Broker, in the business segment, is our insurance broker in Spain providing companies with personalized services (coverage for assets and properties, installment payments collections and work related risks, among others) through an extensive catalogue of products. Moreover, we are currently developing an insurance product to help companies meet the requirements of the Spanish Environmental Responsibility Act.

In insured savings, BBVA Seguros is consolidating its position as a leading entity for management of this type of products as in the Individual Systematic Savings Plans, in which we earned premiums of €181 million in 2009 (up 27%year-on-year) and insured individual incomes with €346 million in premiums in the same period (up 233%year-on-year).

BBVA Portugal

BBVA Portugal manages our banking business in Portugal. BBVA Portugal has experienced positive growth in 2009. Loans and advances to customers increased to €6,063 million as of December 31, 2009, an increase of 2.7% compared to December 31, 2008, with a 9.5% increase in residential mortgages over the period primarily as a result of the launch of several new campaigns. These campaigns included theNos Adaptamos(We Adapt) andAdapte su Crédito(Adjust your Loans) campaigns, both of which allow clients with mortgages to lower their monthly payments or request additional loans. We also expanded the product range for SMEs with a new accounts payable financing service and a range of insurance policies in conjunction with AXA-Vitalplan Corporate and CESCE. Important operations in investment banking in 2009 included financing the purchase by Portucel, GALP, the Jerónimo Martins Group and Emparque for the purchase of Cintra Aparcamientos.

Customer deposits remained relatively stable at €2,542 million as of December 31, 2009 compared to €2,571 million as of December 31, 2008. BBVA Portugal has developed an entire line of products for clients with a conservative risk profile, with deposits includingNos Adaptamos,12-month EuriborandDepósito Fortaleza.

Wholesale Banking and Asset Management

The Wholesale Banking and Asset Management area focuses on providing services to large international companies and investment banking, capital markets and treasury management services to clients.

The principal figures relating to this business area as of December 31, 2009 and December 31, 2008 were:

Loans and advances to customers were €37,493 million as of December 31, 2009, a decrease of 21.8% from €47,950 million as of December 31, 2008.

Customer deposits were €63,330 million as of December 31, 2009 compared to €60,847 million as of December 31, 2008, an increase of 4.1%.

Mutual fund assets under management were €3,914 million as of December 31, 2009, a decrease of 2.5% from €4,014 million as of December 31, 2008.

Pension fund assets under management were €7,224 million as of December 31, 2009, a decrease of 6.1% from €6,810 million as of December 31, 2008.

The business units included in the Wholesale Banking and Asset Management area are:

•  Corporate and Investment Banking:  coordinates origination, distribution and management of a complete catalogue of corporate and investment banking products (corporate finance, structured finance, syndicated loans and debt capital markets) and provides global trade finance and global transaction services with coverage of large corporate customers specialized by sector (industry bankers);

•  Global Markets:  handles the origination, structuring, distribution and risk management of market products, which are placed through our trading rooms in Europe, Asia and the Americas;

•  Asset Management:  designs and manages the products that are marketed through our different branch networks including traditional asset management, alternative asset management and Valanza (our private equity unit);

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•  Industrial and Other Holdings:  helps to diversify the area’s businesses with the aim of creating medium and long-term value through active management of a portfolio of industrial holdings and other Spanish and international projects.

•  Asia:  represents our increased stakes in CIFH in Hong Kong (approximately 30%) and in CNCB (approximately 10%) and our commitment to China as demonstrated by aggregate investments that as of the date of this Annual Report exceed €2,000 million.

Corporate and Investment Banking

In the Corporate and Investment Banking (“C&IB”) unit, we made several organizational changes in April 2009 in response to the economic situation and to maximize efficiency in the business model for this unit that we have been developing since 2007. The new structure includes a reduced target customer base with a greater focus on strategic customers for whom we can provide higher added value services, as well as the separation between lending and fee products. The main changes in this area have been:

•  The creation of an EMEA (European Middle East Asia) Customer division to strengthen our focus on the relationships with customers in this geographic area. The new division groups together all the initiatives with customers in this geographical area. It merges the positions of industry head and senior banker to bring the customer closer and simplify the division of functions in the relationship. The aim of this reorganization is to progress in a matrix model that leads to better coordination of industry and geographical strategies.

•  The trade finance business has been incorporated into the aggregate C&IB value chain to strengthen the product division Global Structured Finance. To do so, Global Trade Finance has been divided into Structured Trade Finance (“STF”), which deals with the management of structured transactions, and Transactional Trade Finance (“TTF”), which deals with more standard trade-related transactions. This division allows us to adapt better to customer needs and helps us to maximize the results from these activities. At the same time, a new segment has been created within STF called “Commodity Trade Finance”, through which we aim to develop our expertise in this area. Its first transaction was concluded with the Brazilian company Amaggi in November 2009, although within the General Finance Agreement signed with CNCB, a transaction of this type was concluded to finance power lines for a railroad in China.

•  In 2009, an additional boost was given to the BIBEC project (Investment Banking for Companies and Corporations) by increasing the team and creating two new sector-based bankers to look after any needs that may arise from high net worth individual (HNWI) banking, such as collaboration in the management of customers undergoing a restructuring process.

In the Cash Management department of the Global Transactional Services division, we implemented in 2009 in Spain and Portugal the SEPA transfer module and the module of periodic information on balances and movements within our net cash position. Within this division in 2009, we also implemented the PRISMA project, an integral solution for transactional management of the branch network. TheSistema Integral de Tesorería para Dispersión, a system that provides large multinationals, companies and institutions with an easy and secure method of paying suppliers, and another for BBVA Bancomer have been installed in Mexico, both through ahost-to-host system. In Venezuela, the double security factor Token Plus was incorporated into BBVA Cash, and in Peru, the Consolidated Collection System and thee-empresario.com portal were launched.

Our Corporate and Investment Banking unit in South America and the United States continued its progress in implementing a new model of coverage and the customer definition was refined in Colombia, Peru, Venezuela, Argentina and Chile (in addition to the model already implemented in Mexico).

Global Markets

The Global Markets unit in 2009 significantly consolidated its commercial activity, particularly in the two latest offices opened:

•  Dusseldorf, which has improved the service to institutional customers and also begun to distribute to the corporate segment.

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•  Hong Kong, where additions are being made to teams and markets to extend the underlying products offered to an increasingly diverse customer base. Among the highlights of 2009 was the establishment of a Medium Term Note program (MTN program), the start of activity with institutional investor customers and cross-selling with global corporate customers.

In Latin America, the Global Markets unit will continue to consolidate its derivate distribution activity through its hub in Mexico (Regional Derivate Center). The capacity to offer a more global and improved service to major multinationals has also been strengthened, and by providing integrated management for the entire group. A new exchange-traded fund (ETF) called MEXTRAC, based on a portfolio of the 20 stocks on the Dow Jones Mexico Titans 20 Index, was also launched on the Mexican stock exchange.

Asset Management

In 2009 the Asset Management unit’s activity in creating and launching new products continued. In the first half of 2009, when markets were unstable and there was high risk aversion, we continued with the expansion of our conservative product range with the launch of two products:BBVA Bonos Cash(BBVA Cash Bonds), a money market fund for retail customers, andBBVA Bonos Largo Plazo Gobiernos II(BBVA Long-Term Government Bonds), a public-debt fund. In addition, to take advantage of the opportunities presented in corporate fixed income, we launched through this unit additional fixed-income long-term funds, includingBBVA Bonos Corporativos 2011andBBVA Bonos 2014, which were preferentially, though not exclusively, sold to HNWI customers. In the period, we also launched the structured fundsBBVA Oportunidad EuropaandBBVA Selección Empresas. In guaranteed products, 2009 was characterized by many maturities and most of the activity was focused on renewals. In the Commercial Banking segment of this unit in 2009, nine guaranteed equity funds were launched (six of them renewals), eight fixed-income guaranteed funds of thePlanes Rentatype (all renewals) and eight guaranteed fixed-incomeFon-Plazotype funds (seven of them renewals). TheSolidezrange of four guaranteed fixed-income funds has been introduced for HNWI banking.

Industrial and Other Holdings

This unit devotes itself to diversifying the area’s businesses, as well as to creating value in the medium and long terms through the active management of our portfolio of industrial holdings and holdings in private equity funds and international real estate. Its management fundamentals are profitability, asset turnover, liquidity and optimal use of economic capital.

It currently manages a portfolio of holdings in the industrial sector of more than 50 companies in various sectors, including Corporación IBV, Bolsa y Mercados Españoles (BME), Técnicas Reunidas, Tubos Reunidos and Desarrollo Urbanístico Chamartin (DUCH). As of December 31, 2009 the latent capital gains in the Industrial and Others Holdings unit’s portfolio increased 71%, significantly higher than the increase in the value of the Spanish stock index (IBEX-35) during the same period (29.8%). In 2009, this unit invested approximately €25 million.

In international funds, this unit has invested $120 million in diverse sectors in companies such as: American Gilstone Company (mining sector), Celeritas (communication), Project Health (healthcare), Taco Bueno and Castro Cheese (food products). This unit also managed our holdings in the CITIC Fund real estate funds, with an investment as of December 31, 2009, of approximately $16 million in real estate projects in China.

Asia

In 2009, we exercised a purchase option to increase our stake in CNCB from 10% to 15%, which we expect will be effective in April 2010. Our planned increased stake in the CITIC group represents an investment of close to €1,000 million after the execution of a purchase option at a price of HKD 6.45 per share. With this new investment we will continue to strengthen our collaboration with the CITIC group.

Our investments and activities in Asia are expected to represent approximately 8% of our net income attributed to parent company within three years. We are working towards this goal on various fronts, including the recent signing of two joint ventures, one in automobile finance and the other in private banking.

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Mexico

The principal figures relating to this business area as of December 31, 2009 and December 31, 2008 were:

Loans and advances to customers were €27,373 million as of December 31, 2009, a moderate increase of 0.8% (a decrease of 0.8% at constant exchange rates) from €27,151 million as of December 31, 2008.

Customer deposits were €31,998 million as of December 31, 2009 compared to €32,466 million as of December 31, 2008, a decrease of 1.4% (a decrease of 3.0% at constant exchange rates).

Mutual fund assets under management were €10,546 million as of December 31, 2009, an increase of 14.9% (an increase of 13.0% at constant exchange rates) from €9,180 million as of December 31, 2008.

Pension fund assets under management were €9,519 million as of December 31, 2009, an increase of 32.3% (an increase of 30.1% at constant exchange rates) from €7,196 million as of December 31, 2008.

The Mexican peso exchange rate as of December 31, 2009, appreciated against the euro, increasing 1.6% compared to the exchange rate as of December 31, 2008. However, comparing average exchange rates, the Mexican currency depreciated relative to the euro 13.3%year-on-year. The aforementioned changes had a slightly positive impact on the area’s balance sheet and activity and a negative effect on the income statement. See “Item 5. Operating and Financial Review and Prospects — Operating Results — Factors Affecting the Comparability of our Results of Operations and Financial Condition”. To provide a better picture of how the business has evolved the comments below will refer toyear-on-year change at constant exchange rates unless otherwise indicated.

The business units included in the Mexico area are:

•  Retail and Corporate banking,and

•  Pensions and Insurance.

Retail and Corporate banking

BBVA Bancomer’s business model is based on segmented distribution by customer type, with a philosophy of risk control and a long-term objective of growth and profitability.

Against an unfavorable macroeconomic backdrop in 2009, BBVA Bancomer’s focus was on strengthening its customer base. BBVA Bancomer has made great efforts to retain and secure the loyalty of its top valued customers through personalized service for preferred clients and the development of a specialized SME network to better service the SME segment. At year-end 2009, BBVA Bancomer had a customer base totaling nearly 16 million customers. Our outstanding performance amid this complicated global economic and financial backdrop was recognized by Euromoney, which named BBVA Bancomer Best Bank in Mexico in 2009.

Loans and advances to customers reached €27,293 million as of December, 31 2009, an 0.8% increase from €27,066 million as of December 31, 2008. The composition of the loan book gradually changed over 2009, with the percentage of consumer-credit and card business shrinking while lower-risk products grew their share of the total. The year-end figures show a diversified structure with 39.7% of the lending in the commercial book (which includes loans to large corporations, SMEs, financial institutions and the Mexican government), 30.8% in the housing book (including developers and excluding the old mortgage portfolio) and 20.7% in the consumer-finance book.

The commercial loan-book grew 7.1% comparing December 31, 2009 to December 31, 2008. The fastest growth came from lending to SMEs, which increased 21.7%year-on-year to €968 million. BBVA Bancomer has developed a specialized network to service this segment, which had more than 300,000 customers as of December 31, 2009. A program (Programa de Liquidez PYME) was launched by BBVA Bancomer to boost liquidity in SMEs, and more than 8,000 SMEs have been beneficiaries of it during the financial crisis. Also noteworthy is the 51.2% increase over 2008 in lending to government bodies. The boost of lending to large corporations through bilateral loans and the placement of bonds and syndicated loans in the local market has been maintained.

BBVA Bancomer launched six new mortgage products for lending to home buyers in 2009. These products included: loans for home improvements, remodeling or additions to homes and financial discount which provides liquidity to construction companies. During 2009, BBVA Bancomer had a significant volume of new mortgages in

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Mexico, with more than 36,000 loans for individual customers and more than 73,000 for developers during the period.

Consumer loans in 2009 continued to shrink compared to 2008, down 13.6%, reflecting both the economic downturn and our strict risk acceptance policy. Much of the drop was due to lower credit-card lending. However, over the last two months of the year, credit cards performed better, helped by an improved economic environment and various campaigns to encourage proper use of credit. A more suitable use of credit cards was reflected in the stabilization of the non-performing assets ratio, on this loan book.

The balance of customer funds (bank deposits, repos, funds and investment companies) reached €44,579 million as of December 31, 2009. This was ayear-on-year increase of 5.2%. This positive performance was largely due to the launch of innovative products and a stronger distribution network. In this regard, as of December 31, 2009, BBVA Bancomer had more than 6,200 ATMs, 423 more than in 2008. Additionally BBVA Bancomer has been authorized to operate banking correspondents which will enable it to increase by more than 12,000 the points of sale over 2010. Apart from this, a new kind of ATM has been activated (practicajas) to allow customers to place deposits, make transfers, pay for credit cards and services and request loans.

Finally, BBVA Bancomer has continued to actively manage its liquidity and its capital adequacy by making issuances in the local market.

Pensions and Insurance

In Mexico, we operate our pensions business through Afore Bancomer, our insurance business through Seguros Bancomer, our annuities business through Pensiones Bancomer and our health insurance business through Preventis. The pension business had a tough year in 2009 due to significant drops in activity and employment rates throughout the country, but was slightly offset by the recovery of financial markets. Nonetheless, Afore Bancomer managed assets totaling €9,519 million as of December 31, 2009, up 30.1%year-on-year.

The insurance business had a less dynamic year in 2009 than in previous years, primarily due to the marked slowdown in banking volumes, which meant lower sales of bancassurance products. The growth in savings products not directly linked to banking activity and products sold through alternative channels accounted for a substantial part of this figure. Therefore, €816 million in premiums were underwritten during 2009 (including sales of savings products), which was 10.4% higher than in 2008.

The United States

The principal figures relating to this business area as of December 31, 2009 and December 31, 2008 were:

Loans and advances to customers were €33,075 million as of December 31, 2009, an increase of 7.0% (10.8% at constant exchange rates) from €30,906 million as of December 31, 2008.

Customer deposits were €33,734 million as of December 31, 2009 compared to €30,717 million as of December 31, 2008, an increase of 9.8% (13.7% at constant exchange rates).

On August 21, 2009, through our subsidiary BBVA Compass, we acquired certain assets and liabilities of Guaranty from the FDIC through a public auction for qualified investors. BBVA Compass acquired assets, mostly loans, for $11,441 million (approximately €8,016 million) and assumed liabilities, mostly customer deposits, for $12,854 million (approximately €9,006 million). These acquired assets and liabilities represented 1.5% and 1.8% of our total assets and liabilities on the acquisition date. The agreement with the FDIC limits the credit risk associated with the acquisition. The purchase included a loss-sharing agreement with the FDIC under which the latter undertook to assume 80% of the losses, if any, on up to the first $2,285 million of the loans purchased by us and up to 95% of the losses on the loans exceeding this amount. This commitment has a maximum term of either five or ten years, depending on the type of portfolio. This investment, which included 164 branches and 300,000 customers in Texas and California, offers us an opportunity to strengthen our United States’ banking franchise in the retail market, while limiting our investment risk.

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The business units included in the United States area are:

•  BBVA Compass

•  Other units:  BBVA Puerto Rico and Bancomer Transfers Services (“BTS”)

BBVA Compass

As of December 31, 2009, loans and advances to customers reached €31,194 million (an increase of 14.5%year-on-year) and customer deposits increased 32.2%year-on-year to €31,064 million as of December 31, 2008. These increases were primarily due to the aforementioned incorporation of Guaranty. Apart from the purchase of certain of the assets and liabilities of Guaranty, the following new products and services are worth highlighting:

The Retail Banking segment had a loan portfolio of €8,433 million as of December 31, 2009, down 8.8% from December 31, 2008, primarily due to the reduction in the Indirect Auto Dealer and Student Lending businesses. However, the residential real estate loans increased quarter by quarter in 2009, with $1,152 million in new mortgages written in 2009, a significant increase over 2008 levels. Customer deposits totaled €12,469 million as of December 31, 2009, down 7.8% from December 31, 2008, primarily due to lower demand for savings products. During 2009 this unit marketed and sold several new products, the most significant of which are as follows:

•  TheClearPointscredit card, which with a new transparent design and better security measures offers a number of advantages to customers.

•  BusinessBuild-to-order Checking, which allows companies to personalize the features of their checking accounts.

•  Compass for your Cause, a package designed for non-profit organizations, which not only includes products such as checking accounts but options for discounts in other products and services.

•  Money Market Sweep, a product that uses an interest-bearing checking account as an investment vehicle that allows customers with surplus of funds to transfer them automatically to this interest-bearing checking account.

As of December 31, 2009, the Corporate and Commercial Group had loans and advances to customers of €14,940 million, a 6.9% decrease from December 31, 2008. Customer deposits reached €8,513 million as of December 31, 2009, up 16.6% since as of December 31, 2008. The customer funds growth was primarily driven by non-interest bearing deposits that have experienced exceptional growth, primarily the result of strong correspondent banking efforts and increases in several large clients assigned to the unit.

The Wealth Management segment of BBVA Compass offers value-added services and products to BBVA Compass’s higher net worth customers. The collaboration between this unit and the BBVA Equity Derivatives and Structured Products department in Madrid has meant continued benefits for BBVA Compass. As of December 31, 2009, the Wealth Management segment of BBVA Compass managed a €1,977 million loan portfolio, an increase of 2.3% from December 31, 2008. As of December 31, 2009, deposits were €3,200 million, an increase of 40.0% from as of December 31, 2008. ThePower CD product linked to the Standard & Poor’s index has generated in excess of $120 million in new deposits since its launch in March 2009. As of December 31, 2009, assets under management were €11,973 million, up 6.1%year-on-year.

The acquisition of certain deposits and liabilities of Guaranty in 2009 significantly strengthened BBVA Compass existing presence in Texas and California.

Other units

BBVA Puerto Rico had loans and advances to customers of €2,913 million as of December 31, 2009, down 9.0% from December 31, 2008. Customer deposits were €1,473 million as of December 31, 2009, growing 5.4% from December 31, 2008. Overall contraction in business volumes, especially lending, resulted in a 7.5% decrease in net interest income in 2009 compared to 2008.

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BTS has processed 26.6 million transfers in 2009, up 6.3% from 2008. Of these, 21.5 million were for Mexico and 5.1 million for other countries

South America

The South America business area includes our banking, insurance and pension businesses in South America.

The principal figures relating to this business area as of December 31, 2009 and December 31, 2008 were:

Loans and advances to customerswere €25,256 million as of December 31, 2009, an increase of 3.5% (a decrease of 1.9% at constant exchange rates) from €24,405 million as of December 31, 2008.

Customer depositswere €29,312 million as of December 31, 2009, an increase of 5.0% (1.1% at constant exchange rates) from €27,921 million as of December 31, 2008.

Mutual fund assets under management were €2,640 million as of December 31, 2009, an increase of 103% (85.4% at constant exchange rates) from €1,300 million as of December 31, 2008.

Pension fund assets under management were €36,104 million as of December 31, 2009, an increase of 47.2% (27.6% at constant exchange rates) from €24,531 million as of December 31, 2008.

The following is a brief description of our operations on acountry-by-country basis in the South America business area. The operating results described below refer to each individual unit’s contribution to the South America business area’s operating results, unless otherwise stated.

The business units included in the South America business area are:

•  Retail and Corporate Banking;includes banks in Argentina, Chile, Colombia, Panama, Paraguay, Peru, Uruguay and Venezuela;

•  Pension businesses;includes pensions businesses in Argentina, Bolivia, Chile, Colombia, Ecuador and Peru and Dominican Republic;

•  Insurance businesses;includes insurance businesses in Argentina, Chile, Colombia, Dominican Republic and Venezuela.

Retail and Corporate Banking

Argentina

In the first two quarters of 2009, the Argentine economy suffered a significant slowdown due to the impact of the international financial crisis on income from the foreign sector and conflicts within the agriculture sector. Implementation of countercyclical measures and a less restrictive monetary policy made room for the first signs of recovery in the second half of the year, which was also helped by higher commodity prices.

In 2009, BBVA Banco Francés, S.A(“BBVA Banco Francés”), our banking subsidiary in Argentina, continued concentrating on expanding its lending activity in all business segments. It placed a special emphasis on the retail segment, which has recorded the greatest growth, especially in credit cards. Asset quality was also strong, and the non-performing assets ratio for the entity as of December 31, 2009, at 1.1%, compares very favorably with the rest of the Argentine financial system. The strategy of prioritizing the capture of transactional deposits was maintained in customer deposits, which were up 11.9% as of December 31, 2009 compared to December 31, 2008.

BBVA Banco Francés was ranked best bank in Argentina by Euromoney in 2009. In 2009, BBVA Banco Francés had €116 million of net income attributed to parent company.

Chile

The Chilean economy, in terms of gross domestic product, shrunk 1.8% in 2009, primarily because the international crisis produced a drop in inventories and fixed capital expenditures, together with a severe contraction of internal demand. This has also resulted in a negative inflation rate for the year. Countercyclical monetary

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measures applied by the Central Bank of Chile and an expansive fiscal policy have resulted in the economy showing early signs of recovery in the third quarter of 2009.

Banco Bilbao Vizcaya Argentaria Chile, S.A. (“BBVA Chile”), our banking subsidiary in Chile, maintained its strategy of repositioning in the retail business. TheTop OneandTop Salesplans were finalized in 2009, and implied a redefinition of commercial networks, with segmentation in the value offer, greater marketing dynamics and externalization of operative servicing.

In 2009, BBVA Chile was granted the National Prize for Quality by the Chilean Ministry of Economy; the Bicentennial Seal by the Office of the Chilean Prime Minister for the social responsibility programNiños Adelante and the Latin American Award for Quality from theFundación Iberoamericana para la Gestión de la Calidad(Latin American Foundation for Quality Management) given to the top company in Latin America. BBVA Chile and Forum have generated an aggregate net income attributed to parent company of €73 million in 2009 (up 18.7% compared to 2008).

Colombia

2009 was a difficult year for the Colombian economy as a result of the complicated international environment. However, the launch of an expansive monetary policy and the increase of public spending on civil works have helped the nation to overcome the situation. Direct foreign investment flows and access to the capital markets were maintained, despite liquidity tensions globally. Against this backdrop, BBVA Colombia, S.A. (“BBVA Colombia”), our banking subsidiary in Colombia, developed several initiatives to improve its service and position in the market in 2009, including the expansion of its commercial and ATM networks. Several consumer finance initiatives were implemented in 2009 in the individual segment, and the credit card section launched theMujer BBVA(BBVA Woman) and Mastercard Black BBVA cards for VIP clients.

In 2009, BBVA Colombia was recognized as the top Colombian bank in sustainability by Latin Finance magazine and the Management & Excellence consulting firm. BBVA Colombia was also Euromoney’s top choice in Cash Management in 2009. In this complicated year, BBVA Colombia increased net income attributed to parent company to €139 million, an increase of 8.7% from 2008.

Panama

Once the liquidity tensions were overcome in the first half of 2009 and the electoral process was finalized, the Panamanian economy successfully emerged from the international financial crisis, especially in the second half of 2009. Banco Bilbao Vizcaya Argentaria Panamá, S.A. (“BBVA Panama”), our banking subsidiary in Panama, closed the year positively with advances in lending and deposits. Moreover, it issued its first corporate bonds in an aggregate principal amount of $25 million in May 2009.

Paraguay

The Paraguayan economy was affected by both the economic crisis in 2009 and the negative effects of a drought on the agriculture sector. The recently announced Economic Reactivation Plan is expected to put the country back on the path to growth as in previous years. At BBVA Paraguay, S.A., our banking subsidiary in Paraguay, lending grew primarily as a result of growth in the retail business with consumer loans. BBVA Paraguay opened two new branches during 2009 and equipped its first customer service center, in addition to increasing its number of ATMs and completing construction on its new headquarters. The entity was recognized for the third consecutive year as the best bank in Paraguay by The Banker and Euromoney.

Peru

The effects of the economic crisis on the Peruvian economy were reflected in 2009 in lower levels of private investment and a decrease in exports. However, Peru has been one of the few countries in the region to report GDP growth in 2009, due to fiscal and monetary stimulation policies. Banco Continental, S.A., our banking subsidiary in Peru, has maintained its business expansion strategy in 2009. In the individual segment, new personal loan products (Préstamo 60) were marketed and credit cards have encouraged customer loyalty. The bank also launched the

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Cuenta Ganadora(Winners’ account) in the customer funds area. In order to improve customer service quality, the number of ATMs was increased by 36% during 2009.

Within the Corporate and Investment Banking segment, derivatives sales to corporate clients increased in 2009 compared to 2008. Banco Continental was recognized as the best bank in Peru by Global Finance (for the sixth consecutive year), Latin Finance and América Economía. It was also named Best Internet Consumer Bank and received an honorable mention in the Great Place to Work ranking.

Uruguay

The Uruguayan economy was greatly affected by the international financial crisis in 2009, and especially by the contraction of world trade. However, the solid foundation of the local economy prevented significant GDP deterioration. In 2009, Banco Bilbao Vizcaya Argentaria Uruguay, S.A. (“BBVA Uruguay”), our banking subsidiary in Uruguay, carried out several actions to improve the quality of customer service it offers. These efforts included the servicing plan in branches, the installation of self-service terminals, improvement of theBBVANetplatform and the implementation of thePlan Crecer Comercio Exterior(foreign trade program). Consumer finance, credit cards and mortgages were strengthened in the individual segment under the Banking Penetration Plan. Business with SMEs also grew through thePlan Crecer Empresas(SME program).

Venezuela

In the first part of 2009, the Venezuelan economy showed clear signs of recession due to the fall in oil prices, and inflationary pressures, decreased volume of currencies liquidated on the official foreign exchange market and the contraction of central government spending. In order to stimulate demand, monetary policy was adjusted by reducing the cost of financing and enabling the absorption of the debt program in the public sector. Economic conditions appeared to recover somewhat in the fourth quarter of 2009, in line with the rise in oil prices.

In 2009, Banco Provincial, S.A. (“BBVA Banco Provincial”), our banking subsidiary in Venezuela, maintained its strategic objective of transformation and growth, and concentrated on the modernization of the branch network, increased weight of alternative channels and improved service quality. Thus, self-service spaces were created in the branches, the capacity of multi-function ATMs was increased and online and telephone banking were equipped with programming to be able to submit complaints. “Loans and advances to customers” increased 14.1% to €5,911 million as of December 31, 2009 compared to €5,182 million December 31, 2008, despite the slowdown of economic activity. Customer deposits increased 14.6% from €7,947 million as of December 31, 2008 to €9,107 million as of December 31, 2009. The bank was awarded several prizes in 2009, including Best Bank in Venezuela byGlobal Finance,EuromoneyandLatin Finance. The Bankernamed it the Most Innovative Bank in Information Security in 2009.

Pensions and Insurance

The pension fund business in South America also had a very positive year in 2009 due to the recovery of the financial markets and the solid performance of income from fees and commissions and cost austerity. Assets under management as of December 31, 2009, increased 27.6% from December 31, 2008. As of December 31, 2009, customers deposits was 5.9% higher than in 2008, excluding the effect of the Consolidar A.F.J.P., S.A. (Argentina) divestment and despite the scarce progress of employment in the region. We have further consolidated our position as a world leader in private pension systems in 2009, thanks to our collaboration agreements with theInter-American Development Bank (“IDB”) and the Organisation for Economic Co-operation and Development (“OECD”). As of December 31, 2009 assets under management reached €24,552 million, an increase of 26.1% from December 31, 2008. Likewise, AFP Horizonte,S.A., our pension funds management company in Colombia, increased its assets under management by 31.8% as of December 31, 2009 compared to December 31, 2008, and its number of pension-savers by 6.6% over the same period, for a net attributable profit in 2009 of €18 million (€4 million in 2008). AFP Horizonte, S.A. our pension funds management company in Peru, achieved a net attributable profit of €14 million (€2 million in 2008), in a context marked by dynamic business activity, with increases in incomes (up 3.8% for 2009 compared to 2008), number of affiliates (up 5.1% for 2009 compared to 2008) and assets under management (up 40.3% as of December 31, 2009 compared to December 31, 2008).

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Our insurance franchise business model in South America has continued to consolidate in 2009, and has extended its range of products and opened new channels for distribution and sales. However, banking networks continue to be the driving force for business, as new business lines have been opened to meet special needs (Plan Empresas,Pymes y Comercios- SME and retail programs). Therefore, the net attributable profit of the group of companies reached €46 million in 2009, €20 million of which corresponded to Grupo Consolidar, our insurance and pension funds management companies in Argentina, €12 million to Seguros Provincial, C.A., our insurances company in Venezuela, €9 million to our Chilean insurance franchise companies and €5 million to our Colombian insurance franchise companies.

Corporate Activities

The Corporate Activities area handles our general management functions. These mainly consist of structural positions for interest rates associated with the euro balance sheet and exchange rates, together with liquidity management and shareholders’ funds.

This area also books the costs from central units that have a strictly corporate function and makes allocations to corporate and miscellaneous provisions, such as early retirement and others of a corporate nature. In 2009 it also incorporated the newly created Real-Estate Management unit, which brings together our Spanish real-estate business. Also, in order to maintain the comparability of results of operations in our South America area, we have included in the results of operations for the Corporate Activities area as of and for the year ended December 31, 2009, the effects the classification of Venezuela as a hyperinflationary economy in 2009.

The business units included in the Corporate Activities business area are:

•  Financial Planning:  administers our interest and exchange-rate structure as well as our overall liquidity and shareholders’ funds.

•  Holdings in Industrial and Other Companies:  manages our investment portfolio in industrial and financial companies applying strict criteria for risk control, economic capital consumption and return on investment, with diversification over different industries

•  Real Estate Management.

Financial Planning

The Financial Planning unit administers our structural interest and exchange-rate positions as well as our overall liquidity and shareholders’ funds through the ALCO.

Managing structural liquidity helps to fund recurrent growth in the banking business at suitable costs and maturities, using a wide range of instruments that provide access to several alternative sources of finance. A core principle in our liquidity management has long been to encourage the financial independence of our subsidiaries in the Americas. This aims to ensure that the cost of liquidity is correctly reflected in price formation. During 2009, as a result of the decisive role of the central banks, liquidity conditions on interbank markets improved significantly, with a large reduction in the Euribor Overnight Index Swap (“OIS”) spread. The medium-term markets also saw marked improvements after the announcement that central banks would buy covered bonds and that there would be public guarantee programs for banks’ issuances. In our case, the positive movement of the business liquidity gap throughout 2009 enabled us not to materially access the long-term funding markets. Our liquidity position remained sound in 2009, due to the weight of retail customer deposits within our balance sheet structure and the ample collateral available as a second source of liquidity. For 2010, we expect that our current and potential sources of liquidity will be sufficient to meet our needs.

Our capital management pursues two key goals. First, we aim to maintain capital levels appropriate to our business targets in all the countries where we operate. Second, we aim to do this while maximizing returns on shareholder funds through efficient capital allocation to our different areas and units through active management of the balance sheet and proportionate use of the different instruments that comprise our equity (shares, preferred securities and subordinated debt). In September 2009, we issued an aggregate principal amount of €2,000, five-year

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mandatory convertible bonds. This provides additional flexibility in capital management. This transaction should also allow us to anticipate the possibility of stricter capital requirements in the future.

We manage our exchange rate exposure on our long-term investments (basically stemming from our franchises in the Americas) to preserve our capital ratios and bring stability to our income statement while controlling impacts on reserves and the cost of this risk management. In 2009, we maintained a policy of actively hedging our investments in Mexico, Chile, Peru and the dollar area. Our aggregate hedging as of December 31, 2009, was close to 50% of non-euro denominated investments. Apart from corporate-level hedging, certain of our subsidiary banks hold dollar positions at the local level. Additionally, at the Group level, we hedge our exchange-rate exposure on expected 2010 earnings from the Americas. During 2009, this hedging mitigated the impact of American currencies’ depreciation against the euro. In 2010, the same policy of prudence and anticipation will be pursued in managing the our exchange-rate exposure at the Group level. This unit also actively manages the structural interest-rate exposure on our consolidated balance sheet. This keeps the performance of short- and medium-term net interest income more uniform by reducing the effects of interest — rate fluctuations.

During 2009, the outcome of this management was highly satisfactory. Hedging has been maintained against a less positive economic scenario in Europe for 2010, while the risk on our U.S. and Mexican balance sheets remains within comfortable parameters. These strategies are managed both with hedging derivatives (caps, floors, swaps, FRA’s, etc) and with balance sheet instruments (mainly government bonds with the highest credit and liquidity ratings). As of December 31, 2009, our asset portfolios were primarily denominated in euros, US dollars and Mexican pesos.

Holdings in Industrial and Other Companies

This unit manages its portfolio of shares in companies operating in the telecommunications, media, electricity, oil and gas and finance sectors. Like the Financial Planning unit, this unit reports to the our Finance Department. We manage our investment portfolio using strict requirements regarding risk control procedures, economic capital consumption and return on investment. We also apply dynamic management techniques to holdings through monetization and coverage strategies. In 2009, we invested €353 million and divested €594 million. As of December 31, 2009, the market value of the Holdings in Industrial and Financial Companies portfolio was €4,698 million, with unrealized capital gains of €1,542 million. During the year, management of the industrial and financial holdings generated €247 million in dividends and €107 million in net trading income.

Real Estate Management

Given the current economic scenario and forecasts as to how it may develop, we have set up a Real Estate Management unit to apply specialized management to real-estate assets from foreclosures,asset-for-debt swaps, purchases of distressed assets and the assets in the BBVA Propiedad real estate fund.

Supervision and Regulation

The Spanish government traditionally has been closely involved with the Spanish banking system, both as a direct participant through its ownership of ICO and as a regulator retaining an important role in the regulation and supervision of financial institutions.

The Bank of Spain

The Bank of Spain was established in 1962 as a public law entity (entidad de derecho público) that operates as Spain’s autonomous central bank. In addition, it has the ability to function as a private bank. Except in its public functions, the Bank of Spain’s relations with third parties are governed by private law and its actions are subject to the civil and business law codes and regulations.

Until January 1, 1999, the Bank of Spain was also the sole entity responsible for implementing Spanish monetary policy. For a description of monetary policy since the introduction of the euro, see “— Monetary Policy”.

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Since January 1, 1999, the Bank of Spain has performed the following basic functions attributed to the European System of Central Banks(“ESCB”):

•  defining and implementing the ESCB’s monetary policy, with the principal aim of maintaining price stability across the euro area;

•  conducting currency exchange operations consistent with the provisions of Article 111 of the Treaty on European Union(“EU Treaty”), and holding and managing the Member States’ official currency reserves;

•  promoting the sound working of payment systems in the euro area; and

•  issuing legal tender banknotes.

Recognizing the foregoing functions as a fully-fledged member of the Eurosystem, theLey de Autonomía del Banco de España(the Bank of Spain Law of Autonomy) stipulates the performance of the following functions by the Bank of Spain:

•  holding and managing currency and precious metal reserves not transferred to the ECB;

•  supervising the solvency and behavior of credit institutions, other entities and financial markets, for which it has been assigned supervisory responsibility, in accordance with the provisions in force;

•  promoting the sound working and stability of the financial system and, without prejudice to the functions of the ECB, of national payment systems;

•  placing coins in circulation and the performance, on behalf of the State, of all such other functions entrusted to it in this connection;

•  preparing and publishing statistics relating to its functions, and assisting the ECB in the compilation of the necessary statistical information;

•  providing treasury services and acting as financial agent for government debt;

•  advising the government, preparing the appropriate reports and studies; and

•  exercising all other powers attributed to it by legislation.

Subject to the rules and regulations issued by the Ministry of Economy, the Bank of Spain has the following supervisory powers over Spanish banks:

•  conducting periodic inspections of Spanish banks to evaluate a bank’s compliance with current regulations including the preparation of financial statements, account structure and credit policies;

•  advising a bank’s board of directors and management on its dividend policy;

•  undertaking extraordinary inspections of banks; and

•  collaborating with other regulatory entities to impose penalties for infringement or violation of applicable regulations.

Fondo de Garantía de Depósitos

TheFondo de Garantía de Depósitos en Establecimientos Bancarios(“FGD”) (the Guaranteed Bank Deposits Fund), which operates under the guidance of the Bank of Spain, guarantees both bank and securities deposits up to €100,000 per customer for each type of deposit, which is the minimum insured amount for all EU member banks. Pursuant to Bank of Spain regulations, the FGD may purchase doubtful loans or may acquire, recapitalize and sell banks that are experiencing difficulties.

The FGD is funded by annual contributions from member banks. The rate of such contributions in 2009 was 0.06% of the year-end amount of bank deposits to which the guarantee extended and 0.06% over the 5% of the securities held on clients’ behalf, in accordance with legislation in effect. Nevertheless, once the capital of the FGD exceeds its requirements, the Minister of Economy may reduce the member banks’ contributions and, when the

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FGD’s funds exceed the capital requirements by one percent or more of the member banks’ deposits, such contributions may be suspended.

In order to safeguard the stability of its members, the FGD may also receive contributions from the Bank of Spain. As of December 31, 2009, all of the Spanish banks belonging to the BBVA Group were members of the FGD and thus obligated to make annual contributions to it.

Fondo Garantía Inversores

Royal Decree 948 of August 3, 2001 regulates investor guarantee schemes related to both investment firms and to credit institutions. These schemes are set up through an investment guarantee fund for securities broker and broker-dealer firms and the deposit guarantee funds already in place for credit institutions. A series of specific regulations have also been enacted, defining the system for contributing to the funds.

The General Investment Guarantee Fund Management Company was created in a relatively short period of time and is a business corporation with capital in which all the fund members hold an interest. Member firms must make a joint annual contribution to the fund equal to 0.06% over the 5% of the securities that they hold on their client’s behalf. However, it is foreseen that these contributions may be reduced if the fund reaches a level considered to be sufficient.

Liquidity Ratio

In an effort to implement European Union monetary policy, effective January 1, 1999, the ECB and the national central banks of the member states of the European Monetary Union (“EMU”) adopted a regulation that requires banks to deposit an amount equal to two percent of their qualifying liabilities, as defined by the regulation, with the central bank of their home country. These deposits will earn an interest rate equal to the average interest rate of the ESCB. Qualifying liabilities for this purpose include:

•  deposits;

•  debt securities issued; and

•  monetary market instruments.

Furthermore, the liquidity ratio is set at 0% instead of 2% for those qualifying liabilities that have a maturity over two years and are sold under repurchase agreements.

Investment Ratio

In the past, the government used the investment ratio to allocate funds among specific sectors or investments. As part of the liberalization of the Spanish economy, it was gradually reduced to a rate of zero percent as of December 31, 1992. However, the law that established the ratio has not been abolished and the government could re-impose the ratio, subject to applicable EU requirements.

Fondo de Regulación Ordenada Bancaria (Ordered Banking Restructuring Fund)

The crisis that has affected the financial markets since 2007 obliged the Spanish authorities to create theOrdered Banking Restructuring Fund(FROB) by Decree-Law 9/2009 of June 26, 2009. Its purpose is to help the restructuring processes undertaken by credit institutions and strengthen their capital positions subject to certain conditions. The FROB will support the restructuring strategy of those institutions that require assistance, in three distinct stages:

•  search for a private solution by the credit institution itself;

•  adopt measures to tackle any weaknesses that may affect the viability of credit institutions; and

•  initiate a restructuring process in which the Fund itself has to intervene directly.

The FROB has to act in what is an absolutely exceptional situation that is closely linked to the development of the financial crisis. In order to comply with its objectives, FROB will be funded jointly from the Spanish national

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budget and the deposit guarantee funds of credit institutions. The FROB will be able to raise funds on securities markets through the issue of debt securities, lending and engaging in any other debt transaction necessary to fulfill its objects.

Capital Requirements

Bank of Spain Circular 3/2008 (“Circular 3/2008”), of 22 May, on the calculation and control of minimum capital requirements, regulates the minimum capital requirements for Spanish credit institutions, on an individual and consolidated groups basis, and sets forth how to calculate capital meeting such requirements, as well as the various internal capital adequacy assessment processes credit institutions should have in place and the information they should disclose to the market.

Circular 3/2008 is the final implementation, for credit institutions, of the legislation on capital and consolidated supervision of financial institutions, which was contained in Law 36/2007, of 16 November, amending Law 13/1985, of 25 May, on the investment ratios, capital and reporting requirements of financial intermediaries, and other financial regulations, which also includes Royal Decree 216/2008, of 15 February, on the capital of financial institutions. Circular 3/2008 also conforms Spanish legislation to Directive 2006/48/EC of the European Parliament and of the Council, of June 14, 2006, and Directive 2006/49/EC of the European Parliament and of the Council, of 14 June 2006. The minimum capital requirements for credit institutions and their consolidated groups were thoroughly revised in both EC directives based on the new Capital Accord adopted by the Basel Committee on Banking Supervision (“Basel II”).

The minimum capital requirements established by Circular 3/2008 are calculated on the basis of the Group’s exposure to (i) credit risk and dilution risk (on the basis of the assets, obligations and contingent exposures and commitments that present these risks, depending on their amounts, characteristics, counterparties, guarantees, etc.); (ii) to counterparty risk and position and settlement risk in the trading book; (iii) to foreign exchange risk (on the basis of the overall net foreign currency position); and (iv) to operational risk. Additionally, the Group is subject to compliance with the risk concentration limits established in Circular 3/2008 and with the requirements related to corporate governance, internal capital adequacy assessment, measurement of interest rate risk and certain additional public disclosure obligations set forth therein. With a view to guaranteeing compliance with the aforementioned objectives, the Group performs integrated management of these risks, in accordance with its internal policies. See Note 7 to the Consolidated Financial Statements.

As of December 31, 2009, 2008 and 2007, the eligible capital of the Group exceeded the minimum required under the regulations then in force. See Note 31 to the Consolidated Financial Statements.

Under Basel II calculation of the minimum regulatory capital requirements under the new standards, referred to as “Pillar 1”, is supplemented with an internal capital adequacy assessment and supervisory review process, referred to as “Pillar 2”. The Group’s internal capital adequacy assessment process is based on the internal model for the quantification of the economic capital required on the basis of the Group’s overall risk profile. Finally, Basel II standards establish, through what is referred to as “Pillar 3”, strict transparency requirements regarding the information on risks to be disclosed to the market.

Capital Management

Basel Capital Accord — Basel II — Economic Capital

The Group’s capital management is performed at both the regulatory and economic levels.

Regulatory capital management is based on the analysis of the capital base and the capital ratios (core capital, Tier 1, etc.) using Basel (“BIS”) and Bank of Spain criteria. See Note 33 to the Consolidated Financial Statements.

The aim is to achieve a capital structure that is as efficient as possible in terms of both cost and compliance with the requirements of regulators, ratings agencies and investors. Active capital management includes securitizations, sales of assets, and preferred and subordinated issues of equity and hybrid instruments.

The Bank has obtained the approval of its internal model of capital estimation (“IRB”) in 2009 and 2008 for certain portfolios.

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From an economic standpoint, capital management seeks to optimize value creation at the Group and at its different business units.

The Group allocates economic capital (“CER”) commensurate with the risks incurred by each business. This is based on the concept of unexpected loss at a certain level of statistical confidence, depending on the Group’s targets in terms of capital adequacy. These targets are applied at two levels: the first is core equity, which determines the allocated capital. The Group uses this amount as a basis for calculating the return generated on the equity (“ROE”) in each business. The second level is total capital, which determines the additional allocation in terms of subordinated debt and preference shares. The CER calculation combines lending risk, market risk (including structural risk associated with the balance sheet and equity positions), operational risk and fixed asset and technical risks in the case of insurance companies.

Stockholders’ equity, as calculated under BIS rules, is an important metric for the Group. However, for the purpose of allocating capital to business areas the Group prefers CER. It is risk-sensitive and thus better reflects management policies for the individual businesses and the business portfolio. These provide an equitable basis for assigning capital to businesses according to the risks incurred and make it easier to compare returns.

To internal effects of management and pursuit of the business areas, the Group realizes a capital allocation to each business area.

Concentration of Risk

The Bank of Spain regulates the concentration of risk. Since January 1, 1999, any exposure to a person or group exceeding 10% of a group’s or bank’s regulatory capital has been deemed a concentration. The total amount of exposure represented by all of such concentrations may not exceed 800% of regulatory capital. Exposure to a single person or group may not exceed 25% (20% in the case of non-consolidated companies of the economic group) of a bank’s or group’s regulatory capital.

Legal and Other Restricted Reserves

We are subject to the legal and other restricted reserves requirements applicable to Spanish companies. Please see “— Capital Requirements”.

Allowance for Loan Losses

For a discussion of the Bank of Spain regulations relating to allowances for loan losses and country risk, see Note 2.2.1.b) to the Consolidated Financial Statements.

Regulation of the Disclosure of Fees and Interest Rates

Interest rates on most kinds of loans and deposits are not subject to a maximum limit. Banks must publish their preferential rates, rates applied on overdrafts, and fees and commissions charged in connection with banking transactions. Banking clients must be provided with written disclosure adequate to permit customers to ascertain transaction costs. The foregoing regulations are enforced by the Bank of Spain in response to bank client complaints.

Law 44/2002 concerning measures to reform the Spanish financial system contained a rule concerning the calculation of variable interest applicable to loans and credit secured by mortgages, bails, pledges or any other equivalent guarantee.

Employee Pension Plans

Under the relevant collective labor agreements, BBVA and some of its subsidiaries provide supplemental pension payments to certain active and retired employees and their beneficiaries. These payments supplement social security benefits from the Spanish state. See Note 2.2.12 and Note 26 to the Consolidated Financial Statements.

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Dividends

If a bank meets the Bank of Spain’s minimum capital requirements described above under “— Capital Requirements”, it may dedicate all of its net profits to the payment of dividends, although, in practice, banks consult with the Bank of Spain before declaring a dividend. We calculate that as of December 31, 2009, we had approximately €13,121 million of unrestricted reserves in excess of applicable capital and reserve requirements available for the payment of dividends. Compliance with such requirements notwithstanding, the Bank of Spain may advise a bank against the payment of dividends on grounds of prudence. In no event may dividends be paid from non-distributable reserves. Banks which fail to comply with the capital adequacy ratio by more than 20% are required to devote all of their net profits to increasing their capital ratios. Banks which fail to meet the required ratio by 20% or less must obtain prior approval of the Bank of Spain to distribute any dividends and must devote at least 50% of net profits to increasing their capital ratios. In addition, banks, and their directors and executive officers that do not comply with the liquidity and investment ratios and capital adequacy requirements may be subject to fines or other sanctions. Compliance with the Bank of Spain’s capital requirements is determined on both a consolidated and individual basis. Our Spanish subsidiaries are in compliance with these capital adequacy requirements on both a consolidated and individual basis. If a bank has no net profits, the board of directors may propose at the general meeting of the stockholders that a dividend be declared out of retained earnings.

The Bank of Spain recommends that interim dividends not exceed an amount equal to one-half of net income attributed to parent company from the beginning of the corresponding fiscal year. No interim dividend may be declared when a bank does not meet the minimum capital requirements and, according to the recommendations of the Bank of Spain, interim dividends may not be declared until the Bank of Spain has sufficient knowledge with respect to the year’s profits. Although banks are not legally required to seek prior approval from the Bank of Spain before declaring interim dividends, the Bank of Spain had asked that banks consult with it on a voluntary basis before declaring interim dividends. It should be noted that the Bank of Spain recommended in 2008 to Spanish banks general moderation on the distribution of dividends, to increase their voluntary reserves in order to strengthen their financial situation and to distribute any dividends in treasury stock.

At the annual general meeting of shareholders on March 13, 2009, BBVA’s shareholders adopted a resolution amending its bylaws to allow for dividends to be paid in cash or in kind as determined by shareholder resolution.

At the same annual general meeting of shareholders, the shareholders resolved to supplement the 2008 cash dividend with a dividend payable in BBVA shares out of treasury stock.

Limitations on Types of Business

Spanish banks are subject to certain limitations on the types of businesses in which they may engage directly, but they are subject to few limitations on the types of businesses in which they may engage indirectly.

Mortgage Legislation

Law 41/2007 reformed an important part of Law 2/1981 of 25 March on mortgage markets as well as specific provisions of Law 2/1994 of 30 March on the subrogation and modification of mortgage loans and the Mortgage Law of 8 February 1946 all with the purpose of providing the Spanish mortgage market with greater flexibility, sophistication and efficiency. A number of reforms have been introduced relating to (i) asset or financing transactions carried out by credit institutions and (ii) liability transactions, i.e., those of moving of mortgage loans and credits that credit institutions carry out as refinancing mechanisms.

Royal Decree 716/2009, implements several aspects of Law 2/1981, of 25 March 1981, on mortgage market regulation and other mortgage and financial system rules, reformed by Law 41/2007. It replaces Royal Decree685/1982 of 17 March 1982 which also implemented several aspects of Law 2/1981 and which is thus repealed. The most significant developments introduced are (i) the modification on theloan-to-value ratio requirement intending to improve the quality of Spanish mortgage-backed securities; (ii) the elimination of many of the administrative requirements for the issuance of covered bonds and mortgage bonds; and (iii) the implementation of a special accounting record of the loans and credit facilities used to back issuances of covered bonds and mortgage-backed bonds.

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Mutual Fund Regulation

Mutual funds in Spain are regulated by theDirección General del Tesoro y Política Financiera del Ministerio de Economía(the Ministry of the Economy) and by theComisión Nacional del Mercado de Valores(“CNMV”). All mutual funds and mutual fund management companies are required to be registered with the CNMV. Spanish mutual funds may be subject to investment limits with respect to single sectors or companies and overall portfolio diversification minimums. In addition, periodic reports including a review of the fund’s performance and any material events affecting the fund are required to be distributed to the fund’s investors and filed with the CNMV.

U.S. Regulation

Banking Regulation

BBVA is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (the “BHC Act”). As such it is subject to the regulation and supervision of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Among other things, the Group’s direct and indirect activities and investments in the United States are limited to those that are “financial in nature” or “incidental” or “complementary” to a financial activity, as determined by the Federal Reserve. BBVA is also required to obtain the prior approval of the Federal Reserve before acquiring, directly or indirectly, the ownership or control of more than 5% of any class of voting stock of any U.S. bank or bank holding company.

Under current Federal Reserve policy, BBVA is required to act as a source of financial strength for its U.S. bank subsidiaries. Among other things, this source of strength obligation may result in a requirement for BBVA, as sole shareholder, to inject capital into any of its U.S. bank subsidiaries.

The Group’s U.S. bank subsidiaries and BBVA’s U.S. branches are also subject to supervision and regulation by a variety of other U.S. regulatory agencies. In addition to supervision by the Federal Reserve, BBVA’s New York branch is supervised by the New York State Banking Department. BBVA Compass is a financial holding company within the meaning of the BHC Act and is subject to supervision and regulation by the Federal Reserve. BBVA Compass is state-chartered bank that is member of the Federal Reserve System and is supervised by the Federal Reserve and the State of Alabama Banking Department. BBVA Compass also has branches in Texas, Arizona, Florida, Colorado, and New Mexico, which are supervised by their respective state banking regulators. BBVA Puerto Rico is chartered and supervised by theOficina del Comisionado de Instituciones Financieras de Puerto Rico. BBVA Compass and BBVA Puerto Rico are also depository institutions insured by, and subject to the regulation of, the Federal Deposit Insurance Corporation.

Bancomer Transfer Services is an affiliate of BBVA, which is licensed as a money transmitter by the State of California Department of Financial Institutions and as a money services business by the Texas Department of Banking. Bancomer Transfer Services is also registered as a money services business with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.

A major focus of U.S. governmental policy relating to financial institutions in recent years has been aimed at fighting money laundering and terrorist financing. Regulations applicable to BBVA and its affiliates impose obligations to maintain appropriate policies, procedures, and controls to detect, prevent, and report money laundering. In particular, Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), as amended, requires financial institutions operating in the United States to (i) give special attention to correspondent and payable-through bank accounts, (ii) implement enhanced reporting due diligence, and ‘know your customer’ standards for private banking and correspondent banking relationships, (iii) scrutinize the beneficial ownership and activity of certainnon-U.S. and private banking customers (especially for so-called politically exposed persons), and (iv) develop new anti-money laundering programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement any existing compliance programs for purposes of requirements under the Banks Secrecy Act and the Office of Foreign Assets Control regulations. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious legal and reputational consequences for the institution.

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Regulation of Other U.S. Entities

The Group’s U.S. broker-dealers are subject to the regulation and supervision of the SEC and the Financial Industry Regulatory Authority (FINRA) with respect to their securities activities.

Monetary Policy

The integration of Spain into the EMU on January 1, 1999 implied the yielding of monetary policy sovereignty to the ESCB. The ESCB is composed of the ECB and the national central banks of the 16 member countries that form the EMU (Slovakia joined the EMU on January 1, 2009).

The ESCB determines and executes the single monetary policy of the 16 member countries of the EMU. The ESCB collaborates with the central banks of member countries to take advantage of the experience of the central banks in each of its national markets. The basic tasks to be carried out by the ESCB include:

•  defining and implementing the single monetary policy of the EU;

•  conducting foreign exchange operations in accordance with the set exchange policy;

•  lending to national monetary financial institutions in collateralized operations;

•  holding and managing the official foreign reserves of the member states; and

•  promoting the smooth operation of the payment systems.

In addition, the EU Treaty establishes a series of rules designed to safeguard the independence of the system, in its institutional as well as in its administrative functions.

Reform of the Spanish Companies Act

Law 3/2009, of 3 April, on structural changes of mercantile companies has implemented Directive 2005/56/EC on cross-border mergers and Directive 2007/63/CE. The most relevant rules that were implemented are (i) an update on the rules on mergers, introducing rules for cross-border and intra-european mergers; (ii) new rules on international transfers on the registered address; and (iii) an update on the rules on treasury stock, increasing the permitted limits of treasury stock held by listed companies from 5% to 10%.

Reform of the Spanish Insolvency Act

Royal Decree-law 3/2009, of 27 May, on urgent tax, financial an insolvency measures according to the financial evolution introduces the most significant development on the rules governing insolvency proceedings since the implementation of the Spanish Insolvency Act. The most relevant novelties and developments incorporated are (i) new rules on the announcement of the insolvency proceedings, including the constitution of an Insolvency Public Registry; (ii) the implementation of refinancing options through insolvency proceedings to take into account the continued viability of the debtor in the short to medium term; (iii) an update on the recognition and categorization of credits; and (iv) new rules speeding up and reducing the expenses of the litigation procedures and court proceedings associated with insolvency.

C.   Organizational Structure

As of December 31, 2009, the Group was made up of 334 companies accounted for under the full consolidation method and seven under the proportionate consolidation method. A further 74 companies are accounted for by the equity method.

The companies are principally domiciled in the following countries: Argentina, Belgium, Bolivia, Brazil, Cayman Islands, Chile, Colombia, Ecuador, France, Germany, Ireland, Italy, Luxembourg, Mexico, Netherlands, Netherlands Antilles, Panama, Peru, Portugal, Puerto Rico, Spain, Switzerland, United Kingdom, United States of America, Uruguay and Venezuela.

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Below is a simplified organizational chart of BBVA’s most significant subsidiaries as of December 31, 2009.

			BBVA
	Country of		Voting		BBVA		Total
Subsidiary	Incorporation	Activity	Power		Ownership		Assets
			(%)		(%)		(In millions
							of euros)
BBVA BANCOMER, S.A. DE C.V.	MEXICO	BANK		100.00		99.97		59,040
COMPASS BANK	UNITED STATES	BANK		100.00		100.00		48,358
BANCO PROVINCIAL S.A. — BANCO UNIVERSAL	VENEZUELA	BANK		55.60		55.60		11,265
BBVA SEGUROS, S.A., DE SEGUROS Y REASEGUROS	SPAIN	INSURANCE		99.95		99.95		11,583
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.	CHILE	BANK		68.18		68.18		9,188
BANCO CONTINENTAL, S.A.	PERU	BANK		92.08		46.04		7,264
BANCO BILBAO VIZCAYA ARGENTARIA (PORTUGAL), S.A.	PORTUGAL	BANK		100.00		100.00		7,009
BBVA COLOMBIA, S.A.	COLOMBIA	BANK		95.43		95.43		6,484
BBVA BANCO FRANCES, S.A.	ARGENTINA	BANK		76.01		76.00		4,294
BANCO BILBAO VIZCAYA ARGENTARIA PUERTO RICO, S.A.	PUERTO RICO	BANK		100.00		100.00		3,816
FINANZIA, BANCO DE CREDITO, S.A.	SPAIN	BANK		100.00		100.00		7,633
COMPASS SOUTHWEST, LP	UNITED STATES	BANK		100.00		100.00		3,643
PENSIONES BANCOMER, S.A. DE C.V.	MEXICO	INSURANCE		100.00		99.96		1,752
SEGUROS BANCOMER, S.A. DE C.V.	MEXICO	INSURANCE		100.00		99.97		1,883
BBVA IRELAND PUBLIC LIMITED COMPANY	IRELAND	FINANCIAL SERVICES		100.00		100.00		1,200
BANCO BILBAO VIZCAYA ARGENTARIA (PANAMA), S.A.	PANAMA	BANK		98.92		98.93		1,375
UNO-E BANK, S.A.	SPAIN	BANK		100.00		100.00		1,382

D.   Property, Plants and Equipment

We own and rent a substantial network of properties in Spain and abroad, including 3,055 branch offices in Spain and, principally through our various affiliates, 4,411 branch offices abroad as of December 31, 2009. As of December 31, 2009, approximately 77% and 55% of these properties are rented in Spain and abroad, respectively, from third parties pursuant to short-term leases that may be renewed by mutual agreement. The increase in the number of branches leased in Spain is mainly due to the sale and leaseback operation described in Note 16 to the Consolidated Financial Statements. The remaining properties, including most of our major branches and our headquarters, are owned by us.

We purchased through a real estate company of the Group theParque Empresarial Forestalocated in a development area in the north of Madrid from Group Gmp pursuant to an agreement executed on June 19, 2007. The BBVA Group will construct its new corporate headquarters at this location. As of December 31, 2009, the accumulated investment for this project amounted to €451 million.

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E.   Selected Statistical Information

The following is a presentation of selected statistical information for the periods indicated. Where required under Industry Guide 3, we have provided such selected statistical information separately for our domestic and foreign activities, pursuant to our calculation that our foreign operations are significant according toRule 9-05 ofRegulation S-X.

Average Balances and Rates

The tables below set forth selected statistical information on our average balance sheets, which are based on the beginning and month-end balances in each year. We do not believe that monthly averages present trends materially different from those that would be presented by daily averages. Interest income figures, when used, include interest income on non-accruing loans to the extent that cash payments have been received. Loan fees are included in the computation of interest revenue.

	Average Balance Sheet — Assets and Interest from Earning Assets
	Year Ended							Year Ended							Year Ended
	December 31, 2009							December 31, 2008							December 31, 2007
	Average				Average			Average				Average			Average				Average
	Balance		Interest		Yield(1)			Balance		Interest		Yield(1)			Balance		Interest		Yield(1)
	(In millions of euro, except percentages)
Assets
Cash and balances with central banks		18,638		253		1.36	%		14,396		479		3.33	%		16,038		458		2.86	%
Debt securities, equity instruments and derivatives		138,030		4,207		3.05	%		118,356		4,659		3.94	%		107,236		4,386		4.09	%
Loans and receivables		355,121		19,194		5.40	%		352,727		25,087		7.11	%		315,156		21,067		6.68	%
Loans and advances to credit institutions		26,152		697		2.66	%		31,229		1,367		4.38	%		39,509		1,777		4.50	%
In euro(2)		16,191		353		2.18	%		21,724		933		4.29	%		29,522		1,138		3.85	%
In other currencies(3)		9,962		344		3.45	%		9,505		434		4.57	%		9,987		639		6.40	%
Loans and advances to customers		328,969		18,498		5.62	%		321,498		23,720		7.38	%		275,647		19,290		7.00	%
In euro(2)		222,254		9,262		4.17	%		218,634		13,072		5.98	%		201,045		10,747		5.35	%
In other currencies(3)		106,715		9,236		8.65	%		102,864		10,648		10.35	%		74,602		8,543		11.45	%
Other financial income		—		120		—			—		179		—			—		265		—
Non-earning assets		31,180		—		—			32,377		—		—			22,770		—		—
Total average assets		542,969		23,775		4.38	%		517,856		30,404		5.87	%		461,200		26,176		5.68	%

(1)	Rates have been presented on a non-taxable equivalent basis.
(2)	Amounts reflected in euro correspond to predominantly domestic activities.
(3)	Amounts reflected in other currencies correspond to predominantly foreign activities.

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	Average Balance Sheet — Liabilities and Interest Paid on Interest Bearing Liabilities
	Year Ended							Year Ended							Year Ended
	December 31, 2009							December 31, 2008							December 31, 2007
	Average				Average			Average				Average			Average				Average
	Balance		Interest		Yield(1)			Balance		Interest		Yield(1)			Balance		Interest		Yield(1)
	(In millions of euro, except percentages)
Liabilities
Deposits from central banks and credit institutions		74,017		2,143		2.89	%		77,159		3,809		4.94	%		65,822		3,470		5.27	%
In euro		35,093		967		2.75	%		32,790		1,604		4.89	%		27,388		1,261		4.60	%
In other currencies		38,924		1,176		3.02	%		44,369		2,205		4.97	%		38,434		2,209		5.75	%
Customer deposits		249,106		4,056		1.63	%		237,387		8,390		3.53	%		205,740		7,013		3.41	%
In euro(2)		116,422		1,326		1.14	%		115,166		3,765		3.27	%		109,605		3,133		2.86	%
In other currencies(3)		132,684		2,730		2.06	%		122,221		4,625		3.78	%		96,135		3,880		4.04	%
Debt securities and subordinated liabilities		120,228		3,098		2.58	%		119,249		6,100		5.12	%		116,247		5,658		4.87	%
In euro(2)		91,730		2,305		2.51	%		96,764		5,055		5.22	%		99,612		4,675		4.69	%
In other currencies(3)		28,498		793		2.78	%		22,485		1,045		4.65	%		16,635		983		5.91	%
Other financial costs		—		596		—			—		418		—			—		408		—
Non-interest-bearing liabilities		70,020		—		—			56,867				—			48,776		—		—
Equity		29,598		—		—			27,194				—			24,615		—		—
Total average liabilities		542,969		9,893		1.82	%		517,856		18,717		3.61	%		461,200		16,548		3.59	%

(1)	Rates have been presented on a non-taxable equivalent basis.
(2)	Amounts reflected in euro correspond to predominantly domestic activities.
(3)	Amounts reflected in other currencies correspond to predominantly foreign activities.

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Changes in Net Interest Income-Volume and Rate Analysis

The following table allocates changes in our net interest income between changes in volume and changes in rate for 2009 compared to 2008, and 2008 compared to 2007. Volume and rate variance have been calculated based on movements in average balances over the period and changes in interest rates on average interest-earning assets and average interest-bearing liabilities. The onlyout-of-period items and adjustments excluded from the following table are interest payments on loans which are made in a period other than the period during which they are due. Loan fees were included in the computation of interest income.

	2009/2008
	Increase (Decrease) Due to Changes in
	Volume(1)			Rate(1)(2)			Net Change
	(In millions of euros)
Interest income
Cash and balances with central bank		141			(366	)		(225	)
Debt securities, equity instruments and derivatives		774			(1,226	)		(452	)
Loans and advances to credit institutions		(222	)		(449	)		(671	)
In euros		(238	)		(342	)		(580	)
In other currencies		21			(112	)		(91	)
Loans and advances to customers		551			(5,774	)		(5,222	)
In euros		216			(4,027	)		(3,810	)
In other currencies		396			(1,725	)		(1,412	)
Other financial income		—			(59	)		(59	)
Total income		1,474			(8,104	)		(6,630	)
Interest expense
Deposits from central banks and credit institutions		(155	)		(1,512	)		(1,667	)
In euros		113			(750	)		(637	)
In other currencies		(271	)		(759	)		(1,029	)
Customer deposits		414			(4,348	)		(4,334	)
In euros		41			(2,094	)		(2,439	)
In other currencies		396			(2,291	)		(1,895	)
Debt certificates and subordinated liabilities		50			(3,052	)		(3,002	)
In euros		(263	)		(2,481	)		(2,744	)
In other currencies		280			(537	)		(258	)
Other financial costs		—			178			178
Total expense		908			(9,733	)		(8,825	)
Net interest income		567			1,629			2,196

(1)	Variances caused by changes in both volume and rate have been allocated proportionally to volume and rate.
(2)	Rates have been presented on a non-taxable equivalent basis.

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	2008/2007
	Increase (Decrease) Due to Changes in
	Volume(1)			Rate(1)(2)			Net Change
	(In millions of euros)
Interest income
Cash and balances with central bank		(46	)		66			21
Debt securities, equity instruments and derivatives		468			(195	)		273
Loans and advances to credit institutions		(368	)		(41	)		(409	)
In euros		37			(242	)		(205	)
In other currencies		(29	)		(175	)		(204	)
Loans and advances to customers		3,270			1,159			4,430
In euros		698			1,627			2,325
In other currencies		3,269			(1,164	)		2,105
Other financial income		—			(86	)		(86	)
Total income		3,297			932			4,229
Interest expense
Deposits from central banks and credit institutions		609			(269	)		340
In euros		253			91			344
In other currencies		348			(351	)		(3	)
Customer deposits		1,101			277			1,377
In euros		167			493			660
In other currencies		1,066			(321	)		745
Debt certificates and subordinated liabilities		162			281			443
In euros		(142	)		522			380
In other currencies		349			(287	)		62
Other financial costs		—			10			10
Total expense		2,084			86			2,170
Net interest income		1,213			846			2,059

(1)	Variances caused by changes in both volume and rate have been allocated proportionally to volume and rate.
(2)	Rates have been presented on a non-taxable equivalent basis.

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Interest Earning Assets — Margin and Spread

The following table analyzes the levels of our average earning assets and illustrates the comparative gross and net yields and spread obtained for each of the years indicated.

	Year Ended December 31,
	2009			2008			2007
	(In millions of euros, except %)
Average interest earning assets		511,789			485,479			438,430
Gross yield(1)		4.65	%		6.17	%		5.89	%
Net yield(2)		4.38	%		5.78	%		5.60	%
Net interest margin(3)		2.71	%		2.41	%		2.20	%
Average effective rate paid on all interest-bearing liabilities		2.23	%		4.31	%		4.27	%
Spread(4)		2.41	%		1.86	%		1.62	%

(1)	Gross yield represents total interest income divided by average interest earning assets.
(2)	Net yield represents total interest income divided by total average assets.
(3)	Net interest margin represents net interest income as percentage of average interest earning assets.
(4)	Spread is the difference between gross yield and the average cost of interest-bearing liabilities.

ASSETS

Interest-Bearing Deposits in Other Banks

As of December 31, 2009, interbank deposits represented 3.72% of our assets. Of such interbank deposits, 29.70% were held outside of Spain and 70.30% in Spain. We believe that our deposits are generally placed with highly rated banks and have a lower risk than many loans we could make in Spain. Such deposits, however, are subject to the risk that the deposit banks may fail or the banking system of certain of the countries in which a portion of our deposits are made may face liquidity or other problems.

Securities Portfolio

As of December 31, 2009, our securities were carried on our consolidated balance sheet at a carrying amount of €109,413 million, representing 20.45% of our assets. €33,688 million, or 30.80%, of our securities consisted of Spanish Treasury bonds and Treasury bills. Our holdings of Spanish government debt increased significantlyyear-on-year as such debt had an attractive risk — return profile in light of the financial crisis. The average yield during 2009 on investment securities that BBVA held was 3.88%, compared to an average yield of approximately 5.40% earned on loans and receivables during 2009. The market or appraised value of our total securities portfolio as of December 31, 2009, was €109,429 million. See Notes 10, 12 and 14 to the Consolidated Financial Statements. For a discussion of our investments in affiliates, see Note 17 to the Consolidated Financial Statements. For a discussion of the manner in which we value our securities, see Notes 2.2.1.a and 8 to the Consolidated Financial Statements.

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The following table analyzes the carrying amount and market value of our ownership of debt securities and equity securities as of December 31, 2009, December 31, 2008 and December 31, 2007. Trading portfolio and investments in affiliated companies consolidated under the equity method are not included in the tables below because the amortized costs and fair values of these items are the same. See Note 10 to the Consolidated Financial Statements

	December 31, 2009				December 31, 2008				December 31, 2007
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
	(In millions of euros)
DEBT SECURITIES
AVAILABLE FOR SALE PORTFOLIO
Domestic		24,577		24,869		11,743		11,910		10,088		10,161
Spanish government		18,312		18,551		6,233		6,371		5,226		5,274
Other debt securities		6,265		6,318		5,510		5,539		4,862		4,887
International		31,868		32,202		28,108		27,920		26,725		27,175
United States		6,804		6,805		10,573		10,442		9,051		9,056
U.S. Treasury and other U.S. government agencies		414		416		444		444		60		61
States and political subdivisions		214		221		382		396		515		518
Other debt securities		6,176		6,168		9,747		9,602		8,476		8,477
Other countries		25,064		25,397		17,535		17,478		17,674		18,119
Securities of other foreign governments		17,058		17,363		9,624		9,653		10,844		11,278
Other debt securities		8,006		8,034		7,911		7,825		6,830		6,841
TOTAL AVAILABLE FOR SALE PORTFOLIO		56,445		57,071		39,851		39,830		36,813		37,336
HELD TO MATURITY PORTFOLIO
Domestic		2,626		2,624		2,392		2,339		2,402		2,271
Spanish government		1,674		1,682		1,412		1,412		1,417		1,349
Other debt securities		952		942		980		927		985		922
International		2,811		2,869		2,890		2,882		3,182		3,063
TOTAL HELD TO MATURITY PORTFOLIO		5,437		5,493		5,282		5,221		5,584		5,334
TOTAL DEBT SECURITIES		61,882		62,564		45,133		45,051		42,397		42,670

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	December 31, 2009				December 31, 2008				December 31, 2007
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value(1)		Cost		Value(1)		Cost		Value(1)
	(In millions of euros)
EQUITY SECURITIES —
AVAILABLE FOR SALE PORTFOLIO
Domestic		3,683		5,409		3,582		4,675		3,783		7,164
Equity listed		3,657		5,383		3,545		4,639		3,710		7,032
Equity unlisted		26		26		37		36		73		132
International		948		1,041		3,408		3,275		2,841		3,932
United States		641		737		665		654		490		489
Equity listed		16		8		39		28		420		419
Equity unlisted		625		729		626		626		70		70
Other countries		307		304		2,743		2,621		2,351		3,443
Equity listed		250		242		2,545		2,416		2,242		3,346
Equity unlisted		57		62		198		205		109		97
TOTAL AVAILABLE FOR SALE PORTFOLIO		4,631		6,450		6,990		7,950		6,624		11,096
TOTAL EQUITY SECURITIES		4,631		6,450		6,990		7,950		6,624		11,096
TOTAL INVESTMENT SECURITIES		66,513		69,014		52,123		53,001		49,021		53,766

(1) Fair values for listed securities are determined on the basis of their quoted values at the end of the year. Appraised values are used for unlisted securities based on our estimate or on unaudited financial statements, when available.

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The following table analyzes the maturities of our debt investment and fixed income securities, excluding trading portfolio, by type and geographical area as of December 31, 2009.

	Maturing in One Year or Less				Maturing after One Year to Five Years				Maturing after Five Year to Ten Years				Maturing after Ten Years
	Amount		Yield %(1)		Amount		Yield %(1)		Amount		Yield %(1)		Amount		Yield %(1)		Total
	(In millions of euros, except %)
AVAILABLE FOR SALE PORTFOLIO
Domestic:
Spanish government		127		4.74		10,536		4.01		5,116		4.13		2,772		5.35		18,551
Other debt securities		576		2.92		4,422		3.50		283		3.75		1,037		2.56		6,318
Total Domestic		703		3.18		14,958		3.85		5,399		4.11		3,809		4.37		24,869
International:
United States:		838		3.59		2,586		4.82		1,597		4.14		1,784		5.19		6,805
U.S. Treasury and other U.S. government securities		223		0.28		53		8.76		—		5.83		140		4.43		416
States and political subdivisions		36		6.53		84		6.44		79		6.37		22		6.45		221
Other debt securities		579		4.76		2,449		4.67		1,518		4.02		1,622		5.24		6,168
Other countries:		2,254		3.59		9,318		4.42		3,614		4.24		10,211		6.61		25,397
Securities of other foreign governments		934		5.47		5,929		5.28		2,454		4.12		8,046		6.97		17,363
Other debt securities		1,320		2.31		3,389		3.12		1,160		4.47		2,165		5.41		8,034
Total International		3,092		3.59		11,904		4.51		5,211		4.21		11,995		6.37		32,202
Total Available for sale		3,795		3.49		26,862		4.12		10,610		4.15		15,804		5.82		57,071
HELD TO MATURITY PORTFOLIO
Domestic:
Spanish government		5		4.00		181		5.21		1,425		3.50		63		4.20		1,674
Other debt securities		50		3.47		486		4.21		294		3.85		122		3.81		952
International:		215		5.66		790		3.77		1,590		4.09		216		3.75		2,811
Total held to maturity		270		5.23		1,457		4.09		3,309		3.81		401		3.84		5,437
TOTAL DEBT SECURITIES		4,065		3.61		28,319		4.12		13,919		4.07		16,205		5.82		62,508

(1) Rates have been presented on a non-taxable equivalent basis.

Loans and Advances to Credit Institutions

As of December 31, 2009, our total loans and advances to credit institutions amounted to €22,200 million, or 4.15% of total assets. Net of our valuation adjustments, loans and advances to credit institutions amounted to €22,239 million as of December 31, 2009, or 4.16% of our total assets.

Loans and Advances to Customers

As of December 31, 2009, our total loans and leases amounted to €331,087 million, or 61.88% of total assets. Net of our valuation adjustments, loans and leases amounted to €323,442 million as of December 31, 2009, or 60.45% of our total assets. As of December 31, 2009 our loans in Spain amounted to €203,529 million. Our foreign loans amounted to €127,558 million as of December 31, 2009. For a discussion of certain mandatory ratios relating to our loan portfolio, see “— Supervision and Regulation — Liquidity Ratio” and “— Investment Ratio”.

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Loans by Geographic Area

The following table analyzes, by domicile of the customer, our net loans and leases as of December 31, 2009:

	As of December 31,
	2009			2008			2007
	(In millions of euros)
Domestic		203,529			208,474			205,287
Foreign
Western Europe		23,333			28,546			23,442
Latin America		61,298			61,978			57,647
United States		37,688			35,498			28,925
Other		5,239			6,826			4,370
Total foreign		127,558			132,848			114,384
Total loans and leases		331,087			341,322			319,671
Valuation adjustments		(7,645	)		(6,062	)		(6,493	)
Total net lending		323,442			335,260			313,178

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Loans by Type of Customer

The following table analyzes by domicile and type of customer our net loans and leases for each of the years indicated. The analyses by type of customer are based principally on the requirements of the regulatory authorities in each country.

	As of December 31,
	2009			2008			2007
	(In millions of euros)
Domestic
Government		20,559			17,436			16,013
Agriculture		1,722			1,898			1,987
Industrial		16,805			17,976			18,404
Real estate and construction		36,584			38,632			36,261
Commercial and financial		17,404			17,165			15,220
Loans to individuals		87,948			88,712			88,853
Lease financing		6,547			7,702			7,698
Other		15,960			18,953			20,851
Total domestic		203,529			208,474			205,287
Foreign
Government		5,660			5,066			5,052
Agriculture		2,202			2,211			1,750
Industrial		25,993			28,600			21,518
Real estate and construction		19,183			15,890			18,895
Commercial and financial		23,310			27,720			21,151
Loans to individuals		38,540			39,178			32,609
Lease financing		1,675			1,683			1,450
Other		10,995			12,500			11,959
Total foreign		127,558			132,848			114,384
Total loans and leases		331,087			341,322			319,671
Valuation adjustments		(7,645	)		(6,062	)		(6,493	)
Total net lending		323,442			335,260			313,178

The following table sets forth a breakdown, by currency, of our net loan portfolio for 2009, 2008 and 2007.

	As of December 31,
	2009		2008		2007
	(In millions of euros)
In euros		217,537		226,855		219,226
In other currencies		105,905		108,405		93,952
Total net lending		323,442		335,260		313,178

As of December 31, 2009, loans by BBVA and its subsidiaries to associates and jointly controlled companies amounted to €613 million, compared to €507 million as of December 31, 2008. Loans outstanding to the Spanish government and its agencies amounted to €20,818 million, or 6.29% of our total loans and leases as of December 31, 2009, compared to €17,770 million, or 5.21% of our total loans and leases as of December 31, 2008. None of our loans to companies controlled by the Spanish government are guaranteed by the government and, accordingly, we apply normal credit criteria in extending credit to such entities. Moreover, we carefully monitor such loans because governmental policies necessarily affect such borrowers.

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Diversification in our loan portfolio is our principal means of reducing the risk of loan losses. We also carefully monitor our loans to borrowers in sectors or countries experiencing liquidity problems. Our exposure to our two largest borrowers as of December 31, 2009, excluding government-related loans, amounted to €11,067 million or approximately 3.34% of our total outstanding loans and leases. As of December 31, 2009 there did not exist any concentration of loans exceeding 10% of our total outstanding loans and leases, other than by category as disclosed in the chart above.

Maturity and Interest Sensitivity

The following table sets forth an analysis by maturity of our total loans and leases by domicile of the office that issued the loan and type of customer as of December 31, 2009. The determination of maturities is based on contract terms.

	Maturity
			Due after
	Due in		One Year
	One Year		through		Due after
	or Less		Five Years		Five Years		Total
	(In millions of euros)
Domestic:
Government		8,329		5,903		6,327		20,559
Agriculture		684		634		403		1,722
Industrial		12,241		3,204		1,361		16,805
Real estate and construction		15,393		9,647		11,543		36,584
Commercial and financial		9,098		5,378		2,928		17,404
Loans to individuals		10,965		17,116		59,867		87,948
Lease financing		607		2,698		3,242		6,547
Other		10,175		3,158		2,627		15,960
Total Domestic		67,494		47,737		88,298		203,529
Foreign:
Government		996		2,665		1,998		5,660
Agriculture		1,073		964		166		2,202
Industrial		7,349		14,873		3,772		25,993
Real estate and construction		8,840		7,262		3,081		19,183
Commercial and financial		11,498		7,770		4,042		23,310
Loans to individuals		3,364		9,368		25,808		38,540
Lease financing		343		1,066		266		1,675
Other		4,855		3,384		2,757		10,995
Total Foreign		38,318		47,351		41,889		127,558
Total Loans and Leases		105,811		95,088		130,188		331,087

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The following table sets forth a breakdown of our fixed and variable rate loans which had a maturity of one year or more as of December 31, 2009.

	Interest Sensitivity of
	Outstanding Loans and Leases
	Maturing in More Than One Year
	Domestic		Foreign		Total
	(In millions of euros)
Fixed rate		18,889		37,350		56,239
Variable rate		117,146		51,891		169,037
Total loans and leases		136,035		89,241		225,276

Loan Loss Reserve

For a discussion of loan loss reserves, see “Item 5. Operating and Financial Review and Prospects — Critical Accounting Policies — Allowance for loan losses” and Note 2.2.1.b) to the Consolidated Financial Statements.

The following table provides information, by domicile of customer, regarding our loan loss reserve and movements of loan charge-offs and recoveries for periods indicated.

	As of December 31,
	2009			2008			2007			2006			2005
	(In millions of euros, except %)
Loan loss reserve at beginning of period:
Domestic		3,766			3,459			3,734			3,079			2,374
Foreign		3,740			3,685			2,690			2,511			2,248
Total loan loss reserve at beginning of period		7,505			7,144			6,424			5,590			4,622
Loans charged off:
Government and other Agencies		—			—			—			—			—
Real estate and loans to individuals		(936	)		(639	)		(361	)		(255	)		(138	)
Commercial and financial		(30	)		(16	)		(7	)		(2	)		(76	)
Other		—			—			—			—			—
Total Domestic		(966	)		(655	)		(368	)		(257	)		(214	)
Foreign		(2,876	)		(1,296	)		(928	)		(289	)		(452	)
Total loans charged off		(3,842	)		(1,951	)		(1,296	)		(546	)		(666	)
Provision for loan losses:
Domestic		3,079			953			807			883			624
Foreign		2,307			2,035			1,321			778			196
Total provision for loan losses		5,386			2,988			2,128			1,661			820
Acquisition and disposition of subsidiaries		—			—			250			69			144
Effect of foreign currency translation		(29	)		(487	)		(420	)		(333	)		370
Other		(216	)		(189	)		58			(17	)		300
Loan loss reserve at end of period:
Domestic		4,853			3,766			3,459			3,734			3,079
Foreign		3,952			3,740			3,685			2,690			2,511
Total loan loss reserve at end of period		8,805			7,505			7,144			6,424			5,590
Loan loss reserve as a percentage of total loans and leases at end of period		2.54	%		2.03	%		2.12	%		2.30	%		2.24	%
Net loan charge-offs as a percentage of total loans and leases at end of period		1.11	%		0.53	%		0.38	%		0.20	%		0.27	%

Our loan loss reserves as a percentage of total loans and leases increased significantly from 2.03% as of December 31, 2008, to 2.54% as of December 31, 2009, principally due to an 80.30% increase in provisions, which

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more than offset the 97.01% increase in loans charged off during the period. The increase in loans charged off during 2009 was primarily due to a significant increase in loans charged off in our United States business and Spain and Portugal business area, which was primarily related to the worsening of the financial situation of certain groups of customers due to a less favorable macroeconomic environment. If loan charge offs continue to increase, additional provisions will be necessary to maintain our loan loss reserve as a percentage of total loans and leases.

We do not maintain records allocating the amount of charge-offs and the amount of recoveries by loan category. Also, at the time that a loan is charged off in accordance with Bank of Spain guidelines, it will normally be substantially or fully reserved and, accordingly, such charge-off would have a very limited effect on our net income attributed to parent company or stockholders’ equity. Accordingly, we believe that information relating to domestic reserves and charge-offs by loan category is of less relevance than would be the case for a U.S. bank.

Substandard Loans

We classify loans as substandard loans in accordance with the requirements of EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 in respect of “impaired loans”. As we described in Note 2.2.1.b) to the Consolidated Financial Statements, loans are considered to be impaired loans, and accrual of the interest thereon is suspended, when there are reasonable doubts that the loans will be recovered in fulland/or the related interest will be collected for the amounts and on the dates initially agreed upon, taking into account the guarantees received by the consolidated entities to assure (in part or in full) the performance of transactions. In addition, all loans that are 90 days past due, even if well-collateralized and in the process of being collected are automatically considered non-accrual if they are classified as substandard loans.

When the recovery of any recognized amount is considered to be remote, this amount is removed from the consolidated balance sheet, without prejudice to any actions taken by the consolidated entities in order to collect the amount until their rights extinguish in full through expiry, forgiveness or for other reasons.

Interest on all of our substandard non-accrual loans is not credited to income until actually collected. The aggregated amount of gross interest income that would have been recorded in respect of our substandard loans as of December 31, 2009, 2008 and 2007 under EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 was €1,485 million, €1,042 million and €880 million, respectively.

Amounts collected in relation to impaired loans and receivables are used to recognize the related accrued interest and any excess amount is used to reduce the principal not yet repaid. The approximate amount of interest income on our substandard loans which was included in net income attributed to parent company in 2009, 2008, 2007, 2006 and 2005 under EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 was €192.3 million, €149.7 million, €158.3 million, €130.7 million and €148.1 million, respectively.

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The following table provides information regarding our substandard loans for periods indicated:

	As of December 31,
	2009			2008			2007			2006			2005
	(In millions of euros, except %)
Substandard loans:
Domestic		11,134			5,700			1,590			1,105			850
Public sector		61			79			116			127			33
Other resident sectors		10,911			5,483			1,435			954			721
Non-resident sector		162			138			38			24			96
Foreign		4,178			2,840			1,776			1,394			1,497
Public sector		25			22			57			86			89
Other resident sectors		1			—			—			—			73
Non-resident sector		4,152			2,818			1,718			1,308			1,335
Total substandard loans		15,312			8,540			3,366			2,500			2,347
Total loan loss reserve		(8,805	)		(7,505	)		(7,144	)		(6,424	)		(5,589	)
Substandard loans net of reserves		6,507			1,035			(3,778	)		(3,925	)		(3,242	)
Substandard loans as a percentage of total loans and receivables (net)		4.42	%		2.31	%		1.00	%		0.89	%		0.94	%
Substandard loans (net of reserves) as a percentage of total loans and receivables (net)		1.88	%		0.28	%		(1.12	)%		(1.40	)%		(1.30	)%

Our total substandard loans amounted to €15,312 million as of December 31, 2009, a 79% increase compared to €8,540 million as of December 31, 2008, principally due to an increase in substandard loans to customers in Spain generally due to the adverse macroeconomic environment. As a result of the significant increase in total substandard loans described above, our substandard loans as a percentage of total loans and receivables (net) increased from 2.31% as of December 31, 2008 to 4.42% as of December 31, 2009.

As mentioned in Note 2.2.1.b) to the Consolidated Financial Statements, our loan loss reserve include loss reserve for impaired assets and loss reserve for not impaired assets but which presents an inherent loss. As of December 31, 2009, the loss reserve for impaired assets amounted to €5,930 million, a 81% increase compared to €3,274 million as of December 31, 2008, due to the aforementioned increase in substandard loans. As of December 31, 2009, the loss reserve for not impaired assets amounted to €2,875 million, a 32% decrease compared to €4,231 million as of December 31, 2008, due to the lower volume of new operations and the higher quality of the assets that remain in this category.

For this reason, our loan loss reserves (including loss reserve for impaired and not impaired assets) as a percentage of substandard loans as of December 31, 2009 declined to 57.51% from 87.89% as of December 31, 2008, principally due to the decrease in loss reserve related to not impaired assets mentioned above.

We historically have experienced higher substandard loans in our Latin American operations, as a percentage of total loans, than in our Spanish operations and actively monitor the higher risk profile of the loan portfolios of our Latin American operations. However, as of December 31, 2009 and 2008, substandard loans in Spain as a percentage of total loans in Spain exceeded the comparable percentages in our South America business area.

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The following table provides information, by domicile and type of customer, regarding our substandard loans and the loan loss reserves to customers taken for each substandard loan category, as of December 31, 2009.

					Substandard
					Loans as a
			Loan		Percentage
	Substandard		Loss		of Loans in
	Loans		Reserve		Category
	(In millions of euros, except %)
Domestic:
Government		61		7		0.30	%
Agricultural		82		28		4.74	%
Industrial		686		283		4.08	%
Real estate and construction		5,634		1,726		15.40	%
Commercial and financial		913		333		5.24	%
Loans to individuals		3,284		787		3.73	%
Other		475		118		2.11	%
Total domestic		11,134		3,282		5.47	%
Total foreign		4,178		2,648		3.28	%
General reserve		—		2,875		—
Total		15,312		8,805		4.62	%

Foreign Country Outstandings

The following tables sets forth, as of the end of the years indicated, the aggregate amounts of our cross-border outstandings (which consist of loans, interest-bearing deposits with other banks, acceptances and other monetary assets denominated in a currency other than the home-country currency of the office where the item is booked) where outstandings in the borrower’s country exceeded 1% of our total assets as of December 31, 2009, December 31, 2008 and December 31, 2007. Cross-border outstandings do not include loans in local currency made by our subsidiary banks to customers in other countries to the extent that such loans are funded in the local currency or hedged. As a result, they do not include the vast majority of the loans made by our subsidiaries in South America, Mexico and United States.

	As of December 31,
	2009					2008				2007
			% of					% of				% of
			Total					Total				Total
	Amount		Assets			Amount		Assets		Amount		Assets
	(In millions of euros, except %)
OECD
United Kingdom		6,619		1.24	%		7,542		1.39		6,201		1.23
Mexico		3,218		0.60	%		4,644		0.86		2,812		0.56
Other OECD		5,761		1.08	%		6,514		1.20		6,134		1.22
Total OECD		15,598		2.92	%		18,700		3.45		15,147		3.02
Central and South America		3,296		0.62	%		4,092		0.75		3,345		0.67
Others		4,657		0.87	%		5,676		1.05		4,810		0.96
Total		23,551		4.40	%		28,468		5.25		23,302		4.64

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The following tables set forth the amounts of our cross-border outstandings as of December 31 of each year indicated by type of borrower where outstandings in the borrower’s country exceeded 1% of our total assets.

			Banks and
			Other		Commercial,
			Financial		Industrial
	Governments		Institutions		and Other		Total
	(In millions of euros)
As of December 31, 2009
Mexico		3		3		3,212		3,218
United Kingdom		—		4,933		1,686		6,619
Total		3		4,936		4,898		9,837
As of December 31, 2008
Mexico		4		228		4,412		4,644
United Kingdom		—		5,113		2,429		7,542
Total		4		5,341		6,841		12,186
As of December 31, 2007
Mexico		26		133		2,653		2,812
United Kingdom		—		3,450		2,751		6,201
Total		26		3,583		5,404		9,013

The Bank of Spain requires that minimum reserves be maintained for cross-border risk arising with respect to loans and other outstandings to countries, or residents of countries, falling into certain categories established by the Bank of Spain on the basis of the level of perceived transfer risk. The category that a country falls into is determined by us, subject to review by the Bank of Spain.

The following table shows the minimum required reserves with respect to each category of country for BBVA’s level of coverage as of December 31, 2009.

	Minimum Percentage of
	Coverage (Outstandings
Categories(1)	Within Category)
Countries belonging to the OECD whose currencies are listed in the Spanish foreign exchange market		0.0
Countries with transitory difficulties(2)		10.1
Doubtful countries(2)		22.8
Very doubtful countries(2)(3)		83.5
Bankrupt countries(4)		100.0

(1)	Any outstanding which is guaranteed may be treated, for the purposes of the foregoing, as if it were an obligation of the guarantor.
(2)	Coverage for the aggregate of these three categories (countries with transitory difficulties, doubtful countries and very doubtful countries) must equal at least 35% of outstanding loans within the three categories. The Bank of Spain has recommended up to 50% aggregate coverage.
(3)	Outstandings to very doubtful countries are treated as substandard under Bank of Spain regulations.
(4)	Outstandings to bankrupt countries must be charged off immediately. As a result, no such outstandings are reflected on our consolidated balance sheet. Notwithstanding the foregoing minimum required reserves, certain interbank outstandings with an original maturity of three months or less have minimum required reserves of 50%. We met or exceeded the minimum percentage of required coverage with respect to each of the foregoing categories.

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Our exposure to borrowers in countries with difficulties (the last four categories in the foregoing table), excluding our exposure to subsidiaries or companies we manage and trade-related debt, amounted to €321 million, €334 million and €1,213 million as of December 31, 2009, 2008 and 2007, respectively. These figures do not reflect loan loss reserves of 30.53%, 14.07% and 10.88%, respectively, against the relevant amounts outstanding at such dates. Deposits with or loans to borrowers in all such countries as of December 31, 2009 did not in the aggregate exceed 0.06% of our total assets.

The country-risk exposures described in the preceding paragraph as of December 31, 2009, 2008 and 2007 do not include exposures for which insurance policies have been taken out with third parties that include coverage of the risk of confiscation, expropriation, nationalization, non-transfer, non-convertibility and, if appropriate, war and political violence. The sums insured as of December 31, 2009, 2008 and 2007 amounted to $14 million, $32 million and $54 million, respectively (approximately €10 million, €23 million and €37 million, respectively, based on a euro/dollar exchange rate on December 31, 2009 of $1.00 = €0.69, on December 31, 2008 of $1.00 = €0.72, and on December 31, 2007 of $1.00 = €0.68).

LIABILITIES

Deposits

The principal components of our customer deposits are domestic demand and savings deposits and foreign time deposits. The following tables provide information regarding our deposits by principal geographic area for the dates indicated.

	As of December 31, 2009
			Bank of Spain and		Other
	Customer		Other Central		Credit
	Deposits		Banks		Institutions		Total
	(In millions of euros)
Total domestic		97,023		15,352		7,692		120,067
Foreign:
Western Europe		22,199		3,945		20,472		46,616
Latin America		63,027		423		11,857		75,307
United States		67,986		948		6,572		75,506
Other		3,148		428		2,352		5,928
Total foreign		156,360		5,744		41,253		203,357
Total		253,383		21,096		48,945		323,424

	As of December 31, 2008
			Bank of Spain and		Other
	Customer		Other Central		Credit
	Deposits		Banks		Institutions		Total
	(In millions of euros)
Total domestic		105,146		6,132		6,220		117,498
Foreign:
Western Europe		26,341		5,524		20,293		52,158
Latin America		57,193		844		10,987		69,024
United States		56,185		4,061		9,297		69,543
Other		8,860		201		2,776		11,837
Total foreign		148,579		10,630		43,353		202,562
Total		253,725		16,762		49,573		320,061

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	As of December 31, 2007
			Bank of Spain and		Other
	Customer		Other Central		Credit
	Deposits		Banks		Institutions		Total
	(In millions of euros)
Total domestic		96,867		24,078		9,276		130,221
Foreign:
Western Europe		15,935		1,705		17,300		34,940
Latin America		58,368		43		18,218		76,629
United States		37,985		1,284		10,811		50,080
Other		8,937		146		4,790		13,873
Total foreign		121,225		3,178		51,119		175,522
Total		218,092		27,256		60,395		305,743

For an analysis of our deposits, including non-interest bearing demand deposits, interest-bearing demand deposits, saving deposits and time deposits, see Note 23 to the Consolidated Financial Statements.

As of December 31, 2009, the maturity of our time deposits (excluding interbank deposits) in denominations of $100,000 (approximately €69,416 considering the noon buying rate as of December 31, 2009) or greater was as follows:

	As of December 31, 2009
	Domestic		Foreign		Total
	(In millions of euros)
3 months or under		7,943		56,633		64,577
Over 3 to 6 months		2,382		11,556		13,938
Over 6 to 12 months		3,132		3,368		6,499
Over 12 months		6,790		4,359		11,149
Total		20,247		75,917		96,164

Time deposits from Spanish and foreign financial institutions amounted to €30,608 million as of December 31, 2009, substantially all of which were in excess of $100,000 (approximately €69,416 considering the noon buying rate as of December 31, 2009).

Large denomination deposits may be a less stable source of funds than demand and savings deposits because they are more sensitive to variations in interest rates. For a breakdown by currency of customer deposits as of December 31, 2009, 2008 and 2007, see Note 23 to the Consolidated Financial Statements.

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Short-term Borrowings

Securities sold under agreements to repurchase and promissory notes issued by us constituted the only categories of short-term borrowings that equaled or exceeded 30% of stockholders’ equity as of December 31, 2009, 2008 and 2007.

	2009					2008					2007
			Average					Average					Average
	Amount		Rate			Amount		Rate			Amount		Rate
	(In millions of euro, except %)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
As of December 31		26,171		2.43	%		28,206		4.66	%		39,902		5.20	%
Average during year		30,811		2.71	%		34,729		5.62	%		42,770		5.13	%
Maximum quarter-end balance		28,849		—			34,202		—			44,155		—
Bank promissory notes:
As of December 31		29,578		0.50	%		20,061		3.70	%		5,810		3.69	%
Average during year		27,434		1.28	%		15,661		4.57	%		6,975		3.96	%
Maximum quarter-end balance		30,919		—			20,061		—			7,133		—
Bonds and Subordinated debt:
As of December 31		13,236		2.54	%		13,565		4.66	%		11,281		4.49	%
Average during year		14,820		3.20	%		12,447		5.18	%		12,147		5.21	%
Maximum quarter-end balance		15,609		—			15,822		—			15,761		—
Total short-term borrowings as of December 31		68,985		1.62	%		61,832		4.35	%		56,993		4.91	%

Return on Equity

The following table sets out our return on equity ratios:

	As of or for the
	Year Ended
	December 31,
	2009		2008		2007
	(in %)
Return on equity(1)		16.0		21.5		34.2
Return on assets(2)		0.85		1.04		1.39
Dividend pay-out ratio(3)		37.4		46.0		44.4
Equity to assets ratio(4)		5.49		4.90		4.95

(1)	Represents net income attributed to parent company for the year as a percentage of average equity for the year.
(2)	Represents net income attributed to parent company as a percentage of average total assets for the year.
(3)	Represents dividends paid as a percentage of net income attributed to parent company.
(4)	Represents total equity over total assets.

The decrease produced in return on equity during 2009 is due to the increase in average equity in 2009, combined with the 14.67% decline in net income in 2009 compared with 2008.

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F.   Competition

The commercial banking sector in Spain has undergone significant consolidation. In the majority of the markets where we provide financial services, the Banco Santander Group is our strongest competitor.

We face strong competition in all of our principal areas of operations. The deregulation of interest rates on deposits in the past decade led to increased competition for large demand deposits in Spain and the widespread promotion of interest-bearing demand deposit accounts and mutual funds. The capturing of customer funds in Spain had been characterized for several years by a large shift of deposits into mutual funds. However, since 2006 we have experienced a reverse shift of mutual funds into deposits. As of December 31, 2006, mutual fund assets under management grew by 3.5% compared to December 31, 2005. As of December 31, 2007 such assets decreased by 6.1% compared to December 31, 2006, as of December 31, 2008 they decreased by 29.8% compared to December 31, 2007 and as December 31, 2009 they decreased by 3.0% compared to December 31, 2008. The trend in deposits has been favorable and deposits in the banking sector increased by 14% as of December 31, 2007 compared to December 31, 2006, 13% as of December 31, 2008 compared to December 31, 2007 and 2% as of December 31, 2009, compared to December 31, 2008.

Spanish savings banks, many of which have receive financial or other support from the Spanish government, and money market mutual funds provide strong competition for savings deposits, which form an important part of our deposit base, and, in the case of savings banks, for other retail banking services. Credit cooperatives, which are active principally in rural areas, where they provide savings bank and loan services and related services such as the financing of agricultural machinery and supplies, are also a source of competition. In Spain, competition distortions in the term deposits market have intensified, and this situation is expected to continue due to the liquidity needs of some financial institutions, which are offering high interest rates

The market turmoil triggered by defaults on subprime mortgages in the United States significantly disrupted first the liquidity of financial institutions and markets and subsequently, the real economy. Wholesale and interbank markets are only open to a limited number of financial institutions, there is no international demand for securities with public guarantee, and the spread on Spanish Residential Mortgage-Backed Security (RMBSs) and sovereign risk keeps well above the pre-crisis levels. In this adverse and uncertain economic environment, the world economy is facing a lengthy adjustment and de-leveraging process that will be costly in terms of activity and employment.

The entry of on-line banks into the Spanish banking system has increased competition, mainly in customer funds businesses such as deposits. Insurance companies and other financial services firms also compete for customer funds. Like the commercial banks, savings banks, insurance companies and other financial services firms are expanding the services offered to consumers in Spain. We face competition in mortgage loans from saving banks and, to a lesser extent, cooperatives.

The EU Directive on Investment Services took effect on December 31, 1995. The EU Directive permits all brokerage houses authorized to operate in other member states of the EU to carry out investment services in Spain. Although the EU Directive is not specifically addressed to banks, it affects the activities of banks operating in Spain. Besides, several initiatives have been implemented recently in order to facilitate the creation of a Pan-European financial market. For example, SEPA (Single Euro Payments Area) is a major project which aims at replacing all existing payment systems — organized by the Member States with new, Pan-Euro systems and it is currently being implemented and the MiFID project (Markets in Financial Instruments Directive) aims to create a European framework for investment services.

Foreign banks also have a strong presence in Spain. As of December 31, 2009, approximately 130 foreign banks, of which 88 were branches, operated in Spain and several foreign banks have acquired small and medium-sized Spanish banks.

Following the recent financial turmoil, a number of banks have disappeared or have been absorbed by other banks. The trend indicates that this will continue in the future, with a number of mergers and acquisitions between financial entities. The U.S. government has already facilitated the purchase of troubled banks by other competitors, and European governments, including the Spanish government, have expressed their willingness to facilitate these type of operations.

In the wake of the exceptional circumstances unfolding in the international financial markets, notably from the second half of 2008, certain European governments committed to taking appropriate measures to try to resolve the issues

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confronting bank funding and the ramifications of constrained funding on the real economy with a view to safeguarding the stability of the international financial system. The overriding goals underpinning these measures were to ensure sufficient liquidity to enable financial institutions to function correctly, to facilitate the funding of banks, to provide financial institutions with additional capital resources where needed so as to continue to ensure the proper financing of the economy, to ensure that applicable accounting standards are sufficiently flexible to take into consideration of current exceptional market circumstances and to reinforce and improve cooperation among European nations.

Framed by this general philosophy, the following measures were passed into law in Spain during the fourth quarter of 2008 and 2009:

•  Royal Decree-Law 6/2008, of October 10, creating the Spanish Financial Asset Acquisition Fund (FAAF), and Order EHA/3118/2008, dated October 31, enacting this Royal Decree. The purpose of the fund, which is managed by Spain’s Economy Ministry and has an initial endowment of €30 billion, which can be increased to €50 billion, is to acquire, with public financing and based on market criteria via auctions, financial instruments issued by Spanish banks and savings and loans (cajas de ahorro) and securitization funds containing Spanish assets, secured by loans extended to individuals, companies and non-financial corporates.

•  Royal Decree-Law 7/2008, of October 13, on Emergency Economic Measures in connection with the Concerted Euro Area Action Plan, and Order EHA/3364/2008, dated November 21, enacting article 1 of the aforementioned Royal Decree, including the following measures:

•  The extension of state guarantees to secure bills, debentures and bonds issued by credit entities resident in Spain since October 14, 2008. Debt issued which takes advantage of this state guarantee must form part of individual operations or issuance programs; not be subordinated or secured by any other class of guarantee; be traded on official Spanish secondary markets; mature within three months and three years (although this maturity can be extended to five years subject to prior notification to the Bank of Spain); be fixed or floating rate (subject to special conditions for floating-rate debt); be repaid in a single installment at maturity; not have any options or other derivatives attached to them; and have a nominal value of €10 million or more. The deadline for issuing debt eligible for state guarantees was December 31, 2009 and the total amount of guarantees that can be extended is €100 billion. The government extended the time period to use the remaining resources (€64 billion) until June 2010.

•  Authorization, on an exceptional basis, until December 31, 2009, for the Spanish Economy Ministry to acquire securities, including preferred shares and other non-voting equity instruments, issued by credit entities resident in Spain that need to reinforce their capital and so request.

•  Royal Decree-Law 09/2009, of June 26, creating theFondo de Reestructuración Ordenada Bancaria(FROB). FROB was created under the management of the Bank of Spain. It has two functions: the management of credit institutions’ restructuring processes and the strengthening of capital in certain merger processes. It has been approved by European authorities up to June 2010, but no deal has been closed up to now.

On 28 January 2010, the European Commission approved until June 30, 2010 a Spanish recapitalization scheme for banks aimed at enhancing the strength and solvency of credit institutions, theFondo de Reestructuración Ordenada Bancaria(FROB).

We are entitled to avail ourselves of the aforementioned measures under the umbrella of our risk management policy. However, at the date of preparation of this Annual Report, we have not requested access to these facilities. We could be adversely affected if one or more of our direct competitors are beneficiaries of selective governmental interventions or assistance and we do not receive comparable assistance.

In the United States, where we operate through BBVA Compass, the competitive landscape has also been significantly affected by the financial crisis. The US banking industry has experienced significant impairment on its assets in 2009, which will result in continuing losses in select product categories and slow loan growth in 2010. Data published by the FDIC in the fourth quarter of 2009 suggested that banking industry write-offs increased by $52.1 billionquarter-on-quarter from $131 billion in the third quarter of 2009 to $183.8 billion in the fourth quarter of 2009 and the total number of problem list institutions rose to 702. Mortgage delinquency rates, which advanced to 10.85% in the fourth quarter of 2009 from 9.52% in the third quarter of 2009, continue to present challenges to the

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banking industry nearly one year after the height of the financial crisis. Domestic loan levels at commercial banks generally declined as banks continued to progress in deleveraging. Certain types of loans, such as commercial and industrial and commercial real estate, grew at rapid rates in the pre-crisis years and now must readjust to a new economic environment. In particular, the level of outstanding residential construction loans declined by roughly half between the second quarter of 2008 and the fourth quarter of 2009. The correction is most striking in commercial and industrial loans, which showedyear-on-year growth of 20% at the end of 2007 but recently declined by 18.3% at the end of 2009 compared to 2008. Commercial real estate loans similarly grew at double digit rates in the years prior to 2008 and now are only beginning a lengthy loan balance decline. We expect declines in commercial real estate loan balances and increases in commercial real estate write-off rates during 2010. The write-off rate on commercial and industrial loans and consumer loans is expected to improve over the course of 2010, with consumer lending beginning to demonstrate slow growth at the end of 2010.

In Mexico, where we operate through BBVA Bancomer, the banking industry remained relatively solvent throughout the financial crisis, although loan delinquency rates increased during 2009, especially those related consumer finance and mortgages. The relative strength of the Mexican banking industry can be tied to several factors. In general, banks in Mexico did not invest heavily in assets linked to the U.S. mortgage market; maintained high capitalization levels, coming from maximum levels observed between 2005 and 2007; generally funded themselves through internal sources in local currency; and were subjected to prudent supervision and regulation by the banks’ supervisor (Comisión Nacional Bancaria y de Valores, CNBV) who maintained capital ratio requirements above international standards and increased loan loss provisions for consumer credit. However, past-due payment rates increased in 2009 at 3.1% as of December 31, 2009 for the industry as a whole and higher rates for consumer finance and mortgages. In 2010, we expect loan demand to start reactivating and delinquency rates to start ameliorating.

In Mexico, changes in banking regulation could have a significant potential impact on profits. Authorities have closely followed international trends and during 2009 they mandated increased loan loss provisions for consumer loans, and indicated that stricter loss provisions for housing loans will be enacted during 2010. Rules to limit loans to firms within a certain financial group (préstamos relacionados) are under discussion as well, and we expect that such limits will impact some banks of the system with strong connections with retail stores (for example, Inbursa and Banco Azteca). In addition, authorities have strengthened the measures to improve transparency and information about financial services by enacting new legislation that gives more powers to the central bank (Banco de México) to regulate interest rates and bank fees. It also gives more powers to the financial services consumer protection agency (Comisión Nacional para la Defensa de los Usuarios de los Servicios Financieros, Condusef) to set information requirements for bank account statements, product publicity, and contracts, and to improve financial education. The consolidation and restructuring of some non banking financial intermediaries (Sofoles) will imply that some of them will go out of business or be acquired. Along these lines, the mortgage arm of BBVA-Bancomer (Hipotecaria Nacional) acquired the portfolio of certainSofoleslast year.

ITEM 4A.   UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

The early part of 2009 was characterized by a widespread decline in terms of activity and employment, which moved toward relative stabilization as the year progressed and, in some cases, signs of early economic growth appeared toward the end of the year, although such improvements varied widely by country. Those countries which successfully implemented special government stimulus packages, both in terms of monetary and fiscal policy, appeared to emerge from recession more rapidly especially in the second half of 2009.

The first half of 2009 was largely a continuation of the adjustment that started at the end of 2008, with significant declines in activity in most economies, a sharp decline in global trade flows and financial markets with continued volatility and instability, despite tentative signs of recovery. Against this background of almost-widespread market failure, countercyclical economic policy measures were necessary to break the vicious cycle

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that began in the fourth quarter of 2009, mainly characterized by risk aversion and the search for safe-haven assets, the liquidity crisis on wholesale finance markets, solvency problems in many financial institutions and, overall, a widespread shrinking of the economy.

With the adoption of largely-expansive fiscal policies in most economies through interest rates at or near zero percent in real terms, central banks began to explore new alternatives for monetary policy. The fall in economic activity levels and the sudden collapse in commodity prices led to a quick drop in inflation rates, which gave central banks room to implement unconventional measures or expand traditional measures as far as possible. The European Central Bank (ECB) continued to slash interest rates to 1.0% and increase full allotment auctions to twelve months. The U.S. Federal Reserve, whose official rate had hit zero, undertook various asset purchase programs.

Moving into the second half of 2009, the set of adopted measures, along with the U.S.’s attitude toward solving the financial problem, was a salutary lesson for international financial markets. The performance of stress tests on the balance sheets of the biggest financial institutions revealed the system’s specific capital requirements, therefore, reducing uncertainty. Certain financial institutions issued unsecured debt and began to repay the capital injections received from the U.S. Treasury Department, which resulted in a loosening of financial tension. The improvement in certain economic indicators consolidated the first signs of “green shoots” which was confirmed with the third quarter results. This growth was backed by the strength of the Asian region, on the restructuring of inventories and on the boost in confidence levels.

In spite of the recovery witnessed in the second half of the year, 2009 ended with a decrease of 2.5% in the United States and 3.9% in the Euro zone, with a negative annual average inflation rate of 0.3% in the United States and around 0.3% in Europe. The wider scope of the U.S. fiscal stimulus program and more perceived determination to tackle the financial crisis will probably lead to higher growth rates than in the Euro zone in 2010. In addition, in Europe the fiscal problems that some economies such as Greece are facing could have a negative effect by significantly increasing the sovereign risk.

As regards the Spanish economy, the decline in gross domestic product, or GDP, will be similar to the Euro zone (−3.6% in Spain and -3.9 in the Euro Zone in 2009), due to the positive contribution from the foreign sector, which behaves counter cyclically (making a positive contribution of 2.6% in 2009 in Spain), and the wider scope of the fiscal stimulus package implemented in relation to Europe. These factors have counteracted some of the pending adjustments which affect the Spanish economy such as job losses, the resizing of the real estate sector and the deleveraging process in the private sector. Average inflation for the year in Spain was negative (−0.3%).

As 2009 drew to a close, it was evident that global growth would be led by the emerging economies in Asia and Latin America, and that growth in developed countries still depended heavily on stimulus packages.

In Mexico, after dealing with the collapse of world trade and the H1N1 influenza pandemic at the start of the year, the results for the end of the year confirm the recovery trend. In addition, the relative strength of employment in comparison to other crises, greater competition and better performance in the United States hint at growth of around 3% for 2010. Other countries in the region are also poised to experience strong growth in 2010, including Brazil, Colombia and Peru.

On the foreign exchange market, after being favored by the safe-haven effect during the first quarter of 2009, the dollar depreciated significantly after the Federal Reserve announced the substantial asset purchase program. Other short-term factors linked to the interest rate spread, along with the diversification of reserves prompted by the debate on the reserve currency status of the US dollar, encouraged this trend.

The average exchange rates for 2009 registeryear-on-year depreciations for some of the currencies relative to the euro: 13.3% for the Mexican peso, 10.6% for the Argentinean peso, 4.0% for the Colombian peso and 1.9% for the Chilean peso, compared with the previous year. Other currencies have gained ground relative to the euro: 5.4% for the U.S. dollar, 5.4% for the Venezuelan bolivar fuerte and 2.4% for the New Peruvian sol. As a result, the comparison of our net income for 2009 to 2008 is negatively affected by the exchange rate by almost 5 percentage points.

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Critical Accounting Policies

The Consolidated Financial Statements as of and for the years ended December 31, 2009, 2008 and 2007 were prepared by the Bank’s directors in accordance with EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and by applying the basis of consolidation, accounting policies and measurement bases described in Note 2 to the Consolidated Financial Statements, so that they present fairly the Group’s equity and financial position as of and for the years ended December 31, 2009, 2008 and 2007, and the results of its operations, the changes in consolidated equity and the consolidated cash flows in 2009, 2008 and 2007. The Consolidated Financial Statements were prepared on the basis of the accounting records kept by the Bank and by each of the other Group companies and include the adjustments and reclassifications required to unify the accounting policies and measurement bases used by the Group. (See Note 2.2 to the Consolidated Financial Statements).

The Consolidated Financial Statements are presented in accordance with the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 applicable at year-end 2009.

In preparing the Consolidated Financial Statements estimates were made by the Group and the consolidated companies in order to quantify certain of the assets, liabilities, income, expenses and commitments reported herein. These estimates relate mainly to the following:

•  The impairment on certain assets.

•  The assumptions used in the actuarial calculation of the post-employment benefit liabilities and commitments.

•  The useful life of tangible and intangible assets.

•  The measurement of goodwill arising on consolidation.

•  The fair value of certain unlisted assets.

Although these estimates were made on the basis of the best information available as of December 31, 2009, 2008 and 2007 on the events analyzed, events that take place in the future might make it necessary to revise these estimates (upwards or downwards) in coming years.

The presentation format used under the EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 vary in certain respects from the presentation format and accounting rules required to be applied under U.S. GAAP and other rules that are applicable to U.S. banks. The tables included in Note 60 to our Consolidated Financial Statements give the effect that application of U.S. GAAP would have on net income attributable to parent company and stockholders’ equity as reported under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

Note 2 to the Consolidated Financial Statements contains a summary of our significant accounting policies. We consider certain of these policies to be particularly important due to their effect on the financial reporting of our financial condition and because they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Our reported financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the preparation of the Consolidated Financial Statements. The nature of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our Consolidated Financial Statements and the discussion below. We have identified the following accounting policies as critical to the understanding of our results of operations, since the application of these policies requires significant management assumptions and estimates that could result in materially different amounts to be reported if conditions or underlying circumstances were to change.

Fair value of financial instruments

The fair value of an asset or a liability on a given date is taken to be the amount for which it could be exchanged or settled, respectively, between two knowledgeable, willing parties in an arm’s length transaction. The most objective and common reference for the fair value of an asset or a liability is the price that would be paid for it on an organized, transparent and deep market (“quoted price” or “market price”).

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If there is no market price for a given asset or liability, its fair value is estimated on the basis of the price established in recent transactions involving similar instruments and, in the absence thereof, by using mathematical measurement models sufficiently tried and trusted by the international financial community. Such estimates would take into consideration the specific features of the asset or liability to be measured and, in particular, the various types of risk associated with the asset or liability. However, the limitations inherent to the measurement models developed and the possible inaccuracies of the assumptions required by these models may signify that the fair value of an asset or liability thus estimated does not coincide exactly with the price for which the asset or liability could be purchased or sold on the date of its measurement.

See Note 2.2.1 to the Consolidated Financial Statements, which contains a summary of our significant accounting policies.

Derivatives and other future transactions

These instruments include outstanding foreign currency purchase and sale transactions, outstanding securities purchase and sale transactions, futures transactions relating to securities, exchange rates or interest rates, forward interest rate agreements, options relating to exchange rates, securities or interest rates and various types of financial swaps.

All derivatives are recognized on the balance sheet at fair value from the date of arrangement. If the fair value of a derivative is positive, it is recorded as an asset and if it is negative, it is recorded as a liability. Unless there is evidence to the contrary, it is understood that on the date of arrangement the fair value of the derivatives is equal to the transaction price. Changes in the fair value of derivatives after the date of arrangement are recognized with a balancing entry under the heading “Gains or Losses on Financial Assets and Liabilities” in the consolidated income statement.

Specifically, the fair value of the standard financial derivatives included in the held for trading portfolios is equal to their daily quoted price. If, under exceptional circumstances, their quoted price cannot be established on a given date, these derivatives are measured using methods similar to those used to measureover-the-counter (“OTC”) derivatives.

The fair value of OTC derivatives is equal to the sum of the future cash flows arising from the instruments discounted at the measurement date (“present value” or “theoretical value”). These derivatives are measured using methods recognized by the financial markets, including the net present value (“NPV”) method and option price calculation models.

Financial derivatives that have as their underlying equity instruments, whose fair value cannot be determined in a sufficiently objective manner and are settled by delivery of those instruments, are measured at cost.

Financial derivatives designated as hedging items are included in the heading of the balance sheet “Hedging derivatives”. These financial derivatives are valued at fair value.

See Note 2.2.1 to the Consolidated Financial Statements, which contains a summary of our significant accounting policies with respect to these instruments.

Goodwill in consolidation

The positive differences between the cost of business combinations and the amount corresponding to the acquired percentage of the net fair value of the assets, liabilities and contingent liabilities of the acquired entity are recorded as goodwill on the asset side of the balance sheet. Goodwill represents the future economic benefits from assets that cannot be individually identified and separately recognized. Goodwill is not amortized and is subject periodically to an impairment analysis. Any impaired goodwill is written off.

Goodwill is allocated to one or more cash-generating units, or CGUs, expected to benefit from the synergies arising from business combinations. The CGUs units represent the Group’s smallest identifiable businessand/or geographical segments as managed internally by its directors within the Group.

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The CGUs to which goodwill has been allocated are tested for impairment based on the carrying amount of the unit including the allocated goodwill. Such testing is performed at least annually and whenever there is an indication of impairment.

For the purpose of determining the impairment of a CGU to which a part or all of goodwill has been allocated, the carrying amount of that unit, adjusted by the theoretical amount of the goodwill attributable to the non-controlling interest, shall be compared with its recoverable amount. The resulting loss shall be apportioned by reducing, firstly, the carrying amount of the goodwill allocated to that unit and, secondly, if there are still impairment losses remaining to be recognized, the carrying amount of the rest of the assets. This shall be done by allocating the remaining loss in proportion to the carrying amount of each of the assets in the unit. In any case, impairment losses on goodwill can never be reversed.

See Note 2.2.8 to the Consolidated Financial Statements, which contains a summary of our significant accounting policies related to goodwill.

As mentioned in Note 20.1 to the Consolidated Financial Statements, as of December 31, 2009 the Group had performed the goodwill impairment test. The results of the test were estimated impairment losses of €1,097 million in the United States CGU, which were recognized under “Impairment losses on other assets (net) — Goodwill and other tangible assets” in the accompanying income statement for 2009 (Note 50). The impairment loss of this unit is attributed to the adverse effect on the business, financial condition, results of operations and cash flows of our subsidiary BBVA Compass due to the significant decline in economic and credit conditions in the states in which the Group operates in the United States. The valuations were verified by an independent expert not related to the Group or its external auditor.

As mentioned in Note 2.2.8 to the Consolidated Financial Statements, when completing the impairment analysis, the carrying amount of the CGU is compared with its recoverable amount. The United States’ CGU recoverable amount is equal to its value in use. Value in use is calculated as the discounted value of the cash flow projections that management estimates and is based on the latest budgets available for the next three years.

Both the US CGU unit’s fair values and the fair values assigned to its assets and liabilities are based on the estimates and assumptions that the Group’s management deems most likely given the circumstances. However, some changes to the valuation assumptions used could result in differences in the impairment test result. If the discount rate had increased or decreased by 50 basis points, the difference between the carrying amount and its recoverable amount would have increased or decreased by up to €573 million and €664 million, respectively. If the growth rate had increased or decreased by 50 basis points, the difference between the carrying amount and its recoverable amount would have increased or decreased by €555 million and €480 million, respectively.

As of December 31, 2008 and 2007, there were no impairment losses on the goodwill that the Group recognized.

Post-employment benefits and other long term commitments to employees

Pension and post-retirement benefit costs and credits are based on actuarial calculations. Inherent in these calculations are assumptions including discount rates, rate of salary increase and expected return on plan assets. Changes in pension and post-retirement costs may occur in the future as a consequence of changes in interest rates, expected return on assets or other assumptions. See Note 2.2.12 to the Consolidated Financial Statements, which contains a summary of our significant accounting policies about pension and post-retirement benefit costs and credits.

Allowance for loan losses

As we describe in Note 2.2.1.b to the Consolidated Financial Statements, a loan is considered to be an impaired loan and, therefore, its carrying amount is adjusted to reflect the effect of its impairment when there is objective evidence that events have occurred which, in the case of loans, give rise to a negative impact on the future cash flows that were estimated at the time the transaction was arranged. The potential impairment of these assets is determined

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individually or collectively. The quantification of impairment losses is determined on a collective basis in the following two cases:

•  Assets classified as impaired for customers in which the amount of their operations is less than €1 million.

•  An asset portfolio not currently impaired but which presents an inherent loss, as described in more detail below.

Inherent loss, calculated using statistical procedures, is deemed equivalent to the portion of losses incurred on the date that the accompanying consolidated financial statements are prepared that has yet to be allocated to specific transactions.

The Group estimates collective inherent loss of credit risk corresponding to operations realized by Spanish financial entities of the Group (approximately 67% of the loans and receivables of the Group as of December 31, 2009) using the parameters set by Annex IX of the Bank of Spain’s Circular4/2004 on the basis of its experience and the Spanish banking sector information regarding the quantification of impairment losses and provisions for insolvencies for credit risk.

Notwithstanding the above, the Group has historic statistical data which it used in its internal ratings models (“IRBs”) that were approved by the Bank of Spain for some portfolios in 2009, albeit only for the purpose of estimating regulatory capital under the new Basel Accord (BIS II). It uses these internal models to calculate the economic capital required in its activities and uses the expected loss concept to quantify the cost of credit risk for incorporation in its calculation of the risk-adjusted return on capital of its operations.

To estimate the collective loss of credit risk corresponding to operations with non-Spanish residents registered in foreign subsidiaries of the Group, the Group applies similar methods and criteria, using the Bank of Spain’s parameters but adapting the default calendars to the particular circumstances of the country. Additionally, in Mexico for consumer loans, credit cards and mortgages portfolios, as well as for credit investment maintained by the Group in the United States (which in the aggregate represent approximately 14% of the loans and receivables of the Group as of December 31, 2009), internal models are used to calculate impairment losses based on the historical experience of the Group. In both of these cases, the provisions required under the Bank of Spain’s Circular 4/2004 standards fall within the range of provisions calculated using the Group’s internal ratings models.

For 2007, the provisions required under EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 standards represented the outermost range of acceptable estimates which were calculated using our historical experience. Therefore, those provisions did not represent the best estimate of allowance for loan losses under U.S. GAAP which provided a more moderate estimate within the acceptable range. As a consequence, there was an adjustment in the reconciliation to U.S. GAAP in order to reflect in net income the reversal of the difference of estimates of the provisions recorded under both GAAPs in each year and in stockholders’ equity the differences of estimates of the accumulated allowance for loan losses under both GAAPs.

For the years ended December 31, 2009 and 2008, there are no substantial differences in the calculations made under both EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP because the allowance for loan losses for such years calculated under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 are similar to the best estimates of allowance for loan losses under U.S. GAAP, which is the central scenario determined using internal risk models based on our historical experience. We included an adjustment in the reconciliation of net income for 2008 and thereafter, following such adjustment, the amounts of the allowance for loan losses estimated under both GAAPs were similar

The estimates of the portfolio’s inherent risks and overall recovery vary with changes in the economy, individual industries, countries and individual borrowers’ or counterparties’ ability and willingness to repay their obligations. The degree to which any particular assumption affects the allowance for credit losses depends on the severity of the change and its relationship to the other assumptions.

Key judgments used in determining the allowance for loan losses include: (i) risk ratings for pools of commercial loans and leases; (ii) market and collateral values and discount rates for individually evaluated loans; (iii) product type classifications for consumer and commercial loans and leases; (iv) loss rates used for consumer

69

and commercial loans and leases; (v) adjustments made to assess current events and conditions; (vi) considerations regarding domestic, global and individual countries economic uncertainty; and (vii) overall credit conditions.

Higher-risk loans

Exposure to subprime credit risk

The application across the BBVA Group of prudent risk policies has resulted in limited exposure to subprime credit risks with respect to mortgage loans, mortgage-backed securities and other securitized financial instruments originated in the United States.

We do not market products specifically to the subprime segment. However, the financial crisis that began in the United States in 2007, and the consequent decline in economic conditions and decreased ability to pay on the part of certain borrowers, has implied a downgrade in their respective credit ratings. It is important to note, however, that the classification of a financial instrument as a “subprime credit risk” does not necessarily signify that such financial instrument is either past due or impaired or that we have not assigned such financial instrument a “high” or “very high” estimate of recoverability.

As of December 31, 2009, mortgage loans originated in the United States to customers whose creditworthiness had dropped below the “subprime” level totaled €513 million, representing 0.16% of the Group’s loans and advances to customers Of this amount, €66 million was past due or impaired as of December 31, 2009.

In addition, as of December 31, 2009, the net carrying amount of structured credit instruments with underlying subprime assets was €13 million (see Note 8 to the Consolidated Financial Statements), of which 85% have a high credit rating from the main rating agencies operating in the market.

Structured credit instruments

As of December 31, 2009, the carrying amount of structured credit instruments on the Group’s balance sheet was €4,403 million, of which the majority is guaranteed by agencies and insurance companies. Of this total, €615 million were recognized under “Financial assets held for trading”, €380 million recognized in “Financial instruments at fair value through profit or loss and €3,408 million under “Available for sale financial assets”.

The valuation methods of this kind of financial product are described in Note 8 to the Consolidated Financial Statements, “Fair value of financial instruments” in the Consolidated Financial Accounts.

A.   Operating Results

Factors Affecting the Comparability of our Results of Operations and Financial Condition

We are exposed to foreign exchange rate risk in that our reporting currency is the euro, whereas certain of our subsidiaries keep their accounts in other currencies, principally Mexican pesos, U.S. dollars, Argentine pesos, Chilean pesos, Colombian pesos, Venezuelan bolivars fuerte and New Peruvian Soles. For example, if Latin American currencies and the U.S. dollar depreciate against the euro, when the results of operations of our subsidiaries in the countries using these currencies are included in our consolidated financial statements, the euro value of their results declines, even if, in local currency terms, their results of operations and financial condition have remained the same or improved relative to the prior period. Accordingly, declining exchange rates may limit the ability of our results of operations, stated in euro, to fully describe the performance in local currency terms of our subsidiaries. By contrast, the appreciation of Latin American currencies and the U.S. dollar against the euro would have a positive impact on the results of operations of our subsidiaries in the countries using these currencies when their results of operations are included in our consolidated financial statements.

The assets and liabilities of our subsidiaries which maintain their accounts in currencies other than the euro have been converted to the euro at the period-end exchange rates for inclusion in our Consolidated Financial Statements. Income statement items have been converted at the average exchange rates for the period. The following table sets forth the exchange rates of several Latin American currencies and the U.S. dollar against the

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euro, expressed in local currency per €1.00 for 2009, 2008 and 2007 and as of December 31, 2009, 2008 and 2007 according to the European Central Bank (“ECB”).

	Average Exchange Rates						Period-end Exchange Rates
	Year Ended		Year Ended		Year Ended		As of		As of		As of
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
Currencies	2009		2008		2007		2009		2008		2007
Mexican peso		18.80		16.29		14.97		18.92		19.23		16.05
U.S. dollar		1.39		1.47		1.37		1.44		1.39		1.47
Venezuelan bolivar fuerte		2.99		3.16		2.94		3.09		2.99		3.16
Colombian peso		2,976.19		2,857.14		2,840.91		2,941.18		3,125.00		2,967.36
Chilean peso		777.60		762.78		715.31		730.46		885.74		731.53
New Peruvian Sol		4.19		4.29		4.29		4.16		4.37		4.40
Argentine peso		5.26		4.71		4.31		5.56		4.92		4.67

On January 8th, 2010 the government of Venezuela decided to devalue the bolivar fuerte. However, on January 19, 2010, the Venezuelan authorities announced that they would grant a preferential rate of 2.60 Bolivar fuerte per dollar for new items, among which payment of dividends is included, as long as the request for Authorization of Acquisition of Foreign Exchange was filed before January 8, 2010. Despite the uncertainty related to the final exchange rate of the bolivar fuerte to the euro, we estimate the devaluation will not have a significant impact on our consolidated financial statements in 2010.

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BBVA Group Results of Operations For 2009 Compared to 2008

The changes in the Group’s consolidated income statements for 2009 and 2008 were as follows

EU-IFRS(*)

	For the Year Ended
	December 31,						Change
	2009			2008			2009/2008
	(Millions of euros)						%
Interest and similar income		23,775			30,404			(21.8	)
Interest expense and similar charges		(9,893	)		(18,718	)		(47.1	)
Net interest income		13,882			11,686			18.8
Dividend income		443			447			(0.9	)
Share of profit or loss of entities accounted for using the equity method		120			293			(59.1	)
Fee and commission income		5,305			5,539			(4.2	)
Fee and commission expenses		(875	)		(1,012	)		(13.6	)
Net gains (losses) on financial assets and liabilities		892			1,328			(32.8	)
Net exchange differences		652			231			182.5
Other operating income		3,400			3,559			(4.5	)
Other operating expenses		(3,153	)		(3,093	)		1.9
Gross income		20,666			18,978			8.9
Administration costs		(7,662	)		(7,756	)		(1.2	)
Personnel expenses		(4,651	)		(4,716	)		(1.4	)
General and administrative expenses		(3,011	)		(3,040	)		(1.0	)
Depreciation and amortization		(697	)		(699	)		(0.3	)
Provisions (net)		(458	)		(1,431	)		(68.0	)
Impairment on financial assets (net)		(5,473	)		(2,941	)		86.1
Net operating income		6,376			6,151			3.7
Impairment on other assets (net)		(1,618	)		(45	)		n.m.(1	)
Gains (losses) in written off assets not classified as non-current assets held for sale		20			72			(72.2	)
Negative goodwill		99			—			n.m.(1	)
Gains (losses) in non-current assets held for sale not classified as discontinued operations		859			748			14.8
Income before tax		5,736			6,926			(17.2	)
Income tax		(1,141	)		(1,541	)		(26.0	)
Net income		4,595			5,385			(14.7	)
Net income attributed to non-controlling interest		(385	)		(365	)		5.2
Net income attributed to parent company		4,210			5,020			(16.1	)

(*)	EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004
(1)	Not meaningful

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The changes in our consolidated income statements for 2009 and 2008 were as follows:

Net interest income

The following table summarizes the principal components of net interest income for 2009 compared to 2008.

	For the Year Ended
	December 31,						Change
	2009			2008			2009/2008
	(Millions of euros)						(%)
Interest and similar income		23,775			30,404			(21.8	)
Interest expense and similar charges		(9,893	)		(18,718	)		(47.1	)
Net interest income		13,882			11,686			18.8

Net interest income rose 18.8% to €13,882 million for 2009 from €11,686 million for 2008 due to our customer deposits and debt certificates repricing faster than loans in the context of a slowdown in business. In our business with customers in the euro zone the sharp decline in interest rates initially had a positive effect because assets were repriced more slowly than liabilities. However, for 2009, the reduction in the yield on loans (down 181 basis points from December 31, 2008 to 4.17% as of December 31, 2009) is similar to the decline in the cost of funds (down 180 basis points from December 31, 2008 to 1.14% as of December 31, 2009). Consequently the average customer spread for 2009 at 3.03% was relatively stable compared to the average customer spread for 2008, returning to the level prior to the drastic decline in interest rates. Nevertheless, the risk profile is now lower because assets, such as the consumer finance portfolio, have shrunk and liabilities, in the form of liquid funds, have expanded.

In Mexico, interbank rates sank for the first half of 2008, but it was steady for the second half of the year, with the average Interbank Equilibrium Interest Rate (TIIE) for 2009 standing at 5.9%, as opposed to the figure of 8.3% for 2008. The customer spread remained stable throughout the year, at 11.4% as of December 31, 2009, compared to 12.4% as of December 31, 2007, due to a larger decline in yield on loans than in cost of deposits.

Dividend income

Dividend income decreased to €443 million for 2009, compared to €447 million for 2008.

Share of profit or loss of entities accounted for using the equity method

Share of profit or loss of entities accounted for using the equity method decreased to €120 million for 2009. This is significantly lower than €293 million for 2008, which included €212 million on sales from the industrial holdings portfolio, principally our interest in Gamesa Corporación Tecnológica, S.A.

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Fee and commission income

The breakdown of fee and commission income for 2009 and 2008 is as follows:

	Year Ended December 31,				Change
	2009		2008		2009/2008
	(Millions of euros)				(%)
Commitment fees		97		62		56.8
Contingent Liabilities		260		243		7.2
Documentary credits		42		45		(6.5	)
Bank and other guarantees		218		198		10.3
Arising from exchange of foreign currencies and banknotes		14		24		(41.0	)
Collection and payment services		2,573		2,655		(3.1	)
Securities services		1,636		1,895		(13.7	)
Counseling on and management of one-off transactions		7		9		(22.9	)
Financial and similar counseling services		43		24		80.8
Factoring transactions		27		28		(4.0	)
Non-banking financial products sales		83		96		(13.2	)
Other fees and commissions		565		503		12.4
Fee and commission income		5,305		5,539		(4.2	)

Fee and commission income for 2009 amounted to €5,305 million, a 4.2% decrease from €5,539 million for 2008, due mainly to the decrease of 18.3% in fee and commission income from mutual funds. Fee and commission income from mutual funds, are recorded under the heading “Securities services” and decreased primarily as a result of the transfer of customer funds out of mutual funds into time deposits.

Fee and commission expenses

The breakdown of fee and commission expenses for 2009 and 2008 is as follows:

	Year Ended December 31,				Change
	2009		2008		2009/2008
	(Millions of euros)				(%)
Brokerage fees on lending and deposit transactions		7		8		(12.6	)
Fees and commissions assigned to third parties		610		728		(16.2	)
Other fees and commissions		258		276		(6.6	)
Fee and commission expenses		875		1,012		(13.6	)

Fee and commission expenses for 2009 amounted to €875 million, a 13.6% decrease from €1,012 million for 2008, mainly due to a 16.2% decrease in fees and commissions assigned to third parties, which are primarily related to our pension business in Chile to €610 million for 2009 from €728 million for 2008.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities for 2009 amounted to €892 million, a 32.8% decrease from €1,328 million for 2008, due primarily to the lower results generated as a result of lower activity given market volatility. In addition, net gains (losses) on financial assets and liabilities for 2008 included non-recurring gains of €232 million related to our sale of shares in the initial public offering of Visa, Inc.

Net exchange differences amounted to €652 million for 2009, an increase of 182.5% from €231 million for 2008 due primarily to gains in currency trading.

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Other operating income and expenses

Other operating income amounted to €3,400 million for 2009 a 4.5% decrease compared with €3,559 million for 2008, primarily due to the lower volume of insurance policies written.

Other operating expenses for 2009, amounted to €3,153 million, a 1.9% increase compared with the €3,093 million recorded for 2008, primarily due to higher contributions to deposit guarantee funds in the countries where we operate. As a result of the fact that other operating income decreased at a faster pace than other operating expenses, the net variation in operating income and expenses was a 46.9% decrease with respect to 2008.

Gross income

As a result of the foregoing, gross income for 2009, was €20,666 million, a 8.9% increase over the €18,978 million recorded for 2008.

Administration costs

Administration costs for 2009 were €7,662 million, a 1.2% decrease from the €7,756 million recorded for 2008, due primarily to cost savings derived from the transformation and restructuring plans initiated in 2006, which resulted in the number of employees of the Group declining to 103,721 as of December 31, 2009 from 108,972 as of December 31, 2008.

The table below provides a breakdown of personnel expenses for 2009 and 2008.

	Year Ended December 31,				Change
	2009		2008		2009/2008
	(Millions of euros)				(%)
Wages and salaries		3,607		3,593		0.4
Social security costs		531		566		(6.2	)
Transfers to internal pension provisions		44		56		(21.5	)
Contributions to external pension funds		68		71		(3.9	)
Other personnel expenses		401		430		(6.8	)
Personnel expenses		4,651		4,716		(1.4	)

The table below provides a breakdown of general and administrative expenses for 2009 and 2008.

	Year Ended December 31,				Change
	2009		2008		2009/2008
	(Millions of euros)				(%)
Technology and systems		577		598		(3.5	)
Communications		254		260		(2.1	)
Advertising		262		273		(4.2	)
Property, fixtures and materials		643		617		4.2
Of which:
Rents expenses		304		268		13.5
Taxes other than income tax		266		295		(9.7	)
Other expenses		1,009		997		1.2
General and administrative expenses		3,011		3,040		(1.0	)

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Depreciation and amortization

Depreciation and amortization for 2009 amounted to €697 million compared to the €699 million recorded for 2008, due primarily to the amortization of software and properties.

Provisions (net)

Provisions (net) for 2009 were €458 million, with an important decrease compared with the €1,431 million recorded for 2008, primarily due to the larger provisions for early retirements (€860 million) and the Madoff fraud (€431 million) recorded in 2008.

Impairment on financial assets (net)

Impairment on financial assets (net) was €5,473 million for 2009, a 86.1% increase over the €2,941 million recorded for 2008, due primarily to an increase in provisions in connection with the significant increase in substandard loans from €8,540 million as of December 31, 2008 to €15,312 million as of December 31, 2009, due primarily to the deterioration of the economic environment in Spain and in the United States. The Group’s non-performing assets ratio increased substantially to 4.3% as of December 31, 2009 from 2.3% as of December 31, 2008.

Net operating income

As a result of the foregoing, net operating income for 2009, was €6,376 million, a 3.7% increase over the €6,151 million recorded for 2008.

Impairment on other assets (net)

Impairment on other assets (net) for 2009 amounted to €1,618 million, a significant increase from the €45 million recorded for 2008, due primarily to impairment charges for goodwill of €1,097 million attributed to the significant decline in economic and credit conditions in the states in which the Group operates in the United States. The remainder of the increase was attributed to write-downs on real-estate investments.

Gains (losses) in written off assets not classified as non-current assets held for sale

Gains (losses) in written off assets not classified as non-current assets held for sale for 2009 amounted to a gain of €20 million, a 72.2% decrease from the €72 million gain recorded for 2008.

Negative goodwill

Negative goodwill for 2009 amounted to a gain of €99 million due to the acquisition of certain assets and liabilities of Guaranty.

Gains (losses) in non-current assets held for sale not classified as discontinued operations

Gains (losses) in non-current assets held for sale not classified as discontinued operations for 2009, was €859 million, an increase of 14.8% million compared to €748 million for 2008. The €859 million for 2009 included capital gains of €830 million generated by the sale on September 25, 2009 of 948 fixed assets (mainly branch offices and various individual properties) to a third-party real estate investor. At the same time, BBVA signed a sale and leaseback long-term contract with such investor, which includes an option to repurchase the properties at fair values, exercisable by the Group on the agreed dates (in most cases, the termination date of each lease agreement). For 2008 the gains (losses) in non-current assets held for sale not classified as discontinued operations, was primarily affected by a gross gain of €727 million from the sale of our stake inBradesco.

Income before tax

As a result of the foregoing, income before tax for 2009 was €5,736 million, a 17.2% decrease from the €6,926 million recorded for 2008.

Income tax

Income tax for 2009 amounted to €1,141 million, a 26.0% decrease from the €1,541 million recorded for 2008, due to lower income before tax and higher income exempt from tax.

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Net income

As a result of the foregoing net income for 2009 was €4,595 million, a 14.7% decrease from the €5,385 million recorded for 2008.

Net income attributed to non-controlling interest

Net income attributed to non-controlling interest for 2009 was €385 million, a 5.2% increase over the €365 million recorded for 2008, due primarily to greater profits obtained by certain of our Latin American subsidiaries, primarily in Venezuela, Peru and Chile, which have minority shareholders.

Net income attributed to parent company

Net income attributed to parent company for 2009 was €4,210 million, a 16.1% decrease from the €5,020 million recorded for 2008.

BBVA Group Results of Operations For 2008 Compared to 2007

The changes in the Group’s consolidated income statements for 2008 and 2007 were as follows:

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Interest and similar income		30,404			26,176			16.2
Interest expense and similar charges		(18,718	)		(16,548	)		13.1
Net interest income		11,686			9,628			21.4
Dividend income		447			348			28.4
Share of profit or loss of entities accounted for using the equity method		293			241			21.6
Fee and commission income		5,539			5,603			(1.1	)
Fee and commission expenses		(1,012	)		(1,043	)		(2.9	)
Net gains (losses) on financial assets and liabilities		1,328			1,545			(14.1	)
Net exchange differences		231			411			(43.8	)
Other operating income		3,559			3,589			(0.8	)
Other operating expenses		(3,093	)		(3,051	)		1.4
Gross income		18,978			17,271			9.9
Administrative costs		(7,756	)		(7,253	)		6.9
Personnel expenses		(4,716	)		(4,335	)		8.8
General and administrative expenses		(3,040	)		(2,918	)		4.2
Depreciation and amortization		(699	)		(577	)		21.1
Provisions (net)		(1,431	)		(235	)		n.m.	(1)
Impairment on financial assets (net)		(2,941	)		(1,903	)		54.6
Net operating income		6,151			7,303			(15.8	)
Impairment on other assets (net)		(45	)		(13	)		n.m.	(1)
Gains (losses) in written off assets not classified as non-current assets held for sale		72			13			n.m.	(1)
Gains (losses) in non-current assets held for sale not classified as discontinued operations		748			1,191			(37.2	)
Income before tax		6,926			8,494			(18.5	)
Income tax		(1,541	)		(2,079	)		(25.9	)
Net income		5,385			6,415			(16.1	)
Net income attributed to non-controlling interest		(365	)		(289	)		26.3
Net income attributed to parent company		5,020			6,126			(18.1	)

(1) Not meaningful

77

Net interest income

The following table summarizes the principal components of net interest income for 2008 compared to 2007.

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Interest and similar income		30,404			26,176			16.2
Interest expense and similar charges		(18,718	)		(16,548	)		13.1
Net interest income		11,686			9,628			21.4

In 2008, net interest income was €11,686 million, a 21.4% increase over the €9,628 million recorded in 2007. The improvement was due to the increase in lending, which effect on net interest income (€3,297 million) was higher than the effect on net interest income of the increase in volume of deposits of customers (€2,084 million). Changes in interest rates between the two periods also had a significant effect on the increase in net interest income mainly due to increase in interest related to loans and advances to customers in euro, particularly in Spain.

Dividend income

Dividend income for 2008 was €447 million, a 28.4% increase over the €348 million recorded in 2007, due primarily to dividends from Telefónica, S.A.

Share of profit or loss of entities accounted for using the equity method

Share of Profit or loss of entities accounted for using the equity method for 2008 was €293 million euros, a 21.6% increase over the €241 million recorded in 2007, due primarily to the results contributed by Corporación IBV (€233 million in 2008 compared to €209 million in 2007).

Fee and commission income

The breakdown of fee and commission income in 2008 and 2007 is as follows:

	Year Ended December 31,				Change
	2008		2007		2008/2007
	(In millions of euros)				(in %)
Commitment fees		62		55		12.7
Contingent liabilities		243		229		6.1
Documentary credits		45		38		18.4
Bank and other guarantees		198		191		3.7
Arising from exchange of foreign currencies and banknotes		24		24		0.0
Collection and payment services		2,655		2,567		3.4
Securities services		1,895		2,089		(9.3	)
Counseling on and management of one-off transactions		9		16		(43.8	)
Financial and similar counseling services		24		23		4.4
Factoring transactions		28		25		12.0
Non-banking financial products sales		96		87		10.3
Other fees and commissions		503		488		3.1
Fee and commission income		5,539		5,603		(1.1	)

Fee and commission income for 2008 amounted to €5,539 million, a 1.1% decrease from €5,603 million in 2007, due mainly to the decrease in fee and commission income from mutual and pension funds and other market-related products. Fee and commission income from mutual and pension funds and other market-related products, which is recorded under the heading “Securities services”, decreased as a result of a decrease in mutual and pension

78

fund assets under management in 2008 compared to 2007 as a result of the negative performance of equity markets in 2008 compared to 2007 and, in markets such as Spain, the transfer of customer funds out of mutual funds, the value of which decreased by of 19.0%, and into time deposits.

Fee and commission expenses

The breakdown of fee and commission expenses in 2008 and 2007 is as follows:

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euro)						(in %)
Brokerage fees on lending and deposit transactions		(8	)		(7	)		28.6
Fees and commissions assigned to third parties		(728	)		(612	)		18.9
Other fees and commissions		(276	)		(424	)		(35.1	)
Fee and commission expenses		(1,012	)		(1,043	)		(2.9	)

Fee and commission expenses for 2008 amounted to €1,012 million, a 3.0% decrease from €1,043 million in 2007, mainly due to a 35.1% decrease in other fees and commissions to €276 million in 2008 from €424 million in 2007.

Net fees and commissions

As a result of the foregoing, net fees and commissions for 2008 was €4,527 million, a 0.7% decrease from the amount €4,560 million recorded in 2007.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities in 2008 amounted to €1,328 million, a 14.05% decrease from €1,545 million in 2007. Net exchange differences amounted to €231 million, a decrease of 43.8% from €411 million in 2007. Decreases were due primarily to the lower results generated by financial assets held for trading.

Other operating income and other operating expenses

Other operating income amounted to €3,559 million in 2008, a 0.8% decrease compared with the €3,589 million in 2007. Other operating expenses in 2008 amounted to €3,093 million, a 1.4% increase compared with the €3,051 million recorded in 2007. The net variation was a 13.4% decrease with respect to 2007, due primarily to the smaller amount of income generated from real estate activities.

Gross income

As a result of the foregoing, gross income in 2008 was €18,978 million, a 9.9% increase over the €17,271 million recorded in 2007.

Administrative costs

Administrative costs for 2008 were €7,756 million, a 6.9% increase over €7,253 million recorded in 2007, due primarily to the incorporation of BBVA Compass (with its higher relative wages and salaries) and a 30.7% increase in rents expenses in connection with the rental in 2008 of properties previously owned by the Group in connection with the project for our new corporate headquarters. These factors were partially offset through a 2.6% reduction in the number of employees of the Group as of December 31, 2008 to 108,972 compared to 111,913 employees as of December 31, 2007.

79

The table below provides a breakdown of personnel expenses for 2008 and 2007.

	Year Ended December 31,				Change
	2008		2007		2008/2007
	(In millions of euro)				(in %)
Wages and salaries		3,593		3,297		8.9
Social security costs		566		546		3.7
Transfers to internal pension provisions		56		56		—
Contributions to external pension funds		71		58		22.4
Other personnel expenses		430		378		13.8
Total		4,716		4,335		8.8

The table below provides a breakdown of general and administrative expenses for 2008 and 2007.

	Year Ended December 31,				Change
	2008		2007		2008/2007
	(In millions of euro)				(in %)
Technology and systems		598		539		10.9
Communications		260		236		10.2
Advertising		273		248		10.1
Property, fixtures and materials		617		520		18.6
Of which:
Rents expenses		268		205		30.7
Taxes other than income tax		295		258		14.3
Other expenses		997		1,117		(10.7	)
Total		3,040		2,918		4.2

Depreciation and amortization

Depreciation and amortization for 2008 amounted to €699 million, a 21.1% increase over the €577 million recorded in 2007, due primarily to the full year of amortization of intangible assets related to our acquired banks in the United States, principally BBVA Compass.

Impairment on financial assets (net)

Impairment on financial assets (net) was €2,940 million, a 54.5% increase over the €1,903 million recorded in 2007, due primarily to an increase in provisions in connection with the increase in substandard loans from €3,369 million as of December 31, 2007 to €8,728 million as of December 31, 2008, due to the deterioration of the economic environment and to the Group’s application of prudent criteria with respect to risks.

Provisions (Net)

Provisions (net) for 2008 were €1,431 million, compared with €235 million recorded in 2007, primarily due to our recognition in 2008 of a non-recurring gross charge of €860 million (compared to €100 million in 2007) related to extraordinary early retirements in Spain under the transformation plan we announced in the fourth quarter of 2007 and the extraordinary provision of €431 million (€302 million net of tax) stemming from the Madoff fraud.

Net operating income

As a result of the foregoing, net operating income for 2008 was €6,151 million, a 15.8% decrease from 2007 (€7,303 million).

80

Impairment on other assets (net)

Impairment on other assets (net) for 2008 amounted to €45 million, an increase from the €13 million recorded in 2007, primarily related to real estate impairments.

Gains (losses) in written off assets not classified as non-current assets held for sale

Gains (losses) in written off assets not classified as non-current assets held for sale for 2008 amounted to €72 million, an increase from the €13 million recorded in 2007.

Gains (losses) in non-current assets held for sale not classified as discontinued operations

Gains (losses) in non-current assets held for sale not classified as discontinued operations for 2008 amounted to €748 million, a 37.2% decrease from the €1,191 million recorded in 2007. In 2008 gains (losses) in non-current assets held for sale not classified as discontinued operations, was primarily affected by a gross gain of €727 million from the sale of our stake in Bradesco. In 2007, gains (losses) in non-current assets held for sale not classified as discontinued operations, was primarily affected by a gross gain of €847 million from our sale of our stake in Iberdrola, S.A. and a gross gain of €273 million from our sale of real estate as part of the construction of our new corporate headquarters.

Income before tax

As a result of the foregoing, income before tax for 2008 was €6,926 million, a 18.5% decrease from the €8,494 million recorded in 2007.

Income tax

Income tax for 2008 amounted to €1,541 million, a 25.9% decrease from the €2,079 million recorded in 2007, due to lower profits before tax, higher profits exempt from tax and the reduction of the tax rate in Spain from 32.5% in 2007 to 30% in 2008.

Net income

As a result of the foregoing net income for 2008 was €5,385 million, a 16.1% decrease from the €6,415 million recorded in 2007.

Net income attributed to non-controlling interest

Net income attributed to non-controlling interest in 2008 was €365 million, a 26.3% increase over the €289 million recorded in 2007, due primarily to greater profits obtained by certain of our Latin American subsidiaries whose results we account for as Net income attributed to non-controlling interest.

Net income attributed to parent company

Net income attributed to parent company in 2008 was €5,020 million, a 18.1% decrease from the €6,126 million recorded in 2007.

81

Results of Operations by Business Areas for 2009 Compared to 2008

Spain and Portugal

	Year Ended December 31,						Change
	2009			2008			2009/2008
	(In millions of euros)						(in percentage)
Net interest income		4,934			4,804			2.7
Net fees and commissions		1,482			1,635			(9.4	)
Net gains (losses) on financial assets and liabilities and exchange differences		188			232			(18.8	)
Other operating income and expenses		434			430			0.8
Gross income		7,038			7,101			(0.9	)
Administrative costs		(2,400	)		(2,509	)		(4.4	)
Depreciation and amortization		(105	)		(104	)		1.0
Impairment on financial assets (net)		(1,931	)		(809	)		138.7
Provisions (net) and other gains (losses)		777			5			n.m.	(1)
Income before tax		3,380			3,684			(8.3	)
Income tax		(1,007	)		(1,119	)		(10.1	)
Net income		2,373			2,565			(7.5	)
Net income attributed to non-controlling interest		—			—			—
Net income attributed to parent company		2,373			2,565			(7.5	)

(1) Not meaningful

Net interest income

Net interest income of this business area for 2009, was €4,934 million, a 2.7% increase over the €4,804 million recorded for 2008, due to the pricing policy and a change in the deposit mix (with current and savings accounts playing a bigger role than time deposits).

Net fees and commissions

Net fees and commissions of this business area amounted to €1,482 million for 2009, a 9.4% decrease from the €1,635 million recorded for 2008, due primarily to the decrease in fees income from mutual and pension funds and other market-related products.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains on financial assets and liabilities and exchange differences of this business area for 2009 was €188 million, a 18.8% decrease from the net gains of €232 million for 2008, due primarily to the result of lower activity given market volatility.

Other operating income and expenses

Other operating income of this business area for 2009 was €434 million, a 0.8% increase over the €430 million recorded for 2008.

Gross income

As a result of the foregoing, gross income of this business area for 2009 was €7,038 million, a 0.9% decrease over the €7,101 million recorded for 2008.

82

Administrative costs

Administrative costs of this business area for 2009 was €2,400 million, a 4.4% decrease from the €2,509 million recorded for 2008, due primarily to the Group’s transformation plan, which helped to reduce wages and salaries, and through continued streamlining of the branch network.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business for 2009 was €1,931 million, a 138.7% increase over the €809 million recorded for 2008, due primarily to the significant increase in non-performing assets as a result of the economic downturn. The business area’s non-performing assets ratio increased significantly to 5.1% as of December 31, 2009 from 2.6% as of December 31, 2008.

Income before tax

As a result of the foregoing, income before tax of this business area for 2009 was €3,380 million, a 8.3% decrease from the €3,684 million recorded in 2008.

Income tax

Income tax of this business area for 2009 was €1,007 million, a 10.1% decrease from the €1,119 million recorded in 2008, primarily as a result of the decrease in income before tax.

Net income attributed to parent company

As a result of the foregoing, net income attributed to parent company of this business area for 2009 was €2,373 million, a 7.5% decrease from the €2,565 million recorded in 2008.

Wholesale Banking and Asset Management

	Year Ended December 31,						Change
	2009			2008			2009/2008
	(In millions of euros)						(in %)
Net interest income		1,148			746			53.9
Net fees and commissions		516			414			24.7
Net gains (losses) on financial assets and liabilities and exchange differences		(53	)		140			n.m.	(1)
Other operating income and expenses		317			409			(22.6	)
Gross income		1,928			1,709			12.8
Administrative costs		(531	)		(491	)		8.5
Depreciation and amortization		(10	)		(9	)		18.0
Impairment on financial assets (net)		(7	)		(258	)		(97.3	)
Provisions (net) and other gains (losses)		(5	)		5			n.m.	(1)
Income before tax		1,375			956			43.8
Income tax		(360	)		(177	)		103.0
Net income		1,015			779			30.3
Net income attributed to non-controlling interest		(3	)		(6	)		(44.9	)
Net income attributed to parent company		1,012			773			30.9

(1) Not meaningful.

The preceding table and descriptions below do not take into account the impact of the Madoff fraud in 2008, which, due to its unique nature, is included in the area of Corporate Activities.

83

Net interest income and Net gains (losses) on financial assets and liabilities and exchange differences

For internal management purposes, “net interest income” and “net gains (losses) on financial assets and liabilities and exchange differences” for this business area are analyzed together. Net interest income includes the cost of funding of the market operations whose revenues are accounted for in the heading “Net gains (losses) on financial assets and liabilities and exchange differences”.

Net interest income for 2009 was €1,148 million, a 53.9% increase over the €746 million recorded for 2008. Net gains (losses) on financial assets and liabilities and exchange differences amounted to losses of €53 million, compared to gains of €140 million for 2008. The sum of these headings for 2009 was €1,095 million, a 23.6% increase over the €886 million recorded for 2008, due primarily to active price management and an increase in the number of customer transactions.

Net fees and commissions

Net fees and commissions of this business area amounted to €516 million for 2009, a 24.7% increase from the €414 million recorded for 2008, due to increased business volumes as a result of the area’s increased strategic focus on customers with the potential to generate high business volumes.

Other operating income and expenses

Other operating income and expenses of this business area for 2009 was €317 million, a 22.6% decrease from the €409 million recorded for 2008, primarily reflecting the non-recurrence in 2009 of gains recognized on the sale of ownership interests in Gamesa in 2008.

Gross income

As a result of the foregoing, gross income of this business area for 2009 was €1,928 million, a 12.8% increase over the €1,709 million recorded in 2008.

Administrative costs

Administrative costs of this business area for 2009 were €531 million, a 8.5% increase over the €491 million recorded in 2008, due primarily to an increase in employees in connection with growth of the business in Corporate and Investment Banking unit.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business for 2009 was €7 million, a 97.3% decrease from the €258 million recorded for 2008, due to the decline of the loan portfolio and to the focus on customers with better credit (which is also boosting transactional business). The business area’s non-performing assets ratio increased to 1.0% as of December 31, 2009 from 0.2% as of December 31, 2008.

Income before tax

As a result of the foregoing, income before tax of this business area for 2009 was €1,375 million, a 43.8% increase over the €956 million recorded in 2008.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2009 was €1,012 million, a 30.9% increase over the €773 million recorded in 2008.

84

Mexico

	Year Ended December 31,						Change
	2009			2008			2009/2008
	(In millions of euros)						(in %)
Net interest income		3,307			3,716			(11.0	)
Net fees and commissions		1,077			1,189			(9.4	)
Net gains (losses) on financial assets and liabilities and exchange differences		370			376			(1.4	)
Other operating income and expenses		116			154			(24.6	)
Gross income		4,870			5,435			(10.4	)
Administrative costs		(1,486	)		(1,727	)		(13.9	)
Depreciation and amortization		(65	)		(73	)		(10.5	)
Impairment on financial assets (net)		(1,525	)		(1,110	)		37.4
Provisions (net) and other gains (losses)		(21	)		(26	)		(15.7	)
Income before tax		1,773			2,499			(29.1	)
Income tax		(412	)		(560	)		(26.5	)
Net income		1,361			1,939			(29.8	)
Net income attributed to non-controlling interest		(2	)		(1	)		45.1
Net income attributed to parent company		1,359			1,938			(29.9	)

As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2009, the depreciation of the Mexican peso against the euro negatively affected the results of operations of our Mexican subsidiaries in euro terms. The average Mexican peso to euro exchange rate for 2009, decreased by 13.3% compared to the average exchange rate for 2008.

Net interest income

Net interest income of this business area for 2009 was €3,307 million, a 11.0% decrease from the €3,716 million recorded for 2008, due primarily to the depreciation of Mexican peso compared to euro, partially offset by larger business volumes, as well as an active pricing policy.

Net fees and commissions

Net fees and commissions of this business area amounted to €1,077 million for 2009, a 9.4% decrease from the €1,189 million recorded 2008, due to the depreciation of Mexican peso compared to euro, partially offset by a positive performance on banking services and pension fund management.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains on financial assets and liabilities and exchange differences of this business area for 2009 amounted to €370 million, a 1.4% decrease from the net gains of €376 million for 2008. Net gains (losses) on financial assets and liabilities and exchange differences for 2008 included non-recurring gains from the sales of shares in the initial public offering of Visa Inc. and there was no comparable transaction in 2009.

Other operating income and expenses

Other operating income and expenses of this business area for 2009, was €116 million, a 24.6% decrease from the €154 million recorded for 2008, due to the depreciation of Mexican peso compared to euro, partially offset by an increase in income from the pension and insurance businesses.

85

Gross income

As a result of the foregoing, gross income of this business area for 2009, was €4,870 million, a 10.4% decrease from the €5,435 million recorded for 2008.

Administrative costs

Administrative costs of this business area for 2009 amounted to €1,486 million, a 13.9% decrease from the €1,727 million recorded for 2008. In the latter part of 2008 we instituted certain cost-control programs to limit the rate of local currency growth in administrative costs in this business area, the effects of which began to be felt in 2009.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business for 2009 was €1,525 million, a 37.4% increase over the €1,110 million recorded for 2008, due primarily to increases from the consumer loan and credit card segments due to a general deterioration in economic conditions. The business area’s non-performing assets ratio increased to 4.3% as of December 31, 2009 from 3.2% as of December 31, 2008.

Income before tax

As a result of the foregoing, income before tax of this business area for 2009 was €1,773 million, a 29.1% decrease from the €2,499 million recorded for 2008.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2009 was €1,359 million, a 29.9% decrease from the €1,938 million recorded in 2008.

The United States

	Year Ended December 31,						Change
	2009			2008			2009/2008
	(In millions of euros)						(in %)
Net interest income		1,514			1,332			13.7
Net fees and commissions		555			546			1.7
Net gains (losses) on financial assets and liabilities and exchange differences		151			123			23.0
Other operating income and expenses		(35	)		21			n.m.	(1)
Gross income		2,184			2,022			8.0
Administrative costs		(1,105	)		(1,088	)		1.5
Depreciation and amortization		(204	)		(244	)		(16.1	)
Impairment on financial assets (net)		(1,419	)		(365	)		288.5
Provisions (net) and other gains (losses)		(1,056	)		(15	)		n.m.	(1)
Income before tax		(1,599	)		309			n.m.	(1)
Income tax		528			(99	)		n.m.	(1)
Net income		(1,071	)		211			n.m.	(1)
Net income attributed to non-controlling interest		—			—			—
Net income attributed to the parent company		(1,071	)		211			n.m.	(1)

(1) Not meaningful.

86

As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2009, the depreciation of the euro against the dollar positively affected the results of operations of our foreign subsidiaries in euro terms. The average dollar to euro exchange rate for 2009 increased by 5.4% to the average exchange rate for 2008.

In addition, on August 21, 2009, BBVA Compass acquired certain assets and liabilities of Guaranty from the FDIC through a public auction for qualified investors. BBVA Compass acquired assets, mostly loans, for $11,441 million (approximately €8,016 million) and assumed liabilities, mostly customer deposits, for $12,854 million (approximately €9,006 million). These acquired assets and liabilities represented 1.5% and 1.8% of our total assets and liabilities on the acquisition date. The agreement with the FDIC limits the credit risk associated with the acquisition. The purchase included a loss-sharing agreement with the FDIC under which the latter undertook to assume 80% of the losses on up to the first $2,285 million of the loans purchased by us and up to 95% of the losses, if any, on the loans exceeding this amount. This commitment has a maximum term of either five or ten years, depending on the category of loan portfolio. This investment, which included 164 branches and 300,000 customers in Texas and California, offers us an opportunity to strengthen our United States’ banking franchise in the retail market, while limiting our investment risk.

Net interest income

Net interest income for 2009 was €1,514 million, a 13.7% increase over the €1,332 million recorded for 2008, due mainly to increased volumes of activity primarily as a result of the incorporation of the deposits and liabilities acquired from Guaranty, a lower average dollar to euro exchange rate and our active pricing policy.

Net fees and commissions

Net fees and commissions of this business area for 2009 was €555 million, a 1.7% increase over the €546 million recorded in 2008.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2009 were €151 million, a 23% increase over the €123 million recorded in 2008.

Other operating income and expenses

Other operating income and expenses of this business area for 2009 was a loss of €35 million compared to a gain of €21 million recorded for 2008, due primarily to higher contributions to the deposit guarantee fund, as a result of the $28 million contribution made during the second quarter of 2009 to the FDIC.

Gross income

As a result of the foregoing, gross income of this business area for 2009 was €2,184 million, a 8.0% increase over the €2,022 million recorded in 2008.

Administrative costs

Administrative costs of this business area for 2009 was €1,105 million, a 1.5% increase over the €1,088 million recorded for 2008, primarily as a result of the exchange rate effects described above.

Depreciation and amortization

Depreciation and amortization of this business area for 2009 was €204 million, a 16.1% decrease from €244 million in 2008, due primarily to the lower amortization of intangible assets related to the acquisition of the banks comprising this business area.

87

Impairment on financial assets (net)

Impairment on financial assets (net) of this business for 2009 was €1,419 million compared with €365 million recorded for 2008, due to the write off of impaired assets attributed to the significant decline in economic and credit conditions in the states in which the area operates in the United States. The value of the collateral against which the commercial real-estate loan book was re-assessed, resulting a write-off for the difference, and additional provisions were set aside to maintain the coverage ratio comparable to year end 2008. The business area’s non-performing assets ratio increased to 5.2% as of December 31, 2009 from 3.4% as of December 31, 2008. The non-performing assets ratio as of December 31, 2009 was positively affected by incorporation of performing assets from Guaranty in the third quarter of 2009. The business’ coverage ratio remained at 57% as of December 31, 2009 mainly due to the above-mentioned provisions.

Provisions (net) and other gains (losses)

Provisions (net) and other gains (losses) for 2009 reflected losses of €1,056 million, compared to the €15 million losses recorded for 2008, due primarily to impairment losses for goodwill attributed to the significant decline in economic and credit conditions in the states in which the area operates in the United States.

Income before tax

As a result of the foregoing, the income before tax of this business area for 2009 was a loss amounted to €1,599 million compared to the income amounted to €309 million recorded in 2008.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2009 was a loss amounted to €1,071 million compared to the income amounted to €211 million recorded in 2008.

South America

	Year Ended December 31,						Change
	2009			2008			2009/2008
	(In millions of euros)						(in %)
Net interest income		2,463			2,149			14.6
Net fees and commissions		836			775			7.8
Net gains (losses) on financial assets and liabilities and exchange differences		405			253			60.4
Other losses (net)		2			15			(83.3	)
Gross income		3,706			3,192			16.1
Administrative costs		(1,389	)		(1,315	)		5.7
Depreciation and amortization		(115	)		(107	)		7.8
Impairment on financial assets (net)		(419	)		(358	)		17.3
Provisions (net) and other gains (losses)		(52	)		(17	)		206.0
Income before tax		1,731			1,396			24.0
Income tax		(397	)		(318	)		24.9
Net income		1,334			1,078			23.7
Net income attributed to non-controlling interest		(463	)		(351	)		31.9
Net income attributed to parent company		871			727			19.8

(1) Not meaningful.

88

As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2009, the depreciation of certain of the currencies in the countries in which we operate in South America against the euro slightly negatively affected the results of operations of our foreign subsidiaries in euro terms.

Net interest income

Net interest income for 2009, was €2,463 million, a 14.6% increase over the €2,149 million recorded for 2008, due to larger business volumes and more favorable customer spreads.

Net fees and commissions

Net fees and commissions of this business area amounted to €836 million for 2009, a 7.8% increase from the €775 million recorded for 2008, mainly due to an increase in banking and mutual fund commissions due primarily to larger business volumes.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains on financial assets and liabilities and exchange differences of this business area for 2009 was €405 million, a 60.4% increase from the net gains of €253 million for 2008, due to recovery in the financial markets, which enabled some entities to realize capital gains on their fixed income portfolios as well as higher returns on proprietary trading positions held by the pension fund managers and insurance providers.

Gross income

As a result of the foregoing, the gross income of this business area for 2009 was €3,706 million, a 16.1% increase over the €3,192 million recorded in 2008.

Administrative costs

Administrative costs of this business area for 2009 were €1,389 million, a 5.7% increase from the €1,315 million recorded for 2008, due primarily to growth in salaries that were lower than average inflation in the region.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business for 2009 was €419 million a 17.3% increase from the €358 million recorded for 2008, due to generic provisions attributable to the rise in lending volume as under Bank of Spain rules recently-made loans require higher generic provisions than older loans in our portfolio. The business area’s non-performing assets ratio increased to 2.7% as of December 31, 2009 from 2.1% as of December 31, 2008.

Income before tax

As a result of the foregoing, income before tax of this business area for 2009 was €1,731 million, a 24.0% increase over the €1,396 million recorded in 2008.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2009 was €871 million, a 19.8% increase over the €727 million in 2008.

89

Corporate Activities

	Year Ended December 31,						Change
	2009			2008			2009/2008
	(In millions of euros)						(in %)
Net interest income		516			(1,061	)		n.m.	(1)
Net fees and commissions		(36	)		(36	)		14.3
Net gains (losses) on financial assets and liabilities and exchange differences		483			436			10.8
Other operating income and expenses		(23	)		176			n.m.	(1)
Gross income		940			(481	)		n.m.	(1)
Administrative costs		(751	)		(625	)		(20.1	)
Depreciation and amortization		(197	)		(163	)		20.7
Impairment on financial assets (net)		(172	)		(41	)		n.m.	(1)
Provisions (net) and other gains (losses)		(743	)		(609	)		22.1
Income before tax		(923	)		(1,919	)		(51.9	)
Income tax		506			732			(30.9	)
Net income		(417	)		(1,187	)		(64.9	)
Net income attributed to non-controlling interest		84			(7	)		n.m.	(1)
Net income attributed to parent company		(333	)		(1,193	)		(72.1	)

(1) Not meaningful.

Net interest income

Net interest income of this business area for 2009 was a gain of €516 million compared to the loss of €1,061 million recorded in 2008, due primarily to the favorable impact of lower interest rates and our strong balance sheet management of the euro balance sheet and the positive contribution of interest rate economic hedges.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2009 were €483 million, an 10.8% increase over the €436 million recorded in 2008.

Other operating income and expenses

Other operating income and expenses of this business area for 2009 was a loss of €217 million compared to a gain of €176 million recorded in 2008, due mainly to the impact in the consolidated financial statements of the treatment of Venezuela as a hyperinflationary economy in 2009.

Gross income

As a result of the foregoing, gross income of this business area for 2009 was a gain of €940 million, compared with a loss of €481 million recorded in 2008.

Administrative costs

Administrative costs of this business area for 2009 were €751 million, a 20.1% increase from the €625 million recorded in 2008.

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Depreciation and amortization

Depreciation and amortization of this business area for 2009 was €197 million, a 20.7% increase over the €163 million recorded in 2008.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business for 2009 was €172 million compared with €41 million recorded for 2008, due primarily to the increase of country risk provisions related to Brazil due to the reclassification of Brazil as a “country with transitory difficulties” by the Bank of Spain.

Provisions (net) and other gains (losses)

Provisions (net) and other gains (losses) for 2009 was a loss of €743 million, compared with a loss of €609 million for 2008. This increased loss was primarily due to impairment charges for investments in tangible assets and inventories from our real estate businesses during the year ended December 31, 2009. The year ended December 31, 2008 included the gross gain of €727 million from the sale of our stake in Bradesco, which was offset in part by a charge of €470 million related to early retirements.

Income before tax

As a result of the foregoing, income before tax of this business area for 2009 was a loss of €923 million, compared with a loss of €1,919 million recorded in 2008.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2009 was a loss of €333 million, compared with €1,193 million in 2008, due primarily to the aforementioned items.

Results of Operations by Business Areas for 2008 Compared to 2007

Spain and Portugal

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in percentage)
Net interest income		4,804			4,395			9.3
Net fees and commissions		1,635			1,705			(4.1	)
Net gains (losses) on financial assets and liabilities and exchange differences		232			251			(7.6	)
Other operating income and expenses		430			401			7.2
Gross income		7,101			6,753			5.2
Administrative costs		(2,509	)		(2,536	)		(1.0	)
Depreciation and amortization		(104	)		(113	)		(8.0	)
Impairment on financial assets (net)		(809	)		(591	)		36.9
Provisions (net) and other gains (losses)		5			6			(16.7	)
Income before tax		3,684			3,519			4.7
Income tax		(1,119	)		(1,144	)		(2.1	)
Net income		2,565			2,375			7.9
Net income attributed to non-controlling interest		—			1			n.m.	(1)
Net income attributed to parent company		2,565			2,376			7.9

(1) Not meaningful

91

Net interest income

Net interest income for 2008 was €4,804 million, a 9.3% increase over the €4,395 million recorded in 2007. Due to a successful pricing policy, interest rate cuts in 2008 did not prevent the yield on loans to domestic customers in Spain from continuing its upward trend of the last two years. This was, however, partially offset by an increase in the costs of deposits, mainly due to structural changes in customer funds, with time deposits playing an ever-increasing role. The increase in costs of deposits was lower than the increase in yields on loans and as result 2008, the average customers spreads was 3.18%, an increase of nine basis points compared to 2007. This helped net interest income in the Spain and Portugal area to grow by 10.0% in 2008.

Net fees and commissions

Net fees and commissions of this business area amounted to €1,635 million in 2008, a 4.1% decrease from the €1,705 million recorded in 2007, due primarily to the decrease in fees from equity intermediation and fees related to mutual funds, due to the impact of the negative market effect on the managed assets and clients’ greater preference for time deposits.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2008 was €232 million, a 7.6% decrease from the €251 million in 2007.

Other operating income and expenses

Other operating income and expenses of this business area for 2008 was €430 million, a 7.2% increase over the €401 million recorded in 2007, as a result of growth in income from insurance activities

Gross income

As a result of the foregoing, gross income of this business area for 2008 was €7,101 million, a 5.2% increase over the €6,753 million recorded in 2007.

Administrative costs

Administrative costs of this business area for 2008 was €2,509 million, a 1.0% decrease over the €2,536 million recorded in 2007, due primarily to the Group’s transformation plan, which helped to reduce wages and salaries, and thorough continued streamlining of the branch network, with a reduction of 220 offices over 2008.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business area for 2008 was €809 million, a 36.9% increase over the €591 million recorded in 2007, due primarily to the deterioration of the economic environment and to the application of prudent criteria with respect to risks. The business area’s non-performing assets ratio increased to 2.6% as of December 31, 2008 from 1.0% as of December 31, 2007.

Income before tax

As a result of the foregoing, income before tax of this business area for 2008 was €3,684 million, a 4.7% increase over the €3,519 million recorded in 2007.

Income tax

Income tax of this business area for 2008 was €1,119 million, a 2.1% decrease from the €1,144 million recorded in 2007, primarily as a result of the reduction in the tax rate in Spain from 32.5% in 2007 to 30% in 2008.

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Net income attributed to parent company

As a result of the foregoing, net income attributed to parent company of this business area for 2008 was €2,565 million, a 7.9% increase over the €2,376 million recorded in 2007.

Wholesale Banking and Asset Management

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Net interest income		746			(13	)		n.m.(1	)
Net fees and commissions		414			442			(6.3	)
Net gains (losses) on financial assets and liabilities and exchange differences		140			789			(82.3	)
Other operating income and expenses		409			377			8.5
Gross income		1,709			1,596			7.2
Administrative costs		(491	)		(445	)		10.3
Depreciation and amortization		(9	)		(7	)		28.6
Impairment on financial assets (net)		(258	)		(131	)		97.0
Provisions (net) and other gains (losses)		5			4			25.0
Income before tax		956			1,017			(5.9	)
Income tax		(177	)		(208	)		(14.8	)
Net income		779			809			(3.7	)
Net income attributed to non-controlling interest		(6	)		(10	)		(40.0	)
Net income attributed to parent company		773			798			(3.1	)

(1) Not meaningful.

The preceding table and descriptions below do not take into account the impact of the Madoff fraud, which, due to its unique nature, is included in the area of Corporate Activities.

Net interest income and Net gains (losses) on financial assets and liabilities and exchange differences

For internal management purposes, “net interest income” and “net gains (losses) on financial assets and liabilities and exchange differences” for this business area are analyzed together. Net interest income includes the cost of funding of the market operations whose revenues are accounted for in the heading “Net gains (losses) on financial assets and liabilities and exchange differences”.

Net interest income amounted to a gain of €746 million in 2008, compared to a loss of €13 million in 2007. Net gains (losses) on financial assets and liabilities and exchange differences amounted to €140 million, compared to €789 million in 2007. The sum of these heading for 2008 was €886 million, a 13.4% increase over the €776 million recorded in 2007. This increase was largely attributable to the Corporate Banking unit, through the sharp rise in lending.

Net fees and commissions

Net fees and commissions of this business area for 2008 was €414 million, a 6.3% decrease from the €442 million recorded in 2007, primarily as a result in a decrease in the value of assets under management in the Asset Management unit as well as the decrease in business volume of origination, structuring, distribution and risk management of market products.

93

Other operating income and expenses

Other operating income and expenses of this business area for 2008 was €409 million, a 8.5% increase from the €377 million recorded in 2007, as a smaller amount of income generated from real estate activities offset an increase in profits of entities accounted for using the equity method and income on equity instruments.

Gross income

As a result of the foregoing, gross income of this business area for 2008 was €1,709 million, a 7.2% increase from the €1,596 million recorded in 2007.

Administrative costs

Administrative costs of this business area for 2008 were €491 million, a 10.3% increase over the €445 million recorded in 2007, due primarily an increase in employees in connection with growth of the business in Corporate and Investment Banking unit.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business area for 2008 was €258 million, a 97.0% increase over the €131 million recorded in 2007, mainly due to generic provisions associated with the sharp rise in lending and specific loan loss provisions made by the Global Markets unit. The non-performing assets ratio of this business area was 0.2% as of December 31, 2008 compared to 0.02% as of December 31, 2007.

Income before tax

As a result of the foregoing, income before tax of this business area for 2008 was €956 million, a 5.9% decrease from the €1,017 million recorded in 2007.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2008 was €773 million, a 3.1% decrease from the €798 million recorded in 2007.

94

Mexico

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Net interest income		3,716			3,505			6.0
Net fees and commissions		1,189			1,305			(8.9	)
Net gains (losses) on financial assets and liabilities and exchange differences		376			311			20.9
Other operating income and expenses		154			115			33.9
Gross income		5,435			5,236			3.8
Administrative costs		(1,727	)		(1,737	)		(0.6	)
Depreciation and amortization		(73	)		(102	)		(28.4	)
Impairment on financial assets (net)		(1,110	)		(834	)		33.1
Provisions (net) and other gains (losses)		(25	)		19			n.m.	(1)
Income before tax		2,499			2,583			(3.3	)
Income tax		(560	)		(701	)		(20.1	)
Net income		1,939			1,882			3.0
Net income attributed to non-controlling interest		(1	)		(2	)		(50.0	)
Net income attributed to parent company		1,938			1,880			3.1

(1) Not meaningful.

As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2008, the depreciation of the Mexican peso against the euro negatively affected the results of operations of our Mexican subsidiaries in euro terms.

Net interest income

Net interest income of this business area for 2008 was €3,716 million, a 6.0% increase over the €3,505 million recorded in 2007, due primarily to larger business volumes and maintenance of the spread. In Mexico, interbank rates showed a slight upward trend over the 2008, with the average Interbank Equilibrium Interest Rate (TIIE) for 2008 standing at 8.3%, as opposed to the figure of 7.7% for 2007. The customer spread remained stable throughout the year, at 12.4% at December 31, 2008, approximately the same level as of December 31, 2007, due to a slight rise both in yield on loans and cost of deposits.

Net fees and commissions

Net fees and commissions of this business area for 2008 was €1,189 million, an 8.9% decrease from the €1,305 million recorded in 2007.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2008 were €376 million, a 20.9% increase over the €311 million in 2007.

Other operating income and expenses

Other operating income and expenses of this business area for 2008 was €154 million a 33.8% increase over the €115 million recorded in 2007, due primarily to an increase in revenue from insurance activity.

95

Gross income

As a result of the foregoing, gross income of this business area for 2008 was €5,435 million, a 3.8% increase over the €5,236 million recorded in 2007.

Administrative costs

Administrative costs of this business area for 2008 were €1,727 million, a 0.8% decrease from the €1,737 million recorded in 2007. In the latter part of 2008 we instituted certain cost-control programs to limit the rate of local currency growth in administrative costs in this business area.

Impairment on financial assets (net)

Impairment on financial assets (net) of this business area for 2008 was €1,110 million, a 33.1% increase over the €834 million recorded in 2007 mainly due to increased loan loss provisions as a result of higher lending volumes and deteriorating asset quality throughout the system. At the end of 2008, the non-performing assets ratio stood at 3.2%, increasing from 2.2% as of December 31, 2007.

Income before tax

As a result of the foregoing, income before tax of this business area for 2008 was €2,499 million, a 3.2% decrease compared to the €2,583 million recorded in 2007.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2008 was €1,938 million, a 3.0% increase over the €1,880 million recorded in 2007.

The United States

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Net interest income		1,332			763			74.6
Net fees and commissions		546			314			73.9
Net gains (losses) on financial assets and liabilities and exchange differences		123			37			n.m.	(1)
Other operating income and expenses		21			11			90.9
Gross income		2,022			1,125			79.7
Administrative costs		(1,088	)		(621	)		75.2
Depreciation and amortization		(244	)		(123	)		98.4
Impairment on financial assets (net)		(365	)		(85	)		n.m.	(1)
Provisions (net) and other gains (losses)		(15	)		1			n.m.	(1)
Income before tax		309			297			4.0
Income tax		(99	)		(93	)		6.5
Net income		211			203			3.9
Net income attributed to non-controlling interest		—			—			—
Net income attributed to the parent company		211			203			3.9

(1) Not meaningful.

As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2008, the depreciation of the dollar against the euro negatively affected the results of operations of

96

our foreign subsidiaries in euro terms. Additionally, because 2007 results of operations only include four months of results of operations for BBVA Compass,year-on-year comparisons for the United States business area are less meaningful.

Net interest income

Net interest income of this business area for 2008 was €1,332 million, a 74.6% increase over the €763 million recorded in 2007.

Net fees and commissions

Net fees and commissions of this business area for 2008 was €546 million, a 73.6% increase over the €314 million recorded in 2007.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2008 were €123 million, an increase compared to the €37 million recorded in 2007.

Gross income

As a result of the foregoing, gross income of this business area for 2008 was €2,022 million, a 79.7% increase over the €1,125 million recorded in 2007.

Administrative costs

Administrative costs of this business area for 2008 were €1,088 million, a 75.2% increase over the €621 million recorded in 2007, due primarily to the inclusion in 2008 of integration and merger expenses.

Depreciation and amortization

Depreciation and amortization of this business area for 2008 was €244 million, a 98.4% increase over the €123 million in 2007, due primarily to the amortization of intangible assets related to the acquisition of the banks comprising this business area.

Impairment on financial assets (net)

Impairment on financial assets (net) for 2008 was €365 million, compared with €85 million recorded in 2007, due to significant write-downs. The non-performing assets ratio was 3.4% as of December 31, 2008, increasing from 1.8% as of December 31, 2007.

Income before tax

As a result of the foregoing, the income before tax of this business area for 2008 was €309 million, a 4.0% increase over the €297 million recorded in 2007.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2008 was €211 million, a 3.9% increase over the €203 million in 2007.

97

South America

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Net interest income		2,149			1,746			23.1
Net fees and commissions		775			751			3.2
Net gains (losses) on financial assets and liabilities and exchange differences		253			222			13.9
Other losses (net)		15			(18	)		n.m.	(1)
Gross income		3,192			2,701			18.2
Administrative costs		(1,315	)		(1,181	)		11.4
Depreciation and amortization		(107	)		(93	)		15.0
Impairment on financial assets (net)		(358	)		(262	)		36.6
Provisions (net) and other gains (losses)		(17	)		(63	)		(73.0	)
Income before tax		1,396			1,102			26.7
Income tax		(318	)		(197	)		61.4
Net income		1,078			905			19.1
Net income attributed to non-controlling interest		(351	)		(282	)		24.5
Net income attributed to parent company		727			623			16.7

(1) Not meaningful.

As discussed above under “Factors Affecting the Comparability of our Results of Operations and Financial Condition”, in 2008, the depreciation of certain of the currencies in the countries in which we operate in South America against the euro negatively affected the results of operations of our foreign subsidiaries in euro terms.

Net interest income

Net interest income of this business area for 2008 was €2,149 million, a 23.1% increase over the €1,746 million recorded in 2007, due primarily to the larger business volumes and the maintenance of the spreads.

Net fees and commissions

Net fees and commissions of this business area for 2008 was €775 million, 3.2% increase over the €751 million recorded in 2007, mainly due to an increase in banking commissions.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2008 was €253 million, a 13.9% increase over the €222 million recorded in 2007.

Gross income

As a result of the foregoing, the gross income of this business area for 2008 was €3,192 million, an 18.2% increase over the €2,701 million recorded in 2007.

Administrative costs

Administrative costs of this business area for 2008 was €1,315 million, a 11.4% increase over the €1,181 million recorded in 2007, due primarily to increases in wages as a result of increased inflation and an increase in employees as a result of expansion of certain business units in this area.

98

Impairment on financial assets (net)

Impairment on financial assets (net) of this business area for 2008 was €358 million, a 36.6% increase over the €262 million recorded in 2007, mainly due to generic provisions attributable to the rise in lending volume as recently-made loans require under Bank of Spain rules higher generic provisions than older loans in our portfolio. The business area’s non-performing assets ratio was 2.12% as of December 31, 2008 compared to 2.14% as of December 31, 2007.

Income before tax

As a result of the foregoing, income before tax of this business area for 2008 was €1,396 million, a 26.7% increase over the €1,102 million recorded in 2007.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2008 was €727 million, a 16.7% increase over the €623 million in 2007.

Corporate Activities

	Year Ended December 31,						Change
	2008			2007			2008/2007
	(In millions of euros)						(in %)
Net interest income		(1,061	)		(769	)		38.0
Net fees and commissions		(32	)		42			n.m.	(1)
Net gains (losses) on financial assets and liabilities and exchange differences		436			346			26.0
Other operating income and expenses		176			242			(27.2	)
Gross income		(481	)		(139	)		n.m.	(1)
Administrative costs		(625	)		(734	)		(14.9	)
Depreciation and amortization		(163	)		(140	)		16.4
Impairment on financial assets (net)		(41	)		—			n.m.	(1)
Provisions (net) and other gains (losses)		(609	)		990			n.m.	(1)
Income before tax		(1,919	)		(23	)		n.m.	(1)
Income tax		732			263			n.m.	(1)
Net income		(1,187	)		240			n.m.	(1)
Net income attributed to non-controlling interest		(7	)		5			n.m.	(1)
Net income attributed to parent company		(1,193	)		245			n.m.	(1)

(1) Not meaningful.

Net interest income

Net interest income of this business area for 2008 was a loss of €1,061 million, a 38.0% increase over the loss of €769 million recorded in 2007, due primarily to a full year of the expenses associated with the financing of the BBVA Compass acquisition and the higher cost of wholesale financing.

Net gains (losses) on financial assets and liabilities and exchange differences

Net gains (losses) on financial assets and liabilities and exchange differences of this business area for 2008 were €436 million, an 26.0% increase over the €346 million recorded in 2007.

99

Other operating income and expenses

Other operating income and expenses of this business area for 2008 was €176 million, a 27.2% decrease from the €242 million recorded in 2007, primarily as a result of net operating income.

Gross income

As a result of the foregoing, gross income of this business area for 2008 was a loss of €481 million, compared with a loss of €139 million recorded in 2007.

Administrative costs

Administrative costs of this business area for 2008 were €625 million, a 14.9% decrease from the €734 million recorded in 2007, which included a €200 million contribution to the BBVA Foundation for Microfinance.

Depreciation and amortization

Depreciation and amortization of this business area for 2008 was €163 million, a 16.4% increase over the €140 million recorded in 2007.

Provisions (net) and other gains (losses)

Provisions (net) and other gains (losses) of this business area for 2008 was a loss of €609 million, compared with a gain of €990 million recorded in 2007, due primarily to the larger provisions for early retirement and lower gains in 2008 compared to 2007. Provisions (net) and other gains (losses) of this business area in 2008 include the following non-recurring items: €727 million in gains from the sale of our stake in Bradesco, a charge of €860 million in provisions for extraordinary early retirements in Spain and the recognition of €431 million in provisions for the loss that could be caused by the Madoff fraud. Provisions (net) and other gains (losses) of this business area in 2007 include the following non-recurring items: gains on the sale of our stake in Iberdrola, S.A. for €847 million, gains on the sale of real estate as part of the project for our new corporate headquarters for €273 million and a charge of €100 million for provisions for extraordinary early retirements in Spain.

Income before tax

As a result of the foregoing, income before tax of this business area for 2008 was a loss of €1,919 million, compared with a loss of €23 million recorded in 2007.

Net income attributed to parent company

Net income attributed to parent company of this business area for 2008 was a loss of €1,193 million, compared with €245 million in 2007, due primarily to the aforementioned items.

Reconciliation to U.S. GAAP

As of December 31, 2009, 2008 and 2007, shareholders’ equity under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 was €29,300 million, €25,656 million and €27,063 million, respectively.

As of December 31, 2009, 2008 and 2007, shareholders’ equity under U.S. GAAP was €36,172 million, €32,744 million and €35,384 million, respectively.

The increase in stockholders’ equity under U.S. GAAP as of December 31, 2009, December 31, 2008 and December 31, 2007 as compared to stockholders’ equity under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 at each of those dates is principally due to the goodwill that arose from the business combinations with Argentaria (2000) and Bancomer (2004).

For the years ended December 31, 2009, 2008 and 2007, net income attributed to parent company under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 was €4,210 million, €5,020 million and €6,126 million, respectively.

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For the years ended December 31, 2009, 2008 and 2007, net income attributed to parent company under U.S. GAAP was €3,825 million, €4,070 million and €5,409 million, respectively.

The differences in net income in 2009 and 2008 under U.S. GAAP as compared with net income attributed to parent company for the years 2009 and 2008 under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 are principally due to the reconciliation item “valuation of assets”.

See Note 60 to our Consolidated Financial Statements for a quantitative reconciliation of net income and stockholders’ equity from EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to U.S. GAAP.

B.  Liquidity and Capital Resources

Our principal source of funds is our customer deposit base, which consists primarily of demand, savings and time deposits. In addition to relying on our customer deposits, we also access the interbank market (overnight and time deposits) and domestic and international capital markets for our additional liquidity requirements. To access the capital markets, we have in place a series of domestic and international programs for the issuance of commercial paper and medium- and long-term debt. We also generally maintain a diversified portfolio of liquid assets and securitized assets. Another source of liquidity is our generation of cash flow. Finally, we supplement our funding requirements, to a very limited extent, with borrowings from the Bank of Spain, mostly short-term and at market interest rates, which is a common practice in Spain.

The following table shows the balances as of December 31, 2009 and December 31, 2008 of our principal sources of funds (including accrued interest, hedge transactions and issue expenses):

	As of December 31,		As of December 31,		As of December 31,
	2009		2008		2007
	(In millions of euros)
Customer deposits		254,183		255,236		219,610
Due to credit entities		70,312		66,805		88,098
Debt securities in issue		117,816		121,144		117,909
Other financial liabilities		5,624		7,420		6,239
Total		447,936		450,605		431,856

Customer deposits

Customer deposits amounted to €254,183 million as of December 31, 2009, compared to €255,236 million as of December 31, 2008 and €219,610 million as of December 31, 2007. The decrease from December 31, 2008 to December 31, 2009 was primarily caused by the decrease in time deposits in Spain partially offset by the increase in saving accounts in Spain and current accounts abroad. Our customer deposits, excluding assets sold under repurchase agreements amounted to €242,194 million as of December 31, 2009, compared to €238,589 million as of December 31, 2008. The increase in customer deposits from December 31, 2007 to December 31, 2008 was principally due to an increase in time deposits and savings accounts in Spain.

Due to credit entities

Amounts due to credit entities amounted to €70,312 million as of December 31, 2009 from €66,805 million as of December 31, 2008 and from €88,098 million as of December 31, 2007. The increase as of December 31, 2009 compared to December 31, 2008, was primarily a result of our participation in an auction in 2009 in the European Central Bank for an amount of €10,974 million.

Capital markets

We have continued making debt issuances in the domestic and international capital markets in order to finance our activities and as of December 31, 2009 we had €99,939 million of senior debt outstanding, comprising €70,357 million in bonds and debentures and €29,582 million in promissory notes and other securities, compared with €104,157 million, €84,172 million and €19,985 million outstanding as of December 31, 2008, respectively

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(€102,247 million, €96,488 million and €5,759 million outstanding, respectively, as of December 31, 2007). See Note 23.4 to the Consolidated Financial Statements. In addition, we had a total of €12,117 million in subordinated debt including convertible subordinated obligations in an aggregated principal amount of €2,000 million issued in September 2009 and €5,188 million in preferred stock outstanding as of December 31, 2009, and included in the total of debt securities in issue, compared to €10,785 million and €5,464 million outstanding as of December 31, 2008, respectively. See Note 23.4 to the Consolidated Financial Statements.

The average maturity of our outstanding debt as of December 31, 2009, was the following:

Senior debt	3.96 years
Subordinated debt (excluding preference shares)	8.05 years

The cost and availability of debt financings are influenced by credit ratings. A reduction in these ratings could increase the cost of, and reduce our access to, debt financing. As of December 31, 2009, our credit ratings were as follows:

	Short Term		Long Term		Financial Strength		Outlook
Moody’s		P-1		Aa2		B-		Negative
Fitch-IBCA		F-1+		AA-		A/B		Positive
Standard & Poor’s		A-1+		AA		—		Negative

On July 31, 2009, Moody’s Investor Service lowered BBVA’s senior debt rating to “Aa2” with “negative outlook” from “Aa1” with “stable outlook” and affirmed BBVA’s short-term ratings at“P-1”. On the same date, Moody’s Investor Service also confirmed the ratings of BBVA’s covered bonds (Aaa), senior debt (Aa2) and subordinated debt (Aa3) and lowered the ratings of BBVA’s preferred shares from Aa3 to A2.

On February 23, 2010, Moody’s revised the ratings of the hybrid securities issued by Spanish financial institutions. This is a consequence of the implementation of the new valuation methodology of this type of issues that was announced by the rating agency on January 12, 2010. Pursuant such revision, Moody’s has lowered the rating of BBVA’s preferred shares issues from A2 to Baa2.

Generation of Cash Flow

We operate in Spain, Mexico, the United States and over 30 other countries, mainly in Europe and Latin America. Our banking subsidiaries around the world, including BBVA Compass, are subject to supervision and regulation by a variety of regulatory bodies relating to, among other things, the satisfaction of minimum capital requirements. The obligation to satisfy such capital requirements may affect the ability of our banking subsidiaries, including BBVA Compass, to transfer funds to us in the form of cash dividends, loans or advances. In addition, under the laws of the various jurisdictions where our subsidiaries, including BBVA Compass, are incorporated, dividends may only be paid out of funds legally available therefor. For example, BBVA Compass is incorporated in Alabama and under Alabama law it is not able to pay any dividends without the prior approval of the Superintendent of Banking of Alabama if the dividend would exceed the total net earnings for the year combined with the bank’s retained net earnings of the preceding two years.

Even where minimum capital requirements are met and funds are legally available therefor, the relevant regulator could advise against the transfer of funds to us in the form of cash dividends, loans or advances, for prudence reasons or otherwise.

There is no assurance that in the future other similar restrictions will not be adopted or that, if adopted, they will not negatively affect our liquidity. The geographic diversification of our businesses, however, could help to limit the effect on the Group any restrictions that could be adopted in any given country.

We believe that our working capital is sufficient for our present requirements and to pursue our planned business strategies.

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Capital

Under the Bank of Spain’s capital adequacy regulations, as of December 31, 2009, 2008 and 2007, we were required to have a ratio of consolidated stockholders’ equity to risk-weighted assets and off-balance sheet items (net of certain amounts) of not less than 8%. As of December 31, 2009, this ratio was 12.89%, up from 11.21% as of December 31, 2008, and our stockholders’ equity exceeded the minimum level required by 37.9%, up from 28.6% at the prior year end. As of December 31, 2007, this ratio was 11.75% and our stockholders’ equity exceeded the minimum level required by 31.9%.

Based on the framework of the Basel II and using such additional assumptions as we consider appropriate, we have estimated that as of December 31, 2009, 2008 and 2007 our consolidated Tier I risk-based capital ratio was 9.4%, 7.9% and 6.8%, respectively, and our consolidated total risk-based capital ratio (consisting of both Tier I capital and Tier II capital) was 13.6%, 12.2% and 10.7%, respectively. The Basel II recommends that these ratios be at least 4% and 8%, respectively.

For qualitative and quantitative information on the principal risks we face, including market, credit, and liquidity risks as well as information on funding and treasury policies and exchange rate risk, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

C.   Research and Development, Patents and Licenses, etc.

In 2009, we continued to foster the use of new technologies as a key component of our global development strategy. We explored new business and growth opportunities, focusing on three major areas: emerging technologies; asset capture/exploitation; and the customer as the focal point of its banking business.

We did not incur any significant research and development expenses in 2009, 2008 and 2007.

D.   Trend Information

The European financial services sector is likely to remain competitive. Further consolidation in the sector (through mergers, acquisitions or alliances) is likely as the other major banks look to increase their market share or combine with complementary businesses or via acquisition of distressed entities. It is foreseeable that regulatory changes will take place in the future that will diminish barriers to such consolidation transactions. However, some of the hurdles that should be dealt with are the result of local preferences, such as consumer protection rules. If there are clear local consumer preferences, leading to specific local consumer protection rules, the same products cannot be sold across all the jurisdictions in which the Group operates, which reduces potential synergies. Certain challenges, such as the Value Added Tax regime for banks, do not however, relate to the interest or preferences of consumers.

The following are the most important trends, uncertainties and events that are reasonably likely to have a material adverse effect on us or that would cause the financial information disclosed herein not to be indicative of our future operating results or financial condition:

•  the prolonged downturn in the Spanish economy and sustained unemployment above historical averages, which we expect will continue in 2010;

•  uncertainties relating to the sustainability of any recovery in economic growth and interest rate cycles, especially in the United States, where the high current account deficit of the U.S. economy may translate into an upward adjustment of risk premium and higher global interest rates;

•  the fragility of the recovery from the financial crisis triggered by defaults on subprime mortgages and related asset-backed securities in the United States which has significantly disrupted the liquidity of financial institutions and markets;

•  the fragility of the Greek economy, which could affect the funding costs of Spanish financial institutions and of the Government;

•  the effects of the withdrawal of significant monetary and fiscal stimulus programs and uncertainty over government responses to growing public deficits. Along these lines, full allotment of ECB liquidity has been

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removed in one year auctions (and in the rest of auctions it is only guaranteed up to October 2010), the Spanish public guarantees program for the issuance of securities is scheduled to terminate in mid-2010 and the Spanish Fund for the Restructuring of the Financial Sector is authorized only until mid-2010;

•  uncertainty over regulation of the financial industry, including the potential limitation on the size or scope of the activities of certain financial institutions or additional capital requirements, coming both from the Bank of Spain or globally;

•  the continued downward adjustment in the housing sector in Spain, which could further negatively affect credit demand and household wealth, disposable income and consumer confidence. The existence of a significant over supply in the housing market in Spain and the pessimistic expectations about house price increases are likely to postpone investment decisions, therefore negatively affecting mortgage growth rates. In addition, we expect that the increase of Value Added Tax in Spain by mid-2010 could further disincentive residential real estate transactions;

•  continued volatility in capital markets or a downturn in investor confidence, linked to factors such as geopolitical risk, particularly given the environment in the Middle East. Continued or new crises in the region could cause an increase in oil prices, generating inflationary pressures that will have a negative effect on interest rates and economic growth;

•  the effect that an economic slowdown may have over Latin American markets and fluctuations in local interest and exchange rates; and

•  although it is foreseeable that entry barriers to domestic markets in Europe will be lowered, our plans for expansion into other European markets could be affected by entry barriers in such countries and by protectionist policies of national governments, which are generally higher in times of crisis.

E.   Off-Balance Sheet Arrangements

In addition to loans, we had outstanding the following contingent liabilities and commitments at the dates indicated:

	As of December 31,
	2009		2008		2007
	(In millions of euros)
Contingent liabilities:
Rediscounts, endorsements and acceptances		45		81		58
Guarantees and other sureties		26,266		27,649		27,997
Other contingent liabilities		6,874		8,222		8,804
Total contingent liabilities		33,185		35,952		36,859
Commitments:
Balances drawable by third parties:
Credit entities		2,257		2,021		2,619
Public authorities		4,567		4,221		4,419
Other domestic customers		29,604		37,529		42,448
Foreign customers		48,497		48,892		51,958
Total balances drawable by third parties		84,925		92,663		101,444
Other commitments		7,398		6,234		5,496
Total commitments		92,323		98,897		106,940
Total contingent liabilities and commitments		125,508		134,849		143,799

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In addition to the contingent liabilities and commitments described above, the following table provides information regarding off-balance-sheet funds managed by us as of December 31, 2009, 2008 and 2007:

	As of December 31,
	2009		2008		2007
	(In millions of euros)
Mutual funds		39,849		37,076		63,487
Pension funds		57,264		42,701		59,143
Other managed assets		26,501		24,582		31,936
Total		123,614		104,359		154,566

See Note 38 to the Consolidated Financial Statements for additional information with respect to our off-balance sheet arrangements.

F.   Tabular Disclosure of Contractual Obligations

Our consolidated contractual obligations as of December 31, 2009 based on when they are due, were as follows:

	Less Than		One to Five		Over
	One Year		Years		Five Years		Total
	(In millions of euros)
Senior debt		42,137		40,435		14,614		97,186
Subordinated liabilities		1,191		1,529		14,585		17,305
Capital lease obligations		—		—		—		—
Operating lease obligations		159		196		213		568
Purchase obligations		240		18		—		258
Total(*)		43,727		42,178		29,412		115,317

(*) Interest to be paid is not included. The majority of the senior and subordinated debt was issued at variable rates. The financial cost of such issuances for 2009, 2008 and 2007 is detailed in Note 39.2 to the Consolidated Financial Statements. Commitments with personnel for 2009, 2008 and 2007 are detailed in Note 26 to the Consolidated Financial Statements. The breakdown by maturities of customer deposits for 2009, 2008 and 2007 are detailed in Note 7 to the Consolidated Financial Statements.

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Our board of directors is committed to a good corporate governance system in the design and operation of our corporate bodies in the best interests of the Company and our shareholders.

Our board of directors is subject to board regulations that reflect and implement the principles and elements of BBVA’s concept of corporate governance. These board regulations comprise standards for the internal management and operation of the board and its committees, as well as the rights and obligations of directors in pursuit of their duties, which are contained in the directors’ charter. Shareholders and investors may find these on our website (www.bbva.com).

The Annual General Meeting (“AGM”) has its own set of regulations on issues such as how it operates and what rights shareholders enjoy regarding AGMs. These establish the possibility of exercising or delegating votes over remote communication media.

Our board of directors has also approved a report on Corporate Governance for 2009, according to the guidelines set forth under Spanish regulation for listed companies. It can be found on our website (www.bbva.com).

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Our website was created as an instrument to facilitate information and communication with shareholders. It provides special direct access to all information considered relevant to BBVA’s corporate governance system in a user-friendly manner.

A.   Directors and Senior Management

We are managed by a board of directors that currently has twelve members. Pursuant to article one of the board regulations, independent directors are those external directors who have been appointed in view of their personal and professional qualifications and can carry out their duties without being compromised by their relationships with us, our significant shareholders or our senior managements. Independent directors may not:

a) Have been employees or executive directors in Group companies, unless three or five years, respectively, have passed since they ceased to be so.

b) Receive any amount or benefit from the Company or its Group companies for any reason other than remuneration of their directorship, unless it is insignificant.

Neither dividends nor supplementary pension payments that the director may receive from earlier professional or employment relationships shall be taken into account for the purposes of this section, provided they are not subject to conditions and the company paying them may not at its own discretion suspend, alter or revoke their accrual without breaching its obligations.

c) Be or have been a partner in the external auditors’ firm or in charge of the auditor’s report with respect to the Company or any other Group company during the last three years.

d) Be executive director or senior manager in any other company on which a Company executive director or senior manager is external director.

e) Maintain or have maintained during the past year an important business relationship with the Company or any of its Group companies, either onhis/her own behalf or as relevant shareholder, director or senior manager of a company that maintains or has maintained such relationship.

Business relationships shall mean relationships as provider of goodsand/or services, including financial, advisoryand/or consultancy services.

f) Be significant shareholders, executive directors or senior managers of any organization that receives or has received significant donations from the Company or its Group during the last three years.

Those who are merely trustees on a foundation receiving donations shall not be ineligible under this letter.

g) Be married to or linked by equivalent emotional relationship, or related by up to second-degree family ties to an executive director or senior manager of the Company.

h) Have not been proposed by the Appointments and Remuneration committee for appointment or renewal.

i) Fall within the cases described under letters a), e), f) or g) above, with respect to any significant shareholder or shareholder represented on the Board. In cases of family relationships described under letter g), the limitation shall not only apply to the shareholder, but also to the directors it nominates for the Company’s board.

Directors owning shares in the Company may be independent providing they comply with the above conditions and their shareholding is not legally considered as significant.

According to the latest recommendations on corporate governance, the board has established a limit on how long a director may remain independent. Directors may not remain on the board as independent directors after having sat on it as such for more than twelve years running.

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Regulations of the Board of Directors

The principles and elements comprising our corporate governance are set forth in our board regulations, which govern the internal procedures and the operation of the board and its committees and directors’ rights and duties as described in their charter. Originally approved in 2004, these regulations were amended in December 2007 to reflect recommendations on corporate governance as adjusted to the Bank’s particular actual circumstances.

The following discussion provides a brief description of several significant matters covered in the Regulations of the board of directors.

Appointment and Re-election of Directors

The proposals that the board submits to the Company’s AGM for the appointment or re-election of directors and the resolutions to appoint directors made by the board of directors shall be approved at the proposal of the Appointments & Compensation committee in the case of independent directors and on the basis of a report from said committee in the case of all other directors.

To such end, the committee assesses the skills, knowledge and experience required on the board and the capacities the candidates must offer to cover any vacant seats. It evaluates how much time and work members may need to carry out their duties properly as a function of the needs that the Company’s governing bodies may have at any time.

Term of Directorships and Director Age Limit

Directors shall stay in office for the term defined by our bylaws (three years). If a director has been appointed to finish the unexpired term of another director, he or she shall work out the term of office remaining of the director whose vacancy he or she covered through appointment, unless a proposal is put to the AGM to appoint him or her for the term of office established under our bylaws.

BBVA’s corporate governance system establishes an age limit for sitting on the Bank’s board. Directors must present their resignation at the first board meeting after the AGM approving the accounts of the year in which they reach the age of seventy.

Performance of Directors’ Duties

Board members must comply with their duties as defined by legislation and by the bylaws in a manner that is faithful to the interests of the Company.

They shall participate in the deliberations, discussions and debates arising on matters put to their consideration and shall have sufficient information to be able to form a sound opinion on the questions corresponding to our governing bodies. They may request additional information and advice if they so require in order to perform their duties. Their participation in the board’s meetings and deliberations shall be encouraged.

The directors may also request help from external experts with respect to business submitted to their consideration whose complexity or special importance makes it advisable.

Conflicts of interest

The rules comprising the BBVA directors’ charter detail different situations in which conflicts of interest could arise between directors, their family membersand/or organizations with which they are linked, and the BBVA Group. They establish procedures for such cases, in order to avoid conduct contrary to our best interests.

These rules help ensure Directors’ conduct reflects stringent ethical codes, in keeping with applicable standards and according to core values of the BBVA Group.

Incompatibilities

Directors are also subject to a regime of incompatibilities, which places strict constraints on holding posts on governing bodies of Group companies or companies in which the Group has a holding. Non-executive directors may

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not sit on the boards of subsidiary or related companies because of the Group’s holding in them, whilst executive directors may only do so if they have express authority.

Directors who cease to be members of the Bank’s board may not offer their services to any other financial institution competing with the Bank or of its subsidiaries for two years after leaving, unless expressly authorized by the board. Such authorization may be denied on the grounds of corporate interest.

Directors’ Resignation and Dismissal

Furthermore, in the following circumstances, reflected in the board regulations, directors must tender their resignation to the Board and accept its decision regarding their continuity in office (formalizing said resignation when the board so resolves):

•  When barred (on grounds of incompatibility or other) under prevailing legal regulations, under the bylaws or under the directors’ charter.

•  When significant changes occur in their professional situation or that may affect the condition by virtue of which they were appointed to the Board.

•  When they are in serious dereliction of their duties as directors.

•  When the director, acting as such, has caused severe damage to the Company’s assets or its reputation or credit,and/or no longer displays the commercial and professional honor required to hold a Bank directorship.

The Board of Directors

The board of directors is currently comprised of 12 members, as in the meeting held on March 23, 2010 the Board accepted the resignation of Mr. Roman Knörr Borrás as member of the board due to the fact that he had reached the age limit provided in the Regulations of the Board.

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The following table sets forth the names of the members of the board of directors as of that date of this Annual Report onForm 20-F, their date of appointment and, if applicable, reelection, their current positions and their present principal outside occupation and five-year employment history.

							Present Principal
							Outside Occupation
							and Five-Year
					Date		Employment
Name	Birth Year		Current Position	Date Nominated	Re-elected		History(*)
Francisco González Rodríguez(1)		1944	Chairman and Chief Executive Officer	January 28, 2000		March 12, 2010	Chairman and CEO of BBVA, since January 2000. Director of Grupo Financiero BBVA Bancomer, S.A. de C.V. and BBVA Bancomer S.A.
Angel Cano Fernandez(1)		1961	President and Chief Operating Officer	September 29, 2009,		March 12, 2010	President and Chief Operating Officer, BBVA, since 2009. Director of Grupo Financiero BBVA Bancomer and BBVA Bancomer, S.A de CV. Citic Bank board member. BBVA Director of Resources and Means from 2005 to 2009.
Tomás Alfaro Drake(2)		1951	Independent Director	March 18, 2006			Director of Business Management and Administration and Business Sciences programs at Universidad Francisco de Vitoria, since 1998.
Juan Carlos Álvarez Mezquíriz(1)(3)		1959	Independent Director	January 28, 2000		March 18, 2006	Managing Director of Grupo Eulen, S.A.
Rafael Bermejo Blanco(2)(4)		1940	Independent Director	March 16, 2007			Chairman of the Audit and Compliance Committee of BBVA since March 28, 2007. Technical Secretary General of Banco Popular, 1999 — 2004.
Ramón Bustamante y de la Mora(2)(4)		1948	Independent Director	January 28, 2000		March 12, 2010	Was Director and General Manager and Non-Executive Vice-President of Argentaria and Chairman of Unitaria (1997)
José Antonio Fernández Rivero(4)		1949	Independent Director	February 28, 2004		March 13, 2009	Chairman of Risk Committee since March 30, 2004; On 2001 was appointed Group General Manager, until January 2003. Has been director representing BBVA on the Boards of Telefonica, Iberdrola, and of Banco de Crédito Local, and Chairman of Adquira.
Ignacio Ferrero Jordi(1)(3)		1945	Independent Director	January 28, 2000		March 12, 2010	Chief Operating Officer of Nutrexpa, S.A. and La Piara, S.A. Chairman of Aneto Natural
Carlos Loring Martínez de Irujo(2)(3)		1947	Independent Director	February 28, 2004		March 18, 2006	Chairman of the Board’s Appointment and Compensation committee since April 2006. Partner of J&A Garrigues, from 1977 until 2004; Director of the Department of Mergers and Acquisitions, of Banking and Capital Markets, Member of the Management Committee since 1985
José Maldonado Ramos(4)		1952	External Director	January 28, 2000		March 13, 2009,	Was appointed Director and General Secretary of BBVA, in January 2000. Took early retirement as Bank executive in December 2009.
Enrique Medina Fernández(1)(4)		1942	Independent Director	January 28, 2000		March 13, 2009	State Attorney on Sabbatical. Deputy Chairman of Gines Navarro Construcciones until it merged to become Grupo ACS.
Susana Rodríguez Vidarte(2)(3)		1955	Independent Director	May 28, 2002		March 18, 2006	Was Dean of Deusto “La Comercial” University1996-2009 Member of the accounts auditing institute.

(*)	Where no date is provided, the position is currently held.
(1)	Member of the Executive Committee.
(2)	Member of the Audit and Compliance Committee.
(3)	Member of the Appointments and Compensation Committee.
(4)	Member of the Risk Committee.

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Executive Officers (Comité de Dirección or Management Committee)

Our executive officers were each appointed for an indefinite term. Their positions as of the date of this Annual Report onForm 20-F are as follows:

		Present Principal Outside Occupation and
Name	Current Position	Five-Year Employment History(*)
Francisco González Rodríguez	Chairman and Chief Executive Officer	Chairman, BBVA, since January 2000. Director of Grupo Financiero BBVA Bancomer, S.A. de C.V. and BBVA Bancomer, S.A.
Angel Cano Fernandez	President and Chief Operating Officer	Director, Grupo Financiero BBVA Bancomer and BBVA Bancomer, S.A. de CV
Eduardo Arbizu Lostao	Head of Legal, Tax, Audit and Compliance department	Head of Legal department of BBVA, since 2002; Chief Executive Officer, Barclays Bank Spain, 1997 to 2002.
Manuel González Cid	Head of Finance Division	Deputy General Manager, BBVA — Head of the Merger Office, 1999 to 2001; Head of Corporate Development, BBVA, 2001 to 2002. Director and Vice president of Repsol YPF, S.A. 2003-2005.
José María García Meyer-Dohner	Head of United States	BBVA Business Management and Coordination Manager for Mexico, 2000-2001. Commercial Banking Manager for BBVA Bancomer, 2001-2004. Retail Banking Manager for the U.S., since August 2004.
Ignacio Deschamps González	Head of Mexico	Commercial Banking Director for BBVA Bancomer to 2006. General Director of BBVA Bancomer since December 2006.
Juan Asúa Madariaga	Head of Corporate and Business -Spain and Portugal	Global Corporate Banking Director, BBVA, 2000. E-Commerce Director, BBVA, 2000-2001. Corporate Global Banking Director, BBVA, 2001-2005.
Jose Barreiro Hernández	Head of Global Operations	Spanish Markets Director, BBVA, 2000-2001. Head of Global Markets and Distribution, Trading and Equity, BBVA, 2001-2005.
Vicente Rodero Rodero	Head of South America	BBVA Corporate Banking Director for Mexico, 1995-1999. BBVA Personal Banking Director, 1999-2003. BBVA Regional Director for Madrid, 2003-2004. BBVA Commercial Banking Director for Spain, 2004-2006.
Carlos Torres Vila	Head of Strategy & Development	BBVA Corporate Strategy & Development Director since January 2009. He entered in BBVA on September 2008. Before he worked five years in Endesa as Strategy Corporate Director.
Gregorio Panadero	Head of Brand and Communication	From April 1, 2009, Head of BBVA Corporate Brand & Communications Department. Director of Communications and Corporate Responsibility at Grupo Ferrovial from 2006-to 2009.
Manuel Castro	Head of Risk	Head of BBVA Risk Department since September 2009. Director of Innovation and Business Development from 2005 to 2009.
Ramón Monell	Head of Innovation & Technology	Head of BBVA Innovation and Technology since September 2009. From 2002-2005 Chief Operating Officer of BBVA in Chile. BBVA Director of Technology & Operations. (2006-2009)
Juan Ignacio Apoita Gordo	Head of Human Resources & Services	BBVA Head of Human Resources and Services since September 2009 BBVA Head of Human Resources Director from 2006 to 2009

(*) Where no date is provided, positions are currently held.

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B.   Compensation

The provisions of BBVA’s bylaws that relate to compensation of directors are in strict accordance with the relevant provisions of Spanish law. The main provisions of the bylaws that relate to these matters are those that, in accordance with applicable Spanish law, allow the members of the board of directors to determine their administration costs or agree on such additional benefits they consider appropriate or necessary, up to four percent of ourpaid-up capital per year, which may only be paid after the minimum yearly dividend of four percent of the paid-in capital has been paid to our shareholders.

Remuneration of non-executive Directors

The remuneration paid to the non-executive members of the Board of Directors during 2009 is indicated below. The figures are given individually for each non-executive director and itemized in thousand euros:

									Appointments
					Audit and				and
			Standing		Compliance		Risk		Compensation
	Board		Committee		Committee		Committee		Committee		Total
Tomás Alfaro Drake		129		—		71		—		—		200
Juan Carlos Álvarez Mezquiriz		129		167		—		—		42		338
Rafael Bermejo Blanco		129		—		179		107		—		415
Ramón Bustamante y de La Mora		129		—		71		107		—		307
José Antonio Fernández Rivero(*)		129		—		—		214		—		343
Ignacio Ferrero Jordi		129		167		—		—		42		338
Román Knörr Borrás(**)		129		167		—		—		—		296
Carlos Loring Martínez de Irujo		129		—		71		—		107		307
Enrique Medina Fernández		129		167		—		107		—		403
Susana Rodríguez Vidarte		129		—		71		—		42		242
Total(***)		1,290		668		463		535		233		3,189

(*)	José Antonio Fernández Rivero, apart from the amounts listed in the previous table, also received a total of €652 thousand during 2009 in early retirement payments as a former member of the BBVA management.
(**)	As previously mentioned, in the meeting held on March 23, 2010, the Board accepted the resignation of Mr. Roman Knörr Borrás as member of the board due to the fact that he had reached the age limit provided in the Regulations of the Board.
(***)	Moreover, Mr. Richard C. Breeden, who stood down as director on 13th March 2009, received the sum of €87 thousand in 2009 as remuneration for his membership of the Board.

Remuneration of executive Directors

The remuneration paid to the current Chairman and CEO and President and COO during 2009 is indicated below. The figures for each such director are itemized in thousand euros below.

	Fixed		Variable
	Remuneration		Remuneration(*)		Total(**)
Chairman and CEO		1,928		3,416		5,343
President and COO		783		1,256		2,039
Total		2,710		4,672		7,382

(*)	Figures for the variable pay from 2008 received in 2009.
(**)	The remuneration paid to the current president & COO, who was appointed September 29, 2009, includes the amount payable as Head of Resources & Systems for the time he occupied this position .

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During 2009, the former president and COO, who was also an executive director and who stood down on September 29, 2009, received €1,065 thousand in fixed remuneration and €2,861 thousand in variable remuneration from 2008 payable in 2009.

During 2009, the former Company secretary, was also an executive director and who stood down as executive of the Bank on December 22, 2009, received €650 thousand in fixed remuneration and €815 thousand in variable remuneration from 2008 payable in 2009.

Additionally, those who have been executive directors during 2009 received remuneration in kind and others to a total joint sum of €144 thousand.

The executive directors have also accrued variable remuneration for 2009, payable in 2010: €3,388 thousand payable to the chairman and CEO and €1,482 thousand payable to the president & COO.

The former president and COO accrued €2,811 thousand in variable remuneration for 2009, under the same item, and the former Company Secretary €805 thousand. These amounts are payable in 2010.

These amounts are booked under “Other Liabilities — Carried Forward” on the consolidated balance sheet at 31st December 2009.

Remuneration of the members of the Management Committee

In 2009, members of the BBVA Management committee (excluding executive directors and members not in their position as of December 31, 2009) received a total of €6,257 thousand in fixed remuneration and €10,804 thousand in variable remuneration from 2008 paid in 2009.

The Management committee members received payment in kind and other worth €453 thousand during 2009.

Long-term share remuneration plan(2006-2008) for executive directors and members of the management committee

Our AGM, on March 13, 2009, approved the settlement of the Long-Term Share Remuneration Plan for 2006 to 2008 (hereinafter “The Plan”), under the terms and conditions established when it began, as a function of the BBVA TSR performance benchmarked against those of the banks in its peer group.

The Plan was formally settled on March 30, 2009, and the number of BBVA shares deliverable to its beneficiaries were:

	No Assigned
	Theoretical		Multiplier		Number of
	Shares		Ratio		Shares
Chairman & CEO		320,000		1.42		454,400
President & COO		125,000		1.42		177,500

(*) The number of shares delivered to the former president and COO and the former Company secretary and director as a result of this settlement were: 383,400 shares for the former president and COO and 142,000 for the former Company Secretary.

The total number of shares deliverable to the Management committee members sitting on the committee on the date the Plan was settled, excluding executive directors, was 1,191,616 shares.

2009 — 2010 Multi-Year Variable Share Remuneration Program for executive directors and members of the Management committee.

The Bank’s AGM, March 13, 2009, adopted a variable-remuneration scheme in BBVA shares for 2009 and 2010 (hereinafter “The Program”), addressed to the members of the senior management, including executive directors and members of the Management committee.

The Program allocates each beneficiary a number of units as a function of their level of responsibility. At the end of the plan, if the requirements established initially are met, these are used to deliver BBVA shares.

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The specific number of shares to be given to each beneficiary of the Program will be determined by multiplying the number of units allocated by a ratio of between 0 and 2, established as a function of the comparative performance of the Bank’s TSR (total shareholders’ return) against the TSR of the Bank’s international peer-group.

The number of units allocated to the executive directors was 215,000 units for the chairman and CEO; 131,707 for the president and COO.

The total number of units allocated under this Program to Management committee members sitting on the committee on December 31, 2009, excluding executive directors, was 817,464 units.

The number of units initially allocated to the former president and COO and the former Company Secretary and director was reduced as a consequence of their retirement pursuant to a scale as a function of the time during which they performed their executive duties in the Bank and the total duration of the Program. They received 48,293 and 29,024 units respectively.

Remuneration system for non-executive directors using deferred delivery of shares

On March 18, 2006, the general shareholders’ meeting resolved to establish a remuneration plan using deferred delivery of shares to the Bank’s non-executive directors, to substitute the earlier plan that had covered these directors.

The plan assigns theoretical shares each year to non-executive director beneficiaries equivalent to 20% of the total remuneration paid to each in the previous year, using the average of BBVA stock closing prices from the sixty trading sessions prior to the AGM that approves the financial statements for the years covered by the plan starting from the year 2007. These shares, where applicable, are to be delivered when the beneficiaries cease to be directors on any grounds other than serious dereliction of duties.

The number of theoretical shares allocated to non-executive director beneficiaries under the deferred share delivery scheme approved at the shareholders’ meeting in 2009 corresponding to 20% of the total remuneration paid to each in 2008, is set forth below:

	Theoretical		Accumulated
Directors	Shares		Theoretical Shares
Tomás Alfaro Drake		5,645		9,707
Juan Carlos Álvarez Mezquíriz		9,543		33,511
Rafael Bermejo Blanco		11,683		15,989
Ramón Bustamante y de la Mora		8,661		32,648
José Antonio Fernández Rivero		9,663		24,115
Ignacio Ferrero Jordi		9,543		34,083
Román Knörr Borrás(*)		8,335		27,838
Carlos Loring Martínez de Irujo		8,667		20,418
Enrique Medina Fernández		11,351		44,708
Susana Rodríguez Vidarte		6,854		20,450
Total		89,945		263,467

(*)  As previously mentioned, in the meeting held on March 23, 2010, the Board accepted the resignation of Mr. Román Knörr Borrás as member of the board due to the fact that he had reached the age limit provided in the Regulations of the Board.

Pension commitments

The provisions recorded at December 31, 2009 to cover the commitments for protection insurance for the president and COO were €13,753 thousand. This includes both the sums accumulated as member of the Management committee, and also those stemming from his current position as president and COO. To date, there are no other commitments for executive directors under this item.

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During 2009, our Board of Directors determined the pension rights to which the chairman and CEO was entitled, having reached the age of 65 at which point his retirement pension rights vested. These were established under the actuarial criteria applicable to the bank, at €79,775 thousand of which €72,547 thousand had already been charged to the earnings of previous years, which have been outsourced under an insurance policy whose benefits may not be received until the chairman and CEO stands down from his executive responsibilities. Thus, at December 31, 2009, all the Bank’s pension commitments for the chairman and CEO have been met.

Likewise, the Board of Directors determined the pension rights to which the former president & COO was entitled as a consequence of his early retirement. It established this sum at €68,674 thousand, of which €52,495 thousand were already charged to the earnings of previous years. This amount has been outsourced under an insurance policy. Thus, at December 31, 2009, all the Bank’s pension commitments for the former president and COO have been met.

Finally, the Board of Directors determined the pension rights to which the former Company secretary and director was entitled as a consequence of his early retirement. It established this sum at €13,511 thousand of which €8,710 thousand were already charged to the earnings of previous years. This amount has been paid as compensation for his pension rights, such that at December 31, 2009, the Bank’s pension commitments for the former Company secretary and director have been met.

Moreover, €79 thousand have been paid in insurance premiums for non-executive members of the Board of Directors.

The provisions charged to December 31, 2009 for pension commitments for the Management committee members, excluding executive directors, amounted to €45,535 thousand. Of these, €8,371 thousand were provisioned during 2009.

Severance Payments

The contractual conditions agreed with the Bank’s executive directors previously recognized their entitlement to receive compensation in the case of severance. The Bank has ceased to bear these obligations. Consequently, at December 31, 2009 there are no severance compensation payment commitments for executive directors and will not be in the future. Our directors do not have services contracts that provide for benefits upon termination of employment beyond those described above.

The contract of the president and COO determines that in the event of him losing this condition on any grounds other than his own will, retirement, disability or severe dereliction of duty, he will take early retirement with a pension payable, as he chooses, through a lifelong annuity pension, or by payment of a lump sum. This pension will be 75% of his pensionable salary if the severance occurs before he is 55, and 85% if it occurs after reaching said age.

C.   Board Practices

Committees

Our corporate governance system is based on the distribution of functions between the board, the Executive Committee and the other board Committees, namely: the Audit and Compliance Committee; the Appointments and Compensation Committee; and the Risk Committee.

Executive Committee

Our board of directors is assisted in fulfilling its responsibilities by the Executive Committee (Comisión Delegada Permanente) of the board of directors. The board of directors delegates all management functions, except those that it must retain due to legal or statutory requirements, to the Executive Committee.

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As of the date of this Annual Report, BBVA’s Executive Committee was comprised of two executive directors and three independent directors, as follows.

Chairman and Chief Executive Officer:	Mr. Francisco González Rodríguez
President and Chief Operating Officer:	Mr. Angel Cano Fernandez
Members:	Mr. Juan Carlos Álvarez Mezquíriz
	Mr. Ignacio Ferrero Jordi
	Mr. Enrique Medina Fernández

According to our bylaws, the Executive Committee’s responsibilities include the following: to formulate and propose policy guidelines, the criteria to be followed in the preparation of programs and to fix targets, to examine the proposals put to it in this regard, comparing and evaluating the actions and results of any direct or indirect activity carried out by the Group; to determine the volume of investment in each individual activity; to approve or reject operations, determining methods and conditions; to arrange inspections and internal or external audits of all operational areas of the Group; and in general to exercise the faculties delegated to it by the board of directors.

Specifically, the Executive Committee is entrusted with evaluation of our system of corporate governance. This shall be analyzed in the context of our development and of the results we have obtained, taking into account any regulations that may be passedand/or recommendations made regarding best market practices and adapting these to our specific circumstances.

The Executive Committee shall meet on the dates indicated in the annual calendar of meetings and when the chairman or acting chairman so decides. During 2009, the Executive Committee met 18 times.

Audit and Compliance Committee

This committee shall perform the duties required it under applicable laws, regulations and our bylaws. Essentially, it has authority from the board to supervise the financial statements and the oversight of the Group.

The board regulations establish that the Audit and Compliance Committee shall have a minimum of four members appointed by the board in light of their know-how and expertise in accounting, auditingand/or risk management. They shall all be independent directors, one of whom shall act as chairman, also appointed by the board.

As of the date of this Annual Report, the Audit and Compliance Committee members were:

Chairman:	Mr. Rafael Bermejo Blanco
Members:	Mr. Tomás Alfaro Drake
	Mr. Ramón Bustamante y de la Mora
	Mr. Carlos Loring Martínez de Irujo
	Mrs. Susana Rodríguez Vidarte

The scope of its functions is as follows:

•  Supervise the internal control systems’ sufficiency, appropriateness and efficacy in order to ensure the accuracy, reliability, scope and clarity of the financial statements of the Company and its consolidated group in their annual and quarterly reports. The committee also oversees the accounting and financial information that the Bank of Spain or other regulators from Spain and abroad may require.

•  Oversee compliance with applicable national and international regulations on matters related to money laundering, conduct on the securities markets, data protection and the scope of Group activities with respect to anti-trust regulations. The committee also oversees that any requests for information or for a response from the competent bodies in these matters are dealt with in due time and in due form.

•  Ensure that the internal codes of ethics and conduct and securities market operations, as they apply to our personnel, comply with regulations and are properly suited to the Bank.

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•  Enforce compliance with provisions contained in our directors’ charter, and ensure that directors satisfy applicable standards regarding their conduct on the securities markets.

•  Ensure the accuracy, reliability, scope and clarity of the financial statements. The committee shall constantly monitor the process by which they are drawn up, holding frequent meetings with the Bank executives and the external auditor responsible for them.

The committee shall also monitor the independence of external auditors. This entails the following two duties:

•  Ensuring that the auditors’ warnings, opinions and recommendations are followed.

•  Establishing the incompatibility between the provision of audit and the provision of consultancy services, unless there are no alternatives in the market to the auditors or companies in the auditors’ group of equal value in terms of their content, quality or efficiency. In such event, the committee must grant its approval, which can be done in advance by delegation to its chairman.

The committee selects the external auditor for the Bank and its Group, and for all the Group companies. It must verify that the audit schedule is being carried out under the service agreement and that it satisfies the requirements of the competent authorities and the Bank’s governing bodies. The committee will also require the auditors, at least once each year, to assess the quality of the Group’s internal oversight procedures.

The Audit and Compliance Committee meets as often as necessary to comply with its tasks, although an annual meeting schedule is drawn up in accordance with its duties. During 2009 the Audit and Compliance Committee met 13 times.

Executives responsible for control, internal audit and regulatory compliance can be invited to attend its meetings and, at the request of these executives, other staff from these departments who have particular knowledge or responsibility in the matters contained in the agenda, can also be invited when their presence at the meeting is deemed appropriate. However, only the committee members and the secretary shall be present when the results and conclusions of the meeting are evaluated.

The committee may engage external advisory services for relevant issues when it considers that these cannot be properly provided by experts or technical staff within the Group on grounds of specialization or independence.

Likewise, the committee can call on the personal cooperation and reports of any member of the management team when it considers that this is necessary to carry out its functions with regard to relevant issues.

The committee has its own specific regulations, approved by the board of directors. These are available on our website and, amongst other things, regulate its operation.

Appointments and Compensation Committee

The Appointments and Compensation Committee is tasked with assisting the board on issues related to the appointment and re-election of board members, and determining the directors’ remuneration.

This committee shall comprise a minimum of three members who shall be external directors appointed by the board, which shall also appoint its chairman. However, the chairman and the majority of its members must be independent directors, in compliance with the board regulations.

As of the date of this Annual Report, the members of the Appointments and Compensation Committee were:

Chairman:	Mr. Carlos Loring Martínez de Irujo
Members:	Mr. Juan Carlos Álvarez Mezquíriz
	Mr. Ignacio Ferrero Jordi
	Mrs. Susana Rodríguez Vidarte

The duties of the Appointments and Compensation Committee, apart from the aforementioned duty in the appointment of directors, include proposing the remuneration system for the board as a whole, within the framework established in the Company’s bylaws. This entails determination of its items, the amount payable for each item and the settlement of said amount, and, as mentioned above, the scope and amount of the

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remuneration, rights and economic compensation for the CEO, the COO and the Bank’s executive directors in order to include these aspects in a written contract.

This committee shall also:

•  Should the chairmanship of the board or the post of chief executive officer fall vacant, examine or organize, in the manner it deems suitable, the succession of the chairmanand/or chief executive officer and put corresponding proposals to the board for an orderly, well-planned succession.

•  Submit an annual report on the directors remuneration policy to the board of directors.

•  Report the appointments and severances of senior managers and propose senior-management remuneration policy to the board, along with the basic terms and conditions for their contracts.

The chairman of the Appointments and Compensation Committee shall convene it as often as necessary to comply with its mission, although an annual meeting schedule shall be drawn up in accordance with its duties. During 2009 the Appointments and Compensation Committee met 12 times.

In accordance with the board regulations, the committee may ask members of the Group to attend its meetings, when their responsibilities relate to its duties. It may also receive any advisory services it requires to inform its criteria on issues falling within the scope of its powers.

Risk Committee

The board’s Risk Committee is tasked with the analysis of issues related to our risk management and control policy and strategy. It assesses and approves any risk transactions that may be significant.

The Risk Committee shall have a majority of external directors, with a minimum of three members, appointed by the board of directors, which shall also appoint its chairman.

The committee is required to be comprised of a majority of non-executive directors. As of the date of this Annual Report, the members of the Risk Committee were:

Chairman:	Mr. José Antonio Fernández Rivero
Members:	Mr. Ramón Bustamante y de la Mora
	Mr. Rafael Bermejo Blanco
	Mr. José Maldonado Ramos
	Mr. Enrique Medina Fernández

Under the board regulations, it has the following duties:

•  Analyze and evaluate proposals related to our risk management and oversight policies and strategy. In particular, these shall identify:

a) the risk map;

b)  the setting of the level of risk considered acceptable according to the risk profile (expected loss) and capital map (risk capital) broken down by our businesses and areas of activity;

c) the internal information and oversight systems used to oversee and manage risks; and

d) the measures established to mitigate the impact of risks identified should they materialize.

•  Monitor the match between risks accepted and the profile established.

•  Assess and approve, where applicable, any risks whose size could compromise the our capital adequacy or recurrent earnings, or that present significant potential operational or reputational risks.

•  Check that we possess the means, systems, structures and resources benchmarked against best practices to allow implementation of its risk management strategy.

The committee meets as often as necessary to best perform its duties, usually once a week. In 2009, it held 53 meetings.

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D.   Employees

As of December 31, 2009, we, through our various affiliates, had 103,721 employees. Approximately 82% of our employees in Spain held technical, managerial and executive positions, while the remainder were clerical and support staff. The table below sets forth the number of BBVA employees by geographic area.

Country	BBVA		Banks		Companies		Total
Spain		25,871		476		1,589		27,936
United Kingdom		89		—		—		89
France		94		—		—		94
Italy		55		—		208		263
Germany		35		—		—		35
Switzerland		—		113		—		113
Portugal		—		917		—		917
Belgium		37		—		—		37
Russia		4		—		—		4
Ireland		—		5		—		5
Total Europe		26,185		1,511		1,797		29,493
United States		136		12,166		—		12,302
Panama		—		308		—		308
Puerto Rico		—		777		—		777
Argentina		—		5,300		—		5,300
Brazil		3		—		17		20
Colombia		—		5,821		—		5,821
Venezuela		—		5,791		—		5,791
Mexico		—		32,580		—		32,580
Uruguay		20		185		—		205
Paraguay		—		250		—		250
Bolivia		—		—		207		207
Chile		—		5,039		—		5,039
Cuba		1		—		—		1
Peru		—		5,208		—		5,208
Ecuador		—		—		262		262
Total Latin America		24		61,259		486		61,769
Hong Kong		116		—		—		116
Japan		10		—		—		10
China		15		—		—		15
Singapore		9		—		—		9
India		2		—		—		2
South Korea		2		—		—		2
Total Asia		154		—		—		154
Australia		3		—		—		3
Total Oceania		3		—		—		3
Total		26,502		74,936		2,283		103,721

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As of December 31, 2008, we, through our various affiliates, had 108,972 employees The table below sets forth the number of BBVA employees by geographic area:

Country	BBVA		Banks		Companies		Total
Spain		26,785		597		1,688		29,070
United Kingdom		98		—		6		104
France		97		—		—		97
Italy		58		—		194		252
Germany		26		—		—		26
Switzerland		—		118		—		118
Portugal		—		936		—		936
Belgium		38		—		—		38
Jersey		—		3		—		3
Russia		4		—		—		4
Ireland		—		4		—		4
Total Europe		27,106		1,658		1,888		30,652
United States		168		12,479		—		12,647
Panama		—		312		—		312
Puerto Rico		—		910		—		910
Argentina		—		5,648		—		5,648
Brazil		4		—		14		18
Colombia		—		6,093		—		6,093
Venezuela		—		6,295		—		6,295
Mexico		—		34,535		—		34,535
Uruguay		46		171		—		217
Paraguay		—		212		—		212
Bolivia		—		—		197		197
Chile		—		5,325		—		5,325
Cuba		1		—		—		1
Peru		—		5,553		—		5,553
Ecuador		—		—		216		216
Total Latin America		51		65,054		427		65,532
Hong Kong		107		—		—		107
Japan		9		—		—		9
China		7		—		—		7
Singapore		18		—		—		18
Total Asia		141		—		—		141
Total		27,466		79,191		2,315		108,972

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As of December 31, 2007, we, through our various affiliates, had 111,913 employees. The table below sets forth the number of BBVA employees by geographic area:

Country	BBVA		Banks		Companies		Total
Spain		28,892		725		1,489		31,106
United Kingdom		133		—		7		140
France		109		—		—		109
Italy		61		—		171		232
Germany		7		—		—		7
Switzerland		—		111		—		111
Portugal		—		925		—		925
Belgium		38		—		—		38
Jersey		—		3		—		3
Russia		3		—		—		3
Ireland		—		5		—		5
Total Europe		29,243		1,769		1,667		32,679
United States		236		13,096		—		13,332
Grand Cayman		2		—		—		2
Total North America		238		13,096		—		13,334
Panama		—		285		—		285
Puerto Rico		—		999		—		999
Argentina		—		7,483		—		7,483
Brazil		4		—		15		19
Colombia		—		5,969		—		5,969
Venezuela		—		5,822		—		5,822
Mexico		—		35,200		—		35,200
Uruguay		36		158		—		194
Paraguay		—		139		—		139
Bolivia		—		—		196		196
Chile		—		4,431		—		4,431
Dominican Republic		—		—		—		—
Cuba		1		—		—		1
Peru		—		4,874		—		4,874
Ecuador		—		—		167		167
Total Latin America		41		65,360		378		65,779
Hong Kong		90		—		—		90
Japan		11		—		—		11
China		6		—		—		6
Singapore		14		—		—		14
Total Asia		121		—		—		121
Total		29,643		80,228		2,045		111,913

The terms and conditions of employment in private sector banks in Spain are negotiated with trade unions representing bank employees. Wage negotiations take place on an industry-wide basis. This process has historically produced collective bargaining agreements binding upon all Spanish banks and their employees. The collective

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bargaining agreement in application during 2009 came into effect as of January 1, 2007 and will apply until December 31, 2010.

As of December 31, 2009, we had 350 temporary employees in our Spanish offices.

E.   Share Ownership

As of March 26, 2010, the members of the board of directors owned an aggregate of 2,609,826 BBVA shares as shown in the table below :

	Directly		Indirectly
	Owned		Owned		Total		% Capital
Name	Shares		Shares		Shares		Stock
Gonzalez Rodríguez, Francisco		318,234		1,564,059		1,882,293		0.050
Cano Fernández, Ángel		277,153				277,153		0.007
Alfaro Drake, Tomás		9,286		—		9,286		0.000
Álvarez Mezquiriz, Juan Carlos		142,439		—		142,439		0.004
Bermejo Blanco, Rafael		27,000		—		27,000		0.001
Bustamante y de la Mora, Ramon		10,302		2,032		12,334		0.000
Fernandez Rivero, José Antonio		50,805				50,805		0.001
Ferrero Jordi, Ignacio		2,916		52,126		55,042		0.001
Loring Martínez de Irujo, Carlos		39,780		—		39,780		0.001
Maldonado Ramos, José		61,053		—		61,053		0.002
Medina Fernández, Enrique		32,262		1,214		33,476		0.001
Rodriguez Vidarte, Susana		16,781		2,384		19,165		0.001
TOTAL		988,011		1,621,815		2,609,826		0.070

BBVA has not granted options on its shares to any members of its administrative, supervisory or Management bodies. Information regarding the Multi-Year Variable Share Remuneration Program (in which executive directors participate) is provided under “Item 6. Directors, Senior Management and Employees — B. Compensation — 2009 to 2010 Multi-Year Variable Share Remuneration Program”.

As of March 26, 2010 the executive officers (excluding executive directors) and their families owned 896,735 shares. None of our executive officers holds 1% or more of BBVA’s shares.

As of March 26, 2010, a total of 25,033 employees (excluding executive officers and directors) owned 36,861,954 shares, which represents 0.98% of our capital stock.

ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   Major Shareholders

As of December 31, 2009 to our knowledge, no person, corporation or government owned beneficially, directly or indirectly, five percent or more of BBVA’s shares. BBVA’s major shareholders do not have voting rights which are different from those held by the rest of its shareholders. To the extent known to us, BBVA is not controlled, directly or indirectly, by any other corporation, government or any other natural or legal person. As of December 31, 2009, there were 884,373 registered holders of BBVA’s shares, with an aggregate of 3,747,969,121 shares, of which 197 shareholders with registered addresses in the United States held a total of 701,208,611 shares (including shares represented by American Depositary Receipts (“ADRs”)). Since certain of such shares and ADRs are held by nominees, the foregoing figures are not representative of the number of beneficial holders. Our directors and executive officers did not own any ADRs as of December 31, 2009.

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B.   Related Party Transactions

Loans to Directors, Executive Officers and Other Related Parties

As of December 31, 2009, loans granted to members of the board of directors amounted to an aggregate of €806 thousand.

As of December 31, 2009, loans granted to the Management Committee, excluding the executive directors, amounted to an aggregate of €3,912 thousand.

As of December 31, 2009, there were no guarantees provided on behalf of members of our Management Committee.

As of December 31, 2009, the loans granted to parties related to key personnel (the members of the board of directors of BBVA and of the Management Committee as mentioned above) amounted to an aggregate of €51,882 thousand. As of December 31, 2009, the other exposure (guarantees, financial leases and commercial loans) to parties related to key personnel amounted to an aggregate of €24,514 thousand.

Related Party Transactions in the Ordinary Course of Business

Loans extended to related parties were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features.

BBVA subsidiaries engage, on a regular and routine basis, in a number of customary transactions with other BBVA subsidiaries, including:

•  overnight call deposits;

•  foreign exchange purchases and sales;

•  derivative transactions, such as forward purchases and sales;

•  money market fund transfers;

•  letters of credit for imports and exports;

and other similar transactions within the scope of the ordinary course of the banking business, such as loans and other banking services to our shareholders, to employees of all levels, to the associates and family members of all the above and to other BBVA non-banking subsidiaries or affiliates. All these transactions have been made:

•  in the ordinary course of business;

•  on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons; and

•  did not involve more than the normal risk of collectability or present other unfavorable features.

C.   Interests of Experts and Counsel

Not Applicable.

ITEM 8.   FINANCIAL INFORMATION

A.   Consolidated Statements and Other Financial Information

Financial Information

See Item 18.

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Dividends

The table below sets forth the amount of interim, final and total cash dividends paid by BBVA on its shares for the years 2005 to 2009, adjusted to reflect all stock splits. The rate used to convert euro amounts to dollars was the noon buying rate at the end of each year.

	Per Share
	First Interim				Second Interim				Third Interim				Final				Total
	€		$		€		$		€		$		€		$		€		$
2005	€	0.115	$	0.143	€	0.115	$	0.143	€	0.115	$	0.143	€	0.186	$	0.231	€	0.531	$	0.660
2006	€	0.132	$	0.174	€	0.132	$	0.174	€	0.132	$	0.174	€	0.241	$	0.318	€	0.637	$	0.841
2007	€	0.152	$	0.222	€	0.152	$	0.222	€	0.152	$	0.222	€	0.277	$	0.405	€	0.733	$	1.070
2008	€	0.167	$	0.232	€	0.167	$	0.232	€	0.167	$	0.232		—		—	€	0.501	$	0.697
2009	€	0.090	$	0.129	€	0.090	$	0.129	€	0.090	$	0.129	€	0.150	$	0.215	€	0.420	$	0.602

We have paid annual dividends to our shareholders since the date we were founded. Historically, we have paid interim dividends each year. The total dividend for a year is proposed by the board of directors following the end of the year to which it relates. The unpaid portion of this dividend (the final dividend) is paid after the approval of our financial statements by the shareholders at the AGM. Interim and final dividends are payable to holders of record on the dividend payment date. Unclaimed dividends revert to BBVA five years after declaration.

While we expect to declare and pay dividends on our shares on a quarterly basis in the future, the payment of dividends will depend upon our earnings, financial condition, governmental regulations and policies and other factors.

On March 13, 2009, our shareholders adopted the distribution of additional shareholder remuneration to complement the 2008 cash dividend in the form of an in-kind distribution of a portion of the share premium reserve. On April 20, 2009, our shareholders received BBVA shares from treasury stock in the proportion of one share for every 62 outstanding. Accordingly, the number of shares distributed was 60,451,115.

This payment entailed a charge against the share premium reserve of €317 million, the weighted average market price of BBVA shares in the continuous electronic market on the trading session on March 12, 2009, the day immediately preceding the date of the AGM (“Reference Value”), subject to a ceiling such that in no event can the charge against the share premium reserve exceed the total account balance.

Subject to the terms of the deposit agreement, holders of ADRs are entitled to receive dividends attributable to the shares represented by the ADSs evidenced by their ADRs to the same extent as if they were holders of such shares.

For a description of BBVA’s access to the funds necessary to pay dividends on the shares, see “Item 4. Information on the Company — Supervision and Regulation — Dividends”. In addition, BBVA may not pay dividends except out of its unrestricted reserves available for the payment of dividends, after taking into account the Bank of Spain’s capital adequacy requirements. Capital adequacy requirements are applied by the Bank of Spain on both a consolidated and individual basis. See “Item 4. Information on the Company — Supervision and Regulation — Capital Requirements” and “Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources — Capital”. Under Spain’s capital adequacy requirements, we estimate that as of December 31, 2009, BBVA had approximately €15 billion of reserves in excess of applicable capital and reserve requirements, which were not restricted as to the payment of dividends.

Legal Proceedings

On March 15, 2002, the Bank of Spain initiated proceedings against BBVA and 16 of its former directors and executives, as a result of the existence of funds (approximately €225 million) belonging to BBV that were not included in the entity’s financial statements until they were voluntarily regularized by being recognized in the 2000 consolidated income statement as non-recurrent income, for which the related corporation tax was recognized and paid. BBVA notified the Bank of Spain of these matters on January 19, 2001.

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On May 22, 2002, the Board of the Spanish Securities and Exchange Commission (“CNMV”) commenced proceedings against BBVA for possible contravention of Article 99 ñ) of the Securities Market Act for the same events as those which gave rise to the proceedings initiated by the Bank of Spain.

The start of legal proceedings to determine possible criminal responsibility of the individuals involved in these events triggered the suspension of the above administrative proceedings until a definitive criminal judgment was issued. These criminal proceedings ended with a definitive court judgment in 2007, with none of those involved being convicted. The end of these criminal proceedings meant that the administrative proceedings could be re-opened. The Bank of Spain and the CNMV announced the lifting of the suspension to their proceedings on June 13, 2007 and July 26, 2007, respectively.

On July 18, 2008, the board of the Bank of Spain sanctioned BBVA with a fine of €1 million for a serious breach as typified in article 5.p) of the “Ley de Disciplina e Intervención de las Entidades de Crédito” (Law regulating the conduct of financial entities) and also imposed various sanctions on the managers and executives responsible for such conduct, none of whom are presently members of the board of directors, or hold executive office at BBVA.

On July 18, 2008, the Ministry of Economy and Finance sanctioned the entity with a fine of €2 million, as a result of the proceeding initiated by the CNMV, for a very serious breach under Article 99 ñ) of the Stock Markets Act.

Both decisions were confirmed by the Ministry for Economy and Finance on administrative appeal

Internal Control Procedures

As a result of our discovery that BBVA funds had been held in offshore accounts and not been reflected in its financial statements, we have implemented several accounting internal control procedures in order to obtain reasonable assurance that breaches of our internal controls do not occur. For example, BBVA has significantly strengthened its internal audit function. BBVA’s internal audit department is responsible for such matters as verifying accuracy and completeness of BBVA’s financial reporting and ensuring the compliance, appropriateness and effectiveness of BBVA’s internal control systems and procedures. BBVA has also enhanced its internal audit function, including by broadening the scope of its internal audit activities to include all of BBVA’s diverse operations, both in terms of business area and geographical location. In addition, since 2002, BBVA has implemented a “Director Plan” to further strengthen its internal controls. As part of this plan, BBVA’s internal audit function was further expanded to include review of information and documentation used by the management of each business unit, review of BBVA’s financial statement consolidation process and review and assessment of BBVA’s compliance with capital adequacy requirements. In addition, the Director Plan provides for the standardization of internal audit work procedures, from making initial contact with the business area or unit being audited to documenting the results of the audit.

BBVA has also reinforced its internal compliance department. This department, whose functions have been established by the Audit and Compliance Committee of our board of directors, is responsible for developing and implementing internal norms and procedures to ensure compliance with legal requirements and ethical guidelines established by us, such as our Code of Ethics and Conduct. For example, this department is responsible for establishing internal controls and procedures related to matters such as the prevention of money-laundering and trading in our securities.

Besides the accounting internal control procedures implemented by us described above, in order to further obtain reasonable assurance that breaches of our internal controls do not occur, we have taken a series of steps to strengthen our corporate governance structures in keeping with the most recent trends in this area and new legislation that has taken effect in Spain and the other countries in which we operate. For a description of these corporate governance structures, see “Item 6. — Directors, Senior Management and Employees”.

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B.   Significant Changes

No significant change has occurred since the date of the Consolidated Financial Statements.

ITEM 9.   THE OFFER AND LISTING

A.   Offer and Listing Details

BBVA’s shares are listed on the Spanish stock exchanges in Madrid, Bilbao, Barcelona and Valencia (the “Spanish Stock Exchanges”) and listed on the computerized trading system of the Spanish Stock Exchanges (the “Automated Quotation System”). BBVA’s shares are also listed on the New York, Mexican and London stock exchanges as well as quoted on SEAQ International in London. BBVA’s shares are listed on the New York stock exchange as American Depositary Shares (ADSs).

ADSs are listed on the New York Stock Exchange and are also traded on the Lima (Peru) Stock Exchange, by virtue of an exchange agreement entered into between these two exchanges. Each ADS represents the right to receive one share.

Fluctuations in the exchange rate between the euro and the dollar will affect the dollar equivalent of the euro price of BBVA’s shares on the Spanish Stock Exchanges and the price of BBVA’s ADSs on the New York Stock Exchange. Cash dividends are paid by BBVA in euro, and exchange rate fluctuations between the euro and the dollar will affect the dollar amounts received by holders of ADRs on conversion by The Bank of New York (acting as depositary) of cash dividends on the shares underlying the ADSs evidenced by such ADRs.

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The table below sets forth, for the periods indicated, the high and low sales closing prices for the shares of BBVA on the Automated Quotation System.

	Euro per Share
	High		Low
Fiscal year ended December 31, 2005
Annual		15.17		11.95
Fiscal year ended December 31, 2006
Annual		19.49		14.91
Fiscal year ended December 31, 2007
Annual		20.08		15.60
First Quarter		20.08		17.38
Second Quarter		18.87		17.65
Third Quarter		18.43		15.60
Fourth Quarter		17.54		16.06
Fiscal year ended December 31, 2008
Annual		16.58		7.16
First Quarter		16.58		12.76
Second Quarter		15.27		12.17
Third Quarter		12.41		10.30
Fourth Quarter		12.30		7.16
Fiscal year ended December 31, 2009
Annual		13.17		4.68
First Quarter		9.28		4.68
Second Quarter		9.03		6.32
Third Quarter		12.71		8.63
Fourth Quarter		13.17		11.51
Month ended September 30, 2009		12.43		11.93
Month ended October 31, 2009		12.58		11.51
Month ended November 30, 2009		13.17		11.84
Month ended December 31, 2009		13.04		12.18
Fiscal year ended December 31, 2010
Month ended January 31, 2010		13.15		10.97
Month ended February 28, 2010		11.24		9.38
Month ended March 31 (through March 24), 2010		10.65		9.58

From January 1, 2009 through December 31, 2009 the percentage of outstanding shares held by BBVA and its affiliates ranged between 0.157% and 2.407%, calculated on a monthly basis. On February 2, 2010, the percentage of outstanding shares held by BBVA and its affiliates was 0.963%.

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The table below sets forth the reported high and low sales closing prices for the ADSs of BBVA on the New York Stock Exchange for the periods indicated.

	U.S. Dollars per ADS
	High		Low
Fiscal year ended December 31, 2005
Annual		17.91		15.08
Fiscal year ended December 31, 2006
Annual		25.15		18.21
Fiscal year ended December 31, 2007
Annual		26.23		21.56
First Quarter		26.23		22.79
Second Quarter		25.37		23.56
Third Quarter		23.57		21.56
Fourth Quarter		25.48		23.44
Fiscal year ended December 31, 2008
Annual		24.27		8.45
First Quarter		24.27		19.32
Second Quarter		23.90		18.97
Third Quarter		19.56		14.59
Fourth Quarter		16.63		8.45
Fiscal year ended December 31, 2009
Annual		19.69		5.76
First Quarter		12.66		5.76
Second Quarter		12.73		8.44
Third Quarter		18.16		12.09
Fourth Quarter		19.69		16.74
Month ended September 30, 2009		18.13		16.88
Month ended October 31, 2009		18.90		16.74
Month ended November 30, 2009		19.69		17.51
Month ended December 31, 2009		19.31		17.59
Fiscal year ended December 31, 2010
Month ended January 31, 2010		18.99		15.19
Month ended February 28, 2010		15.73		12.91
Month ended March 31, 2010 (through March 24)		14.62		12.94

Securities Trading in Spain

The Spanish securities market for equity securities consists of the Automated Quotation System and the four stock exchanges located in Madrid, Bilbao, Barcelona and Valencia. During 2009, the Automated Quotation System accounted for the majority of the total trading volume of equity securities on the Spanish Stock Exchanges.

Automated Quotation System.  The Automated Quotation System (Sistema de Interconexión Bursátil) links the four local exchanges, providing those securities listed on it with a uniform continuous market that eliminates certain of the differences among the local exchanges. The principal feature of the system is the computerized matching of buy and sell orders at the time of entry of the order. Each order is executed as soon as a matching order is entered, but can be modified or canceled until executed. The activity of the market can be continuously monitored by investors and brokers. The Automated Quotation System is operated and regulated by Sociedad de Bolsas, S.A. (“Sociedad de Bolsas”), a corporation owned by the companies that manage the local exchanges. All trades on the Automated Quotation System must be placed through a bank, brokerage firm, an official stock broker or a dealer

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firm member of a Spanish stock exchange directly. Since January 1, 2000, Spanish banks have been allowed to place trades on the Automated Quotation System and have been allowed to become members of the Spanish Stock Exchanges. We are currently a member of the four Spanish Stock Exchanges and can trade through the Automated Quotation System.

In a pre-opening session held from 8:30 a.m. to 9:00 a.m. each trading day, an opening price is established for each security traded on the Automated Quotation System based on orders placed at that time. The regime concerning opening prices was changed by an internal rule issued by theSociedad de Bolsas. In this new regime all references to maximum changes in share prices are substituted by static and dynamic price ranges for each listed share, calculated on the basis of the most recent historical volatility of each share, and made publicly available and updated on a regular basis by theSociedad de Bolsas. The computerized trading hours are from 9:00 a.m. to 5:30 p.m., during which time the trading price of a security is permitted to vary by up to the stated levels. If, during the open session, the quoted price of a share exceeds these static or dynamic price ranges, Volatility Auctions are triggered, resulting in new static or dynamic price ranges being set for the share object of the same. Between 5:30 p.m. and 5:35 p.m. a closing price is established for each security through an auction system similar to the one held for the pre-opening early in the morning.

Trading hours for block trades (i.e. operations involving a large number of shares) are also from 9:00 a.m. to 5:30 p.m.

Between 5:30 p.m. and 8:00 p.m., special operations, whetherAuthorizedorCommunicated,can take place outside the computerized matching system of theSociedad de Bolsasif they fulfill certain requirements. In such respectCommunicatedspecial operations (those that do not need the prior authorization of theSociedad de Bolsas) can be traded if all of the following requirements are met: (i) the trade price of the share must be within the range of 5% above the higher of the average price and closing price for the day and 5% below the lower of the average price and closing price for the day; (ii) the market member executing the trade must have previously covered certain positions in securities and cash before executing the trade; and (iii) the size of the trade must involve at least €300,000 and represent at least a 20% of the average daily trading volume of the shares in theAutomated Quotation Systemduring the preceding three months. If any of the aforementioned requirements is not met, a special operation may still take place, but it will need to take the form ofAuthorizedspecial operation (i.e. those needing the prior authorization of theSociedad de Bolsas). Such authorization will only be upheld if any of the following requirements is met:

•  the trade involves more than €1.5 million and more than 40% of the average daily volume of the stock during the preceding three months;

•  the transaction derives from a merger or spin-off process or from the reorganization of a group of companies;

•  the transaction is executed for the purposes of settling a litigation or completing a complex group of contracts; or

•  theSociedad de Bolsasfinds other justifiable cause.

Please note that the regime set forth in the previous two paragraphs may be subject to change, as article 36 of the Securities Market Act, defining trades in Spanish Exchanges has been, as described below, modified as a result Law 47/2007. The Spanish Stock Markets are currently reviewing their trading rules in light of this new regulation.

Information with respect to the computerized trades between 9:00 a.m. and 5:30 p.m. is made public immediately, and information with respect to trades outside the computerized matching system is reported to theSociedad de Bolsasby the end of the trading day and published in theBoletín de Cotizaciónand in the computer system by the beginning of the next trading day.

Sociedad de Bolsasis also the manager of the IBEX 35^® Index. This index is made up by the 35 most liquid securities traded on the Spanish Market and, technically, it is a price index that is weighted by capitalization and adjusted according to the free float of each company comprised in the index. Apart from its quotation on the four Spanish Exchanges, BBVA is also currently included in this Index.

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Clearing and Settlement System.

On April 1, 2003, by virtue of Law 44/2002 and of Order ECO 689/2003 of March 27, 2003 approved by the Spanish Ministry of Economy, the integration of the two main existing book-entry settlement systems existing in Spain at the time−the equity settlement systemServicio de Compensación y Liquidación de Valores(“SCLV”) and the Public Debt settlement systemCentral de Anotaciones de Deuda del Estado (“CADE”)− took place. As a result of this integration, a single entity, known asSociedad de Gestión de los Sistemas de Registro Compensación y Liquidación de Valores(“Iberclear”) assumed the functions formerly performed by SCLV and CADE according to the legal regime stated in article 44 bis of the Spanish Securities Market Act.

Notwithstanding the above, rules concerning the book-entry settlement systems enacted before this date by SCLV and the Bank of Spain, as former manager of CADE, continue in force, but any reference to the SCLV or CADE must be substituted by Iberclear.

In addition, and according to Law 41/1999, Iberclear manages three securities settlement systems for securities in book-entry form: The system for securities listed on the Stock Exchanges, the system for Public Debt and the system for securities traded in AIAF Mercado de Renta Fija. Cash settlement, from February 18, 2008 for all systems is managed through the TARGET2-Banco de España payment system. The following three paragraphs exclusively address issues relating to the securities settlement system managed by Iberclear for securities listed on the Spanish Stock Exchanges (the “SCLV system”).

Under Law 41/1999 and Royal Decree 116/1992, transactions carried out on the Spanish Stock Exchanges are cleared and settled through Iberclear and its participants (each an “entidad participante”), through the SCLV system. Only Iberclear participants to this SCLV system are entitled to use it, with participation restricted to authorized members of the Spanish Stock Exchanges (for whom participation was compulsory until March 2007), the Bank of Spain (when an agreement, approved by the Spanish Ministry of Economy and Finance, is reached with Iberclear) and, with the approval of the CNMV, other brokers not members of the Spanish Stock Exchanges, banks, savings banks and foreign clearing and settlement systems. BBVA is currently a participant in Iberclear. Iberclear and its participants are responsible for maintaining records of purchases and sales under the book-entry system. In order to be listed, shares of Spanish companies must be held in book-entry form. Iberclear, maintains a “two-step” book-entry registry reflecting the number of shares held by each of its participants as well as the amount of such shares held on behalf of beneficial owners. Each participant, in turn, maintains a registry of the owners of such shares. Spanish law considers the legal owner of the shares to be:

•  the participant appearing in the records of Iberclear as holding the relevant shares in its own name, or

•  the investor appearing in the records of the participant as holding the shares.

Iberclear settles Stock Exchange trades in the SCLV system in the so-called “D+3 Settlement” by which the settlement of Stock Exchange trades takes place three business days after the date on which the transaction was carried out in the Stock Exchange.

Obtaining legal title to shares of a company listed on a Spanish stock exchange requires the participation of a Spanish broker-dealer, bank or other entity authorized under Spanish law to record the transfer of shares inbook-entry form in its capacity as Iberclear participant for the SCLV system. To evidence title to shares, at the owner’s request the relevant participant entity must issue a certificate of ownership. In the event the owner is a participant entity, Iberclear is in charge of the issuance of the certificate with respect to the shares held in the participant entity’s own name.

According to article 42 of the Securities Market Act Brokerage commissions are not regulated. Brokers’ fees, to the extent charged, will apply upon transfer of title of our shares from the depositary to a holder of ADSs, and upon any later sale of such shares by such holder. Transfers of ADSs do not require the participation of a member of a Spanish Stock Exchange. The deposit agreement provides that holders depositing our shares with the depositary in exchange for ADSs or withdrawing our shares in exchange for ADSs will pay the fees of the official stockbroker or other person or entity authorized under Spanish law applicable both to such holder and to the depositary.

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Securities Market Legislation

The Securities Markets Act was enacted in 1988 with the purpose of reforming the organization and supervision of the Spanish securities markets. This legislation and the regulation implementing it:

•  established an independent regulatory authority, the CNMV, to supervise the securities markets;

•  established a framework for the regulation of trading practices, tender offers and insider trading;

•  required stock exchange members to be corporate entities;

•  required companies listed on a Spanish stock exchange to file annual audited financial statements and to make public quarterly financial information;

•  established the legal framework for the Automated Quotation System;

•  exempted the sale of securities from transfer and value added taxes;

•  deregulated brokerage commissions; and

•  provided for transfer of shares by book-entry or by delivery of evidence of title.

On February 14, 1992, Royal Decree No. 116/92 established the clearance and settlement system and the book-entry system, and required that all companies listed on a Spanish stock exchange adopt the book-entry system.

On November 16, 1998, the Securities Markets Act was amended in order to adapt it to Directive 93/22/CEE on investment services (later amended by Directive 95/26/CE and Directive 97/9/CE of the European Parliament and Council on investors indemnity systems).

On November 22, 2002, the Securities Markets Act was amended by Law 44/2002 in order to update Spanish financial law to global financial markets. See “Item 4. Information on the Company — Business Overview — Supervision and Regulation — Reform of the Spanish Securities Markets”.

On June 18, 2003, the Securities Markets Act and the Corporate Law were amended by Law 26/2003, in order to reinforce the transparency of information available regarding listed Spanish companies. This law added a new chapter, Title X, to the Securities Markets Act, which: (i) requires disclosure of shareholders’ agreements relating to listed companies; (ii) regulates the operation of the general shareholders’ meetings and of boards of directors of listed companies; (iii) requires the publication of an annual report on corporate governance; and (iv) establishes measures designed to increase the availability of information to shareholders.

On April 12, 2007, the Spanish Congress approved Law 6/2007, which amends the Securities Markets Act in order to adapt it to Directive 2004/25/EC on takeover bids, and Directive 2004/109/EC on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (amending Directive 2001/34/EC). Regarding the transparency of listed companies, Law 6/2007 has amended the reporting requirements and the disclosure regime, and has established changes in the supervision system. On the takeover bids side, Law 6/2007 has established the cases in which a company must launch a takeover bid and the ownership thresholds at which a takeover bid must be launched. It also regulates conduct rules for the board of directors of target companies and the squeeze-out and sell-out when a 90% of the share capital is held after a takeover bid. Additionally, Law 6/2007 has been further developed by Royal Decree 1362/2007, on transparency requirements for issuers of listed securities.

On December 19, 2007, the Spanish Congress approved Law 47/2007, which amends the Securities Markets Act in order to adapt it to Directive 2004/37/EC on markets in financial instruments (MiFID), Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions, and Directive 2006/73/EC implementing Directive 2004/39/EC with respect to organizational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive. Further MiFID implementation has been introduced by Royal Decree 217/2008.

Trading by the Bank and its Affiliates in the Shares

Trading by subsidiaries in their parent companies shares is restricted by the Spanish Companies Act.

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Neither BBVA nor its affiliates may purchase BBVA’s shares unless the making of such purchases is authorized at a meeting of BBVA’s shareholders by means of a resolution establishing, among other matters, the maximum number of shares to be acquired and the authorization term, which can not exceed five years. Restricted reserves equal to the purchase price of any shares that are purchased by BBVA or its subsidiaries must be made by the purchasing entity. The total number of shares held by BBVA and its subsidiaries may not exceed ten percent of BBVA’s total capital, as per the new treasury stock limits set forth in Law 3/2009 of structural modifications of commercial companies. It is the practice of Spanish banking groups, including ours, to establish subsidiaries to trade in their parent company’s shares in order to meet imbalances of supply and demand, to provide liquidity (especially for trades by their customers) and to modulate swings in the market price of their parent company’s shares.

Reporting Requirements

Royal Decree 1362/2007 requires that any entity which acquires or transfers shares and as a consequence the number of voting rights held exceeds, reaches or is below the threshold of three percent or any multiple of five percent, of the capital stock of a company listed on a Spanish stock exchange must, within four days after that acquisition or transfer, report it to such company, and to the CNMV. This duty to report the holding of a significant stake will be applicable not only to the acquisitions and transfers in the terms described above, but also to those cases in which in the absence of an acquisition or transfer of shares, the ratio of an individual’s voting rights exceeds, reaches or is below the thresholds that trigger the duty to report, as a consequence of an alteration in the total number of voting rights of an issuer.

In addition, any company listed on a Spanish stock exchange must report on a non-public basis any acquisition by such company (or an affiliate) of the company’s own shares if such acquisition, together with any previous one from the date of the last communication, exceeds 1% of its capital stock, regardless of the balance retained. Members of the board of directors must report the ratio of voting rights held at the time of their appointment as members of the board, when they are ceased as members, as well as any transfer or acquisition of share capital of a company listed on the Spanish Stock Exchanges, regardless of the size of the transaction. Additionally, since we are a credit entity, any individual or company who intends to acquire a significant participation in BBVA’s share capital must obtain prior approval from the Bank of Spain in order to carry out the transaction. See “Item 10. Additional Information — Exchange Controls — Restrictions on Acquisitions of Shares”.

Royal Decree 1362/2007 also establishes reporting requirements in connection with any entity acting from a tax haven or a country where no securities regulatory commission exists, in which case the threshold of three percent is reduced to one percent.

Each Spanish bank is required to provide to the Bank of Spain a list dated the last day of each quarter of all the bank’s shareholders that are financial institutions and other non-financial institution shareholders owning at least 0.25% of a bank’s total share capital. Furthermore, the banks are required to inform the Bank of Spain, as soon as they become aware, and in any case not later than in 15 days, of each acquisition by a person or a group of at least one percent of such bank’s total share capital.

In addition, BBVA shares were included, among others, in Annex 1 of the Agreement of the Executive Committee of CNMV on naked short selling dated September 22, 2008. While such agreement continues in effect, any natural or legal person holding short positions in shares included in this Annex 1 has to disclose to the CNMV and make public any short position exceeding 0.25% in the share capital of listed issuers included in such Annex, as well as any increase or decrease of any short position from the 0.25% threshold before 19:00 hours after each change.

Ministerial Order EHA/1421/2009, implements Article 82 of Securities Market Law 24/1988 of 28 July 1988 on the publication of significant information. The Ministerial Order specifies certain aspects relating to notice of significant information that were pending implementation in Law 24/1988. In this respect, the principles to be followed and conditions to be met by entities when they publish and report significant information are set forth, along with the content requirements, including when significant information is connected with accounting, financial or operational projections, forecasts or estimates. The reporting entity must designate at least one interlocutor whom the CNMV may consult or from whom it may request information relating to dissemination of

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the significant information. Lastly, some of the circumstances in which it is considered that an entity is failing to comply with the duty to publish and report significant information are described. These include, among others, cases in which significant information is disseminated at meetings with investors or shareholders or at presentations to analysts or to media professionals, but is not communicated, at the same time, to the CNMV.

Circular 4/2009 of the CNMV further develops Ministerial Order EHA1421/2009. In this respect, the Circular sets forth a precise proceeding for the actual report of the significant information and draws up an illustrative list of the events that may be deemed to constitute significant information. This list includes, among others, events connected with strategic agreements and mergers and acquisitions, information relating to the reporting entity’s financial statements or those of its consolidated group, information on notices of call and official matters and information on significant changes in factors connected with the activities of the reporting entity and its group.

Tax Requirements

According to Law 19/2003 and its associated regulations, an issuer’s parent company (credit entity or listed company) is required, on an annual basis, to provide the Spanish tax authorities with the following information: (i) the identity and tax residence of the recipients of income from securities and (ii) the amount of income obtained in each period.

B.   Plan of distribution

Not Applicable.

C.   Markets

Not Applicable.

D.   Selling Shareholders

Not Applicable.

E.   Dilution

Not Applicable.

F.   Expenses of the Issue

Not Applicable.

ITEM 10.   ADDITIONAL INFORMATION

A.   Share Capital

Not Applicable.

B.   Memorandum and Articles of Association

Spanish law and BBVA’s bylaws are the main sources of regulation affecting the company. All rights and obligations of BBVA’s shareholders are contained in its bylaws and in Spanish law.

Registry and Company’s Objects and Purposes

BBVA is registered with the Commercial Registry of Vizcaya (Spain). Its registration number at the Commercial Registry of Vizcaya is volume 2,083, Company section folio 1, sheet BI-17-1, 1st entry. Its corporate objects and purposes are to: (i) directly or indirectly conduct all types of activities, transactions, acts, agreements and services relating to the banking business which are permitted or not prohibited by law and all banking ancillary activities; (ii) acquire, hold and dispose of securities; and (iii) make public offers for the acquisition and sale of

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securities and all types of holdings in any kind of company. BBVA’s objects and purposes are contained in Article 3 of the bylaws.

Certain Powers of the Board of Directors

In general, provisions regarding directors are contained in our bylaws. Also, our board regulations govern the internal procedures and the operation of the board and its committees and directors’ rights and duties as described in their charter. The referred board regulations (i) limit a director’s right to vote on a proposal, arrangement or contract in which the director is materially interested; (ii) limit the power or directors to vote on compensation for themselves; (iii) limit borrowing powers exercisable by the directors and how such borrowing powers can be amended; or (iv) require retirement of directors at a certain age. In addition, the board regulations contain a series of ethical standards. See “Item 6 − Directors, Senior Management and Employees”

Certain Provisions Regarding Preferred Shares

The bylaws authorize us to issue ordinary, non-voting, redeemable and preferred shares. As of the date of the filing of this Annual Report, we have no non-voting, redeemable or preferred shares outstanding.

The characteristics of preferred shares must be agreed by the board of directors before they are issued.

Only shares that have been issued as redeemable may be redeemed by us. Redemption of shares may only occur according to the terms set forth when they are issued. Redeemable shares must be fullypaid-up at the time of their subscription. If the right to redeem redeemable shares is exclusively given to BBVA, it may not be exercised until at least three years after the issue. Redemption of shares must be financed against profits, free reserves or the proceeds of new securities issued especially for financing the redemption of an issue. If financed against profits or free reserves, BBVA must create a reserve for the amount of the par value of the redeemed shares. If the redemption is not financed against profits, free reserves or a new issue, it may only be done in compliance with the requirements of a reduction in share capital by the refund of contributions.

Holders of non-voting shares, if issued, are entitled to a minimum annual dividend, fixed or variable, set out at the time of the issue. The right of non-voting shares to accumulate unpaid dividends whenever funds to pay dividends are not available, any preemptive rights associated with non-voting shares, and the ability of holders of non-voting shares to recover voting rights also must be established at the time of the issue. Non-voting shares are entitled to the dividends to which ordinary shares are entitled in addition to their minimum dividend.

Certain Provisions Regarding Shareholders Rights

As of the date of the filing of this Annual Report, our capital is comprised of one class of ordinary shares, all of which have the same rights.

Once all legal reserves and funds have been provided for out of the net profits of any given fiscal year, shareholders have the right to the distribution of an annual dividend of at least four percent of our paid-in capital. Shareholders will participate in the distribution of dividends in proportion to their paid-in capital. The right to collect a dividend lapses after five years as of the date in which it was first available to the shareholders. Shareholders also have the right to participate in proportion to their paid-in capital in any distribution resulting from our liquidation.

Each shareholder present at a general shareholders’ meeting is entitled to one vote per each share. However, unpaid shares with respect to which a shareholder is in default of the resolutions of the board of directors relating to their payment will not be entitled to vote. The bylaws contain no provisions regarding cumulative voting.

The bylaws do not contain any provisions relating to sinking funds or potential liability of shareholders to further capital calls by us.

The bylaws do not establish that special quorums are required to change the rights of shareholders. Under Spanish law, the rights of shareholders may only be changed by an amendment to the bylaws that complies with the requirements explained below under “— Shareholders’ Meetings”, plus the affirmative vote of the majority of the shares of the class that will be affected by the amendment.

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Shareholders’ Meetings

The annual general shareholders’ meeting has its own set of regulations on issues such as how it operates and what rights shareholders enjoy regarding annual general shareholders’ meeting. These establish the possibility of exercising or delegating votes over remote communication media.

General shareholders’ meetings may be ordinary or extraordinary. Ordinary general shareholders’ meetings are held within the first six months of each financial year in order to review, among other things, the management of the company, and to approve, if applicable, annual financial statements for the previous fiscal year. Extraordinary general shareholders’ meetings are those meetings that are not ordinary. In any case, the requirements mentioned below for constitution and adoption of resolutions are applicable to both categories of general meetings.

General shareholders’ meetings must be convened by the board of directors, whether by their own decision or upon the request of shareholders holding at least five percent of our share capital. Notice of general meetings must generally be given at least one month in advance by means of an advertisement published in the Official Companies Registry Gazette (Boletín Oficial del Registro Mercantil) (“Borme”) and in a newspaper of general circulation.

As of the date of the filing of this Annual Report, shareholders have the right to attend general meetings if they:

•  own at least 500 shares;

•  have registered their shares in the appropriate account registry at least five days prior to the date for which the general meeting has been convened; and

•  retain the ownership of at least 500 shares until the general shareholders’ meeting takes place.

Additionally, holders of fewer than 500 shares may aggregate their shares to reach at least such number of shares and appoint a shareholder as proxy to attend the general shareholders’ meeting.

General shareholders’ meetings will be validly constituted on first call with the presence of at least 25% of our voting capital, either in person or by proxy. No minimum quorum is required to hold a general shareholders’ meeting on second call. In either case, resolutions will be agreed by the majority of the votes. However, a general shareholders’ meeting will only be validly held with the presence of 50% of our voting capital on first call or of 25% of the voting capital on second call, in the case of resolutions concerning the following matters:

•  issuances of debt;

•  capital increases or decreases;

•  the elimination on or limitation of the pre-emptive subscription rights over new shares,

•  transformation, merger of BBVA orbreak-up of the company and global assignment of assets and liabilities

•  the off-shoring of domicile, and

•  any other amendment to the bylaws.

In these cases, resolutions may only be approved by the vote of the majority of the shares if at least 50% of the voting capital is present at the meeting. If the voting capital present at the meeting is less than 50%, then resolutions may only be adopted by two-thirds of the shares present.

Additionally, our bylaws state that, in order to adopt resolutions regarding a change in corporate purpose or the total liquidation or dissolution of BBVA, at least two-thirds of the voting capital must be present at the meeting on first call and at least 60% of voting capital must be present on second call.

Restrictions on the Ownership of Shares

Our bylaws do not provide for any restrictions on the ownership of our ordinary shares. Spanish law, however, provides for certain restrictions which are described below under “— Exchange Controls — Restrictions on Acquisitions of Shares”.

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Restrictions on Foreign Investments

The Spanish Stock Exchanges are open to foreign investors. However, the acquisition of 50% or more of the share capital of a Spanish company by a person or entity residing in a tax haven must be notified to the Ministry of Economy and Treasury prior to its execution. All other investments in our shares by foreign entities or individuals only require the notification of the Spanish authorities through the Spanish intermediary that took part in the investment once it is executed.

Current Spanish regulations provide that once all applicable taxes have been paid, see “— Exchange Controls”, foreign investors may freely transfer out of Spain any amounts of invested capital, capital gains and dividends.

C.   Material Contracts

We are not aware of the execution of any material contracts other than those executed during our ordinary course of business during the two years immediately ending December 31, 2009, nor are we aware that the Bank or any of the Group’s subsidiaries have entered into contracts that could give rise to material liabilities for the Group.

D.   Exchange Controls

In 1991, Spain adopted the EU standards for free movement of capital and services. As a result, exchange controls and restrictions on foreign investments have generally been abolished and foreign investors may transfer invested capital, capital gains and dividends out of Spain without limitation as to amount, subject to applicable taxes. See “— Taxation”.

Pursuant to Spanish Law 18/1992 on Foreign Investments and Royal Decree 664/1999, foreign investors may freely invest in shares of Spanish companies, except in the case of certain strategic industries.

Shares in Spanish companies held by foreign investors must be reported to the Spanish Registry of Foreign Investments by the depositary bank or relevant Iberclear member. When a foreign investor acquires shares that are subject to the reporting requirements of the CNMV, notice must be given by the foreign investor directly to the Registry of Foreign Investments in addition to the notices of majority interests that must be sent to the CNMV and the applicable stock exchanges. This notice must be given through a bank or other financial institution duly registered with the Bank of Spain and the CNMV or through bank accounts opened with any branch of such registered entities.

Investment by foreigners domiciled in enumerated tax haven jurisdictions is subject to special reporting requirements under Royal Decree 1080/1991.

On July 5, 2003, Law 19/2003 came into effect. This law is an update to other Spanish exchange control and money laundering prevention laws.

Restrictions on Acquisitions of Shares

Law 26/1988 9th July, on discipline and oversight in financial institutions, amended by Act 5/2009, 29th June, provides that any individual or corporation, acting alone or in concert with others, intending to directly or indirectly acquire a significant holding in a Spanish financial institution (as defined in article 56 of the aforementioned Act 26/1998) or to directly or indirectly increase its holding in one in such a way that either the percentage of voting rights or of capital owned were equal to or more than 20%, 30% or 50%, or by virtue of the acquisition, might take control over the financial institution, must first notify the Bank of Spain. The Bank of Spain will have 60 working days after the date on which the notification was received, to evaluate the transaction and, where applicable, challenge the proposed acquisition on the grounds established by law.

A significant participation is considered 10% of the outstanding share capital of a bank or a lower percentage if such holding allows for the exercise of a significant influence.

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Any acquisition without such prior notification, or before the period established in article 58.2 has elapsed or against the objection of the Bank of Spain, will produce the following results:

•  the acquired shares will have no voting rights; and

•  if considered appropriate, the target bank may be taken over or its directors replaced and a sanction imposed.

The Bank of Spain has 60 working days after the date on which the notification was received to object to a proposed transaction. Such objection may be based on the fact that the Bank of Spain does not consider the acquiring person suitable to guarantee the sound and prudent operation of the target bank.

Regarding the transparency of listed companies, Law 6/2007 amended the Securities Markets Act on takeover bids and transparency requirements for issuers. The transparency requirements have been further developed by Royal Decree 1362/2007 developing the Securities Markets Act on transparency requirement for issuers of listed securities, specifically information on significant stakes, reducing the communication threshold to 3%, and extending the disclosure obligations to the acquisition or transfer of financial instruments that grant rights to acquire shares with voting rights.

Tender Offers

As stated above, the Spanish legal regime concerning takeover bids was amended by Law 6/2007 in order to adapt the Spanish Securities Market Act to the Directive 2004/25/EC on takeover bids, and Directive 2004/109/EC on the harmonization of transparency requirements in relation to information about issuers.

E.   Taxation

Spanish Tax Considerations

The following is a summary of the material Spanish tax consequences to U.S. Residents (as defined below) of the acquisition, ownership and disposition of BBVA’s ADSs or ordinary shares as of the date of the filing of this Annual Report. This summary does not address all tax considerations that may be relevant to all categories of potential purchasers, some of whom (such as life insurance companies, tax-exempt entities, dealers in securities or financial institutions) may be subject to special rules. In particular, the summary deals only with the U.S. Holders (as defined below) that will hold ADSs or ordinary shares as capital assets and who do not at any time own individually, and are not treated as owning, 25% or more of BBVA’s shares, including ADSs.

As used in this particular section, the following terms have the following meanings:

(1) “U.S. Holder” means a beneficial owner of BBVA’s ADSs or ordinary shares that is for U.S. federal income tax purposes:

•  a citizen or a resident of the United States,

•  a corporation or other entity treated as a corporation, created or organized under the laws of the United States or any political subdivision thereof, or

•  an estate or trust the income of which is subject to United States federal income tax without regard to its source.

(2) “Treaty” means the Convention between the United States and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, together with a related Protocol.

(3) “U.S. Resident” means a U.S. Holder that is a resident of the United States for the purposes of the Treaty and entitled to the benefits of the Treaty, whose holding is not effectively connected with (1) a permanent establishment in Spain through which such holder carries on or has carried on business, or (2) a fixed base in Spain from which such holder performs or has performed independent personal services.

Holders of ADSs or ordinary shares should consult their tax advisors, particularly as to the applicability of any tax treaty. The statements regarding Spanish tax laws set out below are based on interpretations of those laws in

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force as of the date of this Annual Report. Such statements also assume that each obligation in the Deposit Agreement and any related agreement will be performed in full accordance with the terms of those agreements.

Taxation of Dividends

Under Spanish law, dividends paid by BBVA to a holder of ordinary shares or ADSs who is not resident in Spain for tax purposes and does not operate through a permanent establishment in Spain, are subject to Spanish Non-Resident Income Tax, withheld at source, currently at a 19% tax rate. For these purposes, upon distribution of the dividend, BBVA or its paying agent will withhold an amount equal to the tax due according to the rules set forth above (i.e., applying the general withholding tax rate of 19%), transferring the resulting net amount to the depositary.

However, under the Treaty, if you are a U.S. Resident, you are entitled to a reduced withholding tax rate of 15%. To benefit from the Treaty-reduced rate of 15%, if you are a U.S. Resident, you must provide to BBVA through our paying agent depositary, before the tenth day following the end of the month in which the dividends were payable, a certificate from the U.S. Internal Revenue Service (“IRS”) stating that, to the best knowledge of the IRS, you are a resident of the United States within the meaning of the Treaty and entitled to its benefits.

If the paying agent depositary provides timely evidence (i.e., by means of the IRS certificate) of your right to apply the Treaty-reduced rate will immediately receive the surplus amount withheld, which will be credited to you. The IRS certificate is valid for a period of one year from issuance.

To help shareholders obtain such certificates, BBVA has setup an online procedure to make this as easy as possible.

If the certificate referred to in the above paragraph is not provided to us through our paying agent depositary within said term, you may afterwards obtain a refund of the amount withheld in excess of the rate provided for in the Treaty.

Spanish Refund Procedure

According to Spanish Regulations on Non-Resident Income Tax, approved by Royal Decree 1776/2004 dated July 30, 2004, as amended, a refund for the amount withheld in excess of the Treaty-reduced rate can be obtained from the relevant Spanish tax authorities. To pursue the refund claim, if you are a U.S. Resident, you are required to file:

•  the corresponding Spanish tax form,

•  the certificate referred to in the preceding section, and

•  evidence of the Spanish Non-Resident Income Tax that was withheld with respect to you.

The refund claim must be filed within four years from the date in which the withheld tax was collected by the Spanish tax authorities.

U.S. Residents are urged to consult their own tax advisors regarding refund procedures and any U.S. tax implications thereof.

Additionally, under the Spanish law, the first €1,500 of dividends received by individuals who are not resident in Spain for tax purposes, and do not operate through a permanent establishment in Spain, will be exempt from taxation in certain circumstances. U.S. Holders should consult their tax advisors in order to make effective this exemption.

Taxation of Rights

Distribution of preemptive rights to subscribe for new shares made with respect to your shares in BBVA will not be treated as income under Spanish law and, therefore, will not be subject to Spanish Non-Resident Income Tax. The exercise of such preemptive rights is not considered a taxable event under Spanish law and thus is not subject to

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Spanish tax. Capital gains derived from the disposition of preemptive rights received by U.S. Residents are generally not taxed in Spain provided that certain conditions are met (See “— Taxation of Capital Gains” below).

Taxation of Capital Gains

Under Spanish law, any capital gains derived from securities issued by persons residing in Spain for tax purposes are considered to be Spanish source income and, therefore, are taxable in Spain. For Spanish tax purposes, gain recognized by you, if you are a U.S. Resident, from the sale of BBVA’s ADSs or ordinary shares will be treated as capital gains. Spanish Non-Resident Income Tax is currently levied at a 19% tax rate on capital gains recognized by persons who are not residents of Spain for tax purposes, who are not entitled to the benefit of any applicable treaty for the avoidance of double taxation and who do not operate through a fixed base or a permanent establishment in Spain.

Notwithstanding the discussion above, capital gains derived from the transfer of shares on an official Spanish secondary stock market by any holder who is resident in a country that has entered into a treaty for the avoidance of double taxation with an “exchange of information” clause (the Treaty contains such a clause) will be exempt from taxation in Spain. Additionally, capital gains realized by non-residents of Spain who are entitled to the benefit of an applicable treaty for the avoidance of double taxation will, in the majority of cases, not be taxed in Spain (since most tax treaties provide for taxation only in the taxpayer’s country of residence). If you are a U.S. Resident, under the Treaty, capital gains arising from the disposition of ordinary shares or ADSs will not be taxed in Spain. You will be required to establish that you are entitled to this exemption by providing to the relevant Spanish tax authorities a certificate of residence in the United States from the IRS (discussed above in “— Taxation of Dividends”), together with the corresponding Spanish tax form.

Spanish Inheritance and Gift Taxes

Transfers of BBVA’s shares or ADSs upon death or by gift to individuals are subject to Spanish inheritance and gift taxes (Spanish Law 29/1987), if the transferee is a resident in Spain for tax purposes, or if BBVA’s shares or ADSs are located in Spain, regardless of the residence of the transferee. In this regard, the Spanish tax authorities may argue that all shares of a Spanish corporation and all ADSs representing such shares are located in Spain for Spanish tax purposes. The applicable tax rate for individuals, after applying all relevant factors, ranges between approximately 7.65% and 81.6% for individuals.

Corporations that are non-residents of Spain that receive BBVA’s shares or ADSs as a gift are subject to Spanish Non-Resident Income Tax at a 19% tax rate on the fair market value of such ordinary shares or ADSs as a capital gain tax. If the donee is a United States resident corporation, the exclusions available under the Treaty described in “— Taxation of Capital Gains” above will be applicable.

Spanish Transfer Tax

Transfers of BBVA’s ordinary shares or ADSs will be exempt from Transfer Tax (Impuesto sobre Transmisiones Patrimoniales) or Value-Added Tax. Additionally, no stamp duty will be levied on such transfers.

U.S. Tax Considerations

The following summary describes the material U.S. federal income tax consequences of the ownership and disposition of ADSs or ordinary shares, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person’s decision to hold the securities. The summary applies only to U.S. Holders (as defined under “Spanish Tax Considerations” above) that hold ADSs or ordinary shares as capital assets for tax purposes and does not address all of the tax consequences that may be relevant to holders subject to special rules, such as:

•  certain financial institutions;

•  dealers and traders who use amark-to-market method of accounting;

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•  persons holding ADSs or ordinary shares as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the ADSs or ordinary shares;

•  persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar;

•  persons liable for the alternative minimum tax;

•  tax-exempt entities;

•  partnerships or other entities classified as partnerships for U.S. federal income tax purposes;

•  persons who acquired our ADSs or ordinary shares pursuant to the exercise of any employee stock option or otherwise as compensation; or

•  persons who own or are deemed to own 10% or more of our voting shares.

The summary is based upon the tax laws of the United States including the Internal Revenue Code of 1986, as amended to the date hereof (the “Code”), the Treaty, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof. These laws are subject to change, possibly with retroactive effect. In addition, the summary is based in part on representations by the depositary and assumes that each obligation provided for in or otherwise contemplated by BBVA’s deposit agreement and any other related document will be performed in accordance with its terms. Prospective purchasers of the ADSs or ordinary shares are urged to consult their tax advisors as to the U.S., Spanish or other tax consequences of the ownership and disposition of ADSs or ordinary shares in their particular circumstances, including the effect of any U.S. state or local tax laws.

In general, for United States federal income tax purposes, a U.S. Holder who owns ADSs will be treated as the owner of the underlying ordinary shares represented by those ADSs. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying ordinary shares represented by those ADSs.

The U.S. Treasury has expressed concerns that parties to whom American depositary shares are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. holders of American depositary shares. Such actions would also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received by certain non-corporate U.S. Holders, as described below. Accordingly, the analysis of the creditability of Spanish taxes described below, and the availability of the reduced tax rate for dividends received by certain non-corporate U.S. Holders, could be affected by future actions that may be taken by such parties.

This discussion assumes that BBVA is not, and will not become, a passive foreign investment company (“PFIC”) (as discussed below).

Taxation of Distributions

Distributions, before reduction for any Spanish income tax withheld by BBVA or its paying agent, made with respect to ADSs or ordinary shares (other than certain pro rata distributions of ordinary shares or rights to subscribe for ordinary shares of its capital stock) will be includible in the income of a U.S. Holder as ordinary dividend income, to the extent paid out of BBVA’s current or accumulated earnings and profits as determined in accordance with U.S. federal income tax principles. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. The amount of such dividends will generally be treated as foreign source dividend income and will not be eligible for the “dividends received deduction” generally allowed to U.S. corporations under the Code. Subject to applicable limitations and the discussion above regarding concerns expressed by the U.S. Treasury, dividends paid to certain non-corporate U.S. Holders in taxable years beginning before January 1, 2011 will be taxable at a maximum tax rate of 15%. U.S. Holders should consult their own tax advisors to determine the availability of this favorable rate in their particular circumstances.

The amount of dividend income will equal the U.S. dollar value of the euro received, calculated by reference to the exchange rate in effect on the date of receipt (which, for U.S. Holders of ADSs, will be the date such distribution is received by the depositary), whether or not the depositary or U.S. Holder in fact converts any euro received into U.S. dollars at that time. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not

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be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of its receipt.

Subject to applicable limitations that may vary depending upon a U.S. Holder’s circumstances and subject to the discussion above regarding concerns expressed by the U.S. Treasury, a U.S. Holder will be entitled to a credit against its U.S. federal income tax liability, or a deduction in computing its U.S. federal taxable income, for Spanish income taxes withheld by BBVA or its paying agent at a rate not exceeding the rate the U.S. Holder is entitled to under the Treaty. Spanish taxes withheld in excess of the rate applicable under the Treaty will not be eligible for credit against the U.S. Holder’s U.S. federal income tax liability. See “Spanish Tax Considerations — Taxation of Dividends” for a discussion of how to obtain the Treaty rate. The rules governing foreign tax credits are complex and, therefore, U.S. Holders should consult their tax advisors regarding the availability of foreign tax credits in their particular circumstances.

Sale and Other Disposition of ADSs or Shares

For U.S. federal income tax purposes, gain or loss realized by a U.S. Holder on the sale or other disposition of ADSs or ordinary shares will be capital gain or loss in an amount equal to the difference between the U.S. Holder’s tax basis in the ADSs or ordinary shares disposed of and the amount realized on the disposition. Such gain or loss will be long-term capital gain or loss if the U.S. Holder held the ordinary shares or ADSs for more than one year at the time of disposition. Gain or loss, if any, will generally be U.S. source for foreign tax credit purposes. The deductibility of capital losses is subject to limitations.

Passive Foreign Investment Company Rules

Based upon certain proposed Treasury regulations which are proposed to be effective for taxable years beginning after December 31, 1994 (“Proposed Regulations”), we believe that we were not a PFIC for U.S. federal income tax purposes for our 2009 taxable year. However, since our PFIC status depends upon the composition of our income and assets and the market value of our assets (including, among others, less than 25% owned equity investments) from time to time and since there is no guarantee that the Proposed Regulations will be adopted in their current form and because the manner of the application of the Proposed Regulations is not entirely clear, there can be no assurance that we will not be considered a PFIC for any taxable year

If we were treated as a PFIC for any taxable year during which a U.S. Holder held ADSs or ordinary shares, gain recognized by such U.S. Holder on a sale or other disposition (including certain pledges) of an ADS or an ordinary share would be allocated ratably over the U.S. Holder’s holding period for the ADS or the ordinary share. The amounts allocated to the taxable year of the sale or other exchange and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate for that taxable year, and an interest charge would be imposed on the amount allocated to such taxable year. The same treatment would apply to any distribution received by a U.S. Holder on its ordinary shares or ADSs to the extent that such distribution exceeds 125% of the average of the annual distributions on the ordinary shares or ADSs received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter. In addition, if we were a PFIC or, with respect to a particular U.S. Holder, were treated as a PFIC for the taxable year in which we paid a dividend or the prior taxable year, the 15% dividend rate discussed above with respect to dividends paid to certain non-corporate U.S. Holders would not apply. Certain elections may be available (including amark-to-market election) that may provide an alternative tax treatments. U.S. Holders should consult their tax advisors regarding whether we are or were a PFIC, the potential application of the PFIC rules to determine whether any of these elections for alternative treatment would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances. Under recently enacted legislation effective as of March 18, 2010. If we were a PFIC for any taxable year during which a U.S. Holder held an ADS or ordinary share, unless otherwise provided by the U.S. Treasury, such U.S. Holder would be required to file an annual report containing such information the U.S. Treasury may require.

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Information Reporting and Backup Withholding

Information returns may be filed with the Internal Revenue Service in connection with payments of dividends on, and the proceeds from a sale or other disposition of, ADSs or ordinary shares. A U.S. Holder may be subject to U.S. backup withholding on these payments if the U.S. Holder fails to provide its taxpayer identification number to the paying agent and comply with certain certification procedures or otherwise establish an exemption from backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

F.   Dividends and Paying Agents

At the annual general meeting of shareholders on March 13, 2009, BBVA’s shareholders adopted a resolution amending its bylaws to allow for dividends to be paid in cash or in kind as determined by shareholder resolution.

G.   Statement by Experts

Not Applicable.

H.   Documents on Display

The documents concerning BBVA which are referred to in this Annual Report may be inspected at its offices at Plaza de San Nicolás 4, 48005 Bilbao, Spain. In addition, we are subject to the information requirements of the Exchange Act, except that as a foreign issuer, we are not subject to the proxy rules or the short-swing profit disclosure rules of the Exchange Act. In accordance with these statutory requirements, we file or furnish reports and other information with the SEC. Reports and other information filed or furnished by BBVA with the SEC may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of such material may also be inspected at the offices of the New York Stock Exchange, 11 Wall Street, New York, New York 10005, on which BBVA’s ADSs are listed. In addition, the SEC maintains a web site that contains information filed or furnished electronically with the SEC, which can be accessed over the internet athttp://www.sec.gov.

I.   Subsidiary Information

Not Applicable.

ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Dealing in financial instruments can entail the assumption or transfer of one or more classes of risk by financial institutions. The risks related to financial instruments are:

•  Credit risk:  the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

•  Market risks:  the risks arising from the maintenance of financial instruments whose value may be affected by changes in market conditions. It includes four types of risk:

•  Foreign-exchange risk:  the risk resulting from variations in foreign exchange rates.

•  Interest-rate risk:  the risk arising from variations in market interest rates.

•  Price risk:  the risk resulting from variations in market prices in financial instruments, either due to factors specific to the instrument itself, or alternatively to factors which affect all the instruments traded on the market.

•  Commodities risk:  the risk resulting from changes in the price of traded commodities.

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•  Liquidity risk:  this is the possibility that a company cannot meet its payment commitments duly without having to resort to borrowing funds under onerous conditions, or damaging its image and reputation of the entity.

The basic measurement model we use for measuring risk isValue-at-Risk (“VaR”), which provides a forecast of the maximum loss that a portfolio could incur on aone-day time horizon with a 99% probability, stemming from fluctuations recorded in the equity, interest rate, foreign exchange and commodity markets. For certain positions, moreover, we also consider other risks, such as the credit spread, basis risk or volatility and correlation risk, where necessary.

Currently, BBVA, S.A. and BBVA Bancomer are authorized by the Bank of Spain to use their internal model to determine capital requirements deriving from risk positions in their trading book, which jointly accounts for 80 to 90% of the Group’s trading book market risk. Since December 2007, the method used for estimating market risk in BBVA, S.A. and BBVA Bancomer has been based on historic simulation through the Algorithmics risk assessment platform. The sample period used is two years. The rest of the banks in the Group use a parametric methodology.

In 2009 risk measurements were bolstered to strengthen controls and the application of our market risk policies in line with the new guidelines from Basel II.

Our market risk limits model currently in force consists of a global structure comprising economic risk capital (“ERC”) and VaR limits and VaR stop-loss sublimits for each of our business units. The global limits are proposed by the Risk Area and approved by the Executive Committee on an annual basis, once they have been submitted to the board of directors’ Risk Committee.

This risk limits structure has been developed by identifying specific risks by type, trading activity and trading desk. The market risk units maintain consistency between the global and specific limits on the one hand, and between VaR sublimits and delta sensitivity on the other. This is supplemented by analyses of impacts on the income statement when risk factors enter a stress situation, taking into account the impact of financial crises that have taken place in the past and economic scenarios that could occur in the future.

In order to assess business unit performance over the year, the accrual of negative earnings is linked to the reduction of VaR limits set. The structure in place is supplemented by limits on loss and alert signals to anticipate the effects of adverse situations in terms of riskand/or result.

Finally, the market risk measurement model includes back-testing or ex-post comparison, which helps to refine the accuracy of the risk measurements by comparingday-on-day results with their corresponding VaR measurements.

Market Risk in Trading Portfolio in 2009

The market risk factors used to measure and control risks in the trading portfolio are the basis of all calculations using the VaR.

VaR measures the maximum loss with a given probability over a given period as a result of changes in the general conditions of financial markets and their effects on market risk factors. We mainly conduct daily VaR estimates using the historic simulation methodology.

The types of risk factors we use to measure VaR are:

•  Interest rate risk:  the potential loss in value of the portfolio due to movements in interest rate curves. We use all interest rate curves in which we have positions and risks exist. We also use a wide range of vertices reflecting the different maturities within each curve.

•  Credit spread risk:  the potential loss in the value of corporate bonds or any corporate bond derivatives caused by movements in credit spreads for such instruments. Credit spread VaR is estimated by moving the credit spreads used as risk factors through a range of scenarios. The risk factors used in the simulation are credit spread curves by sector and by rating, and specific spread curves for individual issuers.

•  Exchange rate risk:  the potential loss caused by movements in exchange rates. Exchange rate risk VaR is estimated by analyzing present positions with observed actual changes in exchange rates.

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•  Equity or commodity risk:  the potential loss caused by movements in equity prices, stock-market indices and commodity prices. Equity or commodity risk VaR is estimated by re-measuring present positions using actual changes in equity prices, stock-market indices and commodity prices.

•  Vega risk:  the potential loss caused by movements in implied volatilities affecting the value of options. Vega (equities, interest rate and exchange rate) risk VaR is estimated by analyzing implied volatility surfaces with observed changes in the implied volatilities of equity, interest rate and exchange rate options.

•  Correlation risk:  the potential loss caused by a disparity between the estimated and actual correlation between two assets, currencies, derivatives, instruments or markets.

Finally, all these measurements are supplemented with VaR estimation with exponential smoothing, to better reflect the impact of movements.

In 2009, our market risk remained at low levels compared with the aggregate of risks we manage, particularly in terms of credit risk. This is due to the nature of the business and our policy of minimal proprietary trading. In 2009 the market risk of our trading portfolio increased slightly on previous years to an average economic risk capital of €285 million.

There has been moderate use of global limits approved by the Executive Committee (the average in 2009 was 49%), with a growing trend during the year in the case of Europe and a falling trend in the United States. The limits were not exceeded in any case.

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Our main risk factor in 2009 and going forward continues to be interest-rate risk, with a weight of 58% of the total as of December 31, 2009 (this figure includes the spread risk). Vega and foreign exchange risk accounted for 24% and 4% of VaR, respectively, and lost weight compared with the same date the previous year. Finally, equity risk accounted for 14% of the total portfolio risk as of December 31, 2009. The table below shows the components of VaR as of December 31, 2009 abd 2008 and the average, maximum and minimum VaRs for the years then ended.

Risk	December 31, 2009			December 31, 2008
	(In millions of euros)
Interest/Spread risk		37.6			24.2
Exchange rate risk		2.3			7.4
Equity risk		8.9			1.1
Vega/Correlation risk		15.4			14.8
Diversification effect		(33.2	)		(24.3	)
Total		31.0			23.3
Average		26.2			20.2
Maximum		33.1			35.3
Minimum		18.2			12.8

By geographical area, 61% of the market risk as measured by VaR corresponded to Global Markets Europe trading desks and 39% to the Group’s banks in the Americas, of which 21.6% is in Mexico.

The average use of VaR limits approved by the Executive Committee for the main business units in 2009 has been higher in Europe and the United States, at around 55% over the year (66% as of December 31, 2009). In Latin America the average annual use in 2009 was 44%, with an increase to close to 48% at year-end.

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The back-testing comparison performed with market risk management results for the parent company (which accounts for most of the Group’s market risk) follows the principles set out in the Basel Accord. It makes aday-on-day comparison between actual risks and those estimated by the model, and proved once more that the risk measurement model was working correctly throughout 2009.

The breakdown of the risk exposure by categories of the instruments within the trading portfolio as of December 31, 2009, 2008 and 2007 were as follows:

	As of December 31,
	2009		2008		2007
	Millions of euros
Financial assets held for trading		34,672		26,556		38,392
Debt securities		34,672		26,556		38,392
Government		31,290		20,778		27,960
Credit institutions		1,384		2,825		6,020
Other sectors		1,998		2,953		4,412
Trading derivatives		29,278		40,946		14,764

Market Risk in Non — Trading Activities in 2009

Structural Interest Rate Risk

Central banks maintained expansive monetary policies in the first half of 2009, with significant interest-rate cuts and downward pressure on the curves of the main markets in which we carry out our banking activity. Particularly notable were the decreases in Mexico, South America and Europe, where, in addition, there was a gradual increase in the positive slope between the3-month and1-year rate.

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The variations in market interest rates have an effect on our net interest income, from a medium- and short-term perspective, and on our economic value if a long-term view is adopted. The main source of risk resides in the timing mismatch that exists between repricing and maturity dates of the different products comprising the banking book. This is illustrated by the below chart, which shows the gap analysis of our structural balance sheet as of December 31, 2009 in euros.

Gap of maturities and repricing dates of BBVA’s structural balance sheet in euros
(Million euros)

The major decreases in interest rates in the first quarters of 2009 had a positive effect on our net interest income. The subsequent maintenance of rates at low levels combined with a slowdown in volumes characterized the banking book throughout 2009. Our interest-rate risk has been managed proactively by the Assets and Liabilities Management unit which, through the Asset and Liabilities Committee (ALCO) develops management strategies designed to maximize the economic value of the banking book by preserving the recurring results through net interest income. To do so, it not only takes market outlook into consideration, but it also ensures that exposure levels match the risk profile defined by our management bodies and that a balance is maintained between expected earnings and the risk level borne. The implementation of a transfer pricing system that centralizes our interest rate risk on ALCO’s books is helping to assure that balance-sheet risk is being properly managed.

Structural interest-rate risk control and monitoring is performed in the Risk area, which, acting as an independent unit, helps ensure that the risk management and control functions are conveniently segregated. This policy is in line with the Basel Committee on Banking Supervision recommendations. The area’s functions include designing models and measurement systems, together with the development of monitoring, reporting and control policies. The Risk area performs monthly measurements of structural interest rate risk, thus supporting our management. It also performs risk control and analysis, which is then reported to the main governing bodies, such as the Executive Committee and the board of directors’ Risk Committee.

Our structural interest-rate risk measurement model uses a set of metrics and tools that enable our risk profile to be identified and assessed. From the perspective of characterizing the balance sheet, models of analysis have been developed to establish assumptions dealing fundamentally with prepayment of loans and the performance of deposits with no explicit maturity. A model for simulating interest rate curves is also applied to enable risk to be quantified in terms of probabilities. It allows sources of risk to be addressed in addition to the mismatching of cash flows coming not only from parallel movements but also from changes in the slope and curvature. This simulation model, which also considers the diversification between currencies and business units, calculates the earnings at risk (“EaR”) and economic risk capital (ECR) as the maximum adverse deviations in net interest income and economic profit, respectively, for a particular confidence level and time horizon. These negative impacts are controlled in each of our entities through a limits policy.

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The risk measurement model is supplemented by scenario analyses and stress tests, as well as sensitivity measurements to a standard deviation of 100 basis points for all the market yield curves. The chart below shows the structural interest-rate profile of our main entities, according to their sensitivities.

Structural interest rate risk profile

In 2009 emphasis continued to be placed on stress testing and scenario analysis to judge the results of a possible upward cycle, with high levels of uncertainty in terms of its size and when it would start, which could result in an increase in interest rates from minimum historical levels. At the same time, foreseeable scenarios continued to be evaluated by the Research Department, together with other severe risk scenarios drawn up from an analysis of historical data and the breakdown of certain observed correlations. A more disaggregated analysis of the contribution to risk by portfolios, factors and regions, with their subsequent integration into joint measurements, represents another of the points on which special emphasis has been placed over the year.

The limits structure is one of the mainstays in control policies, because it represents our risk appetite as defined by the Executive Committee. Balance-sheet management has enabled risk levels to be maintained in keeping with our risk profile, as is demonstrated in the following chart, which shows average limits use in each entity during 2009.

Structural interest rate risk. Average use of limits in 2009

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The table below shows the estimated impact on the BBVA Group’s net interest income and economic value for 2009 of a 100 basis point increase and decrease in average interest rates for the year.

	Average estimated impact on Net Interest Income		Average estimated impact on Economic Value(*)
	100 Basis-Point	100 Basis-Point	100 Basis-Point	100 Basis-Point
	Increase	Decrease	Increase	Decrease
BBVA Group	(0.89)%	+1.10%	(0.43)%	(0.19)%

(*) Percentage relating to equity.

Structural Exchange Rate Risk

The foreign exchange market remained volatile throughout 2009, with a final quarter in which the general appreciation in Latin American currencies, of particular relevance in the case of Mexico and Chile, and of the dollar against the euro, helped close a positive year in terms of the impact on BBVA’s capital ratios and equity by changes in exchange rates.

These market variations have an effect on our solvency ratios and our estimated earnings whenever there is exposure deriving from the contribution of subsidiary entities operating in “non-euro” markets. The Asset/Liability Management unit, through ALCO, actively manages structural exchange rate risk using hedging policies that aim to minimize the effect of foreign exchange fluctuations on capital ratios, as well as to assure the equivalent value in euros of the foreign currency earnings contributed by our various subsidiaries while controlling the impact on reserves.

The Risk area acts as an independent unit responsible for designing measurement models, making risk calculations and controlling compliance with limits, reporting on all these issues to the Board of Director’s Risk Committee and to the Executive Committee.

Structural exchange rate risk is evaluated using a measurement model that simulates multiple scenarios of exchange rates and evaluates their impacts on our capital ratios, equity and the income statement. On the basis of this exchange-rate simulation, a distribution is produced of their possible impact on the three core items that determine their maximum adverse deviation for a particular confidence level and time horizon, depending on market liquidity in each currency. The risk measurements are completed with stress testing and backtesting, which give a complete view of exposure and the impacts on the group of structural exchange rate risk.

All these metrics are incorporated into the decision-making process by Asset/Liability Management, so that it can adapt our risk profile to the guidelines derived from the limits structure authorized by the Executive Committee. Active management of foreign exchange exposure kept the risk level within the reasonable limits set for 2009. These incorporated a greater restriction in terms of earnings risk, which is tolerable in an environment of high foreign exchange volatility. The average hedging level of the carrying value of our holdings in foreign currency was close to 50% as of December 31, 2009. As in previous years, hedges of foreign currency earnings also remained high in 2009. At the end of the year, there were significant hedges of foreign currency earnings forecast for 2010.

As of December 31, 2009, the aggregate figure of asset exposure sensitivity to a 1% depreciation in exchange rates stood at €82 million,with the following concentration: 53% in the Mexican peso, 34% in other South American currencies and 8% in the US dollar.

Structural Equity Price Risk

Our exposure to structural equity risk comes largely from our holdings in industrial and financial companies with medium- to long-term investment horizons, reduced by the short net positions held in derivative instruments on the same underlying assets, in order to limit portfolio sensitivity to potential price cuts. The aggregate sensitivity of our consolidated equity to a 1% fall in the price of the shares stood, on December 31, 2009, at €47 million, while the sensitivity of the consolidated earnings to the same change in price on the same date is estimated at €4 million. The latter is positive in the case of falls in prices as these are short net positions in derivatives. This figure is determined by considering the exposure on shares measured at market price or, if not available, at fair value, including the net

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positions in options on the same underlyings in delta equivalent terms. Treasury Area portfolio positions are not included in the calculation.

The Risk area measures and effectively monitors structural risk in the equity portfolio. To do so, it estimates the sensitivity figures and the capital necessary to cover possible unexpected losses due to the variations in the value of the equity portfolio at a confidence level that corresponds to the institution’s target rating, and taking account of the liquidity of the positions and the statistical performance of the assets under consideration. These figures are supplemented by periodic stress comparisons, back-testing and scenario analyses.

Credit Risk Management

Credit risk is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge a contractual obligation due to the insolvency or incapacity of the natural or legal persons involved.

Maximum exposure to credit risk

For the financial assets recognized in the consolidated balance sheets, credit risk exposure is equivalent to these assets’ carrying amount. The maximum exposure to credit risk on financial guarantees is the maximum that BBVA would be liable for if these guarantees were called in.

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The Group’s maximum credit exposure as on December 31, 2009, 2008 and 2007 (without including valuation adjustments or recognizing the availability of collateral or other credit enhancements to guarantee compliance) is broken down by financial instrument and counterparties in the table below:

Maximum Credit Exposure	2009		2008		2007
	Millions of euros
Financial assets held for trading		34,672		26,556		38,392
Debt securities		34,672		26,556		38,392
Government		31,290		20,778		27,960
Credit institutions		1,384		2,825		6,020
Other sectors		1,998		2,953		4,412
Other financial assets designated at fair value through profit or loss		639		516		421
Debt securities		639		516		421
Government		60		38		41
Credit institutions		83		24		36
Other sectors		496		454		344
Available-for-sale financial assets		57,067		39,961		37,252
Debt securities		57,067		39,961		37,252
Government		38,345		19,576		17,573
Credit institutions		12,646		13,377		13,419
Other sectors		6,076		7,008		6,260
Loans and receivables		353,741		375,387		344,124
Loans and advances to credit institutions		22,200		33,679		24,392
Loans and advances to customers		331,087		341,322		319,671
Government		26,219		22,503		21,065
Agriculture		3,924		4,109		3,737
Industry		42,799		46,576		39,922
Real estate and construction		55,766		47,682		55,156
Trade and finance		40,714		51,725		36,371
Loans to individuals		126,488		127,890		121,462
Leases		8,222		9,385		9,148
Other		26,955		31,452		32,810
Debt securities		454		386		61
Government		342		290		(1	)
Credit institutions		4		4		1
Other sectors		108		92		61
Held-to-maturity investments		5,438		5,285		5,589
Government		4,064		3,844		4,125
Credit institutions		754		800		818
Other sectors		620		641		646
Derivatives (trading and hedging)		42,836		46,887		17,412
Subtotal		494,393		494,591		443,190
Valuation adjustments		436		942		655
Total balance		494,829		495,533		443,845
Financial guarantees		33,185		35,952		36,859
Drawable by third parties		84,925		92,663		101,444
Government		4,567		4,221		4,419
Credit institutions		2,257		2,021		2,619
Other sectors		78,101		86,421		94,406
Other contingent exposures		7,398		6,234		5,496
Total off-balances		125,508		134,849		143,799
Total maximum credit exposure		620,338		630,382		587,644

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For financial assets recognized on the consolidated balance sheets, credit risk exposure is equal to the carrying amount, except for trading and hedging derivatives. The maximum exposure to credit risk on financial guarantees is the maximum that we would be liable for if these guarantees were called in.

As of December 31, 2009, the carrying amount of unimpaired financial assets, which could have been impaired had the conditions thereof not been renegotiated, has not varied significantly from the previous year.

For trading and hedging derivatives, this information reflects the maximum credit exposure better than the amount shown on the balance sheet because it does not only include the market value on the date of the transactions (the carrying amount only shows this figure); it also estimates the potential risk of these transactions on their due date.

Mitigation of credit risk, collateral and other credit enhancements, including risk hedging and mitigation policies

In most cases, maximum exposure to credit risk is reduced by collateral, credit enhancements and other actions which mitigate our exposure.

We apply a credit risk hedging and mitigation policy deriving from a banking approach focused on relationship banking. On this basis, the provision of guarantees is a necessary but not sufficient instrument when taking risks; therefore for us to assume risks, we need to verify the payment or resource generation capacity to ensure the amortization of the risk incurred.

The above is carried out through a prudent risk management policy which consists of analyzing the financial risk in a transaction, based on the repayment or resource generation capacity of the credit recipient, the provision of guarantees in any of the generally accepted ways (cash collateral, pledged assets, personal guarantees, covenants or hedges) appropriate to the risk undertaken, and lastly on the recovery risk (the asset’s liquidity).

The procedures for the management and valuation of collaterals are set out in the internal Manual on Credit Risk Management Policies, which we actively use in the arrangement of transactions and in the monitoring of both these and customers.

This Manual sets forth the basic principles of credit risk management, which includes the management of the collateral assigned in transactions with customers. Accordingly, the risk management model jointly values the existence of an adequate cash flow generation by the obligor that enables such obligor to service the debt, together with the existence of suitable and sufficient guarantees that ensure the recovery of the credit when the obligor’s circumstances render such obligor unable to meet their obligations.

The procedures used for the valuation of the collateral are consistent with the market’s best practices, which involve the use of appraisal for real estate guarantees, market price for shares, quoted value of shares in a mutual fund, among other things.

All collateral assigned is to be properly instrumented and recognized in the corresponding register, as well as receive the approval of our legal department.

The following is a description of the main collateral for each financial instrument class:

•  Financial assets held for trading:  Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, may be included in the instruments’ contractual clauses to reduce our ultimate credit exposure. For trading derivatives, credit risk is generally minimized via master netting agreements, whereby derivative financial assets and liabilities with the same counterparty can be settled net. Other types of guarantees may also be put in place, depending on the counterparty’s solvency and the nature of the transaction.

•  Other financial assets designated at fair value through profit or loss:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent in the structure of the instrument.

•  Available-for-sale financial assets:  Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, may be implicit to the instrument’s structuring to reduce our ultimate credit exposure.

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•  Loans and receivables:

•  Loans and advances to credit institutions: Personal guarantees from the counterparties and, on occasion, an additional guarantee from another credit entity with which a credit derivative has been written to reduce our ultimate credit exposure may be required.

•  Loans and advances to customers: Most of these operations are backed by personal guarantees extended by the counterparty. The collateral received to secure loans and advances to other debtors includes mortgages, cash guarantees and other collateral such as pledged securities. Other kinds of credit enhancements may be put in place such as guarantees.

•  Debt securities: Guarantees or credit enhancements, which are taken directly from the issuer or counterparty, may be implicit to the instrument’s structuring.

•  Held-to-maturity investments:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent in the structure of the instrument.

•  Hedging derivatives:  Credit risk is minimized through contractual netting agreements, where positive- and negative-value derivatives with the same counterparty are settled at their net balance. There may likewise be other kinds of guarantees, depending on counterparty solvency and the nature of the transaction.

•  Financial guarantees, other contingent exposures and drawable by third parties:  They have the counterparty’s personal guarantee and, in some cases, the additional guarantee from another credit institution with which a credit derivative has been subscribed.

Our collateralized credit risk as of December 31, 2009, 2008 and 2007, excluding balances deemed impaired, is broken down in the table below:

	2009		2008		2007
	Millions of euros
Mortgage loans		127,957		125,540		123,998
Operating assets mortgage loans		4,050		3,896		4,381
Home mortgages		99,493		96,772		79,377
Rest of mortgages		24,414		24,872		40,240
Secured loans, except mortgage		20,917		19,982		11,559
Cash guarantees		231		250		578
Pledging of securities		692		458		766
Rest of secured loans		19,994		19,274		10,215
Total		148,874		145,522		135,557

In addition, we hold derivatives that carry contractual, legal compensation rights that have effectively reduced credit risk by €27,026 million as of December 31, 2009, by €29,377 million as of December 31, 2008 and by €9,481 million as of December 31, 2007.

As of December 31, 2008, the fair value of all collateral pledged was higher than the value of the underlying assets.

As of December 31, 2009, specifically in relation to mortgages, the average amount pending loan collection represented 54% of the collateral pledged (55% as of December 31, 2008 and 2007).

Credit quality of financial assets that are neither past due nor impaired

We have ratings tools that enable us to rank the credit quality of our operations and customers based on a scoring system and to map these ratings to probability of default (PD) scales. To analyze the performance of PD, we have a series of historical databases that house the pertinent information generated internally.

The scoring tools vary by customer segment (companies, corporate clients, SMEs, public authorities, etc). Scoring is a decision model that contributes to both the arrangement and management of retail type loans: consumer

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loans, mortgages, credit cards for individuals, etc. Scoring is the tool used to decide to whom a loan should be assigned, what amount should be assigned and what strategies can help establish the price, because it is an algorithm that sorts transactions in accordance with their credit rating. Rating tools, as opposed to scoring tools, do not assess transactions but focus on customers instead: companies, corporate clients, SMEs, public authorities, among others. For wholesale portfolios where the number of defaults is very low (sovereigns, corporates, financial entities) the internal ratings models are fleshed out by benchmarking the statistics maintained by external rating agencies (Moody’s, Standard & Poor’s and Fitch). To this end, each year we compare the PDs compiled by the agencies at each level of risk rating and map the measurements compiled by the various agencies to our master rating scale.

Once the probability of default for the transactions or customers has been determined, the so-called business cycle adjustment starts. This involves generating a risk metric outside the context estimate, seeking to gather information that represents behavior for an entire economic cycle. This probability is linked to our master rating scale.

We maintain a master rating scale with a view to facilitating the uniform classification of our various asset risk portfolios. The table below depicts the abridged scale which groups outstanding risk into 17 categories as of December 31, 2009:

	Probability of Default (Basic Points)
			Minimum from		Maximum Until
Rating	Average		>=		<
AAA		1		0		2
AA+		2		2		3
AA		3		3		4
AA−		4		4		5
A+		5		5		6
A		8		6		9
A−		10		9		11
BBB+		14		11		17
BBB		20		17		24
BBB−		31		24		39
BB+		51		39		67
BB		88		67		116
BB-		150		116		194
B+		255		194		335
B		441		335		581
B−		785		581		1,061
C		2,122		1,061		4,243

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The table below outlines the distribution of exposure including derivatives by internal ratings, to financial entities and public institutions (excluding sovereign risk), of the principal banks of the BBVA Group as of December 31, 2009, 2008 and 2007:

	2009			2008			2007
Rating	%			%			%
AAA/AA+/AA/AA−		19.55	%		23.78	%		27.00	%
A+/A/A−		28.78	%		26.59	%		17.00	%
BBB+		8.65	%		9.23	%		9.00	%
BBB		7.06	%		5.76	%		8.00	%
BBB-		6.91	%		9.48	%		8.00	%
BB+		4.46	%		8.25	%		14.00	%
BB		6.05	%		6.16	%		6.00	%
BB−		6.45	%		5.91	%		6.00	%
B+		5.38	%		3.08	%		3.00	%
B		3.34	%		1.44	%		2.00	%
B−		0.88	%		0.29	%		0.00	%
CCC/CC		2.49	%		0.03	%		0.00	%
Total		100.00	%		100.00	%		100.00	%

Policies and procedures for preventing excessive risk concentration

In order to prevent thebuild-up of excessive concentrations of credit risk at the individual, country and sector levels, we oversee updated risk concentration indices at the individual and portfolio levels tied to the various observable variables within the field of credit risk management. The limit on our exposure or share of a customer’s financial business therefore depends on the customer’s credit rating, the nature of the facility, and our presence in a given market, based on the following guidelines:

•  The need to balance the customer’s financing needs, broken down by type (commercial/financial, short/long-term, etc.), and the degree to which its business is or is not attractive to us. We believe this approach provides a better operational mix that is still compatible with the needs of the bank’s clientele.

•  Other determining factors are national legislation and the ratio between the size of customer lending and the bank’s equity (to prevent risk from becoming overly concentrated among few customers). Additional factors taken into consideration include constraints related to market, customer, internal regulation and macroeconomic factors, among others.

•  Correct portfolio management leads to identification of risk concentrations and enables appropriate action to be taken.

Operations with customers or groups that entail an expected loss plus economic capital of over €18 million are approved at the highest level, i.e., by the board of directors’ Risk Committee. As a reference, this is equivalent in terms of exposure to 10% of eligible equity for AAA and to 1% for a BB rating, implying oversight of the major individual risk concentrations by the highest-level risk governance bodies as a function of credit ratings.

There is an additional guideline in terms of a maximum risk concentration level of up to and including 10% of equity: up to this level there are stringent requirements in terms of in-depth knowledge of the client, its operating markets and sectors of operation.

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Financial assets past due but not impaired

The table below provides details of financial assets past due as of December 31, 2009, 2008 and 2007 but not considered to be impaired, including any amount past due on these dates, listed by their first due date:

	2009		2008		2007
	Millions of euros
Less than 1 month		2,653		1,580		1,422
1 to 2 months		336		534		298
2 to 3 months		311		447		234
Total		3,300		2,561		1,954

Impaired assets and impairment losses

The table below shows the composition of the balance of impaired financial assets by heading in the balance sheet and the impaired contingent liabilities as of December 31, 2009, 2008 and 2007:

	2009		2008		2007
	Millions of euros
IMPAIRED RISKS ON BALANCE
Available-for-sale		212		188		3
Debt securities		212		188		3
Loans and receivables		15,311		8,540		3,366
Loans and advances to credit institutions		100		95		8
Loans and advances to customers		15,197		8,437		3,358
Debt securities		14		8		—
Total		15,523		8,728		3,369
Government		87		102		177
Credit institutions		172		165		8
Other sectors		15,264		8,461		3,184
Mortgage		4,426		2,487		696
Rest of secured loans		1,663		941		113
Without secured loans		9,175		5,033		2,375
Total		15,523		8,728		3,369
IMPAIRED RISKS OFF BALANCE
Impaired contingent liabilities		405		131		49
TOTAL IMPAIRED RISKS(*)		15,928		8,859		3,418

(*) Also referred as Non-performing assets

The estimated value of assets used as security for impaired assets with secured loans as of December 31, 2009, was higher than the outstanding amount of those assets.

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The changes in 2009, 2008 and 2007 in the impaired financial assets and contingent liabilities were as follows:

	2009			2008			2007
	Millions of euros
Balance at the beginning of year		8,859			3,418			2,543
Additions		17,298			11,488			4,606
Recoveries		(6,524	)		(3,668	)		(2,418	)
Transfers to write-off		(3,737	)		(2,198	)		(1,497	)
Exchange differences and others		32			(181	)		184
Balance at the end of year		15,928			8,859			3,418

Below are details of the impaired financial assets as of December 31, 2009, 2008 and 2007, without considering impaired liabilities or valuation adjustments, classified by geographical location of risk and by the time since their oldest past-due amount or the period since they were deemed impaired:

	2009
	Amounts Less
	than Six
	Months Past-		6 to 12		12 to 18		18 to 24		More than
Impaired Assets	Due		Months		Months		Months		24 Months		Total
	Millions of euros
Spain		4,644		1,827		2,177		948		1,879		11,475
Rest of Europe		88		16		8		7		29		148
Latin America		1,308		134		80		15		490		2,027
United States		1,671		—		—		—		187		1,858
Rest		14		—		—		—		1		15
Total		7,727		1,977		2,265		970		2,586		15,523

	2008
	Amounts Less
	than Six
	Months Past-		6 to 12		12 to 18		18 to 24		More than
Impaired Assets	Due		Months		Months		Months		24 Months		Total
	Millions of euros
Spain		2,405		1,904		595		87		975		5,966
Rest of Europe		55		10		6		5		16		92
Latin America		1,112		88		22		7		320		1,549
United States		221		869		—		—		30		1,120
Rest		—		—		—		—		1		1
Total		3,793		2,871		623		99		1,342		8,728

	2007
	Amounts Less
	than Six
	Months Past-		6 to 12		12 to 18		18 to 24		More than
Impaired Assets	Due		Months		Months		Months		24 Months		Total
	Millions of euros
Spain		605		409		212		110		295		1,631
Rest of Europe		37		7		3		2		14		63
Latin America		808		104		12		8		312		1,244
United States		189		230		—		—		12		431
Rest		—		—		—		—		—		—
Total		1,639		750		227		120		633		3,369

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The table below presents the finance income accrued on impaired financial assets as of December 31, 2009, 2008 and 2007:

	2009		2008		2007
	Millions of euros
Financial income from impaired assets		1,485		1,042		880

This income is not recognized in the accompanying consolidated income statement due to the existence of doubts as to the collection of these assets.

Note 2.2.1.b to the Consolidated Financial Statements gives a description of the individual analysis of impaired financial assets, including the factors the entity takes into account in determining that they are impaired and the extension of guarantees and other credit enhancements.

The following shows the changes in impaired financial assets written off from the balance sheet for 2009, 2008 and 2007 because the possibility of their recovery was deemed remote:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		6,872			5,622			6,120
Increase:		3,880			1,976			2,112
Decrease:
Re-financing or restructuring		—			—			—
Cash recovery		(188	)		(199	)		(237	)
Foreclosed assets		(48	)		(13	)		(5	)
Definitive written off		(590	)		(261	)		(2,306	)
Cancellation		(346	)		(94	)		(149	)
Expiry of rights		—			—			—
Other causes		(936	)		(355	)		(2,455	)
Net exchange differences		253			(159	)		87
Balance at the end of year		9,833			6,872			5,622

Our non-performing assets (“NPA”) ratios for the headings “Loans and advances to customers” and “Contingent liabilities” as of December 31, 2009, 2008 and 2007 were:

	2009		2008		2007
NPA ratio (%)		4.30		2.30		0.89

A breakdown of impairment losses by type of financial instrument registered in the income statement and the recoveries of impaired financial assets in 2009, 2008 and 2007 is provided Note 49 to the Consolidated Financial Statements.

The accumulated balance of impairment losses broken down by portfolio as of December 31, 2009, 2008 and 2007 is as follows:

	2009		2008		2007
	Millions of euros
Available-for-sale portfolio		449		202		53
Loans and receivables — Loans and advances to customers		8,720		7,412		7,117
Loans and receivables — Loans and advances to credit institutions		68		74		10
Loans and receivables — Debt securities		17		19		9
Held to maturity investment		1		4		5
Total		9,255		7,711		7,194
Of which:
For impaired portfolio		6,380		3,480		1,999
For current portfolio non impaired		2,875		4,231		5,195

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The changes in the accumulated impairment losses for the years 2009, 2008 and 2007 were as follows:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		7,711			7,194			6,504
Increase in impairment losses charged to income		8,282			4,590			2,462
Decrease in impairment losses credited to income		(2,622	)		(1,457	)		(333	)
Acquisition of subsidiaries in the year		—			1			276
Disposal of subsidiaries in the year		—			(4	)		(26	)
Transfers to written-off loans		(3,878	)		(1,951	)		(1,297	)
Exchange differences and other		(238	)		(662	)		(392	)
Balance at the end of year		9,255			7,711			7,194

Most of the impairment on financial assets are included under the heading “Loans and receivables — Loans and advances to customers”. The changes in impairment for 2009, 2008 and 2007 are shown in this heading:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		7,412			7,117			6,404
Increase in impairment losses charged to income		7,983			4,434			2,455
Decrease in impairment losses credited to income		(2,603	)		(1,636	)		(553	)
Acquisition of subsidiaries in the year		—			—			276
Disposal of subsidiaries in the year		—			—			(26	)
Transfers to written-off loans		(3,828	)		(1,950	)		(1,296	)
Exchange differences and other		(244	)		(553	)		(143	)
Balance at the end of year		8,720			7,412			7,117

Liquidity Risk

The aim of liquidity risk management and control is to ensure that the payment commitments can be duly met without having to resort to borrowing funds under burdensome terms, or damaging the image and reputation of the institution.

Our liquidity risk monitoring is centralized in each bank and takes a dual approach: the short-term approach(90-day time horizon), which focuses basically on the management of payments and collections of Treasury and Markets, calculates our possible liquidity requirements; and the structural, long-term approach, which focuses on the financial management of the balance sheet as a whole, with a minimum monitoring time frame of one year.

The evaluation of asset liquidity risk is based on whether or not assets are eligible for rediscounting at the corresponding central bank. For normal situations, both in the short and medium term, those assets that are on the eligible list published by the European Central Bank (“ECB”) or the corresponding monetary authority are considered to be liquid. Non-eligible assets, quoted or non-quoted, are considered to represent a second line of liquidity for the entity when analyzing crisis situations.

Liquidity management is performed entirely by ALCO, through Financial Management. For its implementation, it uses a broad scheme of limits, sublimits and alerts, approved by the Executive Committee, based on which the Risk area carries out its independent measurement and control work. It also provides the manager withback-up decision-making tools and metrics. Each of the local risk areas, which are independent from the local manager, complies with the corporative principles of liquidity risk control that are established by the Global Market Risk Unit (UCRAM) — Structural Risks for the entire Group.

For each entity, the management areas request an outline of the quantitative and qualitative limits and alerts for short-medium- and long-term liquidity risk, which is authorized by the Executive Committee. Also, the Risk area performs periodic (daily and monthly) risk exposure measurements, develops the related valuation tools and

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models, conducts periodic stress tests, measures interbank counterparty concentration, prepares the policies and procedures manual, and monitors the authorized limits and alerts, which are reviewed al least once every year.

Information on liquidity risk is periodically sent to ALCO and to the managing areas themselves. Under the Contingency Plan, the Technical Liquidity Group (TLG), in the event of an alert of a possible crisis, conducts an initial analysis of our short- and long-term liquidity situation. The TLG is made up of specialized staff from the Short-Term Cash Desk, Financial Management and the Global Market Risk Unit (UCRAM-Structural Risk). If the alert is serious, the TLG reports the matter to the Liquidity Committee, which is composed of the managers of the related areas. The Liquidity Committee is responsible, in situations requiring urgent attention, for calling a meeting of the Crisis Committee.

Below is a breakdown by contractual maturity, of the balances of certain headings in the consolidated balance sheets as of December 31, 2009, 2008 and 2007, disregarding any valuation adjustments:

					Up to 1		1 to 3		3 to 12		1 to 5		Over 5
2009	Total		Demand		Month		Months		Months		Years		Years
	Millions of euros
ASSETS —
Cash and balances with central banks		16,331		14,650		535		248		735		163		—
Loans and advances to credit institutions		22,200		3,119		8,484		1,549		1,914		4,508		2,626
Loans and advances to customers		331,087		4,313		31,155		19,939		40,816		94,686		140,178
Debt securities		98,270		1,053		4,764		15,611		10,495		37,267		29,080
Derivatives (trading and hedging)		32,873		—		637		2,072		3,863		13,693		12,608
LIABILITIES —
Deposits from central banks		21,096		213		4,807		3,783		12,293		—		—
Deposits from credit institutions		48,945		1,836		24,249		5,119		5,145		6,143		6,453
Customer deposits		253,383		106,942		55,482		34,329		32,012		18,325		6,293
Debt certificates (including bonds)		97,186		—		10,226		16,453		15,458		40,435		14,614
Subordinated liabilities		17,305		—		500		689		2		1,529		14,585
Other financial liabilities		5,625		3,825		822		141		337		480		20
Short positions		3,830		—		448		—		16		—		3,366
Derivatives (trading and hedging)		30,308		—		735		1,669		3,802		13,585		10,517

159

					Up to 1		1 to 3		3 to 12		1 to 5		Over 5
2008	Total		Demand		Month		Months		Months		Years		Years
	Millions of euros
ASSETS —
Cash and balances with central banks		14,642		13,487		476		296		181		202		—
Loans and advances to credit institutions		33,679		6,198		16,216		1,621		2,221		4,109		3,314
Loans and advances to other debtors		341,322		13,905		36,049		23,973		45,320		91,030		131,045
Debt securities		72,704		716		1,701		12,230		9,483		24,640		23,934
Derivatives (trading and hedging)		44,779		—		3,739		2,206		5,442		16,965		16,427
LIABILITIES —
Deposits from central banks		16,762		2,419		8,737		2,441		3,165		—		—
Deposits from credit institutions		49,573		4,906		22,412		4,090		5,975		6,581		5,609
Deposits from other creditors		253,723		101,141		68,804		27,025		35,176		16,440		5,137
Debt certificates (including bonds)		101,328		—		9,788		13,516		12,072		45,469		20,483
Subordinated liabilities		16,249		69		913		1		872		3,582		10,812
Other financial liabilities		8,453		5,000		1,152		385		203		1,371		342
Short positions		2,700		—		24		—		23		—		2,653
Derivatives (trading and hedging)		41,535		—		2,693		3,108		6,310		15,538		13,886

					Up to 1		1 to 3		3 to 12		1 to 5		Over 5
2007	Total		Demand		Month		Months		Months		Years		Years
	Millions of euros
ASSETS —
Cash and balances with central banks		22,561		22,532		29		—		—		—		—
Loans and advances to credit institutions		24,392		3,764		12,246		2,519		2,301		2,703		859
Loans and advances to other debtors		319,671		7,220		30,338		23,778		46,226		87,414		124,695
Debt securities		81,715		516		1,719		24,726		8,964		20,884		24,906
LIABILITIES —
Deposits from central banks		27,256		117		25,013		1,435		691		—		—
Deposits from credit institutions		60,394		6,696		36,665		4,063		5,258		5,657		2,055
Deposits from other creditors		218,541		74,605		51,671		15,815		36,390		34,404		5,656
Debt certificates (including bonds)		101,874		5,987		7,391		4,191		14,878		44,178		25,249
Subordinated liabilities		15,397		1,200		495		15		583		2,722		10,382
Other financial liabilities		6,239		3,810		1,372		182		450		372		53

In the wake of the exceptional circumstances unfolding in the international financial markets, notably in 2008 and 2009, European governments made a decided effort to try to resolve the issues confronting bank funding and the ramifications of constrained funding on the real economy with a view to safeguarding the stability of the international financial system. The overriding goals underpinning these measures were to ensure sufficient liquidity to enable financial institutions to function correctly, facilitate bank funding, provide financial institutions with additional capital resources where needed so as to continue to ensure the proper financing of the economy, ensure that applicable accounting standards are sufficiently flexible to take into consideration current exceptional market circumstances and to reinforce and improve cooperation among European nations.

The following measures were passed into law in Spain in 2008 to mitigate the problem of bank funding: Royal Decree-Law 6/2008, of October 10, creating the Spanish Financial Asset Acquisition Fund, and Order EHA/3118/2008, dated October 31, implementing this Royal Decree, as well as Royal Decree-Law 7/2008, of October 13, on Emergency Economic Measures in connection with the Concerted Euro Area Action Plan, and Order EHA/3364/2008, dated November 21. The Bank can make use of the above measures as part of its risk management policy. However, at the date of preparation of the Consolidated Financial Statements, we have not had to resort to using these facilities.

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On December 17, 2009, the Basel Committee on Banking Supervision submitted a series of proposals of different kinds aimed at reinforcing international financial system standards regarding Capital and liquidity. The main purpose of the recommendations is to standardize criteria, establish common standards, and to step up regulatory requirements in the financial sector. The new requirements are expected to enter into force at the end of 2012.

Risk Concentrations

The table below shows the Group’s financial instruments by geographical area, not taking into account valuation adjustments, as of December 31, 2009 and 2008:

			Europe
2009			Except				Latin
Risks On-Balance	Spain		Spain		USA		America		Rest		Total
	Millions of euros
Financial assets held for trading		22,893		25,583		3,076		15,941		2,240		69,733
Debt securities		14,487		7,434		652		11,803		296		34,672
Equity instruments		3,268		624		35		1,662		194		5,783
Derivatives		5,138		17,525		2,389		2,476		1,750		29,278
Other financial assets designated at fair value through profit or loss		330		73		436		1,498		—		2,337
Debt securities		157		42		435		5		—		639
Equity instruments		173		31		1		1,493		—		1,698
Available-for-sale portfolio		30,177		11,660		7,828		12,585		1,266		63,516
Debt securities		24,838		11,429		7,082		12,494		1,223		57,066
Equity instruments		5,339		231		746		91		43		6,450
Loans and receivables		206,097		34,613		40,469		66,395		6,167		353,741
Loans and advances to credit institutions		2,568		11,280		2,441		4,993		918		22,200
Loans and advances to customers		203,529		23,333		37,688		61,298		5,239		331,087
Debt securities		—		—		340		104		10		454
Held-to-maturity investments		2,625		2,812		—		—		—		5,437
Hedging derivatives		218		2,965		117		270		25		3,595
Total		262,340		77,706		51,926		96,689		9,698		498,359

			Europe
			Except				Latin
Risks Off-Balance	Spain		Spain		USA		America		Rest		Total
Financial guarantees		15,739		7,826		3,330		4,601		1,689		33,185
Other contingent exposures		37,804		24,119		15,990		13,164		1,246		92,323
Total		53,543		31,945		19,320		17,765		2,935		125,508

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			Europe
2008			Except				Latin
Risks On-Balance	Spain		Spain		USA		America		Rest		Total
	Millions of euros
Financial assets held for trading		20,489		30,251		4,566		16,120		1,873		73,299
Debt securities		7,799		5,926		652		11,563		616		26,556
Equity instruments		2,332		1,376		80		1,071		938		5,797
Derivatives		10,358		22,949		3,834		3,486		319		40,946
Other financial assets designated at fair value through profit or loss		245		24		442		1,042		1		1,754
Debt securities		63		—		441		12		—		516
Equity instruments		182		24		1		1,030		1		1,238
Available-for-sale portfolio		15,233		10,460		9,633		8,449		2,999		46,774
Debt securities		11,811		9,970		8,889		8,368		924		39,962
Equity instruments		3,422		490		744		81		2,075		6,812
Loans and receivables		215,030		44,394		38,268		69,534		8,162		375,388
Loans and advances to credit institutions		6,556		15,848		2,479		7,466		1,330		33,679
Loans and advances to customers		208,474		28,546		35,498		61,978		6,826		341,322
Debt securities		—		—		291		90		6		387
Held-to-maturity investments		2,396		2,889		—		—		—		5,285
Hedging derivatives		439		2,789		270		309		26		3,833
Total		253,832		90,807		53,179		95,454		13,061		506,333

			Europe
			Except				Latin
Risks Off-Balance	Spain		Spain		USA		America		Rest		Total
Financial guarantees		16,843		8,969		3,456		4,721		1,963		35,952
Other contingent exposures		45,039		22,366		16,194		13,559		1,739		98,897
Total		61,882		31,335		19,650		18,280		3,702		134,849

ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A.   Debt Securities

Not Applicable.

B.   Warrants and Rights

Not Applicable.

C.   Other Securities

Not Applicable.

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D.   American Depositary Shares

Our ADSs are listed on the New York Stock Exchange under the symbol “BBVA”. The Bank of New York Mellon is the depositary (the “Depositary”) issuing ADSs pursuant to an amended and restated deposit agreement dated June 29, 2007 among BBVA, the Depositary and the holders from time to time of ADSs (the “Deposit Agreement”). Each ADS represents the right to receive one share. The table below sets forth the fees payable, either directly or indirectly, by a holder of ADSs as of the date of this Annual Report.

Category	Depositary Actions	Associated Fee/By Whom Paid
(a) Depositing or substituting the underlying shares	Issuance of ADSs	Up to $5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADSs delivered (charged to person depositing the shares or receiving the ADSs)
(b) Receiving or distributing dividends	Distribution of cash dividends or other cash distributions; distribution of share dividends or other free share distributions; distribution of securities other than ADSs or rights to purchase additional ADSs	Not applicable
(c) Selling or exercising rights	Distribution or sale of securities	Not applicable
(d) Withdrawing an underlying security	Acceptance of ADSs surrendered for withdrawal of deposited securities	Up to $5.00 for each 100 ADSs (or portion thereof) evidenced by the ADSs surrendered (charged to person surrendering or to person to whom withdrawn securities are being delivered)
(e) Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	Not applicable
(f) General depositary services, particularly those charged on an annual basis	Other services performed by the Depositary in administering the ADSs	Not applicable
(g) Expenses of the Depositary	Expenses incurred on behalf of holders in connection with •   stock transfer or other taxes (including Spanish income taxes) and other governmental charges; •   cable, telex and facsimile transmission and delivery charges incurred at request of holder of ADS or person depositing shares for the issuance of ADSs;	Expenses payable by holders of ADSs or persons depositing shares for the issuance of ADSs; expenses payable in connection with the conversion of foreign currency into U.S. dollars are payable out of such foreign currency
	•   transfer, brokerage or registration fees for the registration of shares or other deposited securities on the share register and applicable to transfers of shares or other deposited securities to or from the name of the custodian;
	•   reasonable and customary expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars

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The Depositary may remit to us all or a portion of the Depositary fees charged for the reimbursement of certain of the expenses we incur in respect of the ADS program established pursuant to the Deposit Agreement upon such terms and conditions as we may agree from time to time. In the year ended December 31, 2009, the Depositary reimbursed us $457 thousand with respect to certain fees and expenses. The table below sets forth the types of expenses that the Depositary has agreed to reimburse and the amounts reimbursed in 2009.

	Amount
	Reimbursed in
	the Year
	Ended
Category of Expenses	December 31, 2009
	Thousands of dollars
Listing fees		131
Investor relations marketing		116
Professional services		136
AGM expenses		74

PART II

ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable.

ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not Applicable.

ITEM 15.   CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2009, BBVA, under the supervision and with the participation of BBVA’s management, including our Chairman and Chief Executive Officer, President and Chief Operating Officer and Chief Accounting Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined inRule 13a-15(e) under the Exchange Act). There are, as described below, inherent limitations to the effectiveness of any control system, including disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.

Based upon that evaluation, BBVA’s Chairman and Chief Executive Officer, President and Chief Operating Officer and Chief Accounting Officer concluded that BBVA’s disclosure controls and procedures are effective to ensure that information relating to BBVA, including its consolidated subsidiaries, required to be disclosed in reports that it files under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to the management, including principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

The management of BBVA is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRule 13a-15(f) under the Exchange Act. BBVA’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•  Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of BBVA;

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•  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of BBVA’s management and directors; and

•  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of BBVA’s management, including our Chairman and Chief Executive Officer, President and Chief Operating Officer and Chief Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our management concluded that, as of December 31, 2009, our internal control over financial reporting was effective based on those criteria.

Our internal control over financial reporting as of December 31, 2009 has been audited by Deloitte S.L., an independent registered public accounting firm, as stated in their report which follows below.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Banco Bilbao Vizcaya Argentaria, S.A.:

We have audited the internal control over financial reporting of BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (the “Company”) and subsidiaries composing the BANCO BILBAO VIZCAYA ARGENTARIA Group (the “Group” — Note 3) as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2009 of the Group and our report dated March 26, 2010 expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph stating that the International Financial Reporting Standards adopted by the European Union (“EU-IFRS”) required to be applied under the Bank of Spain’s Circular 4/2004 vary in certain significant respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”) and that the information relating to the nature and effect of such differences is presented in Note 60 to the consolidated financial statements of the Group.

/s/  DELOITTE, S.L.

Madrid — Spain

March 26, 2010

Changes in Internal Control Over Financial Reporting

There has been no change in BBVA’s internal control over financial reporting (as defined inRule 13a-15(f) under the Exchange Act) that occurred during the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

ITEM 16.   [RESERVED]

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

The charter for our Audit and Compliance Committee provides that the Chairman of the Audit and Compliance Committee is required to have experience in financial matters as well as knowledge of the accounting standards and principles required by BBVA’s regulators, and we have determined that Mr. Rafael Bermejo Blanco, the Chairman of the Audit and Compliance Committee, has such experience and knowledge and is an “audit committee financial expert” as such term is defined by the regulations of the Securities and Exchange Commission issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002. Mr. Bermejo is independent within the meaning of the New York Stock Exchange listing standards.

In addition, we believe that the remaining members of the Audit and Compliance Committee have an understanding of applicable generally accepted accounting principles, experience analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our Consolidated Financial Statements, an understanding of internal controls over financial reporting, and an understanding of audit committee functions. Our Audit and Compliance Committee has experience overseeing and assessing the performance of BBVA and its consolidated subsidiaries and our external auditors with respect to the preparation, auditing and evaluation of our Consolidated Financial Statements.

ITEM 16B.   CODE OF ETHICS

BBVA’s Code of Ethics and Conduct applies to its chief executive officer, chief financial officer and chief accounting officer. This code establishes the principles that guide these officers’ respective actions: ethical conduct, professional standards and confidentiality. It also establishes the limitations and defines the conflicts of interest arising from their status as senior executives. We have not waived compliance with, nor made any amendment to,

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the Code of Ethics and Conduct in 2009. BBVA’s Code of Ethics and Conduct can be found on its website at www.bbva.com.

ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table provides information on the aggregate fees billed by our principal accountants, Deloitte, S.L., by type of service rendered for the periods indicated.

	Year Ended December 31,
Services Rendered	2009		2008
	(In millions of euros)
Audit Fees(1)		4.7		4.3
Audit-Related Fees(2)		2.9		3.0
Tax Fees(3)		0.2		0.1
All Other Fees(4)		0.7		0.3
Total		8.5		7.7

(1)	Aggregate fees billed for each of the last two fiscal years for professional services rendered by Deloitte, S.L. for the audit of BBVA’s annual financial statements or services that are normally provided by Deloitte, S.L. in connection with statutory and regulatory filings or engagements for those fiscal years. Total audit fees billed by Deloitte, S.L. and its worldwide affiliates, were €13.1 million and €12.2 million in 2009 and 2008, respectively.
(2)	Aggregate fees billed in each of the last two fiscal years for assurance and related services by Deloitte, S.L. that are reasonably related to the performance of the audit or review of BBVA’s financial statements and are not reported under (1) above.
(3)	Aggregate fees billed in each of the last two fiscal years for professional services rendered by Deloitte, S.L. for tax compliance, tax advice, and tax planning.
(4)	Aggregate fees billed in each of the last two fiscal years for products and services provided by Deloitte, S.L. other than the services reported in (1), (2) and (3) above. Services in this category consisted primarily of employee education courses and verification of the security of information systems.

The Audit and Compliance Committee’s Pre-Approval Policies and Procedures

In order to assist in ensuring the independence of our external auditor, the regulations of our Audit and Compliance Committee provides that our external auditor is generally prohibited from providing us with non-audit services, other than under the specific circumstance described below. For this reason, our Audit and Compliance Committee has developed a pre-approval policy regarding the contracting of BBVA’s external auditor, or any affiliate of the external auditor, for professional services. The professional services covered by such policy include audit and non-audit services provided to BBVA or any of its subsidiaries reflected in agreements dated on or after May 6, 2003.

The pre-approval policy is as follows:

1. The hiring of BBVA’s external auditor or any of its affiliates is prohibited, unless there is no other firm available to provide the needed services at a comparable cost and that could deliver a similar level of quality.

2. In the event that there is no other firm available to provide needed services at a comparable cost and delivering a similar level of quality, the external auditor (or any of its affiliates) may be hired to perform such services, but only with the pre-approval of the Audit and Compliance Committee.

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3. The Chairman of the Audit and Compliance Committee has been delegated the authority to approve the hiring of BBVA’s external auditor (or any of its affiliates). In such an event, however, the Chairman would be required to inform the Audit and Compliance Committee of such decision at the Committee’s next meeting.

4. The hiring of the external auditor for any of BBVA’s subsidiaries must also be pre-approved by the Audit and Compliance Committee.

5. Agreements entered into prior to May 6, 2003 between BBVA or any of its subsidiaries and any of their respective external auditors, required the approval of the Audit and Compliance Committee in the event that services provided under such agreements continued after May 6, 2004.

ITEM 16D.   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable.

ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

					Total Number of		Maximum Number
					Shares (or Units)		(or Approximate Dollar
					Purchased as Part		Value) of Shares (or
	Total Number of		Average Price		of Publicly		Units) that may yet be
	Ordinary Shares		Paid per Share (or		Announced Plans		Purchased Under the
2009	Purchased		Unit)		or Programs		Plans or Programs
January 1 to January 31		94,239,634	€	7.63		—		—
February 1 to February 28		38,390,021	€	6.55		—		—
March 1 to March 31		61,969,999	€	5.63		—		—
April 1 to April 30		55,363,971	€	7.29		—		—
May 1 to May 31		31,821,214	€	8.50		—		—
June 1 to June 30		35,673,043	€	8.59		—		—
July 1 to July 31		157,413,281	€	9.62		—		—
August 1 to August 31		25,504,533	€	11.83		—		—
September 1 to September 30		30,978,961	€	12.16		—		—
October 1 to October 31		57,444,975	€	12.20		—		—
November 1 to November 30		30,758,449	€	12.67		—		—
December 1 to December 31		69,043,520	€	12.66		—		—
Total		688,601,601	€	9.67		—		—

During 2009, we sold a total of 713,048,315 shares for an average price of €8.95 per share.

ITEM 16F.   CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

During the years ended December 31, 2008 and 2009 and through the date of this Annual Report, the principal independent accountant engaged to audit our financial statements, Deloitte S.L., has not resigned, indicated that it has declined to stand for re-election after the completion of its current audit or been dismissed. For each of the years ended December 31, 2008 and 2009, Deloitte S.L. has not expressed reliance on another accountant or accounting firm in its report on our audited annual accounts for such periods.

ITEM 16G.   CORPORATE GOVERNANCE

Compliance with NYSE Listing Standards on Corporate Governance

On November 4, 2003, the SEC approved new rules proposed by the New York Stock Exchange (the “NYSE”) intended to strengthen corporate governance standards for listed companies. In compliance therewith, the following is a summary of the significant differences between our corporate governance practices and those applicable to domestic issuers under the NYSE listing standards. The Group’s website address is www.bbva.com. We include on

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such website a narrative description in English of corporate governance differences between NYSE rules and home country practice in Spain.

Independence of the Directors on the board of directors and Committees

Under the NYSE corporate governance rules, (i) a majority of a U.S. company’s board of directors must be composed of independent directors, (ii) all members of the audit committee must be independent and (iii) all U.S. companies listed on the NYSE must have a compensation committee and a nominations committee and all members of such committees must be independent. In each case, the independence of directors must be established pursuant to highly detailed rules promulgated by the NYSE and, in the case of the audit committee, the NYSE and the SEC.

Spanish law does not contain any requirement that members of the board of directors or the committees thereof be independent, nor does Spanish law provide any definition of what constitutes independence for the purpose of board or committee membership or otherwise. In addition, Spanish law does not require that a company have a compensation committee or a nominations committee. However, there are non-binding recommendations for listed companies in Spain to have these committees and for them to be composed of a majority of non-executive directors as well as a definition of what constitutes independence for directors.

As described above under “Conditions of Directorship”, BBVA considers directors to be independent when:

Independent directors are external directors appointed for their personal and professional background who can pursue their duties without being constrained by their relations with the Company, its significant shareholders or its executives.

Independent directors may not:

a) Have been employees or executive directors in Group companies, unless three or five years, respectively, have passed since they ceased to be so.

b) Receive any amount or benefit from the Company or its Group companies for any reason other than remuneration of their directorship, unless it is insignificant.

Neither dividends nor supplementary pension payments that the director may receive from earlier professional or employment relationships shall be taken into account for the purposes of this section, provided they are not subject to conditions and the company paying them may not at its own discretion suspend, alter or revoke their accrual without breaching its obligations.

c) Be or have been a partner in the external auditors’ firm or in charge of the auditor’s report with respect to the Company or any other Group company during the last three years.

d) Be executive director or senior manager in any other company on which a Company executive director or senior manager is external director.

e) Maintain or have maintained during the past year an important business relationship with the Company or any of its Group companies, either onhis/her own behalf or as relevant shareholder, director or senior manager of a company that maintains or has maintained such relationship.

“Business relationships”shall mean relationships as provider of goodsand/or services, including financial, advisoryand/or consultancy services.

f) Be significant shareholders, executive directors or senior managers of any organization that receives or has received significant donations from the Company or its Group during the last three years.

Those who are merely trustees on a foundation receiving donations shall not be ineligible under this section.

g) Be married to or linked by equivalent emotional relationship, or related by up to second-degree family ties to an executive director or senior manager of the Company.

h) Have not been proposed by the Appointments and Compensation committee for appointment or renewal.

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i) Fall within the cases described under letters a), e), f) or g) of this section, with respect to any significant shareholder or shareholder represented on the Board. In cases of family relationships described under letter g), the limitation shall not only apply to the shareholder, but also to the directors it nominates for the Company’s Board.

Directors owning shares in the Company may be independent providing they comply with the above conditions and their shareholding is not legally considered as significant.

According to the latest recommendations on corporate governance, the board has established a limit on how long a director may remain independent. Directors may not remain on the board as independent directors after having sat on it as such for more than 12 consecutive years.

Our board of directors has a large of non-executive directors and nine out of the 12 members of our board are independent under the definition of independence described above. In addition, our Audit and Compliance Committee is composed exclusively of independent directors and the committee chairman is required to have experience in financial management and an understanding of the standards and accounting procedures required by the governmental authorities that regulate the banking sector. In accordance with the non-binding recommendation, our board of directors has created an Appointments and Compensation Committee which is composed exclusively of independent directors.

Separate Meetings for Independent Directors

In accordance with the NYSE corporate governance rules, independent directors must meet periodically outside of the presence of the executive directors. Under Spanish law, this practice is not contemplated as such. We note, however, that our independent directors meet periodically outside the presence of our executive directors anytime the Audit and Compliance Committee or the Appointments and Compensation Committee meet, since these Committees are comprised solely of independent directors. In addition, our independent directors meet outside the presence of our executive directors as often as they deem fit, and usually prior to meetings of the board of directors or its Committees.

Code of Ethics

The NYSE listing standards require U.S. companies to adopt a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. For information with respect to BBVA’s code of business conduct and ethics see “Item 16B. Code of Ethics”.

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PART III

ITEM 17.   FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of responding to this Item.

ITEM 18.   FINANCIAL STATEMENTS

Reference is made to Item 19 for a list of all financial statements filed as a part of this Annual Report.

ITEM 19.   EXHIBITS

Exhibit
Number			Description
	1	.1	Amended and Restated Bylaws (Estatutos) of the Registrant.
	4	.1	Transaction Agreement by and between Banco Bilbao Vizcaya Argentaria, S.A. and Compass Bancshares, Inc. dated as of February 16, 2007.*
	8	.1	Consolidated Companies Composing Registrant (see Appendix I to XI to our Consolidated Financial Statements included herein).
	12	.1	Section 302 Chairman and Chief Executive Officer Certification.
	12	.2	Section 302 President and Chief Operating Officer Certification.
	12	.3	Section 302 Chief Accounting Officer Certification.
	13	.1	Section 906 Certification.
	15	.1	Consent of Independent Registered Public Accounting Firm

* Incorporated by reference to BBVA’s 2006 Annual Report onForm 20-F.

We will furnish to the Commission, upon request, copies of any unfiled instruments that define the rights of holders of our long-term debt.

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing onForm 20-F and had duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized.

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

By:  /s/  JAVIER MALAGON NAVAS
Name: JAVIER MALAGON NAVAS
Title:   Chief Accounting Officer

Date: March 26, 2010

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CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			F-1
CONSOLIDATED FINANCIAL STATEMENTS
	•	Consolidated balance sheets	F-2
	•	Consolidated income statements	F-5
	•	Consolidated statements of recognized income and expense	F-6
	•	Consolidated statements of changes in equity	F-7
	•	Consolidated statements of cash flows	F-10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
	1.	Introduction and basis of presentation of the consolidated annual financial statements	F-12
	2.	Principles of consolidation, accounting policies and measurement bases applied and IFRS recent pronouncements	F-14
	3.	Banco Bilbao Vizcaya Argentaria Group	F-39
	4.	Application of earnings	F-43
	5.	Earnings per share	F-44
	6.	Basis and methodology for segment reporting	F-45
	7.	Risk exposure	F-47
	8.	Fair value of financial instruments	F-66
	9.	Cash and balances with central banks	F-72
	10.	Financial assets and liabilities held for trading	F-72
	11.	Other financial assets and liabilities designated at fair value through profit or loss	F-77
	12.	Available for sale financial assets	F-77
	13.	Loans and receivables	F-81
	14.	Held-to-maturity investments	F-84
	15.	Hedging derivatives (receivable and payable)	F-85
	16.	Non-current assets held for sale and liabilities associated with non-current assets held for sale	F-88
	17.	Investments in entities accounted for using the equity method	F-90
	18.	Reinsurance assets	F-93
	19.	Tangible assets	F-94
	20.	Intangible asset	F-98
	21.	Tax assets and liabilities	F-100
	22.	Other assets and liabilities	F-102
	23.	Financial liabilities at amortized cost	F-103
	24.	Liabilities under insurance contracts	F-110
	25.	Provisions	F-110
	26.	Pension and other commitments	F-111
	27.	Common stock	F-122
	28.	Share premium	F-123
	29.	Reserves	F-124
	30.	Treasury stock	F-127
	31.	Valuation adjustments	F-128
	32.	Non-controlling interests	F-128
	33.	Capital base and capital management	F-129
	34.	Financial guarantees and drawable by third parties	F-130
	35.	Assets assigned to other own and third-party obligations	F-130
	36.	Other contingent assets and liabilities	F-131
	37.	Purchase and sale commitments and future payment obligations	F-131

38.	Transactions for the account of third parties	F-131
39.	Interest income and expense and similar items	F-132
40.	Dividend income	F-135
41.	Share of profit or loss of entities accounted for using the equity method	F-136
42.	Fee and commission income	F-136
43.	Fee and commission expenses	F-137
44.	Net gains (losses) on financial assets and liabilities	F-137
45.	Other operating income and expenses	F-138
46.	Administration costs	F-139
47.	Depreciation and amortization	F-141
48.	Provisions (net)	F-142
49.	Impairment losses on financial assets (net)	F-142
50.	Impairment losses on other assets (net)	F-142
51.	Gains (losses) on derecognized assets not classified as non-current assets held for sale	F-143
52.	Gains (losses) in non-current assets held for sale not classified as discontinued operations	F-143
53.	Consolidated statement of cash flows	F-143
54.	Accountant fees and services	F-144
55.	Related party transactions	F-145
56.	Remuneration of the Board of Directors and Members of the Bank’s Management Committee	F-146
57.	Details of the Directors’ holdings in companies with similar business activities	F-150
58.	Other information	F-150
59.	Subsequent events	F-151
60.	Differences between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and the United States generally accepted accounting principles and other required disclosures	F-152

APPENDICES

I.	Financial Statements of Banco Bilbao Vizcaya Argentaria, S.A.	I-1
II.	Additional information on consolidated subsidiaries composing the BBVA Group	II-1
III.	Additional information on jointly controlled companies accounted for under the proportionate consolidation method in the BBVA Group	III-1
IV.	Additional information on holdings and jointly controlled companies accounted for under the equity method in the BBVA Group	IV-1
V.	Changes and notification of investments in the BBVA Group in 2009	V-1
VI.	Fully consolidated subsidiaries with more than 10% owned by non-Group shareholders	VI-1
VII.	BBVA’s Group securitization funds	VII-1
VIII.	Reconciliation of the consolidated financial statements for 2007 prepared in accordance with Circular 6/2008 of the Bank of Spain with those prepared in accordance with Circular 4/2004 of the Bank of Spain	VIII-1
IX.	Consolidated balance sheets as of December 31, 2009, 2008 and 2007 held in foreign currency	IX-1
X.	Details of the most significant outstanding subordinated debt and preferred securities issued by the Bank or entities in the Group consolidated as of December 31, 2009, 2008 and 2007	X-1
XI.	Consolidated income statements for the first and second half of 2009 and 2008	XI-1
XII.	GLOSSARY	XII-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Banco Bilbao Vizcaya Argentaria, S.A.:

We have audited the accompanying consolidated balance sheets of BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (the “Company”) and subsidiaries composing the BANCO BILBAO VIZCAYA ARGENTARIA Group (the “Group” — Note 3) as of December 31, 2009, 2008 and 2007, and the related consolidated statements of income, recognized income and expense, changes in equity and cash flows for each of the three years in the period ended December 31, 2009. These consolidated financial statements are the responsibility of the controlling Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated equity and consolidated financial position of BANCO BILBAO VIZCAYA ARGENTARIA, S.A. and subsidiaries composing the BANCO BILBAO VIZCAYA ARGENTARIA Group as of December 31, 2009, 2008 and 2007, and the consolidated results of their operations, the changes in the consolidated equity and their consolidated cash flows for each of the three years in the period ended December 31, 2009, in conformity with the International Financial Reporting Standards adopted by the European Union (“EU-IFRS”) required to be applied under the Bank of Spain’s Circular 4/2004 (see Note 1.2).

EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 vary in certain significant respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). Information relating to the nature and effect of such differences is presented in Note 60 to the consolidated financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Group’s internal control over financial reporting as of December 31, 2009, based on the criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 26, 2010 expressed an unqualified opinion on the Group’s internal control over financial reporting.

/s/  DELOITTE, S.L

Madrid- Spain

March 26, 2010

F-1

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009, 2008 AND 2007
(Notes 1 to 5)

	Notes		2009		2008		2007
			Millions of euros
ASSETS
CASH AND BALANCES WITH CENTRAL BANKS		9		16,344		14,659		22,581
FINANCIAL ASSETS HELD FOR TRADING		10		69,733		73,299		62,336
Loans and advances to credit institutions				—		—		—
Loans and advances to customers				—		—		—
Debt securities				34,672		26,556		38,392
Equity instruments				5,783		5,797		9,180
Trading derivatives				29,278		40,946		14,764
OTHER FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS		11		2,337		1,754		1,167
Loans and advances to credit institutions				—		—		—
Loans and advances to customers				—		—		—
Debt securities				639		516		421
Equity instruments				1,698		1,238		746
AVAILABLE-FOR-SALE FINANCIAL ASSETS		12		63,521		47,780		48,432
Debt securities				57,071		39,831		37,336
Equity instruments				6,450		7,949		11,096
LOANS AND RECEIVABLES		13		346,117		369,494		337,765
Loans and advances to credit institutions				22,239		33,856		24,527
Loans and advances to customers				323,442		335,260		313,178
Debt securities				436		378		60
HELD-TO-MATURITY INVESTMENTS		14		5,437		5,282		5,584
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK				—		—		—
HEDGING DERIVATIVES		15		3,595		3,833		1,050
NON-CURRENT ASSETS HELD FOR SALE		16		1,050		444		240
INVESTMENTS IN ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD		17		2,922		1,467		1,542
Associates				2,614		894		846
Jointly controlled entities				308		573		696
INSURANCE CONTRACTS LINKED TO PENSIONS				—		—		—
REINSURANCE ASSETS		18		29		29		43
TANGIBLE ASSETS		19		6,507		6,908		5,238
Property, plants and equipment				4,873		5,174		5,156
For own use				4,182		4,442		4,437
Other assets leased out under an operating lease				691		732		719
Investment properties				1,634		1,734		82
INTANGIBLE ASSETS		20		7,248		8,439		8,244
Goodwill				6,396		7,659		7,436
Other intangible assets				852		780		808
TAX ASSETS		21		6,273		6,484		5,207
Current				1,187		1,266		682
Deferred				5,086		5,218		4,525
OTHER ASSETS		22		3,952		2,778		2,297
Inventories				1,933		1,066		457
Rest				2,019		1,712		1,840
TOTAL ASSETS				535,065		542,650		501,726

The accompanying Notes 1 to 60 and Appendices I to XII are an integral part of the consolidated balance sheet as of December 31, 2009.

F-2

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009, 2008 AND 2007
(Notes 1 to 5)

	Notes		2009		2008		2007
			Millions of euros
LIABILITIES AND EQUITY
FINANCIAL LIABILITIES HELD FOR TRADING		10		32,830		43,009		19,273
Deposits from central banks				—		—		—
Deposits from credit institutions				—		—		—
Customers deposits				—		—		—
Debt certificates				—		—		—
Trading derivatives				29,000		40,309		17,540
Short positions				3,830		2,700		1,733
Other financial liabilities				—		—		—
OTHER FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS		11		1,367		1,033		449
Deposits from central banks				—		—		—
Deposits from credit institutions				—		—		—
Customer deposits				—		—		—
Debt certificates				—		—		—
Subordinated liabilities				—		—		—
Other financial liabilities				1,367		1,033		449
FINANCIAL LIABILITIES AT AMORTIZED COST		23		447,936		450,605		431,856
Deposits from central banks				21,166		16,844		27,326
Deposits from credit institutions				49,146		49,961		60,772
Customer deposits				254,183		255,236		219,610
Debt certificates				99,939		104,157		102,247
Subordinated liabilities				17,878		16,987		15,662
Other financial liabilities				5,624		7,420		6,239
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK				—		—		—
HEDGING DERIVATIVES		15		1,308		1,226		1,807
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE		16		—		—		—
LIABILITIES UNDER INSURANCE CONTRACTS		24		7,186		6,571		6,867
PROVISIONS		25		8,559		8,678		8,342
Provisions for pensions and similar obligations				6,246		6,359		5,967
Provisions for taxes and other legal contingencies				299		263		225
Provisions for contingent exposures and commitments				243		421		546
Other provisions				1,771		1,635		1,604
TAX LIABILITIES		21		2,208		2,266		2,817
Current				539		984		582
Deferred				1,669		1,282		2,235
OTHER LIABILITIES		22		2,908		2,557		2,372
TOTAL LIABILITIES				504,302		515,945		473,783

F-3

	Notes		2009			2008			2007
			Millions of euros
LIABILITIES AND EQUITY(Continuation)
STOCKHOLDERS’ FUNDS				29,362			26,586			24,811
Common Stock		27		1,837			1,837			1,837
Issued				1,837			1,837			1,837
Unpaid and uncalled(-)				—			—			—
Share premium		28		12,453			12,770			12,770
Reserves		29		12,074			9,410			6,060
Accumulated reserves (losses)				11,765			8,801			5,609
Reserves (losses) of entities accounted for using the equity method				309			609			451
Other equity instruments				12			89			68
Equity component of compound financial instruments				—			—			—
Other equity instruments				12			89			68
Less: Treasury stock		30		(224	)		(720	)		(389	)
Income attributed to the parent company				4,210			5,020			6,126
Less: Dividends and remuneration				(1,000	)		(1,820	)		(1,661	)
VALUATION ADJUSTMENTS		31		(62	)		(930	)		2,252
Available-for-sale financial assets				1,951			931			3,546
Cash flow hedging				188			207			(50	)
Hedging of net investment in a foreign transactions				219			247			297
Exchange differences				(2,236	)		(2,231	)		(1,588	)
Non-current assets held for sale				—			—			—
Entities accounted for using the equity method				(184	)		(84	)		47
Other valuation adjustments				—			—			—
NON-CONTROLLING INTEREST		32		1,463			1,049			880
Valuation adjustments				18			(175	)		(118	)
Rest				1,445			1,224			998
TOTAL EQUITY				30,763			26,705			27,943
TOTAL LIABILITIES AND EQUITY				535,065			542,650			501,726

Memorandum Item	Notes		2009		2008		2007
CONTINGENT EXPOSURES		34		33,185		35,952		36,859
CONTINGENT COMMITMENTS		34		92,323		98,897		106,940

The accompanying Notes 1 to 60 and Appendices I to XII are an integral part of the consolidated balance sheet as of December 31, 2009.

F-4

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP

CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007 (Notes 1 to 5)

	Notes		2009			2008			2007
			Millions of euros
INTEREST AND SIMILAR INCOME		39		23,775			30,404			26,176
INTEREST AND SIMILAR EXPENSES		39		(9,893	)		(18,718	)		(16,548	)
NET INTEREST INCOME				13,882			11,686			9,628
DIVIDEND INCOME		40		443			447			348
SHARE OF PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD		41		120			293			241
FEE AND COMMISSION INCOME		42		5,305			5,539			5,603
FEE AND COMMISSION EXPENSES		43		(875	)		(1,012	)		(1,043	)
NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES		44		892			1,328			1,545
Financial instruments held for trading				321			265			709
Other financial instruments at fair value through profit or loss				79			(17	)		43
Other financial instruments not at fair value through profit or loss				492			1,080			793
Rest				—			—			—
NET EXCHANGE DIFFERENCES				652			231			411
OTHER OPERATING INCOME		45		3,400			3,559			3,589
Income on insurance and reinsurance contracts				2,567			2,512			2,605
Financial income from non-financial services				493			485			655
Rest of other operating income				340			562			329
OTHER OPERATING EXPENSES		45		(3,153	)		(3,093	)		(3,051	)
Expenses on insurance and reinsurance contracts				(1,847	)		(1,896	)		(2,052	)
Changes in inventories				(417	)		(403	)		(467	)
Rest of other operating expenses				(889	)		(794	)		(532	)
GROSS INCOME				20,666			18,978			17,271
ADMINISTRATION COSTS		46		(7,662	)		(7,756	)		(7,253	)
Personnel expenses				(4,651	)		(4,716	)		(4,335	)
General and administrative expenses				(3,011	)		(3,040	)		(2,918	)
DEPRECIATION AND AMORTIZATION		47		(697	)		(699	)		(577	)
PROVISIONS (NET)		48		(458	)		(1,431	)		(235	)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)		49		(5,473	)		(2,941	)		(1,903	)
Loans and receivables				(5,199	)		(2,797	)		(1,902	)
Other financial instruments not at fair value through profit or loss				(274	)		(144	)		(1	)
NET OPERATING INCOME				6,376			6,151			7,303
IMPAIRMENT LOSSES ON OTHER ASSETS (NET)		50		(1,618	)		(45	)		(13	)
Goodwill and other intangible assets				(1,100	)		(1	)		(1	)
Other assets				(518	)		(44	)		(12	)
GAINS (LOSSES) ON DERECOGNIZED ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE		51		20			72			13
NEGATIVE GOODWILL		20		99			—			—
GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS		52		859			748			1,191
INCOME BEFORE TAX				5,736			6,926			8,494
INCOME TAX		21		(1,141	)		(1,541	)		(2,079	)
INCOME FROM CONTINUING TRANSACTIONS				4,595			5,385			6,415
INCOME FROM DISCONTINUED TRANSACTIONS (NET)				—			—			—
NET INCOME				4,595			5,385			6,415
Net Income attributed to parent company				4,210			5,020			6,126
Net income attributed to non-controlling interests		32		385			365			289
			2009			2008			2007
			Units of euros
EARNINGS PER SHARE		5
Basic earnings per share				1.12			1.35			1.70
Diluted earnings per share				1.12			1.35			1.70

The accompanying Notes 1 to 60 and Appendices I to XII are an integral part of the consolidated income statement for the year ending December 31, 2009.

F-5

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP

CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
(Notes 1 to 5)

	2009			2008			2007
	Millions of euros
NET INCOME RECOGNIZED IN INCOME STATEMENT		4,595			5,385			6,415
OTHER RECOGNIZED INCOME (EXPENSES)		1,061			(3,237	)		(1,092	)
Available-for-sale financial assets		1,502			(3,787	)		320
Valuation gains/losses		1,520			(2,065	)		1,857
Amounts removed to income statement		(18	)		(1,722	)		(1,537	)
Reclassifications		—			—			—
Cash flow hedging		(32	)		361			(94	)
Valuation gains/losses		(21	)		373			(81	)
Amounts removed to income statement		(11	)		(12	)		(13	)
Amounts removed to the initial carrying amount of the hedged items		—			—			—
Reclassifications		—			—			—
Hedging of net investment in foreign transactions		(27	)		(50	)		507
Valuation gains/losses		(27	)		(50	)		507
Amounts removed to income statement		—			—			—
Reclassifications		—			—			—
Exchange differences		68			(661	)		(2,311	)
Valuation gains/losses		141			(678	)		(2,311	)
Amounts removed to income statement		(73	)		17			—
Reclassifications		—			—			—
Non-current assets held for sale		—			—			—
Valuation gains/losses		—			—			—
Amounts removed to income statement		—			—			—
Reclassifications		—			—			—
Actuarial gains and losses in post-employment plans		—			—			—
Entities accounted for using the equity method		(88	)		(144	)		18
Valuation gains/losses		(88	)		(144	)		18
Amounts removed to income statement		—			—			—
Reclassifications		—			—			—
Rest of recognized income and expenses		—			—			—
Income tax		(362	)		1,044			468
TOTAL RECOGNIZED INCOME/EXPENSES		5,656			2,148			5,323
Attributed to the parent company		5,078			1,838			5,038
Attributed to minority interest		578			310			285

The accompanying Notes 1 to 60 and Appendices I to XII are an integral part of the consolidated statement of recognized income and expense for the year ended December 31, 2009.

F-6

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Notes 1 to 5)

	Total Equity Attributed to the Parent Company
	Stockholders’ Funds
						Reserves (Note 29)
									Reserves
									(Losses) From									Profit for			Less:
									Entities						Less:			the Year			Dividends												Non-
	Common		Share			Reserves			Accounted			Other			Treasury			Attributed			and			Total			Valuation						Controlling
	Stock		Premium			(Accumulated			for Equity			Equity			Stock			to Parent			Remunerations			Stockholders’			Adjustments						Interest			Total
	(Note 27)		(Note 28)			Losses)			Method			Instruments			(Note 30)			Company			(Note 4)			Funds			(Note 31)			Total			(Note 32)			Equity
	Millions of euros
Balances as of January 1, 2009		1,837		12,770			8,801			609			89			(720	)		5,020			(1,820	)		26,586			(930	)		25,656			1,049			26,705
Effects of changes in accounting policies		—		—			—			—			—			—			—			—			—			—			—			—			—
Effect of correction of errors		—		—			—			—			—			—			—			—			—			—			—			—			—
Adjusted initial balance		1,837		12,770			8,801			609			89			(720	)		5,020			(1,820	)		26,586			(930	)		25,656			1,049			26,705
Total income/expense recognized		—		—			—			—			—			—			4,210			—			4,210			868			5,078			578			5,656
Other changes in equity		—		(317	)		2,964			(300	)		(77	)		496			(5,020	)		820			(1,434	)		—			(1,434	)		(164	)		(1,598	)
Common stock increase		—		—			—			—			—			—			—			—			—			—			—			—			—
Common stock reduction		—		—			—			—			—			—			—			—			—			—			—			—			—
Conversion of financial liabilities into capital		—		—			—			—			—			—			—			—			—			—			—			—			—
Increase of other equity instruments		—		—			—			—			10			—			—			—			10			—			—			—			10
Reclassification of financial liabilities to other equity instruments		—		—			—			—			—			—			—			—			—			—			—			—			—
Reclassification of other equity instruments to financial liabilities		—		—			—			—			—			—			—			—			—			—			—			—			—
Dividend distribution		—		—			—			—			—			—			—			(1,000	)		(1,000	)		—			(1,000	)		(144	)		(1,144	)
Transactions including treasury stock and other equity instruments (net)		—		—			(238	)		—			—			496			—			—			258			—			258			—			258
Transfers between total equity entries		—		—			3,378			(178	)		—			—			(5,020	)		1,820			—			—			—			—			—
Increase/Reduction due to business combinations		—		—			—			—			—			—			—			—			—			—			—			—			—
Payments with equity instruments		—		(317	)		—			—			(87	)		—			—			—			(404	)		—			(404	)		—			(404	)
Rest of increase/reductions in total equity		—		—			(176	)		(122	)		—			—			—			—			(298	)		—			(298	)		(20	)		(318	)
Balances as of December 31, 2009		1,837		12,453			11,765			309			12			(224	)		4,210			(1,000	)		29,362			(62	)		29,300			1,463			30,763

F-7

	Total Equity Attributed to the Parent Company
	Stockholders’ Funds
					Reserves (Note 29)
								Reserves
								(Losses)
								from							Profit for
								Entities				Less:			the Year															Non-
	Common		Share		Reserves			Accounted				Treasury			Attributed			Less:			Total			Valuation						Controlling
	Stock		Premium		(Accumulated			for Equity		Other Equity		Stock			to Parent			Dividends and			Stockholders’			Adjustments						Interest			Total
	(Note 27)		(Note 28)		Losses)			Method		Instruments		(Note 30)			Company			Remunerations			Funds			(Note 31)			Total			(Note 32)			Equity
	Millions of euros
Balances as of January 1, 2008		1,837		12,770		5,609			451		68		(389	)		6,126			(1,661	)		24,811			2,252			27,063			880			27,943
Effects of changes in accounting policies		—		—		—			—		—		—			—			—			—			—			—			—			—
Effect of correction of errors		—		—		—			—		—		—			—			—			—			—			—			—			—
Adjusted initial balance		1,837		12,770		5,609			451		68		(389	)		6,126			(1,661	)		24,811			2,252			27,063			880			27,943
Total income/expense recognized		—		—		—			—		—		—			5,020			—			5,020			(3,182	)		1,838			310			2,148
Other changes in equity		—		—		3,192			158		21		(331	)		(6,126	)		3,481			(3,244	)		—			(3,244	)		(142	)		(3,388	)
Common stock increase		—		—		—			—		—		—			—			—			—			—			—			—			—
Common stock reduction		—		—		—			—		—		—			—			—			—			—			—			—			—
Conversion of financial liabilities into capital		—		—		—			—		—		—			—			—			—			—			—			—			—
Increase of other equity instruments		—		—		—			—		21		—			—			—			21			—			21			—			21
Reclassification of financial liabilities to other equity instruments		—		—		—			—		—		—			—			—			—			—			—			—			—
Reclassification of other equity instruments to financial liabilities		—		—		—			—		—		—			—			—			—			—			—			—			—
Dividend distribution		—		—		—			—		—		—			1,002			1,820			2,822			—			2,822			142			2,964
Transactions including treasury stock and other equity instruments (net)		—		—		(172	)		—		—		(331	)		—			—			(503	)		—			(503	)		—			(503	)
Transfers between total equity entries		—		—		3,431			33		—		—			(5,125	)		1,661			—			—			—			—			—
Increase/Reduction due to business combinations		—		—		9			—		—		—			—			—			9			—			9			—			9
Payments with equity instruments		—		—		—			—		—		—			—			—			—			—			—			—			—
Rest of increase/reductions in total equity		—		—		(75	)		125		—		—			—			—			49			—			49			—			49
Balances as of December 31, 2008		1,837		12,770		8,801			609		89		(720	)		5,020			1,820			26,586			(930	)		25,656			1,049			26,705

F-8

	Total Equity Attributed to the Parent Company
	Stockholders’ Funds
					Reserves (Note 29)
								Reserves
								(Losses)							Profit for
								from Entities				Less:			the Year			Less:												Non-
	Common		Share		Reserves			Accounted		Other		Treasury			Attributed			Dividends			Total			Valuation						Controlling
	Stock		Premium		(Accumulated			for Equity		Equity		Stock			to Parent			and			Stockholders’			Adjustments						Interest			Total
	(Note 27)		(Note 28)		Losses)			Method		Instruments		(Note 30)			Company			Remunerations			Funds			(Note 31)			Total			(Note 32)			Equity
	Millions of euros
Balances as of January 1, 2007		1,740		9,579		3,268			361		35		(147	)		4,736			(1,363	)		21,229			3,341			24,570			768			25,338
Effects of changes in accounting policies		—		—		—			—		—		—			—			—			—			—			—			—			—
Effect of correction of errors		—		—		—			—		—		—			—			—			—			—			—			—			—
Adjusted initial balance		1,740		9,579		3,268			361		35		(147	)		4,736			(1,363	)		21,229			3,341			24,570			768			25,338
Total income/expense recognized		—		—		—			—		—		—			6,126			—			6,126			(1,088	)		5,038			285			5,323
Other changes in equity		97		3,191		2,341			90		33		(242	)		(4,736	)		3,024			476			(1	)		475			(173	)		302
Common stock increase		97		3,191		(24	)		—		—		—			—			—			3,264			—			3,264			—			3,264
Common stock reduction		—		—		—			—		—		—			—			—			—			—			—			—			—
Conversion of financial liabilities into capital		—		—		—			—		—		—			—			—			—			—			—			—			—
Increase of other equity instruments		—		—		—			—		—		—			—			—			—			—			—			—			—
Reclassification of financial liabilities to other equity instruments		—		—		—			—		—		—			—			—			—			—			—			—			—
Reclassification of other equity instruments to financial liabilities		—		—		—			—		—		—			—			—			—			—			—			—			—
Dividend distribution		—		—		—			—		—		—			848			1,661			2,509			—			2,509			108			2,617
Transactions including treasury stock and other equity instruments (net)		—		—		(26	)		—		—		(242	)		—			—			(268	)		—			(268	)		—			(268	)
Transfers between total equity entries		—		—		2,435			90		—		—			(3,888	)		1,363			—			—			—			—			—
Increase/Reduction due to business combinations		—		—		—			—		—		—			—			—			—			—			—			—			—
Payments with equity instruments		—		—		—			—		33		—			—			—			33			—			33			—			33
Rest of increase/reductions in total equity		—		—		(44	)		—		—		—			—			—			(44	)		(1	)		(45	)		(65	)		(110	)
Balances as of December 31, 2007		1,837		12,770		5,609			451		68		(389	)		6,126			1,661			24,811			2,252			27,063			880			27,943

The accompanying Notes 1 to 60 and Appendices I to XII are an integral part of the consolidated statement of changes in equity for the
year ended December 31, 2009.

F-9

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO BILBAO
VIZCAYA ARGENTARIA GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007 (Notes 1 to 5)

	Notes		2009			2008			2007
			Millions of euros
CASH FLOW FROM OPERATING ACTIVITIES(1)		53		2,567			(1,992	)		17,290
Net income for the year				4,595			5,385			6,415
Adjustments to obtain the cash flow from operating activities:				(591	)		(1,112	)		828
Depreciation and amortization				697			699			577
Other adjustments				(1,288	)		(1,811	)		251
Net increase/decrease in operating assets				(9,781	)		45,714			74,226
Financial assets held for trading				(3,566	)		10,964			10,545
Other financial assets designated at fair value through profit or loss				582			588			190
Available-for-sale financial assets				15,741			(800	)		5,827
Loans and receivables				(23,377	)		30,866			58,352
Other operating assets				839			4,096			(688	)
Net increase/decrease in operating liabilities				(12,359	)		37,908			82,193
Financial liabilities held for trading				(10,179	)		23,736			4,350
Other financial liabilities designated at fair value through profit or loss				334			—			(134	)
Financial liabilities at amortized cost				(3,564	)		20,058			78,385
Other operating liabilities				1,050			(5,886	)		(408	)
Collection/Payments for income tax				1,141			1,541			2,080
CASH FLOWS FROM INVESTING ACTIVITIES(2)		53		(643	)		(2,865	)		(7,987	)
Investment				2,396			4,617			10,948
Tangible assets				931			1,199			1,836
Intangible assets				380			402			134
Investments				2			672			690
Subsidiaries and other business units				7			1,559			7,082
Non-current assets held for sale and associated liabilities				920			515			487
Held-to-maturity investments				156			—			—
Other settlements related to investing activities				—			270			719
Divestments				1,753			1,752			2,961
Tangible assets				793			168			328
Intangible assets				147			31			146
Investments				1			9			227
Subsidiaries and other business units				32			13			11
Non-current assets held for sale and associated liabilities				780			374			744
Held-to-maturity investments				—			283			321
Other collections related to investing activities				—			874			1,184
CASH FLOWS FROM FINANCING ACTIVITIES(3)		53		(74	)		(2,271	)		1,996
Investment				10,012			17,807			20,470
Dividends				1,567			2,813			2,424
Subordinated liabilities				1,667			735			1,723
Common stock amortization				—			—			—
Treasury stock acquisition				6,431			14,095			16,182
Other items relating to financing activities				347			164			141
Divestments				9,938			15,536			22,466
Subordinated liabilities				3,103			1,535			3,096
Common stock increase				—			—			3,263
Treasury stock disposal				6,835			13,745			16,041
Other items relating to financing activities				—			256			66
EFFECT OF EXCHANGE RATE CHANGES(4)				(161	)		(791	)		(1,233	)
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (1+2+3+4)				1,689			(7,919	)		10,066
CASH OR CASH EQUIVALENTS AT BEGINNING OF THE YEAR				14,642			22,561			12,496
CASH OR CASH EQUIVALENTS AT END OF THE YEAR				16,331			14,642			22,561

F-10

Components of Cash and Equivalent at End of the Year	Notes		2009		2008		2007
			Million of euros
Cash				4,218		3,915		2,938
Balance of cash equivalent in central banks				12,113		10,727		19,623
Other financial assets				—		—		—
Less: bank overdraft refundable on demand				—		—		—
TOTAL CASH OR CASH EQUIVALENTS AT END OF THE YEAR		9		16,331		14,642		22,561
Of which:
held by consolidated subsidiaries but not available for the Group				—		—		—

The accompanying Notes 1 to 60 and Appendices I to XII are an integral part of the consolidated statement of cash flows for the year ended December 31, 2009.

F-11

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
AND COMPANIES COMPOSING THE BANCO BILBAO VIZCAYA ARGENTARIA GROUP
REPORT FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

1.   INTRODUCTION AND BASIS OF PRESENTATION OF THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

1.1   INTRODUCTION

Banco Bilbao Vizcaya Argentaria, S.A. (“the Bank” or “BBVA”) is a private-law entity, subject to the rules and regulations governing banking institutions operating in Spain. The Bank conducts its business through branches and offices located throughout Spain and abroad.

The Bylaws and other public information about the Bank are available for consultation at its registered address (Plaza San Nicolás, 4 Bilbao).

In addition to the transactions it carries out directly, the Bank heads a group of subsidiaries, jointly-controlled and associated entities which perform a wide range of activities and which together with the Bank constitute the Banco Bilbao Vizcaya Argentaria Group (hereinafter, “the Group” or “BBVA Group”). In addition to its own individual financial statements, the Bank is therefore obliged to prepare the Group’s annual consolidated financial statements.

As of December 31, 2009, the Group was made up of 334 companies accounted for under the full consolidation method and 7 under the proportionate consolidation method. A further 74 companies are accounted for under the equity method (see Notes 3 and 17 and Appendices II to VII of these consolidated financial statements).

The Group’s accompanying consolidated financial statements for the years ending December 31, 2008 and 2007 were approved by the shareholders at the Bank’s Annual General Meetings held on March 13, 2009 and March 14, 2008, respectively.

The 2009 consolidated financial statements of the Group and the 2009 financial statements of the Bank have been approved by the shareholders at the Annual General Meeting held on March 12, 2010.

1.2.   BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Group’s accompanying consolidated financial statements for 2009 are presented in accordance with the International Financial Reporting Standards endorsed by the European Union (“IFRS-EU”) applicable at year-end 2009, and additionally considering the Bank of Spain Circular 4/2004, of December 22, 2004 (and as amended thereafter). This Bank of Spain Circular is the regulation that implements and adapts the IFRS-EU for Spanish banks.

The BBVA Group’s accompanying consolidated financial statements for the year ending December 31, 2009 were prepared applying by the principles of consolidation, accounting policies and valuation criteria described in Note 2, so that they present fairly the Group’s consolidated equity and financial position as of December 31, 2009, together with the consolidated results of its operations, the changes in the consolidated equity, consolidated recognized income and expenses and consolidated cash flows in the Group during 2009. These accompanying consolidated financial statements were prepared on the basis of the accounting records kept by the Bank and by each of the other companies in the Group and include the adjustments and reclassifications required to harmonize the accounting policies and valuation criteria used by the Group (see Note 2.2).

All accounting policies and valuation criteria with a significant effect on the consolidated financial statements were applied in their preparation.

Since the figures in the annual consolidated financial statements are expressed in millions of euros (except in certain cases where a smaller unit is required), there may be occasions when a balance does not appear in the financial statements because it is in units of euros. In addition, the percentage changes are calculated using thousands of euros. The accounting balances have been rounded to present the amounts in millions of euros. As a result, the amounts appearing in some tables may not be the arithmetical sum of the preceding figures.

F-12

1.3.   COMPARATIVE INFORMATION

As indicated in the previous section, the annual consolidated financial statements for the years ended December 31, 2009, 2008 and 2007 were prepared in accordance with the financial statement models established by the Bank of Spain Circular 4/2004 and its subsequent amendments. The Bank of Spain issued Circular 6/2008 on November 26, 2008, amending the models to be used in preparing financial statements. For this reason, the consolidated financial statements for 2007 which are used in these annual consolidated financial statements have been modified with respect to those originally approved by the Group in order to adapt them to the new requirements. These changes only affect the format of the presentation and have no impact on the Group’s consolidated equity or consolidated net income.

Appendix VIII reconciles the originally issued consolidated financial statements for 2007.

1.4.   SEASONAL NATURE OF INCOME AND EXPENSES

The nature of the most significant activities and transactions carried out by the Group is mainly related to traditional activities carried out by financial institutions, which are not significantly affected by seasonal factors.

1.5.   RESPONSIBILITY FOR THE INFORMATION AND FOR THE ESTIMATES MADE

The information contained in these BBVA Group consolidated financial statements is the responsibility of the Group’s Directors.

Estimates were occasionally made by the Bank and the consolidated companies in preparing these consolidated financial statements in order to quantify some of the assets, liabilities, income, expenses and commitments reported. These estimates relate mainly to the following:

•  Impairment on certain financial assets (see Notes 7, 8, 12, 13 and 14).

•  Assumptions used in the actuarial calculation of the post-employment benefit liabilities and commitments (see Note 26).

•  The useful life and impairment losses of tangible and intangible assets (see Notes 16, 19, 20 and 22).

•  The valuation of consolidation goodwill (see Notes 17 and 20).

•  The fair value of certain unlisted financial assets and liabilities (see Notes 7, 8, 10, 11, 12 and 15).

Although these estimates were made on the basis of the best information available as of December 31, 2009 on the events analyzed, events that take place in the future might make it necessary to change them (upwards or downwards) in the coming years.

1.6.   BBVA GROUP INTERNAL CONTROL FINANCIAL REPORTING MODEL (ICFR Model)

The BBVA Group Internal Control Financial Reporting Model (“ICFR Model”) includes a set of processes and procedures that the Group’s Management has designed to reasonably guarantee fulfillment of the Group’s set control targets. These control targets have been set to ensure the reliability and integrity of the consolidated financial information, as well as the efficiency and effectiveness of transactions and fulfillment of applicable standards.

ICFR Model is based on the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) international standards. The five components that COSO establishes to determine whether an internal control system is effective and efficient are:

•  Evaluate all of the risks that could arise during the preparation of the financial information.

•  Design the necessary control activities to mitigate the most critical risks.

•  Monitor the control activities to ensure they are fulfilled and they are effective over time.

•  Establish the right reporting circuits to detect and report system weaknesses or flaws.

•  Set up a suitable control area to track all of these activities.

F-13

The BBVA Group ICFR Model is summarized in the following chart:

ICFR Model is implemented in the Group’s main entities using a common and uniform methodology.

To determine the scope of the ICFR Model annual evaluation, the main companies, headings and most significant processes are identified based on quantitative criteria (probability of occurrence, economic impact and materiality) and qualitative criteria (related to typology, complexity, nature of risks and the business structure), ensuring coverage of critical risks for the BBVA Group consolidated financial statements. As well as the evaluation that the Internal Control Units performs, ICFR Model is subject to regular evaluations by the Internal Audit Department and is supervised by the Group’s Audit and Compliance Committee.

In the evaluation by the Internal Audit Department and the Internal Control Units, no weaknesses were detected that could have a material or significant impact on the BBVA Group consolidated financial statements for the year 2009.

1.7.   MORTGAGE MARKET POLICIES AND PROCEDURES

The additional disclosure required by Royal Decree 716/2009 of 24 April 2009 (developing certain aspects of Act 2/1981, of 25 March 1981, on the regulation of the mortgage market and other mortgage and financial market regulations) is detailed in the Bank’s individual financial statements for the year ended December 31, 2009.

2.   PRINCIPLES OF CONSOLIDATION, ACCOUNTING POLICIES AND MEASUREMENT BASES APPLIED AND IFRS RECENT PRONOUNCEMENTS

The Glossary (see Appendix XII) includes the definition of financial and economic terms used in this Note 2 and subsequent explanatory notes.

2.1.   PRINCIPLES OF CONSOLIDATION

The accounting principles and valuation criteria used to prepare the Group’s consolidated financial statements for the year ending December 31, 2009 may differ from those used by certain companies in the Group. For this reason, the required adjustments and reclassifications were made on consolidation to harmonize the principles and criteria used and to make them compliant with IFRS-EUs required to be applied under the Bank of Spain’s Circular 4/2004.

The results of subsidiaries acquired during the year are included taking into account only the period from the date of acquisition to year-end. The results of companies disposed of during any year are included only taking into account the period from the start of the year to the date of disposal.

The Group consolidated companies are classified into three types, according to the method of consolidation: subsidiaries, jointly controlled entities and associates entities.

F-14

Subsidiaries

Subsidiaries (see the Glossary) are those companies which the Group has the capacity to control. Control is presumed to exist when the parent owns, either directly or indirectly through other subsidiaries, more than one half of an entity’s voting power, unless, in exceptional cases, it can be clearly demonstrated that ownership of more than one half of an entity’s voting rights does not constitute control of it.

The financial statements of the subsidiaries are consolidated with those of the Bank using the global integration method.

The share of minority interests from subsidiaries in the Group’s consolidated equity is presented under the heading “Non-controlling interest” in the consolidated balance sheets and their share in the profit or loss for the year is presented under the heading “Net Income Attributed to Non-controlling Interests” in the consolidated income statements (see Note 32).

Note 3 includes information on the main companies in the Group as of December 31, 2009. Appendix II includes the most significant information on these companies.

Jointly controlled entities

These are entities that, while not being subsidiaries, fulfill the definition of “joint business” (see the Glossary).

Since the implementation of IFRS-EU required to be applied under the Bank of Spain’s Circular 4/2004, the Group has applied the following policy in relation to investments in jointly controlled entities:

•  Jointly-controlled financial entities:  Since it is a financial entity, the best way of reflecting its activities within the Group’s consolidated financial statements is considered to be the proportionate method of consolidation.

As of December 31, 2009, 2008 and 2007, the contribution of jointly controlled financial entities to the main figures in the Group’s consolidated financial statements under the proportionate consolidation method, calculated on the basis of the Group’s holding in them, is shown in the table below:

Contribution to the Group by Entities
Consolidated by Proportionated Method	2009		2008		2007
	Millions of euros
Assets		869		331		287
Liabilities		732		217		194
Equity		38		27		35
Net income		17		11		9

Additional disclosure is not provided as these investments are not significant.

Appendix III shows the main figures for jointly controlled entities consolidated by the Group under the proportionate method.

•  Jointly-controlled non-financial entities:  It is considered that the effect of distributing the balance sheet and income statement amounts belonging to jointly controlled non-financial entities would distort the information provided to investors. For this reason, the equity method is considered the most appropriate way of reflecting these investments.

Appendix IV shows the main figures for jointly controlled entities consolidated using the equity method. Note 17 details the impact, if any, that application of the proportionate consolidation method on these entities would have had on the consolidated balance sheet and income statement.

Associate entities

Associates are companies in which the Group is able to exercise significant influence, without having total or joint control. Significant influence is deemed to exist when the Group owns 20% or more of the voting rights of an investee directly or indirectly.

F-15

However, certain entities in which the Group owns 20% or more of the voting rights are not included as Group associates, since it is considered that the Group does not have the capacity to exercise significant influence over these entities. Investments in these entities, which do not represent significant amounts for the Group, are classified asavailable-for-sale investments.

Moreover, some investments in entities in which the Group holds less than 20% of the voting rights are accounted for as Group associates, as the Group is considered to have the power to exercise significant influence over these entities.

Investments in associates are accounted for using the equity method (see Note 17). Appendix IV shows the most significant information on the associates consolidated using the equity method.

2.2.   ACCOUNTING POLICIES AND VALUATION CRITERIA APPLIED

The following accounting policies and valuation criteria were used in preparing these consolidated financial statements were as follows:

2.2.1.   FINANCIAL INSTRUMENTS

a)   Valuation of financial instruments and recognition of changes in valuations

All financial instruments are initially accounted for at fair value which, unless there is evidence to the contrary, shall be the transaction price. These instruments will subsequently be valued on the basis of their classification. The recognition of changes arising subsequent to the initial recognition is described below.

All the changes during the year, except in trading derivatives, arising from the accrual of interests and similar items are recognized under the headings “Interest and similar income” or “Interest and similar expenses”, as appropriate, in the consolidated income statement for this year (see Note 39). The dividends accrued in the year are recognized under the heading “Dividend income” in the consolidated income statement for the year (see Note 40).

The changes in the valuations after the initial recognition, for reasons other than those included in preceding paragraph, are described below according to the categories of financial assets and liabilities:

– “Financial assets held for trading” and “Other financial assets and liabilities designated at fair value through profit or loss”

Assets and liabilities recognized under these headings in the accompanying consolidated balance sheets are valued at fair value.

Changes arising from the valuation at fair value (gains or losses) are recognized as their net value under the heading “Net gains (losses) on financial assets and liabilities” in the accompanying consolidated income statements (see Note 44). Changes resulting from variations in foreign exchange rates are recognized under the heading “Net exchange differences” in the accompanying consolidated income statements.

The fair value of the financial derivatives included in the held for trading portfolios is calculated by their daily quoted price if there is an active market. If, under exceptional circumstances, their quoted price cannot be established on a given date, these derivatives are valued using methods similar to those used inover-the-counter (“OTC”) markets.

The fair value of OTC derivatives (“present value” or “theoretical price”) is equal to the sum of future cash flows arising from the instrument, discounted at the measurement date; these derivatives are valued using methods recognized by the financial markets: the net present value (NPV) method, option price calculation models, etc.(see Note 8).

–“Available-for-Sale Financial Assets”

Assets and liabilities recognized under these headings in the accompanying consolidated balance sheets are valued at fair value.

F-16

Changes arising from the valuation at fair value (gains or losses) are recognized temporarily, for their net amount, under the heading “Valuation Adjustments —Available-for-sale financial assets” in the accompanying consolidated balance sheets.

Valuation adjustments arising from non-monetary items by changes in foreign exchange rates are recognized temporarily under the heading “Valuation adjustments — Exchange differences” in the accompanying consolidated balance sheets. Valuation adjustments arising from monetary items by changes in foreign exchange rates are recognized under the heading “Net exchange differences” in the accompanying consolidated income statements.

The amounts recognized under the headings “Valuation adjustments —Available-for-sale financial assets” and “Valuation adjustments — Exchange differences” continue to form part of the Group’s consolidated equity until the asset is derecognized from the consolidated balance sheet or until an impairment loss is recognized in it. If these assets are sold, these amounts are recognized under the headings “Net gains (losses) on financial assets and liabilities” or “Net exchange differences”, as appropriate, in the consolidated income statement for the year in which they are derecognized.

In the particular case of gains from sales of other equity instruments considered strategic investments registered under“Available-for-sale financial assets” are recognized under the heading “Gains (losses) in non-current assetsheld-for-sale not classified as discontinued operations” in the consolidated income statement, although they had not been classified in a previous balance sheet as non-current assets held for sale (see note 52).

The net impairment losses in theavailable-for-sale financial assets during the year are recognized under the heading “Impairment losses on financial assets (net) — Other financial instruments not at fair value through profit or loss” in the consolidated income statements for that year.

– “Loans and receivables”,“Held-to-maturity investments” and “Financial liabilities at amortized cost”

Assets and liabilities recognized under these headings in the accompanying consolidated balance sheets are measured at “amortized cost” using the “effective interest rate” method”, as the consolidated entities has the intention to hold such financial instruments to maturity.

Net impairment losses of assets under these headings arising in a particular year are recognized under the heading “Impairment losses on financial assets (net) — Loans and receivables” or “Impairment losses on financial assets (net) — Other financial instruments not valued at fair value through profit or loss” in the income statement for that year.

– “Hedging derivatives”

Assets and liabilities recognized under these headings in the accompanying consolidated balance sheets are valued at fair value.

Changes produced subsequent to the designation of hedging in the valuation of financial instruments designated as hedged items as well as financial instruments under hedge accounting are recognized according to the following criteria:

•  In fair value hedges, the changes in the fair value of the derivative and the hedged item attributable to the hedged risk are recognized under the heading “Net gains (losses) on financial assets and liabilities” in the consolidated income statement.

•  In cash flow hedges and hedges of net investments in a foreign operations, the differences in valuation in the effective hedging of hedging items are recognized temporarily under the heading “Valuation adjustments — Cash flow hedging” and “Valuation adjustments — Hedging of net investments in foreign transactions” respectively. These valuation changes are recognized under the heading “Net gains (losses) on financial assets and liabilities” in the consolidated income statement at the time when the gain or loss in the hedged instrument affects profit or loss, when the forecast transaction takes place or at the maturity date of the hedged item. Almost all of the hedges used by the Group are for interest rate risks. Therefore, the valuation changes are recognized under the headings “Interest and similar income” or “Interest and similar expenses” as appropriate, in the consolidated income statement (see Note 39). Differences in the valuation of the

F-17

hedging items corresponding to the ineffective portions of cash flow hedges and hedges of net investments in foreign operations are recognized directly in the heading “Net gains (losses) on financial assets and liabilities” in the consolidated income statement.

•  In the hedges of net investments in foreign operations, the differences produced in the effective portions of hedging items are recognized temporarily under the heading “Valuation adjustments — Hedging of net investments in foreign transactions”. These differences in valuation are recognized under the heading “Net exchange differences” in the consolidated income statement when the investment in a foreign operation is disposed of or derecognized.

Other financial instruments

The following exceptions have to be highlighted with respect to the above general criteria:

•  Equity instruments whose fair value cannot be determined in a sufficiently objective manner and financial derivatives that have those instruments as their underlying asset and are settled by delivery of those instruments are measured at acquisition cost adjusted, where appropriate, for any impairment loss.

•  Valuation adjustments arising from financial instruments classified at balance sheet date as non-current assets held for sale are recognized with a balancing entry under the heading “Valuation adjustments — Non-current assets held for sale” in the consolidated balance sheet.

b)   Impairment on financial assets

Definition of impaired financial assets

A financial asset is considered to be impaired — and therefore its carrying amount is adjusted to reflect the effect of its impairment — when there is objective evidence that events have occurred which:

•  In the case of debt instruments (loans and debt securities), give rise to a negative impact on the future cash flows that were estimated at the time the transaction was arranged.

•  In the case of equity instruments, mean that the carrying amount of these instruments cannot be recovered.

As a general rule, the carrying amount of impaired financial instruments is adjusted with a charge to the consolidated income statement for the year in which the impairment becomes known, and the recoveries of previously recognized impairment losses are recognized in the consolidated income statement for the year in which the impairment is reversed or reduced, with the exception that any recovery of previously recognized impairment losses for an investment in an equity instrument classified as available for sale which are not recognized through consolidated profit or loss but recognized under the heading “Valuation adjustments — available — for — sale financial assets” in the accompanying consolidated balance sheet.

Balances are considered to be impaired, and accrual of the interest thereon is suspended, when there are reasonable doubts that the balances will be recovered in fulland/or the related interest will be collected for the amounts and on the dates initially agreed upon, taking into account the guarantees received by the consolidated entities to assure (in part or in full) the performance of transactions. Amounts collected in relation to impaired loans and receivables are used to recognize the related accrued interest and any excess amount is used to reduce the principal not yet paid.

When the recovery of any recognized amount is considered to be remote, this amount is removed from the consolidated balance sheet, without prejudice to any actions taken by the consolidated entities in order to collect the amount until their rights extinguish in full through expiry, forgiveness or for other reasons.

Calculation of impairment on financial assets

The impairment on financial assets is determined by type of instrument and the category in which they are recognized. The BBVA Group recognizes impairment charges directly against the impaired asset when the likelihood of recovery is deemed remote, and uses an offsetting or allowance account when it records non-performing loan provisions.

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The amount of impairment losses of debt securities at amortized cost is measured as a function of whether the impairment losses are determined individually or collectively.

Impairment losses determined individually

The quantification of impairment losses on assets classified as impaired is done on an individual basis in connection with customers whose operations are equal to or exceed €1 million.

The amount of the impairment losses incurred on these instruments relates to the positive difference between their respective carrying amounts and the present values of their expected future cash flows.

The following is to be taken into consideration when estimating the future cash flows of debt instruments:

•  All the amounts that are expected to be obtained over the residual life of the instrument; including, where appropriate, those which may result from the collaterals and other credit enhancements provided for the instrument (after deducting the costs required for foreclosure and subsequent sale).

•  The various types of risk to which each instrument is subject.

•  The circumstances in which collections will foreseeably be made.

These cash flows are discounted using the original effective interest rate. If a financial instrument has a variable interest rate, the discount rate for measuring any impairment loss is the current effective rate determined under the contract.

As an exception to the rule described above, the market value of quoted debt instruments is deemed to be a fair estimate of the present value of their future cash flows.

Impairment losses determined collectively

The quantification of impairment losses is determined on a collective basis in the following two cases:

•  Assets classified as impaired of customers in which the amount of their operations is less than €1 million.

•  Asset portfolio not impaired currently but which presents an inherent loss.

Inherent loss, calculated using statistical procedures, is deemed equivalent to the portion of losses incurred at the date of preparing the accompanying consolidated financial statements that has yet to be allocated to specific transactions.

The Group estimates collectively the inherent loss of credit risk corresponding to operations realized by Spanish financial entities of the Group (approximately 66.9% on “Loans and receivables” of the Group as of December 31, 2009), using the parameters set by Annex IX of the Circular 4/2004 from Bank of Spain on the base of its experience and the Spanish banking sector information in the quantification of impairment losses and provisions for insolvencies for credit risk.

Notwithstanding the above, the Group can avail of the proprietary historic records used in its internal ratings models (IRBs), which were approved by the Bank of Spain for some portfolios in 2008, albeit only for the purposes of estimating regulatory capital under the new Basel Accord (BIS II). It uses these internal ratings models to calculate the economic capital required in its activities and uses the expected loss concept to quantify the cost of credit risk for incorporation into its calculation of the risk-adjusted return on capital of its operations.

The provisions required under Circular 4/2004 from Bank of Spain standards fall within the range of provisions calculated using the Group’s internal ratings models.

To estimate the collective loss of credit risk corresponding to operations with nonresident in Spain registered in foreign subsidiaries, are applied methods and similar criteria, taking like reference the Bank of Spain parameters but adapting the default’s calendars to the particular circumstances of the country. However, in Mexico for consumer loans, credit cards and mortgages portfolios, as well as for credit investment maintained by the Group in the United States are using internal models for calculating the impairment losses based on historical experience of the Group (approximately 13.6% of the “Loans and receivables” of the Group as of December 31, 2009).

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Following is a description of the methodology used to estimate the collective loss of credit risk corresponding to operations with resident in Spain:

1. Impaired financial assets

The debt instruments, whoever the obligor and whatever the guarantee or collateral, that have past-due amounts with more than three months, taking into account the age of the past-due amounts, the guarantees or collateral provided and the economic situation of the customer and the guarantors.

In the case of unsecured transactions and taking into account the age of the past-due amounts, the allowance percentages are as follow:

Age of the Past-Due Amount	Allowance Percentage
Up to 6 months	between 4.5% and 5.3%
Over 6 months and up to 12 months	between 27.4% and 27.8%
Over 12 months and up to 18 months	between 60.5% and 65.1%
Over 18 months and up to 24 months	between 93.3% and 95.8%
Over 24 months	100%

In the case of transactions secured by completed houses when the total exposure is equal or inferior 80% of the value of the guarantee or collateral and taking into account the age of the past-due amounts, the allowance percentages are as follow:

Age of the Past-Due Amount	Allowance Percentage
Less than 3 years		2	%
Over 3 years and up to 4 years		25	%
Over 4 years and up to 5 years		50	%
Over 5 years and up to 6 years		75	%
Over 6 years		100	%

In the rest of transactions secured by real property in which the entity has began the process to take possession of the pledge and taking into account the age of the past-due amounts, the allowance percentages are as follow:

Age of the Past-Due Amount	Allowance Percentage
Up to 6 months	between 3.8% and 4.5%
Over 6 months and up to 12 months	between 23.3% and 23.6%
Over 12 months and up to 18 months	between 47.2% and 55.3%
Over 18 months and up to 24 months	between 79.3% and 81.4%
Over 24 months	100%

Regarding the coverage level to be applied to defaulting transactions secured by property (homes, offices and completed multi-use sites, as well as rural properties), the value of the collateral must be taken into account, applying the previous percentages to the amount of those transactions exceeding 70% of the property value.

Debt instruments for which, without qualifying as doubtful in terms of criteria for classification as past-due, there is reasonable doubt that they will be recovered on the initially agreed terms, are analyzed individually.

2. Not individually impaired assets

The debt instruments, whoever the obligor and whatever the guarantee or collateral, that do not have individually objective of impairment are collectively assesses, including the assets in a group with similar credit risk characteristics, including sector of activity of the debtor or the type of guarantee.

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The allowance percentages of hedge are as follows:

	Allowance
Risk	Percentage
Negligible risk		0	%
Low risk		0.06	%-0.75%
Medium-low risk		0.15	%-1.88%
Medium risk		0.18	%-2.25%
Medium-high risk		0.20	%-2.50%
High risk		0.25	%-3.13%

3. Country Risk Allowance or Provision

Country risk is understood as the risk associated with customers resident in a specific country due to circumstances other than normal commercial risk. Country risk comprises sovereign risk, transfer risk and other risks arising from international financial activity. On the basis of the economic performance, political situation, regulatory and institutional framework, and payment capacity and record, the Group classifies the transactions in different groups, assigning to each group the provisions for insolvencies percentages, which are derived from those analyses.

However, due to the dimension Group, and to risk-country management, the provision levels are not significant in relation to the balance of the provisions by constituted insolvencies (as of December 31, 2009, this provision represents a 0.52% in the provision for insolvencies of the Group).

Impairment of other debt instruments

The impairment losses on debt securities included in the“Available-for-sale financial asset” portfolio are equal to the positive difference between their acquisition cost (net of any principal repayment) and their fair value after deducting any impairment loss previously recognized in the consolidated income statement.

When there is objective evidence that the negative differences arising on measurement of these assets are due to impairment, they are no longer considered as “Valuation adjustments -Available-for-sale financial assets” and are recognized in the consolidated income statement. If all, or part of the impairment losses are subsequently recovered, the amount is recognized in the consolidated income statement for the year in which the recovery occurred.

Similarly, in the case of debt instruments classified as “Non-current assets held — for — sale”, losses previously recorded in equity are considered to be realised — and are recognized in the consolidated income statement — on the date the instruments are so classified.

Impairment of equity instruments

The amount of the impairment in the equity instruments is determinated by the category where is recognized:

•  Equity instruments measured at fair value:  The criteria for quantifying and recognizing impairment losses on equity instruments are similar to those for other debt instruments, with the exception that any recovery of previously recognized impairment losses for an investment in an equity instrument classified as available for sale which are not recognized through profit or loss but recognized under the heading “Valuation adjustments — Available — for — sale financial assets” in the accompanying consolidated balance sheets (Note 31).

•  Equity instruments measured at cost:  The impairment losses on equity instruments measured at acquisition cost are equal to the difference between their carrying amount and the present value of expected future cash flows discounted at the market rate of return for similar securities. These impairment losses are determined taking into account the equity of the investee (except for valuation adjustments due to cash flow hedges) for the last approved (consolidated) balance sheet, adjusted for the unrealized gains at the measurement date.

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Impairment losses are recognized in the consolidated income statement for the year in which they arise as a direct reduction of the cost of the instrument. These losses may only be reversed subsequently in the event of the sale of these assets.

2.2.2.   TRANSFERS AND DERECOGNITION OF FINANCIAL ASSETS AND LIABILITIES

The accounting treatment of transfers of financial assets depends on the extent to which the risks and rewards associated with the transferred assets are transferred to third parties.

Financial assets are only derecognized the consolidated balance sheet when the cash flows they generate have extinguished or when their implicit risks and benefits have been substantially transferred out to third parties. Similarly, financial liabilities are derecognized from the consolidated balance sheet only if their obligations are extinguished or acquired (with a view to subsequent cancellation or renewed placement).

When the risks and benefits of transferred assets are substantially transferred to third parties, the financial asset transferred is derecognized the consolidated balance sheet, and any right or obligation retained or created as a result of the transfer is simultaneously recognized.

The Group is considered to have transferred substantially all the risks and benefits if such risks and benefits account for the majority of the risks and benefits involved in ownership of the transferred assets.

If substantially all the risks and benefits associated with the transferred financial asset are retained:

•  The transferred financial asset is not derecognized and continues to be measured in the consolidated balance sheet using the same criteria as those used before the transfer.

•  A financial liability is recognized at the amount of compensation received, which is subsequently measured at amortized cost and included under the heading “Financial liabilities at amortized cost — Debt certificates” of the accompanying consolidated balance sheets (see Note 23). As these liabilities do not constitute a current obligation, when measuring such a financial liability the Group deducts those financial instruments owned by it which constitute financing for the entity to which the financial assets have been transferred, to the extent that these instruments are deemed to specifically finance the assets transferred.

•  Both the income generated on the transferred (but not derecognized) financial asset and the expenses of the new financial liability are recognized in the accompanying consolidated income statements.

Purchase and sale commitments

Financial instruments sold with a repurchase agreement are not derecognized from the accompanying consolidated balance sheets and the amount received from the sale is considered financing from third parties.

Financial instruments acquired with an agreement to subsequently resell them are not recognized in the accompanying consolidated balance sheets and the amount paid for the purchase is considered credit given to third parties.

Securitization

In the specific instance of the securitization funds to which the Group’s entities transfer their loan portfolios, the following indications of the existence of control are considered for the purpose of analyzing the possibility of consolidation:

•  The securitization funds’ activities are undertaken in the name of the entity in accordance with its specific business requirements with a view to generating benefits or gains from the securitization funds’ operations.

•  The entity retains decision-making power with a view to securing most of the gains derived from the securitization funds’ activities or has delegated this power in some kind of “auto-pilot” mechanism (the securitization funds are structured so that all the decisions and activities to be performed are pre-defined at the time of their creation).

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•  The entity is entitled to receive the bulk of the profits from the securitization funds and is accordingly exposed to the risks inherent in their business activities. The entity retains the bulk of the securitization funds’ residual profit.

•  The entity retains the bulk of the securitization funds’ asset risks.

If there is control based on the preceding guidelines, the securitization funds are integrated into the consolidated Group.

The consolidated Group is deemed to transfer substantially all risks and rewards if its exposure to the potential variation in the future net cash flows of the securitized assets following the transfer is not significant. In this instance, the consolidated Group may derecognize the securitized assets.

The BBVA Group has applied the most stringent prevailing criteria in determining whether or not it retains the risks and rewards on such assets for all securitizations performed since 1 January 2004. As a result of this analysis, the Group has concluded that none of the securitizations undertaken since that date meet the prerequisites for derecognizing the underlying assets from the accompanying consolidated balance sheets (see Note 13.3 and Appendix VII) as it retains substantially all the risks embodied by expected loan losses or associated with the possible variation in net cash flows, as it retains the subordinated loans and credit lines extended by the BBVA Group to these securitization funds.

2.2.3.   FINANCIAL GUARANTEES

Financial guarantees are considered those contracts that oblige their issuer to make specific payments to reimburse the lender for a loss incurred when a specific borrower breaches its payment obligations on the terms — whether original or subsequently modified — of a debt instrument, irrespective of the legal form it may take. These guarantees may take the form of a deposit, financial guarantee, insurance contract or credit derivative, among others.

Financial guarantees, irrespective of the guarantor, instrumentation or other circumstances, are reviewed periodically so as to determine the credit risk to which they are exposed and, if appropriate, to consider whether a provision is required for them. The credit risk is determined by application of criteria similar to those established for quantifying impairment losses on debt instruments measured at amortized cost (see Note 2.2.1).

The provisions made for financial guarantees classified as substandard are recognized under the heading “Provisions — Provisions for contingent exposures and commitments” in the liability side in the accompanying consolidated balance sheets (see Note 25). These provisions are recognized and reversed with a charge or credit, respectively, to heading “Provisions (net)” in the accompanying consolidated income statements (see Note 48).

Income from guarantee instruments is recorded under the heading “Fee and commission income” in the accompanying consolidated income statements and is calculated by applying the rate established in the related contract to the nominal amount of the guarantee (see Note 42).

2.2.4.   NON-CURRENT ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITHNON-CURRENT ASSETS HELD FOR SALE

The heading “Non-current assets held for sale” in the accompanying consolidated balance sheets recognized the carrying amount of financial or non-financial assets that are not part of operating activities of the Group. The recovery of this carrying amount is expected to take place through the price obtained on its disposal (see Note 16). The assets included under this heading are assets where an active sale plan has been initiated and approved at the appropriate level of management and it is highly probable they will be sold in their current condition within one year from the date on which they are classified as such.

This heading includes individual items and groups of items (“disposal groups”) and disposal groups that form part of a major business unit and are being held for sale as part of a disposal plan (“discontinued operations”). The individual items include the assets received by the subsidiaries from their debtors in full or partial settlement of the debtors’ payment obligations (assets foreclosed or donated in repayment of debt and recovery of lease finance

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transactions), unless the Group has decided to make continued use of these assets. The Group has units that specialize in real estate management and the sale of this type of asset.

Symmetrically, the heading “Liabilities associated with non-current assets held for sale” in the accompanying consolidated balance sheets reflects the balances payable arising from disposal groups and discontinued operations.

Non-current assets held for sale are generally measured at fair value less sale costs or their carrying amount upon classification within this category, whichever is the lower. Non-current assets held for sale are not depreciated while included under this heading.

The fair value of non-current assets held for sale from foreclosures or recoveries is determined taking in consideration valuations performed by companies of authorized values in each of the geographical areas in which the assets are located. The BBVA Group requires that these valuations be no more than one year old, or less if there are other signs of impairment losses.

As a general rule, gains and losses generated on the disposal of assets and liabilities classified as non-current held for sale, and related impairment losses and subsequent recoveries, where pertinent, are recognized in “Gains/(losses) on non-current assets held for sale not classified as discontinued operations” in the accompanying consolidated income statements (see Note 52). The remaining income and expense items associated with these assets and liabilities are classified within the relevant consolidated income statement headings.

2.2.5.   TANGIBLE ASSETS

Tangible assets — property, plants and equipment for own use

The heading “Tangible assets — Property, plants and equipment — For own use” relates to the assets under ownership or acquired under lease finance, intended for future or current use by the Group and that it expects to hold for more than one year. It also includes tangible assets received by the consolidated entities in full or partial settlement of financial assets representing receivables from third parties and those assets expected to be held for continuing use.

Tangible assets — property, plants and equipment for own use are presented in the consolidated balance sheets at acquisition cost, less any accumulated depreciation and, where appropriate, any estimated impairment losses resulting from comparing this net value of each item with its corresponding recoverable value.

Depreciation is calculated, using the straight-line method, on the basis of the acquisition cost of the assets less their residual value; the land on which the buildings and other structures stand is considered to have an indefinite life and is therefore not depreciated.

The tangible asset depreciation charges are recognized in the accompanying consolidated income statements under the heading “Depreciation and amortization” (see Note 47) and are based on the application of the following depreciation rates (determined on the basis of the average years of estimated useful life of the various assets):

Tangible Asset	Annual Percentage
Buildings for own use	1.33% to 4%
Furniture	8% to 10%
Fixtures	6% to 12%
Office supplies and computerization	8% to 25%

The BBVA Group’s criteria for determining the recoverable amount of these assets is based onup-to-date independent appraisals that are no more than 3-5 years old at most, unless there are other indications of impairment.

At each accounting close, the entities analyze whether there are internal or external indicators that a tangible asset may be impaired. When there is evidence of impairment, the entity then analyzes whether this impairment actually exists by comparing the asset’s carrying amount with its recoverable amount. When the carrying amount exceeds the recoverable amount, the carrying amount is written down to the recoverable amount and depreciation charges going forward are adjusted to reflect the asset’s remaining useful life.

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Similarly, if there is any indication that the value of a tangible asset has been recovered, the consolidated entities will estimate the recoverable amounts of the asset and recognize it in the consolidated income statement, recording the reversal of the impairment loss registered in previous years and thus adjusting future depreciation charges. In no circumstances may the reversal of an impairment loss on an asset raise its carrying amount above that which it would have if no impairment losses had been recognized in prior years.

Upkeep and maintenance expenses relating to tangible assets held for own use are recognized as an expense in the year they are incurred and recognized in the accompanying consolidated income statements under the heading “General and administrative expenses — Property, fixtures and equipment “ (see Note 46.2).

Other assets leased out under an operating lease

The criteria used to recognize the acquisition cost of assets leased out under operating leases, to calculate their depreciation and their respective estimated useful lives and to record the impairment losses on them, are the same as those described in relation to tangible assets for own use.

Investment properties

The heading “Tangible assets — Investment properties” in the consolidated balance sheets reflects the net values of the land, buildings and other structures held either to earn rentals or for capital appreciation through sale and are neither expected to be sold off in the ordinary course of business nor are destined for own use (see Note 19).

The criteria used to recognize the acquisition cost of investment properties, calculate their depreciation and their respective estimated useful lives and record the impairment losses on them, are the same as those described in relation to tangible assets for continued use.

The criteria used by the BBVA Group to determine their recoverable value is based on independent appraisals no more than 1 year old, unless there are other indications of impairment.

2.2.6.   INVENTORIES

The heading “Other assets — Inventories” in the accompanying consolidated balance sheets mainly reflects the land and other properties that Group’s real estate companies hold for sale as part of their property development activities (see Note 22).

The BBVA Group recognized inventories at their cost or net realizable value, whichever is lower:

•  The cost value of inventories includes the costs incurred for their acquisition and transformation, as well as other direct and indirect costs incurred in giving them their current condition and location.

The cost value real estate assets accounted for as inventories is comprised of: the acquisition cost of the land, the cost of urban planning and construction, non-recoverable taxes and costs corresponding to construction supervision, coordination and management. The financial expenses incurred during the year increase by the cost value provided that the inventories need a period of more than a year to be in a condition to be sold.

•  The net realizable value is the estimated selling price of inventories in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

In the case of real estate assets accounted for as inventories, the BBVA Group’s criteria for obtaining their net realizable value is mainly based on independent appraisals of no more than 1 year old, or less if there are other indications of impairment.

The amount of any inventory valuation adjustment for reasons such as damage, obsolescence, reduction in sale price to its net realizable value, as well as losses for other reasons and, if appropriate, subsequent recoveries of value up to the limit of the initial cost value, are registered under the heading “Impairment losses on other assets (net) — Other assets” in the accompanying consolidated income statement (see Note 50) for the year in which they are incurred.

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In the sale transactions, the carrying amount of inventories is derecognized from the balance sheet and recognized as an expense under the heading “Other operating expenses — Changes in inventories” in the year for which the income from its sale is recognized. This income is recognized under the heading “Other operating income — Financial income from non-financial services” in the accompanying consolidated income statements (see Note 45).

2.2.7.   BUSINESS COMBINATIONS

The result of a business combination is that the Group obtains control of one or more entities. It is accounted for by the purchase method.

The purchase method records business combinations from the point of view of the acquirer, who has to recognize the assets acquired and the liabilities and contingent liabilities assumed, including those that the acquired entity had not recognized. The purchase method can be summed up as a measurement of the cost of the business combination and its allocation to the assets, liabilities and contingent liabilities measured according to their fair value, at the purchase date.

The positive differences between the cost of business combinations and the amount corresponding to the acquired percentage of the net fair value of the assets (including possible intangible assets identified in the acquisition), liabilities and contingent liabilities of the acquired entity are recognized under the heading “Intangible assets — Goodwill” in the accompanying consolidated balance sheets. The negative differences are credited to “Negative goodwill” in the accompanying consolidated income statements.

The purchase of minority interests subsequent to the takeover of the entity are recognized as capital transactions. In other words, the difference between the price paid and the carrying amount of the percentage of minority interests acquired is charged directly to equity.

2.2.8.   INTANGIBLE ASSETS

Goodwill

Goodwill represents payment in advance by the acquiring entity for the future economic benefits from assets that cannot be individually identified and separately recognized. It is only recognized as goodwill when the business combinations are acquired at a price. Goodwill is never amortized. It is subject periodically to an impairment analysis, and impaired goodwill is written off if appropriate.

For the purposes of the impairment analysis, goodwill is allocated to one or more cash-generating units expected to benefit from the synergies arising from business combinations. The cash-generating units represent the Group’s smallest identifiable asset groups that generate cash flows for the entity and that are largely independent of the flows generated from other assets or groups of assets. Each unit or units to which goodwill is allocated:

•  Is the lowest level at which the entity manages goodwill internally.

•  Is not larger than an operating segment.

The cash-generating units to which goodwill has been allocated are tested for impairment by including the allocated goodwill in their carrying amount. This analysis is performed at least annually and always if there is any indication of impairment.

For the purpose of determining the impairment of a cash-generating unit to which a part of goodwill has been allocated, the carrying amount of that unit, adjusted by the theoretical amount of the goodwill attributable to the minority interests, is compared with its recoverable amount.

The recoverable amount of a cash-generating unit is equivalent to its value in use. Value in use is calculated as the discounted value of the cash flow projections that the division estimates and is based on the latest budgets approved for the next three years. The principal hypotheses are a sustainable growth rate to extrapolate the cash flows indefinitely, and the discount rate used to discount the cash flows is equal to the cost of the capital assigned to each cash-generating unit, which is made up of the risk-free rate plus a risk premium.

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If the carrying amount of the cash-generating unit exceeds the related recoverable amount the entity recognizes an impairment loss; the resulting loss is apportioned by reducing, first, the carrying amount of the goodwill allocated to that unit and, second, if there are still impairment losses remaining to be recognized, the carrying amount of the rest of the assets. This is done by allocating the remaining loss in proportion to the carrying amount of each of the assets in the unit. No impairment of goodwill attributable to the minority interests may be recognized. In any case, impairment losses on goodwill can never be reversed.

Impairment losses on goodwill are recognized under the heading “Impairment losses on other assets (net) — Goodwill and other intangible assets” in the accompanying consolidated income statements (see Note 50).

Other intangible assets

These assets may have an indefinite useful life if, based on an analysis of all relevant factors, it is concluded that there is no foreseeable limit to the year over which the asset is expected to generate net cash flows for the consolidated entities. In all other cases they have a finite useful life.

The Group has not recognized any intangible assets with an indefinite useful life.

Intangible assets with a finite useful life are amortized according to this useful life, using methods similar to those used to depreciate tangible assets. The depreciation charge of these assets is recognized in the accompanying consolidated income statements under the heading “Depreciation and amortization” (see Note 47).

The consolidated entities recognize any impairment loss on the carrying amount of these assets with charge to the heading “Impairment losses on other assets (net) — Goodwill and other intangible assets” in the accompanying consolidated income statements (see Note 50). The criteria used to recognize the impairment losses on these assets and, where applicable, the recovery of impairment losses recognized in prior years are similar to those used for tangible assets.

2.2.9.   INSURANCE AND REINSURANCE CONTRACTS

In accordance with standard accounting practice in the insurance industry, consolidated insurance entities credit the amounts of the premiums written to the income statement and charge the cost of the claims incurred on final settlement thereof to income. Insurance entities are therefore required to accrue the unearned loss and profit credited to their income statements and the accrued costs not charged to income at the year-end.

The most significant accruals that consolidated entities recognized in relation to direct insurance contracts that they arranged relate to the following (see Note 24):

•  Life insurance provisions:  Represents the value of the net obligations undertaken with the life insurance policyholder. These provisions include:

-  Provision for unearned premiums intended for the accrual, at the date of calculation, of the premiums written. Their balance reflects the portion of the premiums accrued in the year that has to be allocated to the year from the reporting date to the end of the policy year.

-  Mathematical reserves:  Represents the value of the life insurance obligations of the insurance companies at the year-end, net of the policyholder’s obligations.

•  Non-life insurance provisions:

-  Provisions for unearned premiums.  These provisions are intended for the accrual, at the date of calculation, of the premiums written. Their balance reflects the portion of the premiums accrued in the year that has to be allocated to the year from the reporting date to the end of the policy year.

-  Provisions for unexpired risks:  the provision for unexpired risks supplements the provision for unearned premiums by the amount by which that provision is not sufficient to reflect the assessed risks and expenses to be covered by the insurance companies in the policy period not elapsed at the year-end.

•  Provision for claims:  This reflects the total amount of the outstanding obligations arising from claims incurred prior to the year-end. Insurance companies calculate this provision as the difference between the

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total estimated or certain cost of the claims not yet reported, settled or paid, and the total amounts already paid in relation to these claims.

•  Provision for bonuses and rebates:  this provision includes the amount of the bonuses accruing to policyholders, insurees or beneficiaries and the premiums to be returned to policyholders or insurees, as the case may be, based on the behavior of the risk insured, to the extent that such amounts have not been individually assigned to each of them.

•  Technical provisions for reinsurance ceded:  calculated by applying the criteria indicated above for direct insurance, taking account of the assignment conditions established in the reinsurance contracts in force.

•  Other technical provisions:  insurance companies have recognized provisions to cover the probable mismatches in the market reinvestment interest rates with respect to those used in the valuation of the technical provisions.

The Group controls and monitors the exposure of insurance companies to financial risk and, to this end, uses internal methods and tools that enable it to measure credit risk and market risk and to establish the limits for these risks.

Reinsurance assets and liabilities under insurance contracts

The heading “Reinsurance assets” in the accompanying consolidated balance sheets includes the amounts that the consolidated entities are entitled to receive under the reinsurance contracts entered into by them with third parties and, more specifically, the share of the reinsurer in the technical provisions recognized by the consolidated insurance entities (see Note 18).

The heading “Liabilities under insurance contracts” in the accompanying consolidated balance sheets includes the technical provisions for direct insurance and inward reinsurance recognized by the consolidated entities to cover claims arising from insurance contracts in force at period-end (see Note 24).

The income or expense reported by the Group’s insurance companies on their insurance activities is recognized, attending to it nature in the corresponding items of the accompanying consolidated income statements.

2.2.10.   TAX ASSETS AND LIABILITIES

Corporation tax expense in Spain and the expense for similar taxes applicable to the consolidated entities abroad are recognized in the consolidated income statement, except when they result from transactions on which the profits or losses are recognized directly in equity, in which case the related tax effect is also recognized in equity.

The current income tax expense is calculated by aggregating the current tax arising from the application of the related tax rate to the taxable profit (or tax loss) for the year (after deducting the tax credits allowable for tax purposes) and the change in deferred tax assets and liabilities recognized in the income statement.

Deferred tax assets and liabilities include temporary differences, measured at the amount expected to be payable or recoverable on future fiscal years for the differences between the carrying amount of assets and liabilities and their tax bases, and tax loss and tax credit carry forwards. These amounts are measured applying to each temporary difference the tax rates that are expected to apply in the year when the asset is realized or the liability settled (Note 21).

Deferred tax assets are recognized to the extent that it is considered probable that the consolidated entities will have sufficient taxable profits in the future against which the deferred tax assets can be utilized.

The deferred tax assets and liabilities recognized are reassessed by the consolidated entities at each balance sheet date in order to ascertain whether they are still current, and the appropriate adjustments are made on the basis of the findings of the analyses performed.

The income and expenses directly recognized in equity that do not increase or decrease taxable income are accounted as temporary differences.

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Deferred tax liabilities in relation to taxable temporary differences associated with investments in subsidiaries, associates or jointly controlled entities are recognized as such, except where the Group can control the timing of the reversal of the temporary difference and it is unlikely that it will reverse in the foreseeable future.

2.2.11.   PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES

The heading “Provisions” in the accompanying consolidated balance sheets includes amounts recognized to cover the Group’s current obligations arising as a result of past events. These are certain in terms of nature but uncertain in terms of amountand/or cancellation date. The settlement of these obligations is deemed likely to entail an outflow of resources embodying economic benefits (see Note 25). The obligations may arise in connection with legal or contractual provisions, valid expectations formed by Group companies relative to third parties in relation to the assumption of certain responsibilities or through virtually certain developments of particular aspects of applicable regulation, specifically draft legislation to which the Group will certainly be subject.

Provisions are recognized in the balance sheet when each and every one of the following requirements is met:  The Group has an existing obligation resulting from a past event and, at the consolidated balance sheet date, it is more likely than not that the obligation will have to be settled; it is probable that to settle the obligation the entity will have to give up resources embodying economic benefits; and a reliable estimate can be made of the amount of the obligation. This heading includes provisions for tax and legal litigation.

Contingent assets are possible assets that arise from past events and whose existence is conditional on, and will be confirmed only by the occurrence or non-occurrence of, events beyond the control of the Group. Contingent assets are not recognized in the balance sheet or in the income statement; however, they are disclosed in the notes to financial statements, provided that it is probable that these assets will give rise to an increase in resources embodying economic benefits (see Note 36).

Contingent liabilities are possible obligations of the Group that arise from past events and whose existence is conditional on the occurrence or non-occurrence of one or more future events beyond the control of the entity. They also include the existing obligations of the entity when it is not probable that an outflow of resources embodying economic benefits will be required to settle them or when, in extremely rare cases, their amount cannot be measured with sufficient reliability.

2.2.12.   POST-EMPLOYMENT BENEFITS AND OTHER LONG-TERM COMMITMENTS TO EMPLOYEES

Below is a description of the most significant accounting criteria relating to the commitments to employees, related to post-employment benefits and other long term commitments, of certain Group companies in Spain and abroad (see Note 26).

Commitments valuation: assumptions and gains/losses recognition

The present values of the commitments are quantified on acase-by-case basis. The valuation method used for current employees is the projected unit credit method, which views each year of service as giving rise to an additional unit of benefit entitlement and measures each unit separately.

In adopting the actuarial assumptions, the following are taken into account:

•  They are unbiased, in that they are neither imprudent nor excessively conservative.

•  They are mutually compatible, reflecting the economic relationships between factors such as inflation, rates of salary increase, discount rates and expected return of assets. The expected return of plan assets in the post-employment benefits is estimated taking into account the market expectations and the distribution of such assets in the different portfolios.

•  The future levels of salaries and benefits are based on market expectations at the balance sheet date for the year over which the obligations are to be settled.

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•  The discount rate used is determined by reference to market yields at the balance sheet date on high quality corporate bonds or debentures.

The Group recognizes all actuarial differences under the heading “Provisions (net)” (see Note 48) in the accompanying consolidated income statements for the year in which they arise in connection with commitments assumed by the Group for its staff’s early retirement schemes, benefits awarded for seniority and other similar concepts.

The Group recognizes the actuarial gains or losses arising on all other defined benefit post-employment commitments directly under the heading “Reserves” (see Note 29) in the accompanying consolidated balance sheets.

The Group does not apply the option of deferring actuarial gains and losses in equity to any of its employee commitments using the so-called corridor approach.

Post-employment benefits

– Pensions

Post-employment benefits include defined-contribution and defined-benefit commitments.

–Defined-contribution commitments

The amounts of these commitments are determined as a percentage of certain remuneration itemsand/or as a pre-established annual amount. The contributions made each year by the Group’s companies for defined-contribution retirement commitments, which are recognized with a charge to the heading “Personnel expenses- Contribution to external pension funds” in the accompanying consolidated income statements (Note 46).

–Defined-benefit commitments

Some of the Group’s companies have defined-benefit commitments for permanent disability and death of certain current employees and early retirees; and defined-benefit retirement commitments applicable only to certain groups of serving employees, or early retired employees and retired employees. Defined benefit commitments are funded by insurance contracts and internal provisions.

The amounts recognized in the heading “Provisions — Provisions for pensions and similar obligations” (see Note 25) are the differences between the present values of the vested obligations for defined obligation retirement commitments at balance sheet date, adjusted by the prior service cost and the fair value of plan assets, if applicable, which are to be used directly to settle employee benefit obligations.

These retirement commitments are charged to the heading “Provisions (net) — Provisions to pension commitments and similar obligations” in the accompanying consolidated income statements (see Note 48).

The current contributions made by the Group’s companies for defined-benefit retirement commitments covering current employees are charged to the heading “Administration cost — Personnel expenses” in the accompanying consolidated income statements (see Note 46).

– Early retirements

In 2009, as in previous years, the Group offered some employees in Spain the possibility of taking early retirement before the age stipulated in the collective labor agreement then in force. The corresponding provisions by the Group were recognized with a charge to the heading “Provisions (net) — Provisions to pension commitments and similar obligations” in the accompanying consolidated income statements (see Note 48). The present values for early retirement are quantified on acase-by-case basis and they are recognized in the heading “Provisions — Provision for pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 25).

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The commitments to early retirees include the compensation and indemnities and contributions to external pension funds payable during the year of early retirement. The commitments relating to this group of employees after they have reached normal retirement age are included in the previous section “Pensions”.

– Other post-employment welfare benefits

Some of the Group’s companies have welfare benefit commitments whose effects extend beyond the retirement of the employees entitled to the benefits. These commitments relate to certain current employees and retirees, depending upon the employee group to which they belong.

The present values of the vested obligations for post-employment welfare benefits are quantified on acase-by-case basis. They are recognized in the heading “Provisions — Provision for pensions and similar obligations” in the accompanying consolidated balance sheets (Note 25) and they are charged to the heading “Personnel expenses — Other personnel expenses” in the accompanying consolidated income statements (see Note 46).

Other long-term commitments to employees

Some of the Group’s companies are obliged to deliver goods and services. The most significant, in terms of the type of compensation and the event giving rise to the commitments are as follows: loans to employees, life insurance, study assistance and long-service bonuses.

Some of these commitments are measured according to actuarial studies, so that the present values of the vested obligations for commitments with personnel are quantified on acase-by-case basis. They are recognized in the heading “Provisions — Other provisions” in the accompanying consolidated balance sheets (see Note 25).

The welfare benefits delivered by the Spanish companies to active employees are recognized in the heading “Personnel expenses — Other personnel expenses” in the accompanying income statements (see Note 46).

Other commitments for current employees accrue and are settled on a yearly basis, so it is not necessary to record a provision in this connection.

2.2.13.   EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS

Equity-settled share-based payment transactions, when the instruments granted do not vest until the counterparty completes a specified period of service, shall be accounted for those services as they are rendered by the counterparty during the vesting period, with a corresponding increase in equity. The entity measures the goods or services received and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity measures their value and the corresponding increase in equity indirectly, by reference to the fair value of the equity instruments granted, at grant date.

When the initial compensation agreement includes what may be considered market conditions among its terms, any changes in these conditions will not be reflected on the profit and loss account, as these have already been accounted for in calculating their initial fair value. Non-market vesting conditions are not taken into account when estimating the initial fair value of instruments, but they are taken into account when determining the number of instruments to be granted. This will be recognized on the income statement with the corresponding increase in equity.

2.2.14.   TERMINATION BENEFITS

Termination benefits must be recognized when the Group is committed to severing its contractual relationship with its employees and, to this end, has a formal detailed redundancy plan. There were no redundancy plans in the Group entities, so it is not necessary to recognize a provision for this item.

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2.2.15.   TREASURY STOCK

The amount of the equity instruments that the Bank owns is recognized under “Stockholders’ funds — Treasury stock” in the accompanying consolidated balance sheets. The balance of this heading relates mainly to Bank shares held by some of its consolidated companies as of December 31, 2009, 2008 and 2007 (see Note 30).

These shares are recognized at acquisition cost, and the gains or losses arising on their disposal are credited or debited, as appropriate, to the heading “Stockholders’ funds — Reserves” in the accompanying consolidated balance sheets (see Note 29).

2.2.16.   FOREIGN CURRENCY TRANSACTIONS AND EXCHANGE DIFFERENCES

The Group’s functional currency is the euro. Therefore, all balances and transactions denominated in currencies other than the euro are deemed to be denominated in “foreign currency”. The balances in the financial statements of consolidated entities whose functional currency is not the euro are converted to euros as follows:

•  Assets and liabilities:  at the average spot exchange rates as of December 31, 2009, 2008 and 2007.

•  Income and expenses and cash flows:  at the average exchange rates for the year.

•  Equity items:  at the historical exchange rates.

The exchange differences arising from the conversion of foreign currency balances to the functional currency of the consolidated entities (or entities accounted for by the equity method) and their branches are generally recognized in the consolidated income statement. Exceptionally, the exchange differences arising on non-monetary items whose fair value is adjusted with a balancing item in equity are recognized under the heading “Valuation adjustments — Exchange differences” in the consolidated balance sheet.

The exchange differences arising from the conversion to euros of balances in the functional currencies of the consolidated entities (or entities accounted for by the equity method) whose functional currency is not the euro are recognized under the heading “Valuation adjustments - Exchange differences” in the consolidated balance sheet until the item to which they relate is derecognized, at which time they are recognized in the income statement.

The breakdown of the main balances in foreign currencies of the consolidated balance sheets as of December 31, 2009, 2008 and 2007, with reference to the most significant foreign currencies, are set forth in Appendix IX.

2.2.17.   RECOGNITION OF INCOME AND EXPENSES

The most significant criteria used by the Group to recognize its income and expenses are as follows:

Interest income and expenses and similar items

As a general rule, interest income and expenses and similar items are recognized on the basis of their period of accrual using the effective interest rate method. Specifically, the financial fees and commissions that arise on the arrangement of loans, basically origination and analysis fees, must be deferred and recognized in the income statement over the expected life of the loan. The direct costs incurred in arranging these transactions can be deducted from the amount thus recognized. Also dividends received from other companies are recognized as income when the consolidated companies’ right to receive them arises.

However, when a debt instrument is deemed to be impaired individually or is included in the category of instruments that are impaired because of amounts more than three months past-due, the recognition of accrued interest in the consolidated income statement is interrupted. This interest is recognized for accounting purposes as income, as soon it is received, from the recovery of the impairment loss.

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Commissions, fees and similar items

Income and expenses relating to commissions and similar fees are recognized in the consolidated income statement using criteria that vary according to the nature of such items. The most significant income and expense items in this connection are:

•  Those relating to financial assets and liabilities measured at fair value through profit or loss, which are recognized when collected.

•  Those arising from transactions or services that are provided over a period of time, which are recognized over the life of these transactions or services.

•  Those relating to a single act, which are recognized when this single act is carried out.

Non-financial income and expenses

These are recognized for accounting purposes on an accrual basis.

Deferred collections and payments

These are recognized for accounting purposes at the amount resulting from discounting the expected cash flows at market rates.

2.2.18.   SALES AND INCOME FROM THE PROVISION OF NON-FINANCIAL SERVICES

The heading “Other operating income — Financial income from non-financial services” in the accompanying consolidated income statements includes the carrying amount of the sales of assets and income from the services provided by the consolidated Group companies that are not financial institutions. In the case of the Group, these companies are mainly real estate and services companies (see Note 45).

2.2.19.   LEASES

Lease contracts are classified as finance from the start of the transaction, if they transfer substantially all the risks and rewards incidental to ownership of the asset forming the subject-matter of the contract. Leases other than finance leases are classified as operating leases.

When the consolidated entities act as the lessor of an asset in finance leases, the aggregate present values of the lease payments receivable from the lessee plus the guaranteed residual value (normally the exercise price of the lessee’s purchase option on expiration of the lease agreement) are recognized as financing provided to third parties and, therefore, are included under the heading “Loans and receivables” in the accompanying consolidated balance sheets.

When the consolidated entities act as lessor of an asset in operating leases, the acquisition cost of the leased assets is recognized under “Tangible assets — Property, plants and equipment — Other assets leased out under an operating lease” in the accompanying consolidated balance sheets (Note 19). These assets are depreciated in line with the criteria adopted for items of tangible assets for own use, while the income arising from the lease arrangements is recognized in the accompanying consolidated income statements on a straight line basis within “Other operating income - Rest of other operating income “ (Note 45).

If a fair value sale and leaseback results in an operating lease, the profit or loss generated is recognized at the time of sale. If such a transaction gives rise to a finance lease, the corresponding gains or losses are amortized over the lease period.

The assets leased out under operating lease contracts to other entities in the Group are treated in the consolidated annual financial statements as for own use, and thus rental expense and income is eliminated and the corresponding depreciation is registered.

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2.2.20.   CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSES

The consolidated statements of recognized income and expenses reflect the income and expenses generated each year. It distinguishes between those recognized as results in the consolidated income statements from “Other recognized income (expenses)” recognized directly in the total equity.

“Other recognized income (expenses)” include the changes that have taken place in the year in the “Valuation adjustments” broken down by item.

The sum of the changes to the heading “Valuation adjustments” of the total equity and the income of the year forms the “Total recognized income/expenses of the year”.

2.2.21.   CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The consolidated statements of changes in equity reflect all the movements generated in each year in each of the headings of the consolidated equity, including those from transactions undertaken with shareholders when they act as such, and those due to changes in accounting criteria or corrections of errors, if any.

The applicable regulations establish that certain categories of assets and liabilities are recognized at their fair value with a charge to equity. These charges, known as “Valuation adjustments” (see Note 31), are included in the Group’s total consolidated equity net of tax effect, which has been recognized as deferred tax assets or liabilities, as appropriate.

2.2.22.   CONSOLIDATED STATEMENTS OF CASH FLOWS

The indirect method has been used for the preparation of the consolidated statement of cash flows. This method starts from the entity’s consolidated net income and adjusts its amount for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated cash flows classified as investment or finance.

For these purposes, in addition to cash on hand, cash equivalents include very short term, highly liquid investments subject to very low risk of impairment.

The composition of component of cash and equivalents with respect to the headings of the consolidated balance sheets is shown in the accompanying consolidated cash flow statements.

To prepare the consolidated cash flow statements, the following items are taken into consideration:

a) Cash flows:  Inflows and outflows of cash and cash equivalents, the latter being short-term, highly liquid investments subject to a low risk of changes in value, such as balances with central banks, short-term Treasury bills and notes, and demand deposits with other credit institutions.

b) Operating activities:  The typical activities of credit institutions and other activities that cannot be classified as investing or financing activities.

c) Investing activities:  The acquisition, sale or other disposal of long-term assets and other investments not included in cash and cash equivalents.

d) Financing activities:  Activities that result in changes in the size and composition of equity and of liabilities that do not form part of operating activities.

2.2.23.   ENTITIES AND BRANCHES LOCATED IN COUNTRIES WITH HYPERINFLATIONARY ECONOMIES

In accordance with the IFRS-EU required to be applied under the Bank of Spain’s Circular 4/2004 criteria, to determine whether an economy has a high inflation rate the country’s economic situation is examined, analyzing whether certain circumstances are fulfilled, such as whether the population prefers to keep its wealth or save in non-monetary assets or in a relatively stable foreign currency, whether prices can be set in that currency, whether interest rates, wages and prices are pegged to a price index or whether the accumulated inflation rate over three years

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reaches or exceeds 100%. The fact that any of these circumstances is fulfilled will not be a decisive factor in considering an economy hyperinflationary, but it does provide some reasons to consider it as such.

At the end of 2009, the Venezuelan economy was considered to be hyperinflationary as defined by the aforementioned criteria. Accordingly, as of December 31, 2009, it was necessary to adjust the financial statements of the Group’s subsidiaries based in Venezuela to correct for the effect of inflation.

Pursuant to the requirements of IAS 29, the monetary headings (mainly loans and credits) have not been re-expressed, while the non-monetary headings (mainly tangible fixed assets) have been re-expressed in accordance with the change in the country’s Consumer Price Index.

The historical differences as of January 1, 2009 between the re-expressed costs and the previous costs in the non-monetary headings were credited to “Reserves” in the accompanying consolidated balance sheet as of December 31, 2009, while the differences of the year 2009, and the re-expression of the income statement for 2009 were recognized in the accompanying consolidated income statement for 2009 in accordance with the nature of the income and expenses, the total net loss in income attributed to parent company being €90 million. The total impact of these adjustments to “Total equity” in the accompanying consolidated balance sheet as of December 31, 2009 was €110 million, (€46 million of which correspond to “Non-controlling interest”).

After December 31, 2009, the Venezuelan authorities announced the devaluation of the Venezuelan bolivar with regard to the main foreign currencies and that other measures to contain inflation will be adopted. At the date these consolidated financial statements were prepared, there was not enough information to assess the impact on the balance sheets and consolidated income statements.

As of December 31, 2008 and 2007 none of the functional currencies of the consolidated subsidiaries related to hyperinflationary economies. For this reason, it was not necessary to adjust the financial statements of any of the consolidated subsidiaries or associated entities to correct for the effect of inflation.

2.3   RECENT IFRS PRONOUNCEMENTS

a)   STANDARDS AND INTERPRETATIONS EFFECTIVE IN 2009

The following modifications to the IFRS or their interpretations (IFRIC) came into force in 2009. Their integration in the Group has not had a significant impact on these consolidated financial statements:

IFRS 2 Revised: “Share-based payment”

The published amendment to the IFRS 2 states that vesting conditions are only service and performance conditions. It also clarifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment.

IFRS 7 Amended. financial instruments: Disclosure — reclassification of financial assets

The amendments make changes to the classification of information with the aim of improving the disclosure on the calculation of the fair value of financial instruments and liquidity risk.

IFRS 8 “Operating segments”

This new Standard replaces IAS 14 “Segment reporting”. The main novelty is the adoption of a management approach to reporting business segments. The information reported will be that which management uses internally for evaluating the performance of operating segments and allocating resources to those segments. In the information to be reported, the segments identified and the criteria used to identify the segments will match those which the organization and management uses internally, but which do not meet the IFRS criteria for consolidated financial statements.

The information on segments included in Note 6 of the accompanying consolidated financial statements complies with the requirements of IFRS 8.

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IAS 1 Revised. “Presentation of financial statements”

The amendment to IAS 1 has meant changes to the terminology (including changes to the Financial Statement headings) and changes to the financial statement formats and content, which were taken into consideration when compiling the present consolidated financial statements.

IAS 23 Revised “Interest expense”

The revision of IAS 23 eliminates the option for the immediate recognition of costs attributable to the acquisition, construction or production of qualified assets (those which require a substantial period of time before being ready for use or sale). Thus an entity must recognize these financing costs as part of the cost of this asset.

IAS 32 Amended. “Financial instruments: presentation”

The amendments to IAS 32 intend to improve the accounting process for financial instruments that have similar features to ordinary shares but which at the present time are classified as financial liabilities.

These amendments allow entities to classify subordinate instruments that oblige the issuer to give the counterparty a share of the entity’s net assets in the event of dissolution as Equity, provided that a series of specific criteria are fulfilled.

Amendments to IFRIC 9 and IAS 39 — Embedded derivatives

The purpose of the amendments to both standards is to clarify the posting of embedded derivatives to avoid any possible problems in applying the latest amendments on reclassification made to IAS 39.

In particular, the amendment to IAS 39 bans the reclassification of hybrid financial instruments accounted for at fair value through income statement when such a reclassification means separating the embedded derivative from the main contract and when it is not possible to correctly calculate the fair value of the embedded derivative.

The amendment to IFRIC 9 allows the separation of the embedded derivatives of hybrid financial instruments accounted for at fair value through income statement when such instruments are reclassified into other categories.

First annual improvements project for the IFRS

This is the first annual improvements project carried out by the International Accounting Standard Board (IASB) that includes minor changes affecting the presentation, recognition or valuation of the IFRS as well as changes in terminology and editing that do not have any significant effect on the accounting process.

The most significant amendments affect the following standards:

IFRS 5 —Non-current assets held for sale and discontinued operations

IAS 1 —Presentation of financial statements

IAS 16 —Property, plant and equipment

IAS 19 —Employee benefits

IAS 20 —Accounting for government grants and disclosure of government assistance

IAS 27 —Consolidated and separate financial statements

IAS 28 —Investments in associates

IAS 38 —Intangible assets

IAS 39 — Financial instruments:  recognition and measurement

IAS 40 —Investment property

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IFRIC 13 “Customer loyalty programs”

This IFRIC establishes the accounting procedure for the customer loyalty programs that entities use to provide customers with incentives to buy their goods or services. If a customer buys goods or services, the entity grants the customer award credits (often described as “points”). It is applicable both to entities that grant the credits directly and those which participate in a program which another entity operates.

The interpretation requires that entities allocate some of the proceeds of the initial sale to award credits, recognizing them as revenue only when they have fulfilled their obligations by providing such awards or paying third parties to do so.

IFRIC 14 — IAS 19 — The limit on a defined-benefit asset, minimum funding requirements and their interaction

IFRIC 14 provides a general guide on how to measure the limit in IAS 19 Employee Benefits on the excess amount that may be recognized as an asset and also mentions how assets or liabilities can be affected when there is a legal or contractual minimum for contributions, establishing the need to recognize an additional liability if the company is contractually bound to make additional contributions to the plan and its ability to recover them is restricted. The interpretation standardizes practice and ensures that companies recognize an asset arising from a surplus in a consistent manner.

IFRIC 15 — Agreements for the construction of real estate

This interpretation lays down how entities must determine whether an agreement for the construction of real estate should be posted according to IAS 11 “Construction agreements” or according to IAS 18 “Revenue”. These agreements will only be posted under IAS 11 “Construction agreements” when the buyer is able to specify the major structural elements of the design of the real estate before construction beginsand/or specify major structural changes once construction is in progress (even when the buyer does not exercise this power). Otherwise, IAS 18 “Revenue” will apply.

IFRIC 16 — Hedging net investments in foreign operations

This interpretation addresses the following aspects of hedging net investments in foreign operations:

•  The hedged risk is the foreign currency exposure to the functional currencies of the foreign operations and the parent entity. Consequently, a parent entity may designate as a hedged risk only the foreign exchange differences arising from a difference between its own functional currency and that of its foreign operation, i.e. the presentation currency does not create an exposure to which an entity may apply hedge accounting.

•  The hedging instrument(s) may be held by any entity or entities within the group, irrespective of their functional currencies (except for the foreign entity whose investment is hedged), as long as IAS 39 requirements are met.

b)   STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE GROUP AS OF DECEMBER 31, 2009

New International Financial Reporting Standards together with their interpretations (IFRIC) had been published at the date of close of these consolidated financial statements. These were not obligatory as of December 31, 2009. Although in some cases the IASB permits early adoption before they enter into force, the Group has not done so as of this date.

The future impacts that the adoption of these standards are still been analyzed as of the date of these consolidated financial statements.

Second IFRS annual improvements project

The IASB has published its second annual improvements project, which includes small amendments in the IFRS. These will mostly be applicable for annual periods starting after January 1, 2010.

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The amendments are focused mainly on eliminating inconsistencies between some IFRS and on clarifying terminology.

IFRS 3 Revised — Business combinations, and amendment to IAS 27 — Consolidated and separate financial statements

These standards will be effective for fiscal years starting on or after July 1, 2009. They can be adopted early for transactions in fiscal years beginning after June 30, 2007.

The amendments to IFRS 3 and IAS 27 represented some significant changes to various aspects related to accounting for business combinations. They generally place more emphasis on using the fair value. Some of the main changes are: acquisition costs will be recognized as expense instead of the current practice of considering them at the greater the cost of the business combination; acquisitions in stages, in which at the time of the takeover the acquirer will revalue its investment at fair value or there is the option of valuing the non-controlling interests in the acquired company at fair value, instead of the current practice of only valuing the proportional share of the fair value of the acquired net assets.

IAS 24 Revised — Related party disclosures

This amendment to IAS 24 refers to the disclosures of related parties in the financial statements. There are two main new features. One of them introduces a partial exemption for some disclosures when the relationship is with companies that depend on or are related to the State (or an equivalent governmental institution) and the definition of related party is revised, establishing some relations that were not previously explicit in the standard.

IAS 32 — Classification of preferred subscription rights

The amendment to IAS 32 clarifies the classification of preferred subscription rights (instruments that entitle the holder to acquire instruments from the entity at a fixed price) when they are in a currency other than the issuer’s functional currency. The proposed amendment establishes that the rights to acquire a fixed number of own equity instruments for a fixed amount will be classified as equity regardless of the currency of the exercise price and whether the entity gives the tag-along rights to all of the existing shareholders (in accordance with current standards they must be posted as liability derivatives).

This amendment will apply for years beginning after February 1, 2010. Early adoption is permitted.

IAS 39 Amended — Financial instruments: Recognition and valuation. Eligible hedged items

The amendment to IAS 39 introduces new requirements on eligible hedged items. This amendment applies for years beginning after July 1, 2009. Early adoption is permitted.

The amendment stipulates that:

•  Inflation may not be designated as a hedged item unless it is identifiable and the inflation portion is a contractually specified portion of cash flows of an inflation-linked financial instrument, and the rest of the cash flows are not affected by the inflation-linked portion.

•  When changes in cash flows or the fair value of an item are hedged above or below a specified price or other variable (a one-side risk) via a purchased option, the intrinsic value and time value components of the option must be separated and only the intrinsic value may be designated as a hedging instrument.

IFRIC 17 — Distributions of non-cash assets to owners

The new interpretation will be effective for annual periods beginning after July 1, 2009. Earlier application is permitted.

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IFRIC 17 stipulates that all distributions of non-cash assets to owners must be valued at fair value, clarifying that:

•  The dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity.

•  An entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss.

IFRIC 18 — Transfer of assets from customers

This clarifies the requirements for agreements in which an entity receives an item of property, plant, and equipment from a customer which the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services, or both.

The basic principle of IFRIC 18 is that when the item of property, plant and equipment meets the definition of an asset from the perspective of the recipient, the recipient must recognize the asset at its fair value on the date of the transfer with a balancing entry in ordinary income in accordance with IFRIC 18.

This interpretation will apply prospectively to transfers of assets from customers after July 1, 2009.

IFRIC 19 — Settlement of financial liabilities through equity instruments

In the current market situation, some entities are renegotiating conditions regarding financial liabilities with their creditors. There are cases in which creditors agree to receive equity instruments that the debtor has issued to cancel part or all of the financial liabilities. IFRIC 19 has issued an interpretation that clarifies the posting of these transactions from the perspective of the instruments issuer, and states that these securities must be valued at fair value. If this value cannot be calculated, they will be valued at the fair value of the cancelled liability. The difference between the cancelled liability and the issued instruments will be recognized in the income statement.

This amendment will apply for years beginning after July 1, 2010. Early adoption is permitted.

IFRS 9 — Financial instruments

On November 12, 2009, the IASB published IFRS 9 — Financial instruments as the first stage of its plan to replace IAS 39 — Financial Instruments: Recognition and valuation. IFRS 9 introduces new requirements for the classification and valuation of financial assets. The IASB intends to extend IFRS 9 during 2010 to add new requirements for the classification and valuation of financial liabilities, derecognize financial instruments, impairment methodology and hedge accounting. By the end of 2010 IFRS 9 will have completely replaced IAS 39.

According to what the IASB has established, the recently-published standard on the classification and valuation of financial assets is compulsory from January 1, 2013 onwards, although voluntary adoption is permitted from December 31, 2009 onwards. The European Commission has decided not to adopt IFRS 9 for the time being. The possibility of early adoption of this first part of the standard ended December 31, 2009 for European entities.

3.   BANCO BILBAO VIZCAYA ARGENTARIA GROUP

The BBVA Group is an international diversified financial group with a significant presence in retail banking, wholesale banking, asset management and private banking. The Group also engages in business activity in other sectors, such as insurance, real estate and operational leasing.

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The following table sets forth information related to the Group’s total assets as of 31 December 2009 and 2008 and the Group’s income attributed to parent company for 2009 and 2008, broken down by the companies in the Group according to their activity:

						Net Income
						Attributed to
	Total Assets		% of the			Parent			% of the Net
	Contributed to		Total Asset of			Company of			Income Attributed
2009	the Group		the Group			the Period			to Parent Company
	Millions of euros
Banks		505,398		94.46	%		3,435			81.58	%
Financial services		7,980		1.49	%		343			8.16	%
Portfolio and funds managing company and dealers		3,053		0.57	%		(243	)		(5.77	)%
Insurance and pension fund managing company		16,168		3.02	%		755			17.94	%
Real Estate, services and other entities		2,466		0.46	%		(80	)		(1.91	)%
Total		535,065		100.00	%		4,210			100.00	%

						Net Income
						Attributed to Parent			% of the net
	Total Assets		% of the			Company of the			Income
	Contributed to		Total Asset of			Period Contributed			Attributed to
2008	the Group		the Group			to the Group			Parent Company
	Millions of euros
Banks		498,030		91.78	%		3,535			70.41	%
Financial services		15,608		2.88	%		393			7.84	%
Portfolio and funds managing company and dealers		11,423		2.10	%		466			9.28	%
Insurance and pension fund managing company		14,997		2.76	%		646			12.86	%
Real Estate, services and other entities		2,592		0.48	%		(20	)		(0.40	)%
Total		542,650		100.00	%		5,020			99.99	%

The Group’s activity is mainly located in Spain, Mexico, the United States and Latin America, with an active presence in Europe and Asia (see Note 17).

As of December 31, 2009, 2008 and 2007, the total assets of the Group’s most significant subsidiaries, broken down by countries in which the Group operates, were as follows:

	2009		2008		2007
	Millions of euros
Spain		370,621		380,532		347,767
Mexico		61,655		61,023		65,556
USA		49,576		49,698		44,358
Chile		10,253		9,389		8,835
Venezuela		11,410		9,652		7,156
Colombia		6,532		6,552		5,922
Peru		7,311		7,683		5,650
Argentina		5,030		5,137		4,798
Rest		12,677		12,984		11,684
Total		535,065		542,650		501,726

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For the year ended December 31, 2009, 2008 and 2007, the “Interest and similar income” of the Group’s most significant subsidiaries, broken down by countries where Group operates, were as follows:

	2009		2008		2007
	Millions of euros
Spain		12,046		16,892		15,007
Mexico		5,354		6,721		6,185
USA		1,991		2,174		1,476
Chile		522		986		793
Venezuela		1,553		1,116		772
Colombia		750		811		589
Peru		563		520		395
Argentina		549		541		466
Rest		447		643		493
Total		23,775		30,404		26,176

Appendix II shows relevant information on the Group’s subsidiaries as of December 31, 2009.

Appendix III shows relevant information on the consolidated jointly controlled entities accounted for using the proportionate consolidation method, as of December 31, 2009.

Appendix V shows the main changes in ownership interests in the year 2009.

Appendix VI shows details of the subsidiaries under the full consolidation method and which, based on the information available, were more than 10% owned by non-Group shareholders as of December 31, 2009.

– Spain

The Group’s activity in Spain is fundamentally through BBVA, which is the parent company of the BBVA Group. Appendix I shows BBVA’s individual financial statements as of December 31, 2009 and 2008.

The following table sets forth BBVA’s total assets and income before tax as a proportion of the total assets and consolidated income before tax of the Group, as of December 31, 2009, 2008 and 2007:

	2009			2008			2007
�� % BBVA assets over Group assets		67	%		63	%		62	%
% BBVA income before tax over consolidated income before tax		49	%		28	%		46	%

The Group also has other companies in Spain’s banking sector, insurance sector, real estate sector and service and operating lease companies.

– Mexico

The Group’s presence in Mexico dates back to 1995. It operates mainly through Grupo Financiero BBVA Bancomer, both in the banking sector through BBVA Bancomer, S.A. and in the insurance and pensions business through Seguros Bancomer S.A. de C.V., Pensiones Bancomer S.A. de C.V. and Administradora de Fondos para el Retiro Bancomer, S.A. de C.V.

– United States and Puerto Rico

In recent years, the Group has expanded its presence in the United States through the acquisition of several financial groups operating in various southern states. In 2007 the Group acquired Compass Bancshares Inc. and State National Bancshares Inc., taking control of these entities and the companies in their groups. The merger between the three banks based in Texas owned by the Bank (Laredo National Bank, Inc., Texas National Bank, and State National Bank) and Compass Bank, Inc. took place in 2008.

In 2009, through its subsidiary BBVA Compass, the Group acquired some of the assets and liabilities of Guaranty Bank, Inc (“Guaranty Bank”) in Texas from the Federal Deposit Insurance Corporation (FDIC). At the date of acquisition, Guaranty Bank operated 105 branches in Texas and 59 in California.

The BBVA Group also has a significant presence in Puerto Rico through its subsidiary BBVA Puerto Rico, S.A.

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– Latin America

The Group’s activity in Latin America is mainly focused on the banking, insurance and pensions sectors, in the following countries: Chile, Venezuela, Colombia, Peru, Argentina, Panama, Paraguay and Uruguay. It is also active in Bolivia and Ecuador in the pensions sector.

The Group owns more than 50% of most of the companies in these countries, with the exception of certain companies in Peru and Venezuela. Below is a list of the companies forming part of the BBVA Banco Continental (Peru) Group and BBVA Banco Provincial (Venezuela) which, although less than 50% owned by the Group, as of December 31, 2009, are fully consolidated at this date as a result of agreements between the Group and the other shareholders giving the Group effective control of these entities (see Note 2.1):

	% Controlled Voting
	Rights		% Ownership
Comercializadora Corporativa SAC		99.91		50.00
Banco Continental, S.A.		92.08		46.04
Continental Bolsa, Sociedad Agente de Bolsa, S.A.		100.00		46.04
Continental DPR Finance Company		100.00		46.04
Continental Sociedad Titulizadora, S.A.		100.00		46.04
Continental S.A. Sociedad Administradora de Fondos		100.00		46.04
Inmuebles y Repercusiones Continental, S.A.		100.00		46.04
Banco Provincial Overseas N.V.		100.00		48.01

Changes in the Group in the last three years

The most noteworthy acquisitions and sales of subsidiaries in 2009, 2008 and 2007 were as follows:

2009

• Purchase of assets and liabilities of Guaranty Bank

On August 21, 2009, through its subsidiary BBVA Compass, the Group acquired certain Guaranty Bank assets and liabilities from FDIC through a public auction for qualified investors.

BBVA Compass acquired assets, mostly loans, for approximately $11,441 million (approximately €8,016 million) and assumed liabilities, mostly customer deposits, for $12,854 million (approximately €9,006 million). These acquired assets and liabilities represented 1.5% and 1.8% of the Group’s total assets and liabilities on the acquisition date.

In addition, the purchase included a loss-sharing agreement with the U.S. supervisory body FDIC under which the latter undertook to assume 80% of the losses of the loans purchased by the BBVA Group up to the first $2,285 million, and up to 95% of the losses if they exceeded this amount. This commitment has a maximum term of 5 or 10 years, based on the portfolios.

The results and financial position that would have been obtained if this business combination had been undertaken on January 1, 2009 are considered immaterial.

• Takeovers of Banco de Crédito Local de España, S.A. and BBVA Factoring E.F.C., S.A.

The Directors of the subsidiaries Banco de Crédito Local de España, S.A. (Unipersonal), in meetings of their respective boards of directors held on January 26, 2009, and of Banco Bilbao Vizcaya Argentaria, S.A. in its board of directors meeting held on January 27, 2009, approved respective projects for the takeover of both companies by BBVA and the subsequent transfer of all their equity interest to BBVA, which acquired all the rights and obligations of the companies it had purchased through universal succession.

The merger agreement was submitted for approval at the general meetings of the shareholders and sole shareholder of the companies involved.

Both takeovers were entered into the Companies Register on June 5, 2009, and thus on this date the companies acquired were dissolved, although for accounting purposes the takeover was carried out on January 1, 2009.

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2008

There were no significant changes in the Group in 2008, except the above mentioned merger of three banks in Texas (Laredo National Bank, Inc., Texas National Bank, Inc., and State National Bank, Inc.) with Compass Bank, Inc., and the increase of ownership interest in the CITIC Group (see Note 17).

2007

• Acquisition of State National Bancshares, Inc.

On January 3, 2007 the Group closed the transaction to purchase State National Bancshares Inc. with an investment of $488 million (€378 million), generating a goodwill of €270 million.

• Purchase of Compass Bancshares, Inc.

On September 7, 2007 the Group acquired 100% of the share capital of Compass Bancshares Inc., (“Compass”) a U.S. banking Group, which operates in the states of Alabama, Texas, Florida, Arizona, Colorado and New Mexico.

The consideration paid to former Compass stockholders for the acquisition was $9,115 million, (€6,672 million). The Group paid $4,612 million (€3,385 million) in cash and delivered 196 million new issued BBVA shares, which represented 5.5% of the share capital of BBVA. This capital increase took place on September 10 at €16.77 per share, the closing market price of the BBVA’s shares at September 6, in accordance with the resolutions adopted by the BBVA’s general shareholders’ meeting.

BBVA financed the cash consideration in this transaction through internal resources and funds raised through the sale of its 5.01% stake in Iberdrola, S.A. in February 2007, which represented a net capital gain of €696 million.

4.   APPLICATION OF EARNINGS

In 2009, the Board of Directors of Banco Bilbao Vizcaya Argentaria, S.A. resolved to distribute the first, second and third amounts against the 2009 dividends of the income, amounting to a total of €0.27 gross per share. The aggregate amount of the interim dividends declared as of December 31, 2009, net of the amount collected and to be collected by the Group companies, was €1,000 million and was recognized under the heading “Stockholders’ funds — Dividends and remuneration” in the related consolidated balance sheet. The provisional financial statements prepared in 2009 by Banco Bilbao Vizcaya Argentaria, S.A. in accordance with legal requirements evidencing the existence of sufficient liquidity for the distribution of the amounts to the interim dividend were as follows:

	31-05-2009		31-08-2009		30-11-2009
	First		Second		Third
	Millions of euros
Provisional financial Statements
Interim dividend —
Profit at each of the dates indicated, after the provision for income tax		1,232		2,336		3,771
Less —
Estimated provision for Legal Reserve		—		—		—
Interim dividends paid		—		337		675
Maximum amount distributable		1,232		1,999		3,096
Amount of proposed interim dividend		337		338		337

The final dividend on the 2009 results that the Bank’s board of directors plans to propose to the General Meeting of Stockholders amounts to €0.15 per share. Based on the number of shares that represent the subscribed

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capital as of December 31, 2009 (see Note 27), the final dividend would amount to €562 million. The allocation of net income for 2009 is as follows:

	Millions of
Application of Earnings	euros
Net profit for year of 2009(*)		2,981
Distribution:
Dividends		—
— Interim		1,012
— Final		562
Legal reserve		—
Voluntary reserves		1,407

(*) Profit of BBVA, S.A. (Appendix I)

The dividends paid per share in 2009, 2008 and 2007 were as follows:

	First		Second		Third
Dividend Per Share	Interim		Interim		Interim		Final		Total
2009		0.090		0.090		0.090		0.150		0.420
2008		0.167		0.167		0.167		—		0.501
2007		0.152		0.152		0.152		0.277		0.733

	2009							2008							2007
				Euros		Amount					Euros		Amount					Euros		Amount
	% Over			per		(Millions of		% Over			per		(Millions of		% Over			per		(Millions of
Dividends Paid	Nominal			Share		Euros)		Nominal			Share		Euros)		Nominal			Share		Euros)
Ordinary shares		86	%		0.42		1,574		102	%		0.501		1,878		150	%		0.733		2,717
Rest of shares		—			—		—		—			—		—		—			—		—
Total dividends paid		86	%		0.42		1,574		102	%		0.501		1,878		150	%		0.733		2,717
Dividends with charge to income		86	%		0.42		1,574		102	%		0.501		1,878		150	%		0.733		2,717
Dividends with charge to reserve or share premium		—			—		—		—			—		—		—			—		—
Dividends in kind		—			—		—		—			—		—		—			—		—

The General Meeting of Stockholders held on March 13, 2009 approved an additional shareholder remuneration to complement the 2008 cash dividend in the form of an in-kind distribution of a portion of the share premium reserve, €317 million, by giving Banco Bilbao Vizcaya Argentaria, S.A. stockholders shares in the common stock from the treasury stock (see Note 28).

5.   EARNINGS PER SHARE

The calculation of earnings per share in 2009, 2008 and 2007 were as follows:

Earnings per Share	2009		2008		2007
Numerator for basic earnings per share:
Net income attributed to parent company adjusted (millions of euros)		4,228		5,020		6,126
Numerator for diluted earnings per share:
Net income attributed to parent company adjusted (millions of euros)		4,228		5,020		6,126
Denominator for basic earnings per share (millions of shares)		3,759		3,706		3,594
Denominator for diluted earnings per share (millions of shares)		3,759		3,706		3,594
Basic earnings per share (euros)		1.12		1.35		1.70
Diluted earnings per share (euros)		1.12		1.35		1.70

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In 2009, the Bank issued convertible bonds amounting to €2,000 million, which are due for conversion (see Note 23.4). In accordance with the IAS 33 criteria, to calculate the basic and diluted earnings per share, the resulting total shares after the conversion must be included in the denominator and the result must be adjusted in the numerator, increasing it by the financial costs of the issue (net income attributed to parent company). The basic and diluted earnings per share, taking the IAS 33 criteria into account and considering the principles for conversion, are €1.12 per share.

As of December 31, 2009, 2008 and 2007, there were no other financial instruments, share option commitments with employees or discontinued transactions that could potentially affect the calculation of the basic earnings per share for the years presented .

6.   BASIS AND METHODOLOGY FOR SEGMENT REPORTING

Segment reporting represents a basic tool in the oversight and management of the Group’s various businesses. The Group compiles reporting information on as disaggregated a level as possible, and all data relating to the businesses these units manage is recognized in full. These disaggregated units are then amalgamated in accordance with the organizational structure preordained by the Group into higher level units and, ultimately, the business segments themselves. Similarly, all the companies making up the Group are also assigned to the different segments according to their activity.

Once the composition of each business segment has been defined, certain management criteria are applied, noteworthy among which are the following:

•  Economic capital:  Capital is allocated to each business based on capital at risk (CaR) criteria, in turn predicated on unexpected loss at a specific confidence level, determined as a function of the Group’s target capital ratio. This target level is applied at two levels: the first is adjusted core capital, which determines the allocated capital. The Bank uses this amount as a basis for calculating the return generated on the equity in each business (ROE). The second level is total capital, which determines the additional allocation in terms of subordinate debt and preferred securities. The calculation of the CaR combines credit risk market risk structural risk associated with the balance sheet equity positions operational risk and fixed asset and technical risks in the case of insurance companies. These calculations are carried out using internal models that have been defined following the guidelines and requirements established under the Basel II Capital Accord, with economic criteria prevailing over regulatory ones.

Due to its sensitivity to risk, CaR is an element linked to management policies in the businesses themselves. It standardizes capital allocation between them in accordance with the risks incurred and makes it easier to compare profitability. In other words, it is calculated in a way that is standard and integrated for all kinds of risks and for each operation, balance or risk position, allowing its risk-adjusted return to be assessed and an aggregate to be calculated for the return by client, product, segment, unit or business area.

•  Internal transfer prices:  the calculation of the net interest income of each business is performed using rates adjusted for the maturities and rate reset clauses in effect on the various assets and liabilities making up each unit’s balance sheet. The allocation of profits across business generation and distribution units (e.g., in asset management products) is performed at market prices.

•  Allocation of operating expenses:  Both direct and indirect expenses are allocated to the segments, except for those items for which there is no clearly defined or close link with the businesses, as they represent corporate/institutional expenses incurred on behalf of the overall Group.

•  Cross selling:  On certain occasions, consolidation adjustments are made to eliminate overlap accounted for in the results of one or more units as result of cross-selling focus.

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Description of the Group’s business segments

The business areas described below are considered the Group’s business segments. The composition of the Group’s business areas as of 31 December 2009 was as follows:

•  Spain and Portugal, which includes:  the Retail Banking network in Spain, including the segments of individual customers, private banking and small business and retailer banking in the domestic market; Corporate and Business Banking, which encompasses the segments of SMEs, corporations, institutions and developers in the domestic market; and all other units, among which are Consumer Finance, BBVA Seguros and BBVA Portugal.

•  Wholesale Banking & Asset Management (“WB&AM”), made up of:  Corporate and Investment Banking, which includes the work of offices in Europe, Asia and New York with large corporations and companies; Global Markets, responsible for liquidity assets management and distribution services in the same markets; Asset Management, Asset Management, which includes the management of investment and pension funds in Spain; Industrial and Real Estate Management, which includes the development of long-term business projects and private equity business developed through Valanza; and Asia, with the participation in the CITIC Group. In addition, Wholesale Banking & Asset Management is present in the above businesses both in Mexico and South America, but its activity and results are included in those business areas for the purposes of these consolidated financial statements.

•  Mexico:  includes the banking, pensions and insurance businesses in the country.

•  United States:  includes the banking and insurance businesses in the U.S., as well as those in Puerto Rico.

•  South America:  includes the banking, pensions and insurance businesses in South America.

•  Corporate Activities performs management functions for the Group as a whole, essentially management of asset and liability positions in euro-denominated interest rates and in exchange rates, as well as liquidity and capital management functions. The management of asset and liability interest-rate risks in currencies other than the euro is recognized in the corresponding business areas. It also includes the Industrial and Financial Holdings unit and the Group’s non-international real estate businesses.

In 2009, BBVA maintained the criteria applied in 2008 in terms of the composition of the different business areas, with some insignificant changes. They thus do not affect the Group’s reporting and have practically no impact on the figures of the different business areas and units. The data for 2008 and 2007 have been reworked to ensure that the different years are comparable.

The total breakdown of the Group’s assets by business areas as of December 31, 2009, 2008 and 2007 was as follows:

Total Assets	2009		2008		2007
	Millions of euros
Spain and Portugal		215,797		220,470		223,628
WB&AM		139,632		136,785		103,999
Mexico		62,857		60,704		65,678
USA		44,528		43,351		38,381
South America		44,378		41,600		34,690
Corporate Activities		27,873		39,740		35,350
Total		535,065		542,650		501,726

F-46

The detail of the consolidated net income for the years 2009, 2008 and 2007 for each business area is as follows:

Consolidated Income	2009			2008			2007
	Millions of euros
Spain and Portugal		2,373			2,625			2,381
WB&AM		1,011			754			896
Mexico		1,359			1,938			1,880
USA		(1,071	)		211			203
South America		871			727			623
Corporate Activities		(333	)		(1,235	)		143
Subtotal		4,210			5,020			6,126
Non-assigned income		—			—			—
Elimination of interim income (between segments)		—			—			—
Other gains (losses)		385			365			289
Income tax and/or income from discontinued operations		1,141			1,541			2,079
INCOME BEFORE TAX		5,736			6,926			8,494

For the years 2009, 2008 and 2007 the detail of the ordinary income for each operating segment, which is made up of the “Interest and similar income”, “Dividend income”, “Fee and commission income”, “Net gains (losses) on financial assets and liabilities” and “Other operating income”, is as follows:

Total Ordinary Income	2009		2008		2007
	Millions of euros
Spain and Portugal		9,738		12,613		11,442
WB&AM		3,365		5,920		5,559
Mexico		7,672		9,162		8,721
USA		2,713		2,862		1,831
South America		5,480		5,834		4,643
Corporate Activities		4,847		4,886		5,064
Adjustments and eliminations of ordinary income between segments		—		—		—
TOTAL		33,815		41,277		37,260

7.   RISK EXPOSURE

Dealing in financial instruments can entail the assumption or transfer of one or more classes of risk by financial institutions. The risks related to financial instruments are:

•  Credit risk:  Credit risk defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

•  Market risks:  These are defined as the risks arising from the maintenance of financial instruments whose value may be affected by changes in market conditions. It includes three types of risk:

•  Foreign-exchange risk:  this is the risk resulting from variations in foreign exchange rates.

•  Interest-rate risk:  this arises from variations in market interest rates.

•  Price risk:  This is the risk resulting from variations in market prices, either due to factors specific to the instrument itself, or alternatively to factors which affect all the instruments traded on the market.

•  Commodities risk:  this is the risk resulting from changes in the price of traded commodities.

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•  Liquidity risk:  this is the possibility that a company cannot meet its payment commitments duly without having to resort to borrowing funds under onerous conditions, or damaging its image and reputation of the entity.

Principles and policies

The general guiding principles followed by the BBVA Group to define and monitor its risk profile are set out below:

•  The risk management function is unique, independent and global.

•  The assumed risks must be compatible with the target capital adequacy and must be identified, measured and assessed. Monitoring and management procedures and sound control systems must likewise be in place.

•  All risks must be managed integrally during their life cycle, being treated differently depending on their type and with active portfolio management based on a common measurement (economic capital).

•  It is each business area’s responsibility to propose and maintain its own risk profile, within their independence in the corporate action framework (defined as the set of risk policies and procedures).

•  The risk infrastructure must be suitable in terms of people, tools, databases, information systems and procedures so that there is a clear definition of roles and responsibilities, ensuring efficient assignment of resources among the corporate area and the risk units in business areas.

Building on these principles, the Group has developed an integrated risk management system that is structured around three main components: (i) a corporate risk governance regime, with adequate segregation of duties and responsibilities (ii) a set of tools, circuits and procedures that constitute the various different risk management regimes, and (iii) an internal risk control system.

Corporate governance system

The Group has a corporate governance system which is in keeping with international recommendations and trends, adapted to requirements set by regulators in each country and to the most advanced practices in the markets in which it pursues its business.

In the field of risk management, it is the board of directors that is responsible for approving the risk control and management policy, as well as periodically monitoring internal reporting and control systems.

To perform this function correctly the board is supported by the Executive Committee and a Risk Committee, the main mission of the latter being to assist the board in undertaking its functions associated with risk control and management.

Under Article 36 of the Board Regulations, the Risk Committee is assigned the following functions for these purposes:

•  To analyze and evaluate proposals related to the Group’s risk management and oversight policies and strategies.

•  To monitor the match between risks accepted and the profile established.

•  To assess and approve, where applicable, any risks whose size could compromise the Group’s capital adequacy or recurrent earnings, or that present significant potential operational or reputational risks.

•  To check that the Group possesses the means, systems, structures and resources in accordance with best practices to allow the implementation of its risk management strategy.

The Group’s risk management system is managed by the Corporate Risk Area, which combines the view by risk type with a global view. The Corporate Risk Management Area is made up of the Corporate Risk Management unit, which covers credit, market, structural and non-banking risks, which work alongside the transversal units: such as Structural Management & Asset Allocation, Risk Assessment Methodologies and Technology, and Validation and Control, which include internal control and operational risks.

Below this level there are risk teams with which it maintains flowing, continuous relations, and which examine the risks from each country or from specific business groups.

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Using this structure, the risk management system insures the following: first, the integration, control and management of all the Group’s risks; second, the application of standardized risk principles, policies and metrics throughout the entire Group; and third, the necessary insight into each geographical region and each business.

This organizational system is supplemented by regular committees which may be exclusively from the Risk Area (the Risk Management Committee, the Markets Committee and the Technical Operations Committee) or from several areas (the New Products Committee; the Global Internal Control and Operational Risk Committee, the Assets and Liabilities Committee and the Liquidity Committee). Their duties are:

•  The mission of the Risk Management Committee is to develop and implement the Group’s risk management model in such a way as to ensure regularfollow-up of each type of risk at a global level and in each of the business unit. The risk managers from the business areas and the risk managers from the Corporate Risk Area are members of this committee.

•  The Technical Operations Committee analyzes and approves, if appropriate, transactions and financial programs to the level of its competency, passing on those beyond its scope of power to the Risks Committee.

•  The Global Asset Allocation Committee assesses the Group’s global risk profile and whether its risk management policies are consistent with its target risk profile; it identifies global risk concentrations and alternatives to mitigate these; it monitors the macroeconomic and competitor environment, quantifying global sensitivities and the foreseeable impact different scenarios will have on risk exposure.

•  The task of the Global Internal Control and Operational Risk Committee is to undertake a review at the level of the Group and of each of its units, of the control environment and the running of the Internal Control and Operational Risk Models, and likewise to monitor and locate the main operational risks the Group is subject to, including those that are transversal in nature. This Committee is therefore the highest operational risk management body in the Group.

•  The functions of the New Products Committee are to assess, and if appropriate to approve, the introduction of new products before the start of activity; to undertake subsequent control and monitoring for newly authorized products; and to foster business in an orderly way to enable it to develop in a controlled environment.

•  The Assets and Liabilities Committee (“ALCO”) is responsible for actively managing structural liquidity, interest rate and foreign exchange risks, together with the Group’s capital resources base.

•  The Liquidity Committee monitors the measures adopted and verifies the disappearance of the trend signals which led to it being convened or, if it so deems necessary, it will convene the Crisis Committee.

Tools, circuits and procedures

The Group has implemented an integral risk management system designed to cater for the needs arising in relation to the various types of risk. This has prompted it to equip the management processes for each risk with measurement tools for risk acceptance, assessment and monitoring and to define the appropriate circuits and procedures, which are reflected in manuals that also include management criteria.

Specifically, the Group’s risk management main activities are as follows: calculation of the risk exposures of the various portfolios, considering any related mitigating factors (netting, collateral, etc.); calculation of the probability of default (“PD”), loss severity and expected loss of each portfolio, and assignment of the PD to the new transactions (ratings and scorings);values-at-risk measurement of the portfolios based on various scenarios using historical simulations; establishment of limits to the potential losses based on the various risks incurred; determination of the possible impacts of the structural risks on the income statement; setting of limits and alerts to safeguard the Group’s liquidity; identification and quantification of operational risks by business line to enable the mitigation of these risks through corrective measures; and definition of efficient circuits and procedures which contribute to the efficient achievement of the targets set.

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Risk concentration

In the trading area, limits are approved each year by the Board’s Risk Committee on exposures to trading, structural interest rate, structural currency, equity and liquidity risk at the banking entities and in the asset management, pension and insurance businesses. These limits factor in many variables, including economic capital and earnings volatility criteria, and are reinforced with alert triggers and a stop-loss scheme.

In relation to credit risk, maximum exposure limits are set by customer and country; generic limits are also set for maximum exposure to specific deals and products. Upper limits are allocated based on iso-risk curves, determined as the sum of expected losses and economic capital, and its ratings-based equivalence in terms of gross nominal exposure.

There is also an additional guideline in terms of oversight of maximum risk concentration up to and at the level of 10% of equity: stringent requirements in terms of in-depth knowledge of the counterparty, its operating markets and sectors.

For retail portfolios, potential concentrations of risk are analyzed by geographical area or by certain specific risk profiles in relation to overall risk and earnings volatility; where appropriate, the opportune measures are taken, imposing cut-offs using scoring tools, via recovery management and mitigating exposure using pricing strategy, among other approaches.

7.1   CREDIT RISK

Credit risk is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge a contractual obligation due to the insolvency or incapacity of the natural or legal persons involved.

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Maximum exposure to credit risk

The Group’s maximum credit exposure as of December 31, 2009, 2008 and 2007 (without including valuation adjustments nor recognizing the availability of collateral or other credit enhancements to guarantee compliance) is broken down by financial instrument and counterparties in the table below:

Maximum Credit Risk Exposure	Note		2009		2008		2007
			Millions of euros
Financial assets held for trading		10		34,672		26,556		38,392
Debt securities				34,672		26,556		38,392
Government				31,290		20,778		27,960
Credit institutions				1,384		2,825		6,020
Other sectors				1,998		2,953		4,412
Other financial assets designated at fair value through profit or loss		11		639		516		421
Debt securities				639		516		421
Government				60		38		41
Credit institutions				83		24		36
Other sectors				496		454		344
Available-for-sale financial assets		12		57,067		39,961		37,252
Debt securities				57,067		39,961		37,252
Government				38,345		19,576		17,573
Credit institutions				12,646		13,377		13,419
Other sectors				6,076		7,008		6,260
Loans and receivables		13		353,741		375,387		344,124
Loans and advances to credit institutions				22,200		33,679		24,392
Loans and advances to customers				331,087		341,322		319,671
Government				26,219		22,503		21,065
Agriculture				3,924		4,109		3,737
Industry				42,799		46,576		39,922
Real estate and construction				55,766		54,522		55,156
Trade and finance				40,714		44,885		36,371
Loans to individuals				126,488		127,890		121,462
Leases				8,222		9,385		9,148
Other				26,955		31,452		32,810
Debt securities				454		386		61
Government				342		290		(1	)
Credit institutions				4		4		1
Other sectors				108		92		61
Held-to-maturity investments		14		5,438		5,285		5,589
Government				4,064		3,844		4,125
Credit institutions				754		800		818
Other sectors				620		641		646
Derivatives (trading and hedging)		15		42,836		46,887		17,412
Subtotal				494,393		494,591		443,190
Valuation adjustments				436		942		655
Total balance				494,829		495,533		443,845
Financial guarantees				33,185		35,952		36,859
Drawable by third parties				84,925		92,663		101,444
Government				4,567		4,221		4,419
Credit institutions				2,257		2,021		2,619
Other sectors				78,101		86,421		94,406
Other contingent exposures				7,398		6,234		5,496
Total off-balance		34		125,508		134,849		143,799
Total maximum credit risk exposure				620,338		630,382		587,644

For financial assets recognized in the accompanying consolidated balance sheets, credit risk exposure is equal to the carrying amount, except for trading and hedging derivatives. The maximum exposure to credit risk on financial guarantees is the maximum that BBVA would be liable for if these guarantees were called in.

As of December 31, 2009, the value of the renegotiated financial assets, which could have deteriorated had it not been for the renegotiation of their terms, has not varied significantly from the previous year.

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For trading and hedging derivatives, this information reflects the maximum credit exposure better than the amount shown on the balance sheet because it does not only include the market value on the date of the transactions (the carrying amount only shows this figure); it also estimates the potential risk of these transactions on their due date.

Mitigation of credit risk, collateral and other credit enhancements, including risk hedging and mitigation policies

In most cases, maximum exposure to credit risk is reduced by collateral, credit enhancements and other actions which mitigate the Group’s exposure.

The Group applies a credit risk hedging and mitigation policy deriving from a banking approach focused on relationship banking. On this basis, the provision of guarantees is a necessary but not sufficient instrument when taking risks; therefore for the Group to assume risks, it needs to verify the payment or resource generation capacity to ensure the amortization of the risk incurred.

The above is carried out through a prudent risk management policy which consists of analyzing the financial risk in a transaction, based on the repayment or resource generation capacity of the credit recipient, the provision of guarantees in any of the generally accepted ways (cash collateral, pledged assets, personal guarantees, covenants or hedges) appropriate to the risk undertaken, and lastly on the recovery risk (the asset’s liquidity).

The procedures for the management and valuation of collaterals are set out in the internal Manual on Credit Risk Management Policies, which the Group actively uses in the arrangement of transactions and in the monitoring of both these and customers.

This Manual lays down the basic principles of credit risk management, which includes the management of the collateral assigned in transactions with customers. Accordingly, the risk management model jointly values the existence of an adequate cash flow generation by the obligor that enables him to service the debt, together with the existence of suitable and sufficient guarantees that ensure the recovery of the credit when the obligor’s circumstances render him unable to meet their obligations.

The procedures used for the valuation of the collateral are consistent with the market’s best practices, which involve the use of appraisal for real estate guarantees, market price for shares, quoted value of shares in a mutual fund, etc.

All collaterals assigned are to be properly instrumented and recognized in the corresponding register, as well as receive the approval of the Group’s Legal Units.

The following is a description of the main collateral for each financial instrument class:

•  Financial assets held for trading:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are implicit in the clauses of the instrument. In trading derivatives, credit risk is minimized through contractual netting agreements, where positive- and negative-value derivatives with the same counterparty are offset for their net balance. There may likewise be other kinds of guarantees, depending on counterparty solvency and the nature of the transaction.

•  Other financial assets at fair value through profit or loss:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent in the structure of the instrument.

•  Available for sale financial assets:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent in the structure of the instrument.

•  Loans and receivables:

•  Loans and advances to credit institutions:  These have the counterparty’s personal guarantee.

•  Total lending to customers:  Most of these operations are backed by personal guarantees extended by the counterparty. The collateral received to secure loans and advances to other debtors includes mortgages, cash guarantees and other collateral such as pledged securities. Other kinds of credit enhancements may be put in place such as guarantees.

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•  Debt securities:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent in the structure of the instrument.

•  Held-to-maturity investments:  The guarantees or credit enhancements obtained directly from the issuer or counterparty are inherent in the structure of the instrument.

•  Hedging derivatives:  Credit risk is minimized through contractual netting agreements, where positive- and negative-value derivatives with the same counterparty are settled at their net balance. There may likewise be other kinds of guarantees, depending on counterparty solvency and the nature of the transaction.

•  Financial guarantees, other contingent exposures and drawable by third parties:  They have the counterparty’s personal guarantee and, in some cases, the additional guarantee from another credit institution with which a credit derivative has been subscribed.

The Group’s collateralized credit risk as of December 31, 2009, 2008 and 2007, excluding balances deemed impaired, is broken down in the table below:

	2009		2008		2007
	Millions of euros
Mortgage loans		127,957		125,540		123,998
Operating assets mortgage loans		4,050		3,896		4,381
Home mortgages		99,493		96,772		79,377
Rest of mortgages		24,414		24,872		40,240
Secured loans, except mortgage		20,917		19,982		11,559
Cash guarantees		231		250		578
Pledging of securities		692		458		766
Rest of secured loans		19,994		19,274		10,215
Total		148,874		145,522		135,557

In addition, the derivatives carry contractual, legal compensation rights that have effectively reduced credit risk by €27,026 million as of December 31, 2009, by €29,377 million as of December 31, 2008 and by €9,481 million as of December 31, 2007.

As of December 31, 2009, specifically in relation to mortgages, the average amount pending loan collection represented 54% of the collateral pledged (55% as of December 31, 2008 and 2007).

Credit quality of financial assets that are neither past due nor impaired

BBVA has ratings tools that enable it to rank the credit quality of its operations and customers based on a scoring system and to map these ratings to probability of default (“PD”) scales. To analyze the performance of PD, the Bank has a series of historical databases that house the pertinent information generated internally.

The scoring tools vary by customer segment (companies, corporate clients, SMEs, public authorities, etc). Scoring is a decision model that contributes to both the arrangement and management of retail type loans: consumer loans, mortgages, credit cards for individuals, etc. Scoring is the tool used to decide to whom a loan should be assigned, what amount should be assigned and what strategies can help establish the price, because it is an algorithm that sorts transactions in accordance with their credit rating. Rating tools, as opposed to scoring tools, do not assess transactions but focus on customers instead: companies, corporate clients, SMEs, public authorities, etc. For wholesale portfolios where the number of defaults is very low (sovereigns, corporates, financial entities) the internal ratings models are fleshed out by benchmarking the statistics maintained by external rating agencies (Moody’s, Standard & Poor’s and Fitch). To this end, each year the Bank compares the PDs compiled by the agencies at each level of risk rating and maps the measurements compiled by the various agencies to the BBVA master rating scale.

Once the probability of default for the transactions or customers has been determined, the so-called business cycle adjustment starts. This involves generating a risk metric outside the context estimate, seeking to gather

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information that represents behavior for an entire economic cycle. This probability is linked to the Group’s master rating scale.

BBVA maintains a master rating scale with a view to facilitating the uniform classification of the Group’s various asset risk portfolios. The table below depicts the abridged scale which groups outstanding risk into 17 categories as of December 31, 2009:

	Probability of Default (Basic Points)
			Minimum from		Maximum Until
Rating	Average		>=		<
AAA		1		0		2
AA+		2		2		3
AA		3		3		4
AA-		4		4		5
A+		5		5		6
A		8		6		9
A-		10		9		11
BBB+		14		11		17
BBB		20		17		24
BBB-		31		24		39
BB+		51		39		67
BB		88		67		116
BB-		150		116		194
B+		255		194		335
B		441		335		581
B-		785		581		1,061
C		2,122		1,061		4,243

The table below outlines the distribution of exposure including derivatives by internal ratings, to financial entities and public institutions (excluding sovereign risk), of the Group’s main institutions as of December 31, 2009, 2008 and 2007:

Rating	2009			2008			2007
AAA/AA+/AA/AA-		19.55	%		23.78	%		27.00	%
A+/A/A-		28.78	%		26.59	%		17.00	%
BBB+		8.65	%		9.23	%		9.00	%
BBB		7.06	%		5.76	%		8.00	%
BBB-		6.91	%		9.48	%		8.00	%
BB+		4.46	%		8.25	%		14.00	%
BB		6.05	%		6.16	%		6.00	%
BB-		6.45	%		5.91	%		6.00	%
B+		5.38	%		3.08	%		3.00	%
B		3.34	%		1.44	%		2.00	%
B-		0.88	%		0.29	%		0.00	%
CCC/CC		2.49	%		0.03	%		0.00	%
Total		100.00	%		100.00	%		100.00	%

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Policies and procedures for preventing excessive risk concentration

In order to prevent thebuild-up of excessive concentrations of credit risk at the individual, country and sector levels, the Group oversees updated risk concentration indices at the individual and portfolio levels tied to the various observable variables within the field of credit risk management. The limit on the Group’s exposure or share of a customer’s financial business therefore depends on the customer’s credit rating, the nature of the facility, and the Group’s presence in a given market, based on the following guidelines:

•  The need to balance the customer’s financing needs, broken down by type (commercial/financial, short/long-term, etc.), and the degree to which its business is or is not attractive to BBVA. This approach provides a better operational mix that is still compatible with the needs of the bank’s clientele.

•  Other determining factors are national legislation and the ratio between the size of customer lending and the Bank’s equity (to prevent risk from becoming overly concentrated among few customers). Additional factors taken into consideration include constraints related to market, customer, internal regulation and macroeconomic factors, etc.

•  Meanwhile, correct portfolio management leads to identification of risk concentrations and enables appropriate action to be taken.

Operations with customers or groups that entail an expected loss plus economic capital of over €18 million are approved at the highest level, i.e., by the Board Risk Committee. As a reference, this is equivalent in terms of exposure to 10% of eligible equity for AAA and to 1% for a BB rating, implying oversight of the major individual risk concentrations by the highest-level risk governance bodies as a function of credit ratings.

There is additional guideline in terms of a maximum risk concentration level of up to and including 10% of equity: up to this level there are stringent requirements in terms of in-depth knowledge of the client, its operating markets and sectors of operation.

Financial assets past due but not impaired

The table below provides details of financial assets past due as of December 31, 2009, but not considered to be impaired, including any amount past due on this date, listed by their first due date:

	2009		2008		2007
	Millions of euros
Less than 1 month		2,653		1,580		1,422
1 to 2 months		336		534		298
2 to 3 months		311		447		234
Total		3,300		2,561		1,954

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Impaired assets and impairment losses

The table below shows the composition of the balance of impaired financial assets by heading in the balance sheet and the impaired contingent liabilities as of December 31, 2009, 2008 and 2007:

Impaired Risks	2009		2008		2007
	Millions of euros
IMPAIRED RISKS ON BALANCE
Available-for-sale financial assets		212		188		3
Debt securities		212		188		3
Loans and receivables		15,311		8,540		3,366
Loans and advances to credit institutions		100		95		8
Loans and advances to customers		15,197		8,437		3,358
Debt securities		14		8		—
Total		15,523		8,728		3,369
Government		87		102		177
Credit institutions		172		165		8
Other sectors		15,264		8,461		3,184
Mortgage		4,426		2,487		696
Rest of secured loans		1,663		941		113
Without secured loans		9,175		5,033		2,375
Total		15,523		8,728		3,369
IMPAIRED RISKS OFF BALANCE
Impaired contingent liabilities		405		131		49
TOTAL IMPAIRED RISKS		15,928		8,859		3,418

The estimated value of assets used as security for impaired assets with secured loans as of December 31, 2009 was higher than the outstanding amount of those assets.

The changes in 2009, 2008 and 2007 in the impaired financial assets and contingent liabilities were as follows:

	2009			2008			2007
	Millions of euros
Balance at the beginning of year		8,859			3,418			2,543
Additions		17,298			11,488			4,606
Recoveries		(6,524	)		(3,668	)		(2,418	)
Transfers to write-off		(3,737	)		(2,198	)		(1,497	)
Exchange differences and others		32			(181	)		184
Balance at the end of year		15,928			8,859			3,418

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Below are details of the impaired financial assets as of December 31, 2009, 2008 and 2007, without considering impaired contingent liabilities or valuation adjustments, classified by geographical location of risk and by the time since their oldest past-due amount or the period since they were deemed impaired:

	2009
	Amounts
	Less than
	Six
	Months		6 to 12		12 to 18		18 to 24		More than
Impaired Assets	Past-Due		Months		Months		Months		24 Months		Total
	Millions of euros
Spain		4,644		1,827		2,177		948		1,879		11,475
Rest of Europe		88		16		8		7		29		148
Latin America		1,308		134		80		15		490		2,027
United States		1,671		—		—		—		187		1,858
Rest		14		—		—		—		1		15
Total		7,727		1,977		2,265		970		2,586		15,523

	2008
	Amounts
	Less than
	Six
	Months		6 to 12		12 to 18		18 to 24		More than
Impaired Assets	Past-Due		Months		Months		Months		24 Months		Total
	Millions of euros
Spain		2,405		1,904		595		87		975		5,966
Rest of Europe		55		10		6		5		16		92
Latin America		1,112		88		22		7		320		1,549
United States		221		869		—		—		30		1,120
Rest		—		—		—		—		1		1
Total		3,793		2,871		623		99		1,342		8,728

	2007
	Amounts
	Less than
	Six
	Months		6 to 12		12 to 18		18 to 24		More than
Impaired Assets	Past-Due		Months		Months		Months		24 Months		Total
	Millions of euros
Spain		605		409		212		110		295		1,631
Rest of Europe		37		7		3		2		14		63
Latin America		808		104		12		8		312		1,244
United States		189		230		—		—		12		431
Rest		—		—		—		—		—		—
Total		1,639		750		227		120		633		3,369

The table below depicts the finance income accrued on impaired financial assets as of December 31, 2009, 2008 and 2007:

	2009		2008		2007
	Millions of euros
Financial income from impaired assets		1,485		1,042		880

This income is not recognized in the accompanying consolidated income statements due to the existence of doubts as to the collection of these assets.

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Note 2.2.1.b gives a description of the individual analysis of impaired financial assets, including the factors the entity takes into account in determining that they are impaired and the extension of guarantees and other credit enhancements.

The following shows the changes in impaired financial assets written off from the balance sheet for the years ended December 31, 2009, 2008 and 2007 because the possibility of their recovery was deemed remote:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		6,872			5,622			6,120
Increase:		3,880			1,976			2,112
Decrease:
Cash recovery		(188	)		(199	)		(237	)
Foreclosed assets		(48	)		(13	)		(5	)
Sales of written-off		(590	)		(261	)		(2,306	)
Other causes		(346	)		(94	)		(149	)
Net exchange differences		253			(159	)		87
Balance at the end of year		9,833			6,872			5,622

The Group’s Non-Performing Assets (“NPA”) ratios for the headings “Loans and advances to customers” and “Contingent liabilities” as of December 31, 2009, 2008 and 2007 were:

	2009		2008		2007
NPA ratio (%)		4.3		2.3		0.9

A breakdown of impairment losses by type of financial instrument registered in income statement and the recoveries of impaired financial assets in 2009, 2008 and 2007 is provided Note 49.

The accumulated balance of impairment losses broken down by portfolio as of December 31, 2009, 2008 and 2007 is as follows:

	Notes		2009		2008		2007
			Millions of euros
Available-for-sale financial assets		12		449		202		53
Loans and receivables — Loans and advances to customers		13.3		8,720		7,412		7,117
Loans and receivables — Loans and advances to credit institutions		13.2		68		74		10
Loans and receivables — Debt securities				17		19		9
Held to maturity investments		14		1		4		5
Total				9,255		7,711		7,194
Of which:
For impaired portfolio				6,380		3,480		1,999
For current portfolio non impaired				2,875		4,231		5,195

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The changes in the accumulated impairment losses for the years 2009, 2008 and 2007 were as follows:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		7,711			7,194			6,504
Increase in impairment losses charged to income		8,282			4,590			2,462
Decrease in impairment losses credited to income		(2,622	)		(1,457	)		(333	)
Acquisition of subsidiaries in the year		—			1			276
Disposal of subsidiaries in the year		—			(4	)		(26	)
Transfers to written-off loans		(3,878	)		(1,951	)		(1,297	)
Exchange differences and other		(238	)		(662	)		(392	)
Balance at the end of year		9,255			7,711			7,194

Most of the impairment on financial assets are included under the heading “Loans and receivables — Loans and advances to customers” whose changes for the years ended 2009, 2008 and 2007 were as follows:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		7,412			7,117			6,404
Increase in impairment losses charged to income		7,983			4,434			2,455
Decrease in impairment losses credited to income		(2,603	)		(1,636	)		(553	)
Acquisition of subsidiaries in the year		—			—			276
Disposal of subsidiaries in the year		—			—			(26	)
Transfers to written-off loans		(3,828	)		(1,950	)		(1,296	)
Exchange differences and other		(244	)		(553	)		(143	)
Balance at the end of year		8,720			7,412			7,117

7.2   MARKET RISK

a)   Market Risk

Market risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, resulting in changes in the different assets and financial risk factors. The risk can be mitigated or even eliminated through hedges using other products (assets/liabilities or derivatives), or by undoing the transaction/open position.

There are four main risk factories that affect market prices: interest rates, foreign exchange rates, equity and commodities.

•  Interest rate risk:  defined as changes in the term structure of market interest rates for different currencies.

•  Foreign-exchange risk:  this is the risk resulting from changes in the foreign exchange rate for different currencies.

•  Price risk:  This is the risk resulting from variations in market prices, either due to factors specific to the instrument itself, or alternatively to factors which affect all the instruments traded on the market.

•  Commodities risk:  this is the risk resulting from changes in the price of traded commodities.

In addition, for certain positions, other risks also need to be considered: credit spread risk, basis risk, volatility or correlation risk.

Value at Risk (VaR) is the basic variable for measuring and controlling the Group’s market risk. This risk metric estimates the maximum loss that may occur in a portfolio’s market positions for a particular time horizon and given confidence level. VaR is calculated in the Group at a 99% confidence level and a1-day time horizon.

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The BBVA and BBVA Bancomer have received approval from the Bank of Spain to use the internal model to calculate bank capital for market risk. This authorization was made effective from December 31, 2004 in the case of BBVA, and from December 31, 2007 for BBVA Bancomer.

In BBVA and BBVA Bancomer VaR is estimated using Historic Simulation methodology. This methodology consists of observing how the profits and losses of the current portfolio would perform if the market conditions from a particular historic period were in force, and from that information to infer the maximum loss at a certain confidence level. It offers the advantage of accurately reflecting the historical distribution of the market variables and of not requiring any specific distribution assumption. The historic period used is one of two years.

With regard to market risk, limit structure determines a system of VaR and economic capital at risk limits for each business unit, with specificsub-limits by type of risk, activity and desk.

Validity tests are performed on the risk measurement models used to estimate the maximum loss that could be incurred in the positions assessed with a certain level of probability (backtesting), as well as measurements of the impact of extreme market events on risk positions (stress testing).

The Group is currently performing stress testing on historical and economic crisis scenarios drawn up by its Economic Research Department.

Changes in market risk in 2009

The BBVA Group’s market risk increased slightly in 2009 compared to previous years. The average risk for 2009 stood at €26.2 million (VaR calculation without smoothing). During 1H09, some subsidiaries of the Group in South America and Bancomer were more exposed to interest rates in light of the expectations of falling rates, which were evident through considerable cuts in the short end of the yield curves, which had a positive impact on activity results. This greater exposure was gradually reduced once the central banks stopped cutting interest rates, contributing toward a reduction of market risks in the region, which was helped by lower market volatility. During 2H09, the Group’s market risk trend was explained by some increases in Mercados Globales Europa’s exposure, especially, in long-term interest rates and in the volatility of stock markets.

In 2009, the changes in market risk (VaR calculations without smoothing with a 99% confidence level and a1-day horizon) were as follows:

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The breakdown of VaR by risk factor as of December 31, 2009, 2008 and 2007 was as follows:

VaR by Risk Factors	2009			2008			2007
Interest/Spread risk		37.6			24.2			12.2
Currency risk		2.3			7.4			2.4
Stock-market risk		8.9			1.1			6.3
Vega/Correlation risk		15.4			14.8			8.8
Diversification effect		(33.2	)		(24.3	)		(5.7	)
TOTAL		31.0			23.2			24.0
VaR medium in the year		26.2			20.2			21.5
VaR max in the year		33.1			35.3			26.4
VaR min in the year		18.2			12.8			16.7

b)   Structural interest rate risk

The aim of on-balance-sheet interest rate risk management is to maintain the BBVA Group’s exposure to market interest rate fluctuations at levels in keeping with its risk strategy and profile. In pursuance of this, the Asset-Liability Committee (ALCO) undertakes active balance sheet management through operations intended to optimize the levels of risk borne according to the expected earnings and enable the maximum levels of accepted risk with which to be complied.

ALCO uses the interest rate risk measurements performed by the Risk Area. Acting as an independent unit, the Risk Area periodically quantifies the impact of interest rate fluctuations on the BBVA Group’s net interest income and economic value.

In addition to measuring the sensitivity to 100-basis-point changes in market interest rates, the Group performs probability calculations that determine the economic capital and risk margin for structural interest rate risk in the BBVA’s Group banking activity (excluding the Treasury area), based on interest rate curve simulation models. The Group regularly performs stress tests and sensitivity analysis to complement its assessment of its interest rate risk profile.

All these risk measurements are subsequently analyzed and monitored, and levels of risk assumed and the degree of compliance with the limits authorized by the Executive Committee are reported to the various managing bodies of the BBVA Group.

Below are the average interest rate risk exposure levels in terms of sensitivity of the main financial institutions of the BBVA Group in 2009, in millions of euros:

Average Impact on Net Interest

Average Impact on Economic

Income(*)

Value(*)

100 Basis-

100 Basis-

100 Basis-

Point

Point

100 Basis-

Point

Increase

Decrease

Point Increase

Decrease

Europe

−3,63

%

+3,96

%

+0,45

%

−0,72

%

BBVA Bancomer

+1,28

%

−1,27

%

−2,89

%

+2,59

%

BBVA Compass

+0,83

%

−0,23

%

+1,26

%

−4,19

%

BBVA Puerto Rico

+3,57

%

−3,20

%

−1,68

%

+1,01

%

BBVA Chile

−0,64

%

+0,52

%

−6,15

%

+4,87

%

BBVA Colombia

+1,83

%

−1,85

%

−1,85

%

+1,93

%

BBVA Banco Continental

+1,78

%

−1,79

%

−5,38

%

+5,94

%

BBVA Banco Provincial

+0,71

%

−0,71

%

−1,58

%

+1,68

%-

BBVA Banco Francés

+0,86

%

−0,87

%

+0,13

%

−0,17

%

(*) Percentage relating to “1 year” net Interest margin forecast in each entity.

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(**) Percentage relating to each entity’s Capital Base.

As part of the measurement process, the Group established the assumptions regarding the movement and behavior of certain items, such as those relating to products with no explicit or contractual maturity. These assumptions are based on studies that estimate the relationship between the interest rates on these products and market rates and enable specific balances to be classified into trend-based balances maturing at long term and seasonal or volatile balances with short-term residual maturity.

c)   Structural currency risk

Structural foreign exchange risk is basically caused by exposure to variations in foreign exchange rates that arise in the Group’s foreign subsidiaries and the provision of funds to foreign branches financed in a different currency to that of the investment.

The ALCO is responsible for arranging hedging transactions to limit the capital impact of fluctuations in exchange rates, based on their projected trend, and to guarantee the equivalent euro value of the foreign currency earnings expected to be obtained from these investments.

Structural currency risk management is based on the measurements performed by the Risk Area. These measurements use a foreign exchange rate scenario simulation model which quantifies possible changes in value for a given confidence interval and a pre-established time horizon. The Executive Committee authorizes the system of limits and alerts for these risk measurements, which include a limit on the economic capital or unexpected loss arising from the foreign exchange risk of the foreign-currency investments.

As of December 31, 2009, the aggregate figure of asset exposure sensitivity to 1% depreciation in exchange rates stood at €82 million,with the following concentration: 53% in the Mexican peso, 34% in other South American currencies and 8% in the US dollar.

d)   Structural equity risk

The Group’s exposure to structural equity risk comes largely from its holdings in industrial and financial companies with medium- to long-term investment horizons, reduced by the short net positions held in derivative instruments on the same underlying assets, in order to limit portfolio sensitivity to potential price cuts. The aggregate sensitivity of the Group’s consolidated equity to a 1% fall in the price of shares stood, on December 31, 2009, at €47 million, while the sensitivity of the consolidated earnings to the same change in price on the same date is estimated at €4 million. The latter is positive in the case of falls in prices as these are short net positions in derivatives. This figure is determined by considering the exposure on shares measured at market price or, if not available, at fair value, including the net positions in options on the same underlyings in delta equivalent terms. Treasury Area portfolio positions are not included in the calculation.

The Risk Area measures and effectively monitors structural risk in the equity portfolio. To do so, it estimates the sensitivity figures and the capital necessary to cover possible unexpected losses due to the variations in the value of the equity portfolio at a confidence level that corresponds to the institution’s target rating, and taking account of the liquidity of the positions and the statistical performance of the assets under consideration. These figures are supplemented by periodic stress comparisons, back-testing and scenario analyses.

7.3   LIQUIDITY RISK

The aim of liquidity risk management and control is to ensure that the payment commitments can be duly met without having to resort to borrowing funds under burdensome terms, or damaging the image and reputation of the institution.

The Group’s liquidity risk monitoring is centralized in each bank and takes a dual approach: the short-term approach(90-day time horizon), which focuses basically on the management of payments and collections of Treasury and Markets, calculates the Bank’s possible liquidity requirements; and the structural, long-term approach, which focuses on the financial management of the balance sheet as a whole, with a minimum monitoring time frame of one year.

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The evaluation of asset liquidity risk is based on whether or not assets are eligible for rediscounting at the corresponding central bank. For normal situations, both in the short and medium term, those assets that are on the eligible list published by the European Central Bank (“ECB”) or the corresponding monetary authority are considered to be liquid. Non-eligible assets, quoted or non-quoted, are considered to represent a second line of liquidity for the entity when analyzing crisis situations.

Liquidity management is performed entirely by the Bank’s Assets and Liabilities Committee (“ALCO”), through Financial Management. For its implementation, it uses a broad scheme of limits, sublimits and alerts, approved by the Executive Committee, based on which the Risk Area carries out its independent measurement and control work. It also provides the manager withback-up decision-making tools and metrics. Each of the local risk areas, which are independent from the local manager, complies with the corporative principles of liquidity risk control that are established by the Global Market Risk Unit (“UCRAM”) — Structural Risks for the entire Group.

For each entity, the management areas request an outline of the quantitative and qualitative limits and alerts for short-medium- and long-term liquidity risk, which is authorized by the Executive Committee. Also, the Risk Area performs periodic (daily and monthly) risk exposure measurements, develops the related valuation tools and models, conducts periodic stress tests, measures interbank counterparty concentration, prepares the policies and procedures manual, and monitors the authorized limits and alerts, which are reviewed at least once every year.

Information on liquidity risk is periodically sent to the Group’s ALCO and to the managing areas themselves. Under the Contingency Plan, the Technical Liquidity Group (TLG), in the event of an alert of a possible crisis, conducts an initial analysis of the Bank’s short- and long-term liquidity situation. The TLG is made up of specialized staff from the Short-Term Cash Desk, Financial Management and the Global Market Risk Unit (UCRAM-Structural Risk). If the alert is serious, the TLG reports the matter to the Liquidity Committee, which is composed of the managers of the related areas. The Liquidity Committee is responsible, in situations requiring urgent attention, for calling a meeting of the Crisis Committee.

Below is a breakdown by contractual maturity, of the balances of certain headings in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, disregarding any valuation adjustments:

					Up to 1		1 to 3		3 to 12		1 to 5		Over 5
2009	Total		Demand		Month		Months		Months		Years		Years
	Millions of euros
ASSETS —
Cash and balances with central banks		16,331		14,650		535		248		735		163		—
Loans and advances to credit institutions		22,200		3,119		8,484		1,549		1,914		4,508		2,626
Loans and advances to customers		331,087		4,313		31,155		19,939		40,816		94,686		140,178
Debt securities		98,270		1,053		4,764		15,611		10,495		37,267		29,080
Derivatives (trading and hedging)		32,873		—		637		2,072		3,863		13,693		12,608
LIABILITIES —
Deposits from central banks		21,096		213		4,807		3,783		12,293		—		—
Deposits from credit institutions		48,945		1,836		24,249		5,119		5,145		6,143		6,453
Deposits from customers		253,383		106,942		55,482		34,329		32,012		18,325		6,293
Debt certificates (including bonds)		97,186		—		10,226		16,453		15,458		40,435		14,614
Subordinated liabilities		17,305		—		500		689		2		1,529		14,585
Other financial liabilities		5,625		3,825		822		141		337		480		20
Short positions		3,830		—		448		—		16		—		3,366
Derivatives (trading and hedging)		30,308		—		735		1,669		3,802		13,585		10,517

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					Up to 1		1 to 3		3 to 12		1 to 5		Over 5
2008	Total		Demand		Month		Months		Months		Years		Years
	Millions of euros
ASSETS —
Cash and balances with central banks		14,642		13,487		476		296		181		202		—
Loans and advances to credit institutions		33,679		6,198		16,216		1,621		2,221		4,109		3,314
Loans and advances to other debtors		341,322		13,905		36,049		23,973		45,320		91,030		131,045
Debt securities		72,704		716		1,701		12,230		9,483		24,640		23,934
Derivatives (trading and hedging)		44,779		—		3,739		2,206		5,442		16,965		16,427
LIABILITIES —
Deposits from central banks		16,762		2,419		8,737		2,441		3,165		—		—
Deposits from credit institutions		49,573		4,906		22,412		4,090		5,975		6,581		5,609
Money market operations through counterparties		—		—		—		—		—		—		—
Deposits from other creditors		253,723		101,141		68,804		27,025		35,176		16,440		5,137
Debt certificates (including bonds)		101,328		—		9,788		13,516		12,072		45,469		20,483
Subordinated liabilities		16,249		69		913		1		872		3,582		10,812
Other financial liabilities		8,453		5,000		1,152		385		203		1,371		342
Short positions		2,700		—		24		—		23		—		2,653
Derivatives (trading and hedging)		41,535		—		2,693		3,108		6,310		15,538		13,886

					Up to 1		1 to 3		3 to 12		1 to 5		Over 5
2007	Total		Demand		Month		Months		Months		Years		Years
	Millions of euros
ASSETS —
Cash and balances with central banks		22,561		22,532		29		—		—		—		—
Loans and advances to credit institutions		24,392		3,764		12,246		2,519		2,301		2,703		859
Loans and advances to other debtors		319,671		7,220		30,338		23,778		46,226		87,414		124,695
Debt securities		81,715		516		1,719		24,726		8,964		20,884		24,906
LIABILITIES —
Deposits from central banks		27,256		117		25,013		1,435		691		—		—
Deposits from credit institutions		60,394		6,696		36,665		4,063		5,258		5,657		2,055
Money market operations through counterparties		—		—		—		—		—		—		—
Deposits from other creditors		218,541		74,605		51,671		15,815		36,390		34,404		5,656
Debt certificates (including bonds)		101,874		5,987		7,391		4,191		14,878		44,178		25,249
Subordinated liabilities		15,397		1,200		495		15		583		2,722		10,382
Other financial liabilities		6,239		3,810		1,372		182		450		372		53

In the wake of the exceptional circumstances unfolding in the international financial markets, notably in 2008 and 2009, the European governments made a decided effort to try to resolve the issues confronting bank funding and the ramifications of constrained funding on the real economy with a view to safeguarding the stability of the international financial system. The overriding goals underpinning these measures were to ensure sufficient liquidity to enable financial institutions to function correctly, facilitate bank funding, provide financial institutions with additional capital resources where needed so as to continue to ensure the proper financing of the economy, ensure that applicable accounting standards are sufficiently flexible to take into consideration current exceptional market circumstances and to reinforce and improve cooperation among European nations.

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The following measures were passed into law in Spain in 2008 to mitigate the problem of bank funding: Royal Decree-Law 6/2008, of October 10, creating the Spanish Financial Asset Acquisition Fund, and Order EHA/3118/2008, dated October 31, implementing this Royal Decree, as well as Royal Decree-Law 7/2008, of October 13, on Emergency Economic Measures in connection with the Concerted Euro Area Action Plan, and Order EHA/3364/2008, dated November 21.

The Bank can make use of the above measures as part of its risk management policy. However, at the date of preparation of the accompanying consolidated financial statements, the Group has not had to resort to using these facilities.

On December 17, 2009, the Basel Committee on Banking Supervision submitted a series of proposals of different kinds aimed at reinforcing international financial system standards regarding Capital and liquidity. The main purpose of the recommendations is to standardize criteria, establish common standards, and to step up regulatory requirements in the financial sector. The new requirements are expected to enter into force at the end of 2012.

7.4.   RISK CONCENTRATIONS

The table below shows the Group’s financial instruments by geographical area, not taking into account valuation adjustments, as of December 31, 2009 and 2008:

2009

			Europe
			Except
Risks On-Balance	Spain		Spain		USA		Latin America		Rest		Total
	Millions of euros
Financial assets held for trading		22,893		25,583		3,076		15,941		2,240		69,733
Debt securities		14,487		7,434		652		11,803		296		34,672
Equity instruments		3,268		624		35		1,662		194		5,783
Derivatives		5,138		17,525		2,389		2,476		1,750		29,278
Other financial assets designated at fair value through profit or loss		330		73		436		1,498		—		2,337
Debt securities		157		42		435		5		—		639
Equity instruments		173		31		1		1,493		—		1,698
Available-for-sale portfolio		30,177		11,660		7,828		12,585		1,266		63,516
Debt securities		24,838		11,429		7,082		12,494		1,223		57,066
Equity instruments		5,339		231		746		91		43		6,450
Loans and receivables		206,097		34,613		40,469		66,395		6,167		353,741
Loans and advances to credit institutions		2,568		11,280		2,441		4,993		918		22,200
Loans and advances to customers		203,529		23,333		37,688		61,298		5,239		331,087
Debt securities		—		—		340		104		10		454
Held-to-maturity investments		2,625		2,812		—		—		—		5,437
Hedging derivatives		218		2,965		117		270		25		3,595
Total		262,340		77,706		51,926		96,689		9,698		498,359

			Europe
			Except
Risks Off-Balance	Spain		Spain		USA		Latin America		Rest		Total
Financial guarantees		15,739		7,826		3,330		4,601		1,689		33,185
Other contingent exposures		37,804		24,119		15,990		13,164		1,246		92,323
Total		53,543		31,945		19,320		17,765		2,935		125,508

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2008

			Europe				Latin
Risks On-Balance	Spain		Except Spain		USA		America		Rest		Total
	Millions of euros
Financial assets held for trading		20,489		30,251		4,566		16,120		1,873		73,299
Debt securities		7,799		5,926		652		11,563		616		26,556
Equity instruments		2,332		1,376		80		1,071		938		5,797
Derivatives		10,358		22,949		3,834		3,486		319		40,946
Other financial assets designated at fair value through profit or loss		245		24		442		1,042		1		1,754
Debt securities		63		—		441		12		—		516
Equity instruments		182		24		1		1,030		1		1,238
Available-for-sale portfolio		15,233		10,460		9,633		8,449		2,999		46,774
Debt securities		11,811		9,970		8,889		8,368		924		39,962
Equity instruments		3,422		490		744		81		2,075		6,812
Loans and receivables		215,030		44,394		38,268		69,534		8,162		375,388
Loans and advances to credit institutions		6,556		15,848		2,479		7,466		1,330		33,679
Loans and advances to customers		208,474		28,546		35,498		61,978		6,826		341,322
Debt securities		—		—		291		90		6		387
Held-to-maturity investments		2,396		2,889		—		—		—		5,285
Hedging derivatives		439		2,789		270		309		26		3,833
Total		253,832		90,807		53,179		95,454		13,061		506,333

			Europe
			Except				Latin
Risks Off-Balance	Spain		Spain		USA		America		Rest		Total
Financial guarantees		16,843		8,969		3,456		4,721		1,963		35,952
Other contingent exposures		45,039		22,366		16,194		13,559		1,739		98,897
Total		61,882		31,335		19,650		18,280		3,702		134,849

The breakdown of the principal consolidated balance sheets in the most significant foreign currencies as of December 31, 2009, 2008 and 2007, are set forth in Appendix IX.

8.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial asset or a liability on a given date is the amount for which it could be exchanged or settled, respectively, between two knowledgeable, willing parties in an arm’s length transaction. The most objective and common reference for the fair value of a financial asset or a liability is the price that would be paid for it on an organized, transparent and deep market (“quoted price” or “market price”).

If there is no market price for a given financial asset or liability, its fair value is estimated on the basis of the price established in recent transactions involving similar instruments and, in the absence thereof, by using mathematical measurement models sufficiently tried and trusted by the international financial community. The estimates used in such models take into consideration the specific features of the asset or liability to be measured and, in particular, the various types of risk associated with the asset or liability. However, the limitations inherent in the measurement models developed and the possible inaccuracies of the assumptions required by these models may mean that the fair value of an asset or liability that is estimated does not coincide exactly with the price for which the asset or liability could be exchanged or settled on the date of its measurement.

F-66

Determining the fair value of financial instruments

Below is a comparison of the carrying amount of the Group’s financial assets and liabilities and their respective fair values as of December 31, 2009, 2008 and 2007:

			2009				2008				2007
			Book		Fair		Book		Fair		Book		Fair
	Note		Value		Value		Value		Value		Value		Value
	Millions of euros
Assets
Cash and balances with central banks		9		16,344		16,344		14,659		14,659		22,581		22,581
Financial assets held for trading		10		69,733		69,733		73,299		73,299		62,336		62,336
Other financial assets designated at fair value through profit or loss		11		2,337		2,337		1,754		1,754		1,167		1,167
Available-for-sale financial assets		12		63,521		63,521		47,780		47,780		48,432		48,432
Loans and receivables		13		346,117		354,933		369,494		381,845		337,765		345,505
Held-to-maturity investments		14		5,437		5,453		5,282		5,221		5,584		5,334
Hedging derivatives		15		3,595		3,595		3,833		3,833		1,050		1,050
Liabilities
Financial assets held for trading		10		32,830		32,830		43,009		43,009		19,273		19,273
Other financial liabilities designated at fair value through profit or loss		11		1,367		1,367		1,033		1,033		449		449
Financial liabilities at amortized cost		23		447,936		448,537		450,605		447,722		431,856		425,265
Hedging derivatives		15		1,308		1,308		1,226		1,226		1,807		1,807

For financial instruments whose carrying amount is different from its fair value, fair value was calculated in the following manner:

•  The fair value of “Cash and balances with central banks”, which are short term by their very nature, is equivalent to their carrying amount.

•  The fair value of“Held-to-maturity investments” is equivalent to their quoted price in active markets.

•  The fair values of “Loans and receivables” and “Financial liabilities at amortized cost” were estimated by discounting estimated cash flows using the market interest rates prevailing at each year-end.

For financial instruments whose carrying amount corresponds to their fair value, the measurement processes used are set forth below:

•  Level 1:  Measurement using market observable quoted prices for the financial instrument in question, secured from independent sources and linked to active markets. This level includes listed debt securities, listed equity instruments, some derivatives and mutual funds.

•  Level 2:  Measurement using valuation techniques the inputs for which are drawn from market observable data.

•  Level 3:  Measurement using valuation techniques, where some of the inputs are not taken from market observable data. Model selection and validation is undertaken at the independent business units.

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The following table depicts the main financial instruments carried at fair value as of December 31, 2009, 2008 and 2007, broken down by the valuation technique level used to determine fair value:

			2009						2008						2007
Fair Value by Levels	Note		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
			Millions of euros
ASSETS
Financial assets held for trading		10		39,608		29,236		889		29,096		43,257		946		44,880		17,246		210
Debt securities		10.2		33,043		1,157		471		22,227		4,015		314		34,265		4,031		96
Other equity instruments		10.3		5,504		94		185		5,348		89		360		9,149		30		1
Trading derivatives		10.4		1,060		27,985		233		1,521		39,153		272		1,466		13,185		113
Other financial assets designated at fair value through profit or loss		11		1,960		377		—		923		831		—		1,116		51		—
Debt securities				584		54		—		515		1		—		370		51		—
Other equity instruments				1,376		323		—		408		830		—		746		—		—
Available-for-sale financial assets		12		49,747		12,367		818		24,640		19,679		2,905		37,590		10,445		397
Debt securities				44,387		12,146		538		19,274		19,384		1,173		35,587		1,452		297
Other equity instruments				5,360		221		280		5,366		295		1,732		2,003		8,993		100
Hedging derivatives		15		302		3,293		—		444		3,386		2		389		661		—
LIABILITIES
Financial liabilities held for trading		10		4,936		27,797		96		4,517		38,408		84		1,506		17,691		76
Trading derivatives		10.4		1,107		27,797		96		1,817		38,408		84		—		17,464		76
Short positions		10.1		3,830		—		—		2,700		—		—		1,506		227		—
Other financial liabilities designated at fair value through profit or loss		11		—		1,367		—		—		1,033		—		449		—		—
Hedging derivatives		15		319		989		—		564		662		—		502		1,305		—

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The following table sets forth the main valuation techniques, hypotheses and inputs used in the estimation of fair value in level 2 and 3, based on the type of financial instrument:

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(1)	Credit spread: The spread between the interest rate of a risk-free asset (e.g. Treasury securities) and the interest rate of any other security that is identical in every respect except for its credit rating. Spreads are considered as Level 3 inputs when referring to illiquid issues. Based on spreads of similar entities.
(2)	Correlation decay: The constant rate of decay that allows us to calculate how the correlation evolves between the different pairs of forward rates.
(3)	Vol-of-Vol:: Volatility of implicit volatility. This is a statistical measure of the changes of the spot volatility.
(4)	Reversion Factor: The speed with which volatility reverts to its mean.
(5)	Volatility- Spot Correlation: A statistical measure of the linear relationship (correlation) between the spot price of a security and its volatility.

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The changes in 2009 in the balance of Level 3 financial assets and liabilities were as follows:

	Level 3
Changes in Financial Assets in Level 3	Assets			Liabilities
	Millions of euros
Balance as of January 1		3,853			84
Valuation adjustments recognized in the income statement		(146	)		6
Valuation adjustments not recognized in the income statement		33			—
Acquisitions, disposals and liquidations		(634	)		(1	)
Transfers to/from Level 3		(1,375	)		7
Exchange differences		(24	)		—
Balance at end of year		1,707			96

The change in the amount of assets classified as Level 3 in 2009 is due to the improvement in the situation of the liquidity of certain financial markets in 2007 and 2008 which became illiquid as well as to the sale of certain instruments, primarily hedge funds.

As of December 31, 2009, the potential effect on the valuation of Level 3 financial instruments of a change in the main models if other reasonable models, more or less favorable, were used, taking the highest or lowest value of the range deemed probable, would mean increasing or reducing the net gains and losses by the following amounts:

	Potential Impact on Consolidated Income Statement (Million euros)					Potential Impact on Total Equity (Million euros)
	Most Favorable		Least Favorable			Most Favorable		Least Favorable
Sensitivity Analysis for Level 3 Financial Assets	Hypotheses		Hypotheses			Hypotheses		Hypotheses
	Millions of euros
ASSETS		53		(80	)		30		(35	)
Financial assets held for trading		53		(80	)		—		—
Available-for-sale financial assets		—		—			30		(35	)
LIABILITIES		6		(6	)		—		—
Financial liabilities held for trading		6		(6	)		—		—
Total		59		(86	)		30		(35	)

Loans and financial liabilities at fair value through profit or loss

As of December 31, 2009, 2008 and 2007, there were no loans or financial liabilities at fair value other than those recognized in the headings “Other financial assets designated at fair value through profit and loss” and “Other financial liabilities designated at fair value through profit and loss” in the accompanying consolidated balance sheets.

Financial instruments at cost

The Group had equity instruments, derivatives with equity instruments as underlyings and certain discretionary profit sharing arrangements that were recognized at cost in Group’s consolidated balance sheet, as their fair value could not be reliably determined. As of December 31, 2009 and 2008, the balance of these financial instruments amounted to €589 million and €556 million, respectively. These instruments are currently in theavailable-for-sale portfolio.

The fair value of these instruments could not be reliably estimated because it corresponds to shares in companies not quoted on organized exchanges, and any valuation technique that could be used would contain significant unobservable inputs.

F-71

The table below outlines the financial assets and liabilities carried at cost that were sold in 2009:

			Carrying Amount
	Amount of Sale		At Sale Date		Gains (Losses)
	Millions of euros
Sales of financial instruments at cost		73		64		9

9.   CASH AND BALANCES WITH CENTRAL BANKS

The breakdown of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Cash		4,218		3,915		2,938
Balances at the Bank of Spain		2,426		2,391		11,543
Balances at other central banks		9,687		8,336		8,080
Subtotal		16,331		14,642		22,561
Accrued interests		13		17		20
Total		16,344		14,659		22,581

10.   FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING

10.1.   BREAKDOWN OF THE BALANCE

The breakdown of the balances of these headings in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Assets —
Debt securities		34,672		26,556		38,392
Equity instruments		5,783		5,797		9,180
Trading derivatives		29,278		40,946		14,764
Total		69,733		73,299		62,336
Liabilities —
Trading derivatives		29,000		40,309		17,540
Short positions		3,830		2,700		1,733
Total		32,830		43,009		19,273

F-72

10.2.   DEBT SECURITIES

The breakdown by type of instrument of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Issued by central banks		326		378		208
Spanish government bonds		13,463		6,453		5,043
Foreign government bonds		17,500		13,947		22,709
Issued by Spanish financial institutions		431		578		1,436
Issued by foreign financial institutions		954		2,247		4,584
Other debt securities		1,998		2,953		4,412
Total		34,672		26,556		38,392

10.3.   EQUITY INSTRUMENTS

The breakdown of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Shares of Spanish companies		3,268		2,332		2,996
Credit institutions		666		444		237
Other sectors		2,602		1,888		2,759
Shares of foreign companies		2,515		3,465		6,184
Credit institutions		156		205		602
Other sectors		2,359		3,260		5,582
Total		5,783		5,797		9,180

10.4.   TRADING DERIVATIVES

The trading derivatives portfolio arises from the Group’s need to manage the risks incurred by it in the course of its normal business activity, mostly for the positions held with customers. As of December 31, 2009, 2008 and 2007, trading derivatives were principally contracted in non-organized markets, with non-resident credit entities as the main counterparties, and related to foreign exchange and interest rate risk and shares.

F-73

Below is a breakdown by transaction type and market, of the fair value of outstanding financial trading derivatives recognized in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 and held by the main companies in the Group, divided into organized and non-organized (Over The Counter — “OTC”) markets:

							Equity			Precious
	Currency			Interest			Price			Metals		Commodities			Credit			Other
2009	Risk			Rate Risk			Risk			Risk		Risk			Risk			Risks			Total
	Millions of euros
Organized markets		—			2			(136	)		—		—			—			—			(134	)
Financial futures		—			2			7			—		—			—			—			9
Options		—			—			(143	)		—		—			—			—			(143	)
Other products		—			—			—			—		—			—			—			—
OTC markets		110			658			(597	)		2		7			228			4			412
Credit institutions		(320	)		(1,772	)		(662	)		2		12			(66	)		3			(2,803	)
Forward transactions		251			—			—			—		—			—			—			251
Future rate agreements (FRAs)		—			30			—			—		—			—			—			30
Swaps		(568	)		(1,559	)		(126	)		2		18			—			—			(2,233	)
Options		(3	)		(243	)		(536	)		—		(6	)		—			3			(785	)
Other products		—			—			—			—		—			(66	)		—			(66	)
Other financial institutions		27			875			(312	)		—		1			345			—			936
Forward transactions		28			—			—			—		—			—			—			28
Future rate agreements (FRAs)		—			(2	)		—			—		—			—			—			(2	)
Swaps		—			932			29			—		1			—			—			962
Options		(1	)		(55	)		(341	)		—		—			—			—			(397	)
Other products		—			—			0			—		—			345			—			345
Other sectors		403			1,555			377			—		(6	)		(51	)		1			2,279
Forward transactions		351			—			0			—		—			—			—			351
Future rate agreements (FRAs)		—			(1	)		0			—		—			—			—			(1	)
Swaps		7			1,383			44			—		(9	)		—			—			1,425
Options		45			155			336			—		3			—			1			540
Other products		—			18			(3	)		—		—			(51	)		—			(36	)
Total		110			660			(733	)		2		7			228			4			278
of which: asset trading derivatives		5,953			19,398			2,836			2		59			1,018			12			29,278
of which: liability trading derivatives		(5,843	)		(18,738	)		(3,569	)		—		(52	)		(790	)		(8	)		(29,000	)

F-74

	Currency			Interest			Equity			Commodities			Credit			Other
2008	Risk			Rate Risk			Price Risk			Risk			Risk			Risks			Total
	Millions of euros
Organized markets		—			5			(228	)		—			2			—			(221	)
Financial futures		—			—			4			—			—			—			4
Options		—			5			(232	)		—			2			—			(225	)
OTC markets		(1,491	)		1,288			674			93			294			—			858
Credit institutions		(1,676	)		(1,652	)		(165	)		15			(196	)		—			(3,674	)
Forward transactions		(978	)		—			—			—			—			—			(978	)
Future rate agreements (FRAs)		—			68			—			—			—			—			68
Swaps		(672	)		(1,580	)		154			15			(196	)		—			(2,279	)
Options		(26	)		(140	)		(319	)		0			0			—			(485	)
Other financial institutions		(112	)		1,335			(151	)		27			580			—			1,679
Forward transactions		(110	)		—			—			—			—			—			(110	)
Swaps		—			1,278			24			12			580			—			1,894
Options		(2	)		57			(175	)		15			—			—			(105	)
Other sectors		297			1,605			990			51			(90	)		—			2,853
Forward transactions		378			—			—			—			—			—			378
Swaps		10			1,482			49			63			(90	)		—			1,514
Options		(91	)		119			962			(12	)		—			—			978
Other products		—			4			(21	)		—			—			—			(17	)
Total		(1,491	)		1,293			446			93			296			—			637
of which: asset trading derivatives		10,940			22,574			5,082			174			2,174			2			40,946
of which: liability trading derivatives		(12,431	)		(21,281	)		(4,636	)		(81	)		(1,878	)		(2	)		(40,309	)

F-75

	Currency			Interest			Equity			Commodities			Credit			Other
2007	Risk			Rate Risk			Price Risk			Risk			Risk			Risks			Total
	Millions of euros
Organized markets		(1	)		1			214			1			—			—			215
Financial futures		—			—			2			—			—			—			2
Options		(1	)		—			212			1			—			—			212
Other products		—			1			—			—			—			—			1
OTC markets		(1,762	)		764			(2,063	)		2			50			18			(2,997	)
Credit institutions		(1,672	)		(417	)		(1,140	)		2			115			15			(3,103	)
Forward transactions		(1,379	)		—			—			—			—			—			(1,379	)
Future rate agreements (FRAs)		—			70			—			—			—			—			70
Swaps		(343	)		(328	)		(287	)		2			—			—			(956	)
Options		50			(149	)		(853	)		—			—			9			(943	)
Other products		—			(10	)		—			—			115			—			105
Other financial institutions		(160	)		1,716			(840	)		—			91			—			807
Forward transactions		(161	)		—			(2	)		—			—			—			(163	)
Future rate agreements (FRAs)		—			—			—			—			—			—			—
Swaps		—			1,695			22			—			—			—			1,717
Options		1			21			(860	)		—			—			—			(838	)
Other products		—			—			—			—			91			—			91
Other sectors		70			(535	)		(83	)		—			(156	)		3			(701	)
Forward transactions		27			—			(1	)		—			—			—			26
Future rate agreements (FRAs)		—			—			—			—			—			—			—
Swaps		(1	)		(646	)		(251	)		—			—			—			(898	)
Options		44			111			169			—			—			3			327
Other products		—			—			—			—			(156	)		—			(156	)
Total		(1,763	)		765			(1,849	)		3			50			18			(2,782	)
of which: asset trading derivatives		2,038			9,866			2,497			21			307			35			14,764
of which: liability trading derivatives		(3,800	)		(9,101	)		(4,345	)		(18	)		(258	)		(23	)		(17,540	)

F-76

11.   OTHER FINANCIAL ASSETS AND LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS

The detail of the balances of these headings in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, were as follows:

	2009		2008		2007
	Millions of euros
Assets
Debt securities		639		516		421
Unit-Linked products		95		516		421
Other securities		544		—		—
Equity instruments		1,698		1,238		746
Unit-Linked products		1,242		921		329
Other securities		456		317		417
Total		2,337		1,754		1,167
Liabilities
Other financial liabilities		1,367		1,033		449
Unit-Linked products		1,367		1,033		449
Total		1,367		1,033		449

12.   AVAILABLE-FOR-SALE FINANCIAL ASSETS

12.1.   BREAKDOWN OF THE BALANCE

The detail of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, broken down by the nature of the financial instruments, was as follows:

	2009		2008		2007
	Millions of euros
Debt securities		57,071		39,831		37,336
Other equity instruments		6,450		7,949		11,096
Total		63,521		47,780		48,432

F-77

12.2.   DEBT SECURITIES

The detail of the balance of the heading “Debt securities” as of December 31, 2009, 2008 and 2007, broken down by the nature of the financial instruments, was as follows:

2009	Unrealized Gains		Unrealized Losses			Fair Value
	Millions of euros
Domestic		487		(195	)		24,869
Spanish Government and other government agency debt securities		309		(70	)		18,551
Other debt securities		178		(125	)		6,318
International		1,067		(733	)		32,202
United States		174		(173	)		6,805
Government securities		11		(2	)		637
US Treasury and other US Government agencies		4		(2	)		416
States and political subdivisions		7		—			221
Other securities		163		(171	)		6,168
Other Countries		893		(560	)		25,397
Other foreign Governments and other government agency debt securities		697		(392	)		17,363
Other debt securities		196		(168	)		8,034
Total net		1,554		(928	)		57,071

The increase in the balance of the heading “Financial assets held for trading — Debt securities” in 2009 is due to the acquisition of debt securities from the Spanish government and other countries.

	Unrealized		Unrealized			Fair
2008	Gains		Losses			Value
	Millions of euros
Domestic		229		(62	)		11,910
Spanish Government and other government agency debt securities		138		—			6,371
Other debt securities		91		(62	)		5,539
International		586		(774	)		27,920
United States		155		(286	)		10,442
Government securities		15		(1	)		840
US Treasury and other US Government agencies		0		—			444
States and political subdivisions		15		(1	)		396
Other securities		140		(285	)		9,602
Other Countries		431		(488	)		17,478
Other foreign Governments and other government agency debt securities		261		(232	)		9,653
Other debt securities		170		(256	)		7,825
Total net		815		(836	)		39,830

F-78

	Unrealized		Unrealized			Fair
2007	Gains		Losses			Value
	Millions of euros
Domestic		150		(77	)		10,161
Spanish Government and other government agency debt securities		79		(31	)		5,274
Other debt securities		71		(46	)		4,887
International		737		(287	)		27,175
United States		50		(45	)		9,056
Government securities		6		(2	)		579
US Treasury and other US Government agencies		1		—			61
States and political subdivisions		5		(2	)		518
Other securities		44		(43	)		8,477
Other Countries		687		(242	)		18,119
Other foreign Governments and other government agency debt securities		562		(128	)		11,278
Other debt securities		125		(114	)		6,841
Total net		887		(364	)		37,336

12.3.   EQUITY INSTRUMENTS

The breakdown of the balance of the heading “Equity instruments”, broken down by the nature of the financial instruments as of December 31, 2009, 2008 and 2007 was as follows:

	Unrealized		Unrealized			Fair
2009	Gains		Losses			Value
	Millions of euros
Other equity instruments listed		1,750		(40	)		5,633
Listed spanish company shares		1,738		(12	)		5,383
Credit institutions		—		—			—
Other entities		1,738		(12	)		5,383
Listed foreign company shares		12		(28	)		250
United States		—		(8	)		8
Other countries		12		(20	)		242
Other unlisted equity instruments		109		—			817
Unlisted spanish company shares		—		—			26
Credit institutions		—		—			1
Other entities		—		—			25
Shares of unlisted foreign companies		109		—			791
United States		104		—			729
Other countries		5		—			62
Total		1,859		(40	)		6,450

F-79

The decrease of the balance in this heading in 2009 is fundamentally due to the reclassification of the participation in China Citic Bank (“CNCB”) (Note 17).

	Unrealized		Unrealized			Fair
2008	Gains		Losses			Value
	Millions of euros
Other equity instruments listed		1,190		(236	)		7,082
Listed spanish company shares		1,189		(95	)		4,639
Credit institutions		—		(9	)		22
Other entities		1,189		(86	)		4,617
Listed foreign company shares		1		(141	)		2,443
United States		—		(11	)		28
Other countries		1		(130	)		2,416
Other unlisted equity instruments		7		(1	)		867
Unlisted spanish company shares		—		(1	)		36
Credit institutions		—		—			1
Other entities		—		(1	)		35
Shares of unlisted foreign companies		7		—			831
United States		—		—			626
Other countries		7		—			205
Total		1,197		(237	)		7,949

	Unrealized			Unrealized			Fair
2007	Gains			Losses			Value
	Millions of euros
Other equity instruments listed		4,449			(24	)		10,797
Listed spanish company shares		3,322			—			7,032
Credit institutions		4			—			35
Other entities		3,318			—			6,997
Listed foreign company shares		1,127			(24	)		3,765
United States		—			(1	)		419
Other countries		1,127			(23	)		3,346
Other unlisted equity instruments		52			(5	)		299
Unlisted spanish company shares		64			(5	)		132
Credit institutions		—			—			2
Other entities		64			(5	)		130
Shares of unlisted foreign companies		(12	)		—			167
United States		—			—			70
Other countries		(12	)		—			97
Total		4,501			(29	)		11,096

F-80

12.4.   GAINS/LOSSES

The changes in the gains/losses, net of taxes, recognized under the equity heading “Valuation adjustments — Available for sale financial assets” for the year ended December 31, 2009, 2008 and 2007 was as follows:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		931			3,546			3,323
Valuation gains and losses		1,520			(2,065	)		1,857
Income tax		(483	)		1,172			(97	)
Amounts transferred to income		(17	)		(1,722	)		(1,537	)
Balance at end of year		1,951			931			3,546
Of which:
Debt securities		456			(116	)		331
Equity instruments		1,495			1,047			3,215

The losses recognized under the heading “Impairment losses on financial assets (net)” in the income statement for 2009 amounted to €277 million (€145 million and €1 million for the year ended December 31, 2008 and 2007, respectively) (see Note 49).

The losses recognized in the heading “Valuation adjustments —Available-for-sale financial assets” as of December 31, 2009, were generated in a period of less than a year and correspond to debt securities.

After analyzing these losses, it was concluded that they are temporary since the payment deadlines for interests have been met for all debt securities, there is no evidence that the issuer will not continue meeting the payment terms and the future payments of principal and interest are sufficient to recover the cost of the debt securities.

13.   LOANS AND RECEIVABLES

13.1.   BREAKDOWN OF THE BALANCE

The detail of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, based on the nature of the financial instrument, is as follows:

	2009		2008		2007
	Millions of euros
Loans and advances to credit institutions		22,239		33,856		24,527
Loans and advances to customers		323,442		335,260		313,178
Debt securities		436		378		60
Total		346,117		369,494		337,765

F-81

13.2.   LOANS AND ADVANCES TO CREDIT INSTITUTIONS

The detail of the balance under this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, broken down by the nature of the related financial instrument, is as follows:

	2009			2008			2007
	Millions of euros
Reciprocal accounts		226			390			138
Deposits with agreed maturity		8,301			8,005			9,388
Demand deposits		2,091			6,433			834
Other accounts		6,125			9,250			4,610
Reverse repurchase agreements		5,457			9,601			9,422
Total gross		22,200			33,679			24,392
Valuation adjustments		39			177			135
Impairment losses		(68	)		(74	)		(10	)
Accrued interest and fees		110			223			107
Hedging derivatives and others		(3	)		28			38
Total		22,239			33,856			24,527

13.3.   LOANS AND ADVANCES TO CUSTOMERS

The detail of the balance under this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, broken down by the nature of the related financial instrument, is as follows:

	2009			2008			2007
	Millions of euros
Financial paper		602			587			387
Commercial credit		24,031			29,215			36,108
Secured loans		148,874			145,522			135,557
Credit accounts		19,683			21,593			23,835
Other loans		98,238			111,597			94,695
Reverse repurchase agreements		987			1,658			2,000
Receivable on demand and other		15,253			13,372			14,582
Finance leases		8,222			9,341			9,149
Impaired assets		15,197			8,437			3,358
Total gross		331,087			341,322			319,671
Valuation adjustments		(7,645	)		(6,062	)		(6,493	)
Impairment losses		(8,720	)		(7,431	)		(7,138	)
Accrued interests and fees		320			719			549
Hedging derivatives and others		755			650			96
Total		323,442			335,260			313,178

F-82

The Group, via several of its banks, provides its customers with financing to purchase assets, including movable and immovable property, in the form of the finance lease arrangements recognized under this heading. The breakdown of these finance leases as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Movable property		4,963		6,158		5,983
Real estate		3,259		3,271		3,166
Fixed rate		38%		33%		28%
Floating rate		62%		67%		72%

As of December 31, 2009, non-accrued financial income from finance leases granted to customers amounted to €113 million. The unguaranteed residual value of these contracts amounted to €475 million. Impairment losses determined collectively on finance lease arrangements amounted to €85 million.

The heading “Loans and receivables — Loans and advances to customers” in the accompanying consolidated balance sheets includes securitized loans that have not been derecognized as mentioned in Note 2.2.2.

The amounts recognized in the accompanying consolidated balance sheets corresponding to these securitized loans are set forth below:

	2009		2008		2007
	Millions of euros
Securitized mortgage assets		33,786		34,012		17,214
Other securitized assets(*)		10,597		10,341		11,007
Commercial and industrial loans		4,356		2,634		3,097
Finance leases		1,380		2,238		2,361
Loans to individuals		4,536		5,124		5,154
Rest		326		345		395
Total		44,383		44,353		28,221
Of which:
Liabilities associated to assets retained on the balance sheet		9,011		14,948		19,249

(*) These liabilities are recognized under “Financial liabilities at amortized cost — Debt securities” in the accompanying consolidated balance sheets. (see Note 23.4).

Some other securitized loans have been derecognized where substantially all attendant risks or benefits were effectively transferred.

As of December 31, 2009, 2008 and 2007, the outstanding balances of derecognized securitized loans were as follows:

	2009		2008		2007
	Millions of euros
Securitized mortgage assets		116		132		173
Other securitized assets		276		413		585
Total		392		545		758

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14.   HELD-TO-MATURITY INVESTMENTS

The detail of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 was as follows:

	Amortized		Unrealized		Unrealized			Fair
2009	Cost		Gains		Losses			Value
	Millions of euros
Domestic		2,626		29		(31	)		2,624
Spanish Government and other government agency debt securities		1,674		21		(13	)		1,682
Other domestic debt securities		952		8		(18	)		942
Foreign securities		2,811		71		(13	)		2,869
Government and other government agency debt securities		2,399		64		(7	)		2,456
Other debt securities		412		7		(6	)		413
Total		5,437		100		(44	)		5,493

	Amortized		Unrealized		Unrealized			Fair
2008	Cost		Gains		Losses			Value
	Millions of euros
Domestic		2,392		7		(60	)		2,339
Spanish Government and other government agency debt securities		1,412		7		(7	)		1,412
Other domestic debt securities		980		—		(53	)		927
Foreign securities		2,890		25		(33	)		2,882
Government and other government agency debt securities		2,432		22		(17	)		2,437
Other debt securities		458		3		(16	)		445
Total		5,282		32		(93	)		5,221

	Amortized		Unrealized		Unrealized			Fair
2007	Cost		Gains		Losses			Value
	Millions of euros
Domestic		2,402		—		(131	)		2,271
Spanish Government and other government agency debt securities		1,417		—		(68	)		1,349
Other domestic debt securities		985		—		(63	)		922
Foreign securities		3,182		—		(119	)		3,063
Total		5,584		—		(250	)		5,334

The foreign securities by the Group as of December 31, 2009, 2008 and 2007 in theheld-to-maturity portfolio correspond to European issuers.

After analyzing the unrealized losses, it was concluded that they are temporary since the payment deadlines on the interests have been met for all debt securities, there is no evidence that the issuer will not continue meeting the payment terms and the future payments of principal and interest are sufficient to recover the cost of the securities.

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The following is a summary of the gross changes in 2009, 2008 and 2007 in this heading in the consolidated balance sheets, not including impairment losses:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		5,285			5,589			5,911
Acquisitions		426			—			—
Redemptions		(257	)		(284	)		(300	)
Rest		(16	)		(20	)		(22	)
Balance at end of year		5,438			5,285			5,589
Impairment		(1	)		(3	)		(5	)
Total		5,437			5,282			5,584

15.   HEDGING DERIVATIVES (RECEIVABLE AND PAYABLE)

As of December 31, 2009, 2008 and 2007, the main positions hedged by the Group and the derivatives assigned to hedge those positions are:

•  Fair value hedge:

-  Available-for-sale fixed-interest debt securities:  this risk is hedged using interest-rate derivatives (fixed-variable swaps).

-  Long term fixed-interest debt issued by Group:  this risk is hedged using interest-rate derivatives (fixed-variable swaps).

-  Available-for-sale equity securities:  this risk is hedged using equity swaps.

-  Fixed-interest loans:  this risk is hedged using interest-rate derivatives (fixed-variable swaps).

•  Cash-flow hedge:  Most of the hedged items are floating interest-rate loans: this risk is hedged using foreign-exchange and interest-rate swaps.

•  Net foreign-currency investment hedge:  The risks hedged are foreign-currency investments in the Group’s subsidiaries abroad. This risk is hedged mainly with foreign-exchange options and forward currency purchase.

Note 7 analyzes the Group’s main risks that are hedged using these financial instruments.

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The details of the fair value of the hedging derivatives, organized hedged risk, recognized in the accompanying consolidated balance sheets are as follows:

	Exchange			Interest			Equity			Other
2009	Risk			Rate Risk			Price Risk			Risks			Total
	Millions of euros
OTC markets
Credit institutions		18			2,216			(36	)		(4	)		2,194
Fair value hedge		—			1,985			(32	)		—			1,953
Cash flow hedge		17			258			(4	)		(4	)		267
Net investment in a foreign operation hedge		1			(27	)		—			—			(26	)
Other financial institutions		—			123			(21	)		—			102
Fair value hedge		—			123			(21	)		—			102
Cash flow hedge		—			—			—			—			—
Other sectors		—			(9	)		—			—			(9	)
Fair value hedge		—			(9	)		—			—			(9	)
Cash flow hedge		—			—			—			—			—
Total		18			2,330			(57	)		(4	)		2,287
of which: Asset hedging derivatives		22			3,492			81			—			3,595
of which: Liability hedging derivatives		(4	)		(1,162	)		(138	)		(4	)		(1,308	)

	Exchange			Interest rate
2008	Risk			Risk			Total
	Millions of euros
OTC markets
Credit institutions		205			2,290			2,495
Fair value hedge		—			1,972			1,972
Cash flow hedge		106			338			444
Net investment in a foreign operation hedge		99			(20	)		79
Other financial institutions		—			100			100
Fair value hedge		—			68			68
Cash flow hedge		—			32			32
Other sectors		11			1			12
Fair value hedge		—			1			1
Cash flow hedge		11			—			11
Total		216			2,391			2,607
of which: Asset hedging derivatives		227			3,606			3,833
of which: Liability hedging derivatives		(11	)		(1,215	)		(1,226	)

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	Exchange			Interest			Equity
2007	Risk			Rate Risk			Price Risk			Total
	Millions of euros
Organised Markets
Fair value hedge		(1	)		—			—			(1	)
OTC markets
Credit institutions		18			(719	)		(72	)		(773	)
Fair value hedge		—			(693	)		(72	)		(765	)
Cash flow hedge		—			(26	)		—			(26	)
Net investment in a foreign operation hedge		18			—			—			18
Other financial institutions		8			144			(135	)		17
Fair value hedge		—			100			(135	)		(35	)
Cash flow hedge		—			44			—			44
Net investment in a foreign operation hedge		8			—			—			8
Total		25			(575	)		(207	)		(757	)
of which: Asset hedging derivatives		35			1,015			—			1,050
of which: Liability hedging derivatives		(10	)		(1,590	)		(207	)		(1,807	)

The most significant cash flows that are expected to have an impact on the income statement in the coming years for cash flow hedging held on the balance sheet as of December 31, 2009 are shown below:

	3 Months		More Than 3 Months		From 1 to		More Than
	or Less		But Less Than 1 Year		5 Years		5 Years		Total
	Millions de euros
Cash inflows from assets		123		269		486		592		1,470
Cash outflows from liabilities		58		229		291		317		895

The forecast cash flows will at most impact on the consolidated income statement for 2048. The amounts previously recognized in equity from cash flow hedges that were removed from equity and included in the consolidated income statement, either in the heading “Net gains (losses) on financial assets and liabilities” or in the heading “Net Exchange differences”, in 2009, 2008 and 2007 were €12 million, €12 million and €13 million.

The amount for derivatives designated as accounting hedges that did not pass the effectiveness test in 2009 was not significant.

As of December 31, 2009 there were no hedges of highly probable forecast transactions in the Group.

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16.   NON-CURRENT ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITHNON-CURRENT ASSETS HELD FOR SALE

The composition of the balance of the heading “Non-current assets held for sale” in the accompanying consolidated balance sheets, broken down by the origin of the assets, is as follows:

	2009			2008			2007
	Millions of euros
From:
Tangible fixed assets		397			151			99
For own use		313			79			32
Assets leased out under an operating lease		84			72			67
Foreclosures or recoveries		861			391			237
Foreclosures		795			364			215
Recoveries from financial leases		66			27			22
Accrued amortization until classified as non-current assets held for sale		(41	)		(34	)		(30	)
Impairment losses		(167	)		(64	)		(66	)
Total		1,050			444			240

As of December 31, 2009, 2008 and 2007, there were no liabilities associated with non-current assets held for sale.

As of December 31, 2009, 2008 and 2007, the changes in the heading “Non-current assets held for sale” of the accompanying consolidated balance sheets were as follow:

	2009			2008			2007
	Millions of euros
Revalued cost —
Balance at beginning of year		506			306			268
Additions		919			515			487
Retirements		(780	)		(374	)		(744	)
Acquisition of subsidiaries		—			—			15
Transfers		493			57			265
Exchange difference and other		79			2			15
Balance at end of year		1,217			506			306
Impairment —
Balance at beginning of year		62			66			82
Additions		134			38			38
Retirements		(7	)		(22	)		(43	)
Transfers		77			25			8
Exchange difference and other		(99	)		(45	)		(19	)
Balance at end of year		167			62			66
Balance total at end of year		1,050			444			240

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16.1.   FROM TANGIBLE ASSETS FOR OWN USE

The most significant changes in the balance of the heading “Non-current assets held for sale — From tangible assets for own use”, in 2009, 2008 and 2007, were a result of the following operations:

Transfers 2009

In 2009, 1,150 properties (offices and other singular buildings) belonging to the Group in Spain were reclassified to this heading at an amount of €426 million, for which a sales plan had been established. As of December 31, 2008, these assets were recognized under the heading “Tangible assets — Property, plants and equipment — For own use” of the accompanying consolidated balance sheets (Note 19).

Sale of property with leaseback in 2009

In 2009, the Bank sold 971 properties in Spain to investments not related to BBVA Group for a total sale price of €1,263 million at market prices, without making funds available to the buyers to pay the price of these transactions.

At the same time the Bank signed long-term operating leases with these investors on the aforementioned properties for periods of 15, 20, 25 or 30 years (according to the property) and renewable. Most have obligatory periods of 20 or 30 years. Most can be extended for a maximum of three additional5-year periods, up to a total of 35 to 45 years. The total of these operating leases establish a rent price (initially set at €87 million a year) which is updated each year.

The sale agreements also established call options for each of the properties at the termination of each of the lease agreements so that the Bank can repurchase these properties. The repurchasing price of these call options will be the market value as determined by an independent expert. For this reason, these transactions were considered firm sales. Therefore, the Group made a gross profit of €914 million euros, recognized under the heading “Gains (losses) in non-current assets held for sale not classified as discontinued operations” in the accompanying consolidated income statement for 2009 (see Note 52).

The current value of the future minimum payments the Bank will incur in the obligational period, as of December 31, 2009, is €80 million in 1 year, €265 million between 2 and 5 years and €517 million in more than 5 years.

Sale of the Bancomer building in 2008

On March 4, 2008, BBVA Bancomer, S.A. de C.V. completed the process of selling its Centro Bancomer property together with its car park, for which it obtained a gross profit of €61.3 million, recognized under the heading “Gains (losses) in non-current assets held for sale not classified as discontinued operations” in the accompanying consolidated income statement for 2008 (see Note 52). This transaction was carried out without the purchaser receiving any type of finance from any BBVA Group entity.

As of December 31, 2007, these assets were recognized under the heading “Tangible assets — Property, plants and equipment — For own use” in the accompanying consolidated balance sheet as of that date (see Note 19). Jointly with the sale agreement, an operational leasing agreement was concluded for this property and its car park for a3-year period extendable for 2 more years.

Sale of BBVA’s real estate in 2007

In 2007, the Bank reached an agreement with a real estate group not linked to the BBVA Group for the sale of Bank properties located on Castellana 81, Goya 14, Hortaleza-Vía de los Poblados and Alcalá 16, all in Madrid. As a result, the Bank transferred from “Tangible assets — Property, plants and equipment” to “Non-current assets held for sale” an amount of €257 million. Once the sale of the buildings was completed, the amounts were derecognized under the heading “Non-current assets held for sale”. The sale price of these buildings was €579 million.

This sale generated gains of €279 million recognized in the heading “Gains (losses) in non-current assets held for sale not classified as discontinued operations” in the accompanying income statement (see Note 52). The sale was carried out without the GMP Group receiving any type of finance from any BBVA Group entity.

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At the same time, an operational lease contract was signed for these properties for a period of 2 years, which can be renewed yearly.

16.2.   FROM FORECLOSURES OR RECOVERIES

As of December 31, 2009, the balance of the heading “Non-current assets held for sale - Foreclosures or recoveries” was made up of €441 million of assets for residential use, €209 million of assets for tertiary use (industrial, commercial or offices) and €27 million of assets for agricultural use.

In 2009, the additions of assets through foreclosures or recoveries amounted to €721 million. The derecognitions in 2009 through sales of such assets amounted to €309 million. None of these sale operations were carried out by the BBVA Group providing finance for the purchaser.

As of December 31, 2009, mean maturity of the assets through foreclosures and recoveries was less than 2 years.

In 2009, some of the Group’s entities financed 2.5% of the total sales of “Non-current assets held for sale”. The amount of the loans granted to the buyers of these assets in 2009 was €40 million.

There are €32 million of gains from the financed sale of these assets yet to be recognized for transactions completed in 2009 as well as in previous years.

17.   INVESTMENTS IN ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD

The balances of “Investments in entities accounted for using the equity method” in the accompanying consolidated balance sheets are as follows:

	2009		2008		2007
	Millions of euros
Associate entities		2,614		894		846
Jointly controlled entities		308		573		696
Total		2,922		1,467		1,542

17.1.   ASSOCIATES

The following table shows the carrying amount of the most significant of the Group’s investments in associates as of December 31, 2009, 2008 and 2007:

Investments in Associates	2009		2008		2007
	Millions of euros
CITIC Group(*)		2,296		541		432
Occidental Hoteles Management, S.L.		84		128		131
Tubos Reunidos, S.A.		52		54		85
BBVA Elcano Empresarial II, S.C.R., S.A.		49		39		57
BBVA Elcano Empresarial, S.C.R., S.A.		49		39		57
Rest of companies		84		93		84
Total		2,614		894		846

(*) The investment in the CITIC Group includes the investment in Citic International Financial Holdings Limited (“CIFH”) and China Citic Bank (“CNCB”), as described below.

Appendix IV shows on details of associates as of December 31, 2009. As of December 31, 2009, the fair value, calculated according to the official listed price, of the listed associates was higher than their book value.

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The details of the balance and gross changes as of December 31, 2009, 2008 and 2007 under this heading of the accompanying consolidated balance sheets are as follows:

	2009			2008			2007
	Millions of euros
Balance at beginning of year		894			846			206
Acquisitions and capital increases		53			655			626
Disposals		(2	)		(782	)		—
Transfers and others(*)		1,669			175			14
Balance at end of year		2,614			894			846
Of which:
Goodwill		844			217			119
CITIC Group		841			214			115
Rest		3			3			4

(*) The “Transfers and others” heading in 2009 mainly relates the classification of the investment in CNCB described below from the heading“Available-for-sale assets”.

Agreement with the CITIC Group

In November 2006 and June 2008 BBVA reached agreements with the banking branch of the largest industrial group in China, CITIC Group (CITIC) to develop a strategic alliance in the Chinese market.

Under these agreements, as of December 31, 2009, BBVA has a 29.68% holding in CITIC International Financial Holdings Ltd, (CIFH), which operates in Hong Kong, and 10.07% in China Citic Bank (CNCB).

BBVA’s investment in CNCB is considered strategic for the Group, as it is the platform for developing its business in continental China and is also key for the development of CITIC’s international business. BBVA has the status of “sole strategic investor” in CNCB. In addition, under the umbrella of its strategic commitment to CNCB, in 2009 BBVA and CNCB concluded new economic cooperation agreements under profit sharing regimes in the car financing and private banking segments. As of December 31, 2008 and 2007, BBVA’s interest in CNCB was included under“Available-for-sale financial assets” in the accompanying consolidated balance sheets (see Note 12). For 2009 it was reclassified to “Investments in entities accounted for using the equity method - Associates” since the Group gained significant influence in the investment.

BBVA also had an option to extend its holding, subject to certain conditions. On December 3, 2009, the BBVA Group announced its intention of exercising this call option for a total of 1,924,343,862 shares, amounting to 4.93% of CNCB’s capital. The acquisition price will be approximately €0.56 per share, which means that the total amount of the investment resulting from the exercise of the option will be approximately €1,000 million. Once this option is exercised, the BBVA Group’s investment in CNCB’s capital will be 15%. As of the date on which these consolidated financial statements were drafted, said purchase had not materialized.

17.2.   JOINTLY CONTROLLED ENTITIES

The jointly controlled entities that the Group has considered should be accounted for using the equity method (see Note 2.1) because this better reflects the economic reality of such holdings, are registered in this heading of the accompanying consolidated balance sheets.

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The following table shows the detail of the most significant Group’s investments in jointly controlled entities as of December 31, 2009, 2008 and 2007:

Jointly Controlled Entities	2009		2008		2007
	Millions of euros
Corporación IBV Participaciones Empresariales S.A.		157		385		574
Fideicomiso F/403853-5 BBVA Bancomer SoS ZIBAT		20		20		—
I+D Mexico, S.A.		15		14		—
Las Pedrazas Golf, S.L.		15		16		—
Fideicomiso Hares BBVA Bancomer F/47997-2		9		12		—
Distransa Rentrucks, S.A.(*)		—		15		—
Rest		92		111		122
Total		308		573		696
Of which
Goodwill
Grupo Profesional Planeación y Proyectos S.A. de C.V.		3		4		4
Distransa Rentrucks, S.A.(*)		—		8		—
Rest		2		4		2
		5		16		6

(*) For the year ended Decembre 31, 2009, the company Distransa Rentrucks, S.A. had been accounted for under the proportionated method.

If the jointly controlled entities accounted for using the equity method had been accounted for under the proportionate method, the effect on the Group’s main consolidated figures as of December 31, 2009, 2008 and 2007 would have been as follows:

	2009			2008		2007
	Millions of euros
Assets		719			910		1,009
Liabilities		364			139		122
Net operating income		(12	)		17		40

Details of the jointly controlled entities consolidated using the equity method as of December 31, 2009 are shown in Appendix IV.

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17.3.   INFORMATION ABOUT ASSOCIATES AND JOINTLY CONTROLLED ENTITIES BY THE EQUITY METHOD

The following table provides relevant information of the balance sheet and income statement of associates and jointly controlled entities accounted for by the equity method as of December 31, 2009, 2008 and 2007, respectively (see Appendix IV).

						Millions of Euros
	2009(*)					2008(*)				2007(*)
			Jointly					Jointly				Jointly
			Controlled					Controlled				Controlled
	Associates		Entities			Associates		Entities		Associates		entities
Current Assets		10,611		347			745		559		423		680
Non-current Assets		8,463		514			4,162		349		2,116		329
Current Liabilities		10,356		108			230		136		385		199
Non-current Liabilities		8,719		754			4,677		772		2,154		810
Net sales		605		84			210		102		181		109
Operating Income		244		(12	)		99		17		64		40
Net Income		166		(14	)		93		286		29		221

(*) Non audited information derived from local GAAP (before standardization adjustment).

17.4.   NOTIFICATIONS ABOUT ACQUISITION OF HOLDINGS

Appendix V shown on acquisitions and disposals of holdings in associates or jointly controlled entities and the notification dates thereof, in compliance with Article 86 of the Corporations Act and Article 53 of the Securities Market Act 24/1988.

17.5.   IMPAIRMENT

For the year ended December 31, 2009, €3 million of impairment losses on goodwill in jointly controlled entities were recognized, of which most were related to Econta Gestión Integral, S.L. For the year ended December 31, 2008 and 2007, no impairment on goodwill in associates and jointly controlled entities was recognized.

18.   REINSURANCE ASSETS

This heading in the accompanying consolidated balance sheets reflects the amounts receivable by consolidated entities from reinsurance contracts with third parties.

As of December 31, 2009, 2008 and 2007, the detail of the balance of this heading in the accompanying consolidated balance sheets was as follows:

	2009		2008		2007
	Millions of euros
Reinsurance asset		29		29		43

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19.   TANGIBLE ASSETS

As of December 31, 2009, 2008 and 2007, the details of the balance of this heading in the accompanying consolidated balance sheets, broken down by the nature of the related items, were as follows:

																Assets
	For Own Use									Total						Leased
							Furniture,			Tangible						Out Under
	Land and			Work in			Fixtures and			Asset of			Investment			an Operating
2009	Buildings			Progress			Vehicles			Own Use			Properties			Lease			Total
	Millions of euros
Revalued cost —
Balance as of 1 January 2009		3,030			422			4,866			8,318			1,786			996			11,100
Additions		120			102			437			659			74			210			943
Retirements		(22	)		(73	)		(661	)		(756	)		(35	)		(2	)		(793	)
Acquisition of subsidiaries in the year		—			—			—			—			—			—			—
Disposal of entities in the year		—			—			—			—			—			—			—
Transfers		(747	)		(16	)		(23	)		(786	)		(11	)		(212	)		(1,009	)
Exchange difference and other		353			—			980			1,333			(11	)		(3	)		1,319
Balance as of 31 December 2009		2,734			435			5,599			8,768			1,803			989			11,560
Accrued depreciation —
Balance as of 1 January 2009		729			—			3,128			3,857			45			259			4,161
Additions		66			—			349			415			11			8			434
Retirements		(15	)		—			(511	)		(526	)		—			(1	)		(527	)
Acquisition of subsidiaries in the year		—			—			—			—			—			—			—
Disposal of entities in the year		—			—			—			—			—			—			—
Transfers		(253	)		—			(15	)		(268	)		(2	)		(103	)		(373	)
Exchange difference and other		223			—			867			1,090			(1	)		102			1,191
Balance as of 31 December 2009		750			—			3,818			4,568			53			265			4,886
Impairment —
Balance as of 1 January 2009		16			—			3			19			8			5			32
Additions		7			—			17			24			93			38			155
Retirements		(2	)		—			(17	)		(19	)		(1	)		—			(20	)
Exchange difference and other		(6	)		—			1			(5	)		16			(11	)		—
Balance as of 31 December 2009		15			—			4			19			116			32			167
Net tangible assets —
Balance as of January 1, 2009		2,285			422			1,735			4,442			1,734			732			6,908
Balance as of December 31, 2009		1,969			435			1,777			4,181			1,634			692			6,507

F-94

																Assets
	For Own Use									Total						Leased
							Furniture,			Tangible						Out Under
	Land and			Work in			Fixtures and			Assets of			Investment			an Operating
2008	Buildings			Progress			Vehicles			Own Use			Properties			Lease			Total
	Millions of euros
Revalued cost —
Balance as of 1 January 2008		3,415			151			5,024			8,590			96			966			9,652
Additions		156			101			561			818			41			220			1,079
Retirements		(125	)		(55	)		(483	)		(663	)		(3	)		(28	)		(694	)
Acquisition of subsidiaries in the year		—			—			16			16			1,661			—			1,677
Disposal of entities in the year		(12	)		(2	)		(5	)		(19	)		—			—			(19	)
Transfers		(326	)		263			(22	)		(85	)		(8	)		(162	)		(255	)
Exchange difference and other		(78	)		(36	)		(225	)		(339	)		(1	)		—			(340	)
Balance at 31 December 2008		3,030			422			4,866			8,318			1,786			996			11,100
Accrued depreciation —
Balance as of 1 January 2008		725			—			3,402			4,127			14			245			4,386
Additions		77			—			356			433			1			8			442
Retirements		(30	)		—			(490	)		(520	)		(3	)		(4	)		(527	)
Acquisition of subsidiaries in the year		—			—			4			4			33			—			37
Disposal of entities in the year		(3	)		—			(4	)		(7	)		—			—			(7	)
Transfers		(11	)		—			(4	)		(15	)		—			—			(15	)
Exchange difference and other		(29	)		—			(136	)		(165	)		—			10			(155	)
Balance at 31 December 2008		729			—			3,128			3,857			45			259			4,161
Impairment —
Balance as of 1 January 2008		21			—			5			26			1			2			29
Additions		3			—			—			3			4			1			8
Retirements		(1	)		—			—			(1	)		—			—			(1	)
Acquisition of subsidiaries in the year		—			—			—			—			—			—			—
Exchange difference and other		(7	)		—			(2	)		(9	)		3			2			(4	)
Balance as of 31 December 2008		16			—			3			19			8			5			32
Net tangible assets —
Balance as of 1 January 2008		2,669			151			1,617			4,437			82			719			5,238
Balance as of 31 December 2008		2,285			422			1,735			4,442			1,734			732			6,908

F-95

																Assets
	For Own Use									Total						Leased
							Furniture,			Tangible						Out Under
	Land and			Work in			Fixtures and			Assets of			Investment			an Operating
2007	Buildings			Progress			Vehicles			Own Use			Properties			Lease			Total
	Millions of euros
Revalued cost —
Balance as of 1 January 2007		3,088			24			4,974			8,086			76			881			9,043
Additions		501			138			577			1,216			38			213			1,467
Retirements		(116	)		(29	)		(165	)		(310	)		(2	)		(16	)		(328	)
Acquisition of subsidiaries in the year		388			32			65			485			—			57			542
Disposal of entities in the year		—			—			(19	)		(19	)		(16	)		(160	)		(195	)
Transfers		(272	)		(8	)		(174	)		(454	)		1			—			(453	)
Exchange difference and other		(174	)		(6	)		(234	)		(414	)		(1	)		(9	)		(424	)
Balance as of 31 December 2007		3,415			151			5,024			8,590			96			966			9,652
Accrued depreciation —
Balance as of 1 January 2007		798			—			3,445			4,243			14			231			4,488
Additions		54			—			340			394			3			79			476
Retirements		(6	)		—			(114	)		(120	)		—			(77	)		(197	)
Acquisition of subsidiaries in the year		8			—			4			12			—			21			33
Disposal of entities in the year		—			—			(24	)		(24	)		—			—			(24	)
Transfers		(65	)		—			(81	)		(146	)		—			—			(146	)
Exchange difference and other		(64	)		—			(168	)		(232	)		(4	)		(9	)		(245	)
Balance as of 31 December 2007		725			—			3,402			4,127			13			245			4,385
Impairment —
Balance as of 1 January 2007		27			—			—			27			1			—			28
Additions		6			—			5			11			—			—			11
Retirements		(3	)		(4	)		—			(7	)		—			—			(7	)
Acquisition of subsidiaries in the year		—			—			—			—			—			2			2
Exchange difference and other		(9	)		4			—			(5	)		—			—			(5	)
Balance as of 31 December 2007		21			—			5			26			1			2			29
Net tangible assets —
Balance as of 1 January 2007		2,263			24			1,529			3,816			61			650			4,527
Balance as of 31 December 2007		2,669			151			1,617			4,437			82			719			5,238

The main changes under this heading in 2009, 2008 and 2007 are as follows:

2009

•  The reduction in the balance of the heading “Tangible assets for own use — lands and buildings” in 2009 is mainly the result of the transfer of some properties owned by the Bank in Spain to the heading “Non-current assets held for sale”, as mentioned in Note 16.

F-96

2008

•  The balance under the heading “Investment properties” includes mainly the rented buildings of the real estate fund BBVA Propiedad FII (see Appendix II) which has been fully consolidated since 2008 (see Appendix II) following the Group’s acquisition in 2008 of a 95.65% stake. The activity of this real estate fund is subject to regulations by the Spanish Securities and Exchange Commission (“CNMV”).

•  In March 2008, BBVA Bancomer bought two properties in Mexico City, one of them located on Paseo de la Reforma and the other on Parques Polanco, in which it will set up the new BBVA Bancomer Group corporate headquarters. These acquisitions were recognized, as of December 31, 2009, under the heading “Tangible assets — Property, plants and equipment - For own use” in the accompanying consolidated balance sheet. The total cost of acquisition was €72 million.

2007

•  Under an agreement signed on June 19, 2007 with a real estate investor not part of the BBVA Group, the Group purchased the Parque Empresarial Foresta industrial estate through a real estate company that is part of the Group. The acquisition is located in a development area in the north of Madrid and will be the site of a new corporate headquarters. This project amounted to an initial investment of €451 million for the BBVA Group. The amount is recognized under the headings “Tangible assets-Property, plants and equipment — For own use” and “Work in progress” in the accompanying consolidated balance sheets. As of December 31, 2009, the accumulated investment for this project amounted to €353 million and €98 million respectively

In the case of the land and buildings acquired in 2007 in the “Parque Empresarial Foresta” for the purpose of building a new corporate headquarters, no impairment was recognized in the recoverable value of these assets as of December 31, 2009, 2008 or 2007.

As of December 31, 2009 the carrying amount of fully amortized financial assets that continue in use was €1,583 million.

The main activity of the Group is carried out through a network of bank branches located geographically as shown in the following table:

	Number of Branches
	2009		2008		2007
Spain		3,055		3,375		3,595
America		4,267		4,267		4,291
Rest of the world		144		145		142
Total		7,466		7,787		8,028

As of December 31, 2009, 2008 and 2007, the percentage of branches leased from third parties in Spain was 77%, 47.3% and 47.3%, respectively. The figures in Latin America for the same periods were 55%, 61% and 56.7%, respectively. The increase in the number of branches leased in Spain is mainly due to the sale and leaseback operation described above (see Note 16).

The following table shows the detail of the net carrying amount of the tangible assets corresponding to Spanish or foreign entities as of December 31, 2009, 2008 and 2007:

	2009		2008		2007
	Millions of euros
Foreign subsidiaries		2,473		2,276		2,271
BBVA y Spanish subsidiaries		4,034		4,632		2,967
Total		6,507		6,908		5,238

The amount of tangible assets under financial lease schemes on which it is expected to exercise the purchase option was insignificant as of December 31, 2009, 2008 and 2007.

F-97

20.   INTANGIBLE ASSETS

20.1.  GOODWILL

As of December 31, 2009, 2008 and 2007, the details of the balance of this heading in the accompanying consolidated balance sheets, broken down by the cash-generating units (“CGU”) that originated them, were as follows:

	Balance at													Balance at
	beginning				Exchange									End of
2009	of Year		Additions		Difference			Impairment			Rest			Year
	Millions of euros
United States		6,676		—		(226	)		(1,097	)		4			5,357
México		588		—		9			—			(4	)		593
Colombia		193		—		12			—			—			205
Chile		54		—		11			—			—			65
Chile Pensions		89		—		19			—			—			108
Spain and Portugal		59		—		—			—			9			68
Total		7,659		—		(175	)		(1,097	)		9			6,396

	Balance at												Balance at
	Beginning				Exchange								End of
2008	of Year		Additions		Difference			Impairment		Rest			Year
	Millions of euros
United States		6,296		—		368			—		12			6,676
México		702		—		(114	)		—		—			588
Colombia		204		—		(11	)		—		—			193
Chile		64		—		(10	)		—		—			54
Chile Pensions		108		—		(19	)		—		—			89
Spain and Portugal		62		—		—			—		(3	)		59
Total		7,435		—		214			—		9			7,659

	Balance at												Balance at
	Beginning				Exchange								End of
2007	of Year		Additions		Difference			Impairment		Rest			Year
	Millions of euros
United States		1,714		5,171		(562	)		—		(27	)		6,296
México		787		—		(85	)		—		—			702
Colombia		213		—		(1	)		—		(8	)		204
Chile		86		—		(2	)		—		20			64
Chile Pensions		112		—		(4	)		—		—			108
Spain and Portugal		61		1		—			—		—			62
Total		2,973		5,172		(654	)		—		(55	)		7,436

For the year ended December 31, 2009, through Compass Bank the Group acquired banking transactions from Guaranty Bank (see Note 3). On December 31, 2009, using the purchase method, the comparison between the fair values assigned at the time of the purchase to the assets and liabilities acquired from Guaranty Bank (including the cash payment that the FDIC made in consideration of the transaction ($2,100 million) generated a difference €99 million, recognized under the heading “Negative goodwill” in the accompanying consolidated income statement for 2009.

As of December 31, 2009 the Group had performed the goodwill impairment test. The results of the test were estimated impairment losses of €1,097 million in the United States cash-generating unit which were recognized under “Impairment losses on other assets (net) — Goodwill and other tangible assets” in the accompanying income

F-98

statement for 2009 (Note 50). The impairment loss of this unit is attributed to the significant decline in economic and credit conditions in the states in which the Group operates in the United States. The valuations have been verified by an independent expert, not the Group’s accounts auditor.

As mentioned in Note 2.2.8, when completing the impairment analysis, the carrying amount of the cash-generating unit is compared with its recoverable amount. The United States’ CGU recoverable amount is equal to its value in use. Value in use is calculated as the discounted value of the cash flow projections that Management estimates and is based on the latest budgets available for the next three years. The Group uses a sustainable growth rate of 4.3% to extrapolate the cash flows in perpetuity which is based on the US real GDP growth rate. The discount rate used to discount the cash flows is the cost of capital assigned to the CGU, 11.2%, which consists of the free risk rate plus a risk premium.

Both the US unit’s fair values and the fair values assigned to its assets and liabilities are based on the estimates and assumptions that the Group’s Management deems most likely given the circumstances. However, some changes to the valuation assumptions used could result in differences in the impairment test result. If the discount rate had increased or decreased by 50 basis points, the difference between the carrying amount and its recoverable amount would have increased or decreased by up to €573 million and €664 million, respectively. If the growth rate had increased or decreased by 50 basis points, the difference between the carrying amount and its recoverable amount would have increased or decreased by €555 million and €480 million, respectively.

As of December 31, 2008 and 2007, there were no impairment losses on the goodwill that the Group recognized.

20.2.  OTHER INTANGIBLE ASSETS

The details of the balance under this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 are as follows:

										Average
										Useful Life
	2009			2008			2007			(Years)
	Millions of euros
Computer software acquisition expense		464			259			42			5
Other deferred charges		29			113			202			5
Other intangible assets		360			409			571			5
Impairment		(1	)		(1	)		(7	)
Total		852			780			808

The changes for the year ended, December 31, 2009, 2008 and 2007 under this heading in the accompanying consolidated balance sheets are as follows:

	Note		2009			2008			2007
			Millions de euros
Balance at beginning of year				780			808			296
Additions				362			242			134
Amortization in the year		47		(262	)		(256	)		(151	)
Exchange differences and other				(28	)		(13	)		530
Impairment		50		—			(1	)		(1	)
Balance at end of year				852			780			808

As of December 31, 2009, the totally amortized intangible assets still in use amounted to €1,061 million.

F-99

21.   TAX ASSETS AND LIABILITIES

21.1  Consolidated tax group

Pursuant to current legislation, the Consolidated Tax Group includes BBVA as the Parent company, and, as subsidiaries, the Spanish subsidiaries that meet the requirements provided for under Spanish legislation regulating the taxation regime for the consolidated net income of corporate groups.

The Group’s other banks and subsidiaries file individual tax returns in accordance with the tax legislation in force in each country.

21.2  Years open for review by the tax authorities

The years open to review in the Consolidated Tax Group at the time these consolidated financial statements were prepared, are 2004 onward for the main taxes applicable.

In 2008, as a result of action by the tax authorities, tax inspections had been initiated in various Group companies for the years up to and including 2003, some of which were contested. Said inspections were in 2009, and their impact on equity was fully provisioned at year-end

In view of the varying interpretations that can be made of the applicable tax legislation, the outcome of the tax inspections of the open years that could be conducted by the tax authorities in the future could give rise to contingent tax liabilities which cannot be objectively quantified at the present time. However, the Banks’ Board of Directors and its tax advisers consider that the possibility of these contingent liabilities becoming actual liabilities is remote and, in any case, the tax charge which might arise therefore would not materially affect the Group’s accompanying consolidated financial statements.

21.3  Reconciliation

The reconciliation of the corporate tax expense resulting from the application of the standard tax rate and the expense registered by this tax for the years 2009, 2008 and 2007 in the accompanying income statement is as follows:

	2009			2008			2007
	Millions of euros
Corporation tax(*)		1,721			2,078			2,761
Decreases due to permanent differences:
Tax credits and tax relief at consolidated Companies		(223	)		(441	)		(439	)
Other items net		(410	)		(249	)		(229	)
Net increases (decreases) due to temporary differences		96			580			(262	)
Charge for income tax and other taxes		1,184			1,968			1,831
Deferred tax assets and liabilities recorded (utilized)		(96	)		(580	)		262
Income tax and other taxes accrued in the year		1,088			1,388			2,093
Adjustments to prior years’ income tax and other taxes		53			153			(14	)
Income tax and other taxes		1,141			1,541			2,079

(*) 30% Tax Rate in 2009 and 2008 and 32.5% in 2007.

F-100

The effective tax rate for 2009, 2008 and 2007 is as follows:

	2009			2008			2007
	Millions of euros
Income from:
Consolidated tax group		4,066			2,492			4,422
Other Spanish entities		(77	)		40			4
Foreign entities		1,747			4,394			4,069
		5,736			6,926			8,495
Income tax		1,141			1,541			2,079
Effective tax rate		19.89	%		22.25	%		24.48	%

21.4  Tax recognized in total equity

In addition to the income tax recognized in the consolidated income statements, the group has recognized the following amounts for these items in its consolidated equity as of December 31, 2009, 2008 and 2007:

	2009			2008			2007
	Millions of euros
Charges to total equity
Debt securities		(276	)		(19	)		(36	)
Equity instruments		(441	)		(168	)		(1,373	)
Credits to total equity
Rest		1			2			22
Total		(716	)		(185	)		(1,387	)

21.5  Deferred taxes

The balance of the heading “Tax assets” in the accompanying consolidated balance sheets includes the tax receivables relating to deferred tax assets; the balance of the heading “Tax liabilities” includes the liabilities relating to the Group’s various deferred tax liabilities.

The details of the most important tax assets and liabilities are as follows:

	2009		2008		2007
	Millions of euros
Tax assets		6,273		6,484		5,207
Current		1,187		1,266		682
Deferred		5,086		5,218		4,525
Of which:
Pensions		1,472		1,654		1,519
Portfolio		89		335		587
Impairment losses		1,632		1,436		1,400
Rest		1,867		1,753		895
Tax losses and other		26		40		124
Tax liabilities		2,208		2,266		2,817
Current		539		984		582
Deferred		1,669		1,282		2,235
Of which:
Free depreciation and other		1,669		1,282		2,235

F-101

As of December 31, 2009, the estimated balance of temporary differences in connection with investments in subsidiaries, branches and associates and investments in jointly controlled entities was €432 million. No deferred tax liabilities have been recognized with respect to this in the consolidated balance sheet.

The amortization of certain components of goodwill for tax purposes gives rise to temporary differences triggered by the resulting differences in the tax and accounting bases of goodwill balances. In this regard, and as a general rule, the Group’s accounting policy is to recognize deferred tax liabilities in respect of these temporary differences at the Group companies that are subject to this particular tax benefit.

22.   OTHER ASSETS AND LIABILITIES

The breakdown of the balance of these headings in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 are as follows:

	2009		2008		2007
	Millions of euros
Assets -
Inventories		1,933		1,066		457
Transactions in transit		55		33		203
Accrued interest		581		383		604
Non-accrued prepaid expenses		421		206		359
Other prepayments and accrued income		160		177		245
Other items		1,383		1,296		1,033
Total		3,952		2,778		2,297
Liabilities -
Transactions in transit		49		53		54
Accrued interest		2,079		1,918		1,820
Unpaid accrued expenses		1,412		1,321		1,381
Other accrued expenses and deferred income		667		597		439
Other items		780		586		498
Total		2,908		2,557		2,372

The heading “Inventories” includes the net carrying amount of the purchases of land and property that the Group’s property companies hold for sale or for their business. Of the amount reflected in the table above as of December 31, 2009, €776 million correspond to land and real estate purchased from customers in difficulties in Spain during 2009, net of their corresponding impairment (Note 50).

The principal companies in the Group that engage in real estate business activity and make up nearly all of the amount in the “Inventory” heading of the accompanying consolidated balance sheets are as follows: Anida Desarrollos Inmobiliarios, S.A., Inensur Brunete, S.L., Monasterio Desarrollo, S.L., Desarrollo Urbanístico Chamartín, S.A., Marina Llar, S.L., Montealiaga, S.A., Anida Desarrollo Singulares, S.L., Anida Operaciones Singulares, S.L., Anida Inmuebles España y Portugal, S.L. and Adprotel Strand, S.L.

F-102

23.   FINANCIAL LIABILITIES AT AMORTIZED COST

The breakdown of the balance under this heading in the accompanying consolidated balance sheets as of December 2009, 2008 and 2007 is as follows:

	2009		2008		2007
	Millions of euros
Deposits from central banks		21,166		16,844		27,326
Deposits from credit institutions		49,146		49,961		60,772
Customer deposits		254,183		255,236		219,610
Debt certificates (including bonds)		99,939		104,157		102,247
Subordinated liabilities		17,878		16,987		15,662
Other financial liabilities(*)		5,624		7,420		6,239
Total		447,936		450,605		431,856

(*) The agreed dividend payable by BBVA but pending payment, relating to the third interim dividend against 2008 and 2007 results, paid in January of the following years, is included as of December 31, 2008 and 2007 (see Note 4).

23.1.  DEPOSITS FROM CENTRAL BANKS

The breakdown of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 is as follows:

	2009		2008		2007
	Millions of euros
Bank of Spain		12,130		4,036		19,454
Credit account drawdowns		10,974		37		8,209
Other State debt and Treasury bills under repurchase agreement		—		2,904		—
Other assets under repurchase agreement		1,156		1,095		11,245
Other central banks		8,966		12,726		7,802
Subtotal		21,096		16,762		27,256
Accrued interest until expiration		70		82		70
Total		21,166		16,844		27,326

The financing limit assigned to the Group by the Bank of Spain and the rest of central banks and the amount drawn down as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Assigned		43,535		16,049		10,320
Drawn down		10,925		125		8,053

F-103

23.2.  DEPOSITS FROM CREDIT INSTITUTIONS

The breakdown of the balance of this heading in the accompanying consolidated balance sheets, according to the nature of the related transactions, as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Reciprocal accounts		68		90		3,059
Deposits with agreed maturity		30,608		35,785		33,576
Demand deposits		1,273		1,228		1,410
Other accounts		733		547		362
Repurchase agreements		16,263		11,923		21,988
Subtotal		48,945		49,573		60,395
Accrued interest until expiration		201		388		377
Total		49,146		49,961		60,772

The details by geographical area and the nature of the related instruments of this heading of the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, disregarding valuation adjustments, were as follows:

					Funds Received
	Demand		Deposits with		under Financial
2009	Deposits		Agree Maturity		Asset Transfers		Total
	Millions of euros
Spain		456		6,414		822		7,692
Rest of Europe		382		15,404		4,686		20,472
United States		150		5,611		811		6,572
Latin America		336		1,576		9,945		11,857
Rest of the world		16		2,336		—		2,352
Total		1,340		31,341		16,264		48,945

					Funds Received
	Demand		Deposits with		under Financial
2008	Deposits		Agree Maturity		Asset Transfers		Total
	Millions of euros
Spain		676		4,413		1,131		6,220
Rest of Europe		82		17,542		2,669		20,293
United States		40		8,164		1,093		9,297
Latin America		439		3,518		7,030		10,987
Rest of the world		80		2,696		—		2,776
Total		1,317		36,333		11,923		49,573

					Funds Received
	Demand		Deposits with		under Financial
2007	Deposits		Agree Maturity		Asset Transfers		Total
	Millions of euros
Spain		790		5,247		3,239		9,276
Rest of Europe		231		13,126		3,943		17,300
United States		3,077		6,853		881		10,811
Latin America		331		3,962		13,925		18,218
Rest of the world		40		4,750		—		4,790
Total		4,469		33,938		21,988		60,395

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23.3.  CUSTOMERS DEPOSITS

The breakdown of the balance of this heading in the accompanying consolidated balance sheets, according to the nature of the related transactions, as of December, 31 2009, 2008 and 2007, was as follows:

	2009		2008		2007
	Millions of euros
Government and other government agencies		15,297		18,837		16,372
Spanish		4,291		6,320		6,844
Foreign		10,997		12,496		9,512
Accrued interest		9		21		16
Other resident sectors		93,190		98,630		90,863
Current accounts		20,243		20,725		22,798
Savings accounts		27,137		23,863		21,389
Fixed-term deposits		35,135		43,829		36,911
Reverse repos		7,186		9,339		8,785
Other accounts		3,031		62		141
Accrued interest		458		812		839
Non-resident sectors		145,696		137,769		112,375
Current accounts		33,697		28,160		25,453
Savings accounts		23,394		22,840		19,057
Fixed-term deposits		83,754		79,094		58,492
Repurchase agreements		4,415		6,890		8,545
Other accounts		103		104		166
Accrued interest		333		681		662
Total		254,183		255,236		219,610
Of which:
In euros		114,066		121,895		107,371
In foreign currency		140,117		133,341		112,239
Of which:
Deposits from other creditors without valuation adjustment		253,566		254,075		218,509
Accrued interest		617		1,161		1,101

The details by geographical area of this heading as of December 31, 2009, 2008 and 2007, disregarding valuation adjustments, were as follows:

					Deposits
	Demand		Saving		with Agreed
2009	Deposits		Deposits		Maturity		Repos		Total
	Millions of euros
Spain		23,836		27,245		38,370		7,572		97,023
Rest of Europe		2,975		457		18,764		3		22,199
United States		11,548		10,146		46,292		—		67,986
Latin America		24,390		13,593		20,631		4,413		63,027
Rest of the world		440		181		2,527		—		3,148
Total		63,189		51,622		126,584		11,988		253,383

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					Deposits
	Demand		Saving		with agreed
2008	Deposits		Deposits		maturity		Repos		Total
	Millions of euros
Spain		26,209		23,892		45,299		9,745		105,145
Rest of Europe		3,214		360		22,733		34		26,341
United States		8,288		10,899		36,997		—		56,184
Latin America		20,219		9,911		20,195		6,867		57,192
Rest of the world		1,576		2,488		4,796		—		8,860
Total		59,506		47,550		130,020		16,646		253,722

					Deposits
	Demand		Saving		with agreed
2007	Deposits		Deposits		maturity		Repos		Total
	Millions of euros
Spain		28,339		21,467		37,862		9,199		96,867
Rest of Europe		3,055		315		12,555		10		15,935
United States		6,996		7,877		22,964		148		37,985
Latin America		18,677		9,445		21,854		8,392		58,368
Rest of the world		1,656		2,842		4,439		—		8,937
Total		58,723		41,946		99,674		17,749		218,092

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23.4.  DEBT CERTIFICATES (INCLUDING BONDS) AND SUBORDINATED LIABILITIES

The breakdown of the heading “Debt certificates (including bonds)” in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007, by type of financial instruments, are as follows:

	2009		2008		2007
	Millions of euros
Promissory notes and bills
In euros		11,024		9,593		4,902
In other currencies		18,558		10,392		857
Subtotal		29,582		19,985		5,759
Bonds and debentures issued
In euros —
Non-convertible bonds and debentures at floating interest rates		8,593		11,577		18,955
Non-convertible bonds and debentures at fixed interest rates		5,932		4,736		6,154
Covered bonds		34,708		38,481		38,680
Hybrid financial instruments		389		—		—
Bonds from securitization realized by the Group		8,407		13,783		19,229
Accrued interest and others(*)		2,731		2,668		252
In foreign currency —
Non-convertible bonds and debentures at
floating interest rates		4,808		8,980		10,707
Non-convertible bonds and debentures at
fixed interest rates		2,089		1,601		1,322
Covered bonds		731		1,005		1,049
Hybrid financial instruments		1,342		—		—
Other securities associate to financial activities		—		15		—
Bonds from securitization realized by the Group		605		1,165		20
Accrued interest and others(*)		22		161		120
Subtotal		70,357		84,172		96,488
Total		99,939		104,157		102,247

(*) Hedging operations and issuance costs.

The breakdown of the heading “Subordinated liabilities” of the accompanying consolidated balance sheets, by type of financial instruments, are as follows:

	2009		2008		2007
	Millions of euros
Subordinated debt		12,117		10,785		10,834
Preferred securities		5,188		5,464		4,561
Total gross		17,305		16,249		15,395
Accrued interest		573		738		267
Total		17,878		16,987		15,662

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The changes in 2009, 2008 and 2007 under the headings “Debt certificates (including bonds)” and “Subordinated liabilities” are as follows:

	Balance at							Exchange			Balance at
	Beginning				Repurchase			Differences			the End of
2009	of Year		Issuances		or Refund			and others			Year
	Millions of euros
Debt certificates issued in the European Union		111,158		129,107		(126,713	)		(6,484	)		107,068
With information brochure		111,125		129,107		(126,713	)		(6,485	)		107,034
Without information brochure		33		—		—			1			34
Other debt certificates issued outside European Union		9,986		4,894		(4,343	)		210			10,748
Total		121,144		134,001		(131,056	)		(6,274	)		117,816

	Balance at							Exchange			Balance at
	Beginning				Repurchase			Differences and			the End of
2008	of Year		Issuances		or Refund			Others			Year
	Millions of euros
Debt certificates issued in the European Union		109,173		107,848		(85,671	)		(20,193	)		111,158
With information brochure		109,140		107,848		(85,671	)		(20,193	)		111,125
Without information brochure		33		—		—			—			33
Other debt certificates issued outside European Union		8,737		42,494		(40,844	)		(401	)		9,986
Total		117,910		150,342		(126,515	)		(20,594	)		121,144

								Exchange			Balance at
	Balance at				Repurchase			Differences and			the End
2007	Beginning of Year		Issuances		or Refund			Others			of Year
	Millions of euros
Debt certificates issued in the European Union		95,107		64,972		(40,801	)		(9,641	)		109,637
With information brochure		95,077		64,967		(40,801	)		(9,639	)		109,604
Without information brochure		30		5		—			(2	)		33
Other debt certificates issued outside European Union		5,471		3,589		(1,213	)		425			8,272
Total		100,578		68,561		(42,014	)		(9,216	)		117,909

The detail of the most significant outstanding issuances, repurchases or refunds of debt instruments issued by the Bank or companies in the Group as of December 31, 2009, 2008 and 2007 are shown on Appendix X.

23.4.1  Promissory notes and bills

These promissory notes were issued mainly by BBVA, S.A. and Banco de Financiación, S.A.

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23.4.2.  Bonds and debentures issued

The following table shows the weighted average interest rates of fixed and floating rate bonds and debentures issued in euros and foreign currencies in 2009, 2008 and 2007:

	2009						2008						2007
				Foreign						Foreign						Foreign
	Euros			Currency			Euros			Currency			Euros			Currency
Fixed rate		3.86	%		5.00	%		3.86	%		4.79	%		3.87	%		5.12	%
Floating rate		0.90	%		2.56	%		4.41	%		4.97	%		4.68	%		5.97	%

Most of the foreign-currency issuances are denominated in U.S. dollars.

23.4.3.  Subordinated liabilities

23.4.3.1.  Subordinated debt

These issuances are subordinated debt and, accordingly, for debt seniority purposes, they rank behind ordinary debt.

The breakdown of this heading in the accompanying consolidated balance sheets, without factoring in valuation adjustments, by currency of issuance and interest rate, is disclosed in Appendix X.

The change in 2009 in the heading “Subordinated Liabilities” of the accompanying consolidated balance sheets is due, primarily, to the issue of convertible subordinated obligations at a value of €2,000 million issued by BBVA in September 2009. These obligations have a 5% annual coupon, payable quarterly, and can be converted into Bank shares after the first year, at the Bank’s discretion, at each of the coupon payment dates, and by obligation on the date of their final maturity date, October 15, 2014. These obligations have been recognized as financial liabilities given that the number of Bank shares to be delivered is variable. The number of said shares will be that value at the date of conversion (determined based on the quoted value of the five sessions preceding the conversion) is equal to the nominal value of the obligations.

23.4.3.2.  Preferred securities:

The breakdown by issuer of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 is as follows:

	2009		2008		2007
	Millions of euros
BBVA International, Ltd.(1)		500		500		500
BBVA Capital Finance, S.A.U.		2,975		2,975		1,975
Banco Provincial, S.A		67		70		66
BBVA International Preferred, S.A.U.(2)		1,628		1,901		2,003
Phoenix Loan Holdings, Inc.		18		18		17
Total		5,188		5,464		4,561

(1)	Traded on the Spanish AIAF market.
(2)	Traded on the London Stock Exchange and New York Stock Exchange.

These issues were fully subscribed by third parties outside the Group and are wholly or partially redeemable at the issuer company’s option after five or ten years from the issue date, depending on the terms of each issue.

Of the above, the issuances of BBVA International Ltd., BBVA Capital Finance, S.A.U. and BBVA International Preferred, S.A.U, are subordinately guaranteed by the Bank.

In 2009, there was a partial exchange of three issues of preferred securities of the company BBVA International Preferred, S.A.U. for two new preferred securities in the same company. As a result of said exchange, two issues in euros at €801 million and another in pounds sterling at 369 million pounds, which were substituted

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with one issue in euros at €645 million and another in pounds sterling at 251 million pounds. The debt instruments issued have substantially different conditions than those amortized in terms of their current value. Therefore, the Group has recognized gains of €228 million in the heading “Net gains (losses) on financial assets and liabilities” of the accompanying consolidated income statement for 2009 (see Note 44).

The breakdown of this heading in the accompanying consolidated balance sheets, disregarding valuation adjustments, by currency of issuance and interest rate, is disclosed in Appendix X.

24.   LIABILITIES UNDER INSURANCE CONTRACTS

The details of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 are as follows:

	2009		2008		2007
	Millions of euros
Technical provisions for:
Mathematical reserves		5,994		5,503		5,847
Provision for unpaid claims reported		712		640		580
Other insurance technical provisions		480		428		440
Total		7,186		6,571		6,867

25.   PROVISIONS

The details of the balance of this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 are as follows:

	Note		2009		2008		2007
			Millions of euros
Provisions for pensions and similar obligations		26		6,246		6,359		5,967
Provisions for taxes and other legal contingents				299		263		225
Provisions for contingent exposures and commitments				243		421		546
Other provisions				1,771		1,635		1,604
Total				8,559		8,678		8,342

The changes in 2009, 2008 and 2007 in the balances of this heading in the accompanying consolidated balance sheets are as follows:

Provisions for Pensions and Similar Obligation	Note		2009			2008			2007
			Millions of euros
Balance at beginning of the year				6,359			5,967			6,358
Add -
Year provision with a charge to income for the year				870			1,309			417
Interest expenses and similar charges		39		274			252			242
Personal expenses		46		44			55			71
Provision expenses		48		552			1,002			104
Charges in reserves(*)				147			74			—
Transfers and other changes				13			(1	)		(4	)
Less -
Payments				(1,087	)		(963	)		(843	)
Amount use and other variations				(56	)		(27	)		39
Balance at end of the year				6,246			6,359			5,967

(*) Correspond to actuarial losses (gains) arising from certain defined-benefit post-employment commitments recognized in “Reserves” in the consolidated balance sheets (see Note 2.2.12.).

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Commitments and Contingent Risks Provisions	2009			2008			2007
	Millions of euros
Balance at beginning of the year		421			546			502
Add -
Year provision with a charge to income for the year		110			97			93
Transfers and other Changes		—			—			—
Less -
Available funds		(280	)		(216	)		(46	)
Amount use and other variations		(8	)		(6	)		(3	)
Balance at end of the year		243			421			546

Provisions for Taxes and Other Provisions	2009			2008			2007
	Millions of euros
Balance at beginning of the year		1,898			1,829			1,789
Add -
Year provision with a charge to income for the year		152			705			275
Acquisition of subsidiaries		—			—			56
Transfers and other Changes		360			254			14
Less -
Available funds		(103	)		(245	)		(140	)
Amount use and other variations		(237	)		(645	)		(165	)
Disposal of subsidiaries		—			—			—
Balance at end of the year		2,070			1,898			1,829

26.   PENSION AND OTHER COMMITMENTS

As described in Note 2.2.12, the Group has assumed both defined-benefit and defined-contribution post-employment commitments with its employees; the proportion of defined-contribution benefits is gradually increasing, mainly due to new hires.

26.1.  PENSION COMMITMENTS THROUGH DEFINED-CONTRIBUTION PLANS

The commitments with employees for pensions in post-employment defined-contribution plans correspond to current contributions the Group makes every year on behalf of active employees. These contributions are accrued and charged to the consolidated income statement in the corresponding financial year (see Note 2.2.12). No liability is therefore recognized in the accompanying consolidated balance sheets.

The contributions to the defined-contribution plans in 2009, 2008 and 2007 were €68, €71 and €58 million, respectively (see Note 46.1).

26.2   PENSION COMMITMENTS THROUGH DEFINED-BENEFIT PLANS AND OTHERLONG-TERM BENEFITS

Pension commitments in defined-benefit plans correspond mainly to employees who have retired or taken early retirement from the Group and to certain groups of employees still active in the Group in the case of pension benefits, and to the majority of active employees in the case of permanent incapacity and death benefits.

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The following table shows the commitments under defined-benefit plans and the long-term post-employment benefits, which are recognized under the heading “Provisions” in the accompanying consolidated balance sheets corresponding to 2009, 2008, 2007, 2006 and 2005:

	2009		2008		2007			2006		2005
	Millions of euros
Post-employment benefits		7,995		7,985		7,816			8,173		7,639
Assets and Insurance contracts coverage		1,749		1,626		1,883			1,816		1,399
Net assets		—		—		(34	)		—		—
Net liabilities (Note 25)		6,246		6,359		5,967			6,357		6,240

The commitments under defined-benefit plans as well as the rest of long-term post-employment benefits, in Spain and abroad as of December 31, 2009, 2008 and 2007, can be broken down as follows:

	Commitments in Spain						Commitments Abroad							Total
	2009		2008		2007		2009		2008		2007			2009		2008		2007
	Millions of euros
Post-employment benefits
Post-employment benefits		2,946		3,060		3,115		997		903		1,097			3,943		3,963		4,212
Early retirement		3,309		3,437		2,950		—		—		—			3,309		3,437		2,950
Post-employment welfare benefits		222		221		234		521		364		420			743		585		654
Total post-employment benefits		6,477		6,718		6,299		1,518		1,267		1,517			7,995		7,985		7,816
Insurance contracts coverage
Post-employment benefits		455		436		467		—		—		—			455		436		467
Plan assets
Post-employment benefits		—		—		—		952		889		1,062			952		889		1,062
Post-employment welfare benefits		—		—		—		342		301		354			342		301		354
Total assets and Insurance contracts coverages		455		436		467		1,294		1,190		1,416			1,749		1,626		1,883
Net commitments of plan assets		6,022		6,282		5,832		224		77		101			6,246		6,359		5,933
of which:
Net assets		—		—		—		—		—		(34	)		—		—		(34	)
Net liabilities(*)		6,022		6,282		5,832		224		77		135			6,246		6,359		5,967

(*) Recognized under the heading “Provisions — Provisions for pensions and similar obligations” in the accompanying consolidated balance sheets.

Additionally, there are other commitments to employees, including long-service bonuses which are recognized under the heading “Other provisions” in the accompanying consolidated balance sheets (see Note 25). These amounted to €39 million as of December 31, 2009 of which €13 million correspond to Spanish companies and €26 million to companies abroad.

The balance of the heading “Provisions — Provisions for pensions and similar obligations” of the accompanying consolidated balance sheet as of December 31, 2009 included €206.2 million, for commitments for post-employment benefits maintained with previous executive members of the Board of Directors and the Bank’s

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Management Committee. Likewise, it included €8 million, under the concept of commitments for post-employment benefits maintained with former non-executive members of the Board of Directors of the Group.

The charges recognized in the accompanying consolidated income statement for the year 2009, under the concept of commitments for pensions and similar obligations maintained by the Group with former members of the Board of Directors of the Bank and the Management Committee reached €6 million. For the year ended December 31, 2009, no charges for those concepts corresponding to former non-executive members of the Bank’s Board of Directors were recognized.

26.2.1  Commitments in Spain

The most significant actuarial assumptions used as of December 31, 2009, 2008 and 2007, to quantify these commitments are as follows:

Pension Actuarial Hypothesis Spain	2009	2008	2007
Mortality tables	PERM/F 2000P.	PERM/F 2000P.	PERM/F 2000P.
Discount rate (cumulative annual)	4.5%/AA corporate bond yield curve	4.5%/AA corporate bond yield curve	4.5%/AA corporate bond yield curve
Consumer price index (cumulative annual)	2%	2%	2%
Salary growth rate (cumulative annual)	At least 3% (depending on employee)	At least 3% (depending on employee)	At least 3% (depending on employee)
Retirement ages
	First date at which the employees are entitled to retire or contractually
	agreed at the individual level in the case of early retirements

The breakdown of the various commitments to employees in Spain is as follows:

Pension commitments in Spain

The situation of pension commitments in defined-benefit plans as of December 31, 2009, 2008 and 2007 is as follows:

Pension Commitments Spain	2009		2008		2007
	Millions of euros
Commitments to retired employees		2,847		2,852		2,733
Vested contingencies in respect of current employees		99		208		382
Net Commitments(*)		2,946		3,060		3,115

(*) Recognized under the heading “Provision for pensions and similar obligations”

Insurance contracts have been contracted with insurance companies not related to the group to cover some pension commitments. These commitments are covered by assets and therefore are presented in the accompanying consolidated balance sheets for the net amount of the commitment less plan assets. As of December 31, 2009, 2008 and 2007, the plan assets related to the insurance contracts mentioned (shown in the previous table under the heading “Insurance contract cover”) equaled the amount of the commitments covered, therefore its net value was zero in the accompanying consolidated balance sheets.

The rest of commitments included in the previous table include defined-benefit commitments for which insurance has been contracted with BBVA Seguros, S.A. de Seguros y Reaseguros, which is 99.95% owned by the Group. The assets in which the insurance company has invested the amount of the policies cannot be considered plan assets under IAS 19 and are presented in the accompanying consolidated balance sheets under different headings of “assets”, depending on the classification of their corresponding financial instruments. The commitments are recognized under the heading “Provisions — Provision for pensions and similar obligations” of the accompanying consolidated balance sheets (see Note 25).

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The changes in these commitments net of plan insurance contracts, contracted with insurance companies related to the Group in 2009, 2008 and 2007, were as follows:

Pension Net Commitment Spain	2009			2008			2007
	Millions of euros
Balance at beginning of year		2,624			2,648			2,817
Interest cost		114			116			109
Current service cost		18			14			18
Payments made		(249	)		(167	)		(163	)
Prior service cost or changes in the plan		31			8			1
Actuarial losses (gains)		2			5			(134	)
Other changes		(49	)		—			—
Balance at end of year		2,491			2,624			2,648

The estimated benefit payments in millions of euros over the next 10 years are as follows:

	2010		2011		2012		2013		2014		2015-2019
	Millions of euros
Pension payments Spain		175		175		174		173		170		823

Early retirements in Spain

In 2009 the Group offered certain employees the possibility of taking early retirement before the age stipulated in the collective labor agreement in force. This offer was accepted by 857 employees (2,044 and 575 in 2008 and 2007, respectively).

The early retirements commitments in Spain as of December 31, 2009, 2008 and 2007 are recognized under the heading “Provisions — Provisions for pensions and similar obligations” (see Note 25) in the accompanying consolidated balance sheets amounted to €3,309 million, €3,437 million and €2,950 million, respectively.

The changes in these commitments in 2009, 2008 and 2007 for all the Group’s companies in Spain, were as follows:

Early Retirements Commitments Spain	2009			2008			2007
	Millions of euros
Balance at beginning of the year		3,437			2,950			3,186
Interest cost		135			117			112
Current services cost		430			1,004			294
Payments made		(712	)		(618	)		(587	)
Other changes		15			(14	)		—
Actuarial losses (gains)		4			(2	)		(55	)
Balance at end of the year		3,309			3,437			2,950

The cost of early retirements for the year was recognized under the heading “Provisions (Net) — Provisions for pensions and similar obligations — Early retirements” in the accompanying consolidated income statements (see Note 48).

The estimated benefit payments in millions of euros over the next 10 years are as follows:

	2010		2011		2012		2013		2014		2015-2019
	Millions of euros
Early retirements payments Spain		612		546		504		460		412		1,198

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Other long-term commitments with employees in Spain

On October 18, 2007, the Bank signed a Social Benefit Standardization Agreement for their employees in Spain. The agreement standardizes the existing welfare benefits for the different groups of employees and, in some cases when a service is provided, quantifies it as an annual amount in cash. These welfare benefits include post-employment welfare benefits and other commitments with employees.

Post-employment welfare benefits in Spain

The details of these commitments as of December 31, 2009, 2008 and 2007 are as follows:

Post-Employment Welfare Benefits Spain	2009		2008		2007
	Millions of euros
Post-employment welfare benefit commitments to retired employees		183		181		192
Vested post-employment welfare benefit contingencies in respect of current employees		39		40		42
Net Commitments(*)		222		221		234

(*) Recognized under the heading “Provisions for pensions and similar obligations”

The changes in these commitments in 2009, 2008 and 2007 for all the Group’s companies in Spain, were as follows:

Post-Employment Welfare Benefits Spain	2009			2008			2007
	Millions of euros
Balance at beginning of year		221			234			223
Interest cost		10			11			9
Current service cost		2			2			2
Payments made		(19	)		(43	)		(12	)
Prior service cost or changes in the plan		5			—			8
Other changes		6			16			3
Actuarial losses (gains)		(3	)		1			1
Balance at end of year		222			221			234

The estimated benefit payments in millions of euros over the next 10 years are as follows:

	2010		2011		2012		2013		2014		2015-2019
	Millions of euros
Post-employment welfare benefits payments Spain		20		19		18		17		17		83

Other commitments with employees

Long-service bonuses

In addition to the post-employment welfare benefits mentioned above, the Group maintained certain commitments in Spain with some employees, called “Long-service bonuses”. These commitments were for payment of a certain amount in cash and for the allotment of Banco Bilbao Vizcaya Argentaria S.A. shares, when these employees complete a given number of years of effective service.

The Benefit Standardization Agreement mentioned above established that the long-service bonuses terminated as of December 31, 2007. Employees meeting the seniority conditions established are entitled to receive only the value of the commitment accrued to December 31, 2007.

In November 2007, the Group in Spain offered to these employees the option to redeem the accrued value of such share benefits prior to the established date of seniority. The offer was accepted by most of employees and the settlement (by allotment of shares or cash) took place in December 2007.

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The value of the long-service bonuses as of December 31, 2009 for employees who did not choose early settlement is recognized under the heading “Provisions — Other provisions” of the accompanying consolidated balance sheets with the figure of €13 million (see Note 25).

Summary on the consolidated income statements by defined benefit plans commitments

The charges corresponding to 2009, 2008 and 2007 for commitments in post-employment benefits in entities in Spain are summarized below:

	Note		2009		2008		2007
			Millions of euros
Interest expense and similar charges		39
Interest cost of pension funds				259		244		230
Personnel expenses		46
Transfer to pensions plans				18		14		18
Welfare benefits				2		2		2
Provisions (net)		48
Provisions for pension and similar obligations
Pension funds				—		8		(180	)
Early retirements				434		1,004		294
Total				713		1,272		364

26.2.2.  Commitments abroad:

As of December 31, 2009, 2008 and 2007 the main commitments with employees abroad correspond to those in Mexico, Portugal and United States, which jointly represent 94%, 94% and 96% respectively of the total commitments with employees abroad and 18%, 15% and 19% respectively of the total commitments with employees in the BBVA Group as a whole.

As of December 31, 2009 the breakdown by country of the various commitments with employees of the BBVA Group abroad was as follows:

			Plan		Net
Commitments Abroad	Commitments		Assets		Commitments
	Millions of euros
Pension commitments
Mexico		398		424		(26	)
Portugal		321		320		1
United States		194		162		32
Rest		84		46		38
		997		952		45
Post-employment welfare benefits
Mexico		511		342		169
Portugal		—		—		—
United States		—		—		—
Rest		10		—		10
		521		342		179
Total commitments		1,518		1,294		224

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26.2.2.1.  Commitments with employees in Mexico

In Mexico, the main actuarial assumptions used in quantifying the commitments with employees as of December 31, 2009, 2008 and 2007, were as follows:

Pension Actuarial Hypothesis Mexico	2009	2008	2007
Mortality tables	EMSSA 97	EMSSA 97	EMSSA 97
Discount rate (cumulative annual)	9.25%	10.25%	8.75%
Consumer price index (cumulative annual)	3.75%	3.75%	3.60%
Medical cost trend rates	6.75%	6.75%	5.75%
Expected rate of return on plan assets	9.40%	9.75%	8.75%

• Pension commitments in Mexico

The plan assets related to these commitments are to be used directly to settle the vested obligations and meet the following conditions: They are not owned by the Group entities; they are available only to pay post-employment benefits; and they cannot be returned to the Group entities. In 2009, the return on plan assets amounts to €43 million. The vested obligations related to these commitments are disclosed in the accompanying consolidated balance sheets net of the plan assets for these commitments.

As of December 31, 2009 the plan assets for these commitments were all in debt securities.

On December 2008 new defined-contribution plan was put in place in Mexico on a voluntary basis; it substitutes the current defined-benefit plan commitments. Approximately 70% of the workforce opted to sign up for the new plan, triggering a decrease in the pension obligations included in the tables showing the changes in commitments in 2009.

The changes of these commitments and plan assets in 2009, for all Group’s companies in Mexico, were as follows:

				Plan			Net
Pension Net Commitments Mexico	Commitments			Assets			Commitments
	Millions of euros
Balance at beginning of year		387			436			(49	)
Finance expenses		35			—			35
Finance income		—			37			(37	)
Current service cost		4			—			4
Prior service cost of changes in the plan		1			—			1
Acquisitions or divestments made		—			—			—
Effect of reductions or settlement		(1	)		—			(1	)
Payments		(31	)		(31	)		—
Exchange difference		6			6			—
Actuarial losses (gains)		30			6			24
Contributions		—			3			(3	)
Other movements(*)		(33	)		(33	)		—
Balance at end of year		398			424			(26	)

(*) This change, in commitments and affected assets, corresponds to the new system of contribution by the collective that accepted the proposal for the migration of their commitments

As of December 31, 2008, the excess of affected assets over the commitments amounts to €49 million. As of December 31, 2007 the net commitments of plan assets amounted to €12 million.

The net commitments of the plan assets mentioned above are recognized under the heading “Provisions-Provisions for pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 25).

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The estimated benefit payments in millions of euros over the next 10 years for all the companies in Mexico are as follows:

	2010		2011		2012		2013		2014		2015-2019
	Millions of euros
Pension payments Mexico		32		30		31		31		32		191

The following is a summary of the charges for these commitments, for all Group’s companies in Mexico, in the consolidated income statements corresponding to 2009, 2008 and 2007:

Pension Commitments Mexico Profit and Losses Summary	2009			2008			2007
	Millions of euros
Interest expense and similar charges		(2	)		1			1
Personnel expenses		4			15			17
Provisions (net)		(1	)		(66	)		(3	)
Total		1			(50	)		15

• Post-employment welfare benefits in Mexico

The plan assets related to these commitments are to be used directly to settle the vested obligations and meet the following conditions: They are not owned by the Group entities; they are available only to pay post-employment benefits; and they cannot be returned to the Group entities. In 2009, the return on plan assets for the post-employment welfare benefits commitments amounts to €44 million. The vested obligations related to these commitments are disclosed in the accompanying consolidated balance sheets net of the plan assets for these commitments.

The plan assets for these commitments are all in debt securities.

The net commitments of the above plan assets are recognized under the heading “Provisions — Provision for pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 25).

The changes in these commitments and plan assets in 2009 for all Groups’ companies in Mexico were as follows:

				Plan			Net
Post-Employment Welfare Benefits in Mexico	Commitments			Assets			Commitments
	Millions of euros
Balance at beginning of year		360			301			59
Finance expenses		37			—			37
Finance income		—			28			(28	)
Current service cost		11			—			11
Prior service cost of changes in the plan		—			—			—
Acquisitions or divestments made		—			—			—
Effect of reductions or settlement		(4	)		—			(4	)
Payments		(18	)		(18	)		—
Exchange difference		6			6			—
Actuarial losses (gains)		119			16			103
Contributions		—			9			(9	)
Other movements		—			—			—
Balance at end of year		511			342			169

As of December 31, 2008 and 2007 the net commitments of plan assets amounted to €59 million and €62 million respectively.

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The following is a summary of the charges for these commitments, for all Group’s companies in Mexico, in the consolidated income statements corresponding to 2009, 2008 and 2007:

Post-Employment Welfare Benefits Mexico
Profit and Losses Summary	2009			2008			2007
	Millions of euros
Interest expense and similar charges		9			5			5
Personnel expenses		11			14			16
Provisions (net)		(4	)		(17	)		13
Total		16			2			34

The sensitivity analysis to changes in trend rates growth of medical care costs for 2009 by BBVA Bancomer, S.A. is as follows:

Post-Employment Welfare Benefits Mexico
Sensitivity Analysis	1% Increase		1% Decrease
	Millions of euros
Increase/Decrease in current services cost and interest cost		14		(11	)
Increase/Decrease in commitments		101		(79	)

26.2.2.2. Pension Commitments in Portugal:

In Portugal, the main actuarial assumptions used in quantifying the commitments as of December 31, 2009, 2008 and 2007, are as follows:

Post-Employment Actuarial Hypothesis Portugal	2009	2008	2007
Mortality tables	TV 88/90	TV 88/90	TV 88/90
Discount rate (cumulative annual)	5.35%	5.90%	5.30%
Consumer price index (cumulative annual)	2.00%	2.00%	2.00%
Salary growth rate (cumulative annual)	3.00%	3.00%	3.00%
Expected rate of return on plan assets	4.50%	4.60%	4.60%

The plan assets related to these commitments are to be used directly to settle the vested obligations and meet the following conditions: They are not owned by the Group entities; they are available only to pay post-employment benefits; and they cannot be returned to the Group entities. In 2009 the return on plan assets related to these pension commitments reached €24 million. The vested obligations related to these commitments are disclosed in the accompanying consolidated balance sheets net of the plan assets for these commitments.

The distribution of the main categories of plan assets related to these commitments as of 31 December, 2009, 2008 and 2007 for all Group’s companies in Portugal was as follows:

			%
Plan Assets Portugal	2009		2008		2007
Equity securities		—		8.7		13.0
Debt securities		93.2		85.3		83.5
Property, Land and Buildings		—		0.5		0.3
Cash		5.2		3.6		0.8
Other investments		1.6		1.9		2.4

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The changes to these commitments and plan assets in 2009, for all Group’s companies in Portugal, were as follows:

Pension Net Commitments Portugal	Commitments			Plan Assets			Net Commitments
	Millions of euros
Balance at beginning of year		283			283			—
Finance expenses		16			—			16
Finance income		—			13			(13	)
Current service cost		4			—			4
Prior service cost of changes in the plan		—			—			—
Acquisitions or divestments made		—			—			—
Effect of reductions or settlement		10			—			10
Payments		(16	)		(16	)		—
Exchange difference		—			—			—
Actuarial losses (gains)		24			11			13
Contributions		—			29			(29	)
Other movements		—			—			—
Balance at end of year		321			320			1

As of December 31, 2008, the amount of the affected assets was equal to that of the commitments. As of December 31, 2007 the net commitments of plan assets amounted to €3 million.

The net commitments of the plan assets mentioned above are recognized under the heading “Provisions-Provisions for pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 25).

The estimated benefit payments in millions of euros over the next 10 years are as follows:

	2010		2011		2012		2013		2014		2015-2019
					Millions of euros
Pensions payments Portugal		16		16		17		18		18		102

The following is a summary of the charges for these commitments, for all Group’s companies in Portugal, in the consolidated income statements corresponding to 2009, 2008 and 2007:

Pension Commitment Portugal Profit and Losses Summary	2009		2008		2007
	Millions of euros
Interest expense and similar charges		3		2		2
Personnel expenses		4		4		5
Provisions (net)		10		—		11
Total		17		6		18

26.2.2.3.   Pension commitments in the United States:

In the United States, the main actuarial assumptions used in quantifying the commitments as of December 31, 2009, 2008 and 2007, are as follows:

Pension Actuarial Hypothesis United States	2009	2008	2007
Mortality tables	RP 2000 Projected	RP 2000 Projected	RP 2000 Projected
Discount rate (cumulative annual)	5.93%	6.92%	6.62%
Consumer price index (cumulative annual)	2.50%	2.50%	2.50%
Salary growth rate (cumulative annual)	3.50%	4.00%	4.00%
Expected rate of return on plan assets	7.50%	7.50%	7.50%
Medical care growth rate	8% to 5% 2010-2013	n/a	n/a

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The plan assets related to these commitments are to be used directly to settle the vested obligations and meet the following conditions: They are not owned by the Group entities; they are available only to pay post-employment benefits; and they cannot be returned to the Group entities. In 2009 the return on plan assets related to these pension commitments reached €27 million. The vested obligations related to these commitments are disclosed in the accompanying consolidated balance sheets net of the plan assets for these commitments.

The distribution of the main category of plan assets related to these commitments as of 31 December, 2009, 2008 and 2007 for all the companies in the United States was as follows:

	%
Pension Plan Assets United States	2009		2008		2007
Equity securities		63.6		52.7		59.2
Debt securities		35.1		46.0		39.9
Property, Land and Buildings		—		—		—
Cash		—		1.3		—
Other investments		1.3		—		0.9

The changes of these commitments and plan assets in 2009, for all Group’s companies in United States, were as follows:

Pension Net Commitments United States	Commitments			Plan Assets			Net Commitments
	Millions of euros
Balance at beginning of year		167			133			34
Finance expenses		11			—			11
Finance income		—			10			(10	)
Current service cost		5			—			5
Prior service cost of changes in the plan		(1	)		—			(1	)
Acquisitions or divestments made		—			—			—
Effect of reductions or settlement		—			—			—
Payments		(7	)		(7	)		—
Exchange difference		(6	)		(5	)		(1	)
Actuarial losses (gains)		25			17			8
Contributions		—			14			(14	)
Other movements		—			—			—
Balance at end of year		194			162			32

As of December 31, 2008 and 2007 the net commitments of plan assets amounted to €34 million and €-7 million respectively.

The net commitments of the plan assets mentioned above are recognized under the heading “Provisions-Provisions for pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 25).

The estimated benefit payments in millions of euros over the next 10 years are as follows:

	2010		2011		2012		2013		2014		2015-2019
	Millions of euros
Pension payments United States		7		8		8		9		10		63

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The following is a summary of the charges for these commitments, for all Group’s companies in the United States, in the consolidated income statements corresponding to 2009, 2008 and 2007:

Pension Commitments United States Profit and Losses Summary	2009		2008			2007
	Millions of euros
Interest expense and similar charges		1		(2	)		—
Personnel expenses		5		5			2
Provisions (net)		—		(2	)		(6	)
Total		6		1			(4	)

26.2.2.4.   Commitments with employees in other countries

In other countries, the commitments for post-employment defined-benefit plans and other post-employment benefits as of December 31, 2009 amounted to €84 million for pension commitments and €10 million for post-employment welfare benefits.

Below is a summary of the charges resulting from these commitments on the consolidated income statements corresponding to 2009, 2008 and 2007 for all the Group’s companies in other countries:

Post-Employment Commitments Other Countries Profit and Losses Summary	2009		2008		2007
	Millions of euros
Interest expense and similar charges		4		2		3
Personnel expenses		—		1		3
Provisions (net)		6		—		5
Total		10		3		11

27.   COMMON STOCK

As of December 31, 2009, the share capital of BBVA amounted to €1,836,504,869.29, divided into 3,747,969,121 fully subscribed andpaid-up registered shares, all of the same class and series, at €0.49 par value each, represented through book-entry accounts.

All BBVA shares carry the same voting and dividend rights and no single shareholder enjoys special voting rights. There are no shares that do not represent an interest in the Bank’s capital.

The shares of BBVA are traded on the stock market in Spain and in the markets in London and Mexico. American Depositary Shares (ADSs) quoted in New York are also traded on the Lima (Peru) Stock Exchange, by virtue of an exchange agreement entered into between these two markets.

As of December 31, 2009, the shares of BBVA Banco Continental, S.A., Banco Provincial S.A., BBVA Colombia, S.A., BBVA Chile, S.A., BBVA Banco Francés, S.A. and AFP Provida were also traded on their respective local stock markets, with BBVA Banco Francés and AFP Provida also being traded on the New York Stock Exchange. In addition, BBVA Banco Francés, S.A. is traded on theLatin-American market of the Madrid Stock Exchange.

As of December 31, 2009, Manuel Jove Capellán owned 4.86% of BBVA common stock through the companies Inveravante Inversiones Universales, S.L. and Bourdet Inversiones, SICAV, S.A.

Blackrock Inc, with a registered office in the United Kingdom, also notified BBVA that as a result of the acquisition on December 1 of Barclays Global Investors (BGI), it now has a 4.45% indirect holding in BBVA’s common stock through the company Blackrock Investment Management (UK).

In addition, as of December 31, 2009, Chase Nominees Ltd, State Street Bank and Trust Co., The Bank of New York Mellon, The Bank of New York International Nominees and Clearstream AG, in their capacity as international custodian/depositary banks, held 6.89%, 5.25%, 3.80%, 3.43% and 3.13% of BBVA common stock, respectively.

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BBVA is not aware of any direct or indirect interests through which ownership or control of the Bank may be exercised.

BBVA has not been notified of the existence of any agreements between shareholders to regulate the exercise of voting rights at the Bank’s AGMs, or to restrict or place conditions upon the free transferability of BBVA shares. The Bank is also not aware of any agreement that might result in changes in the control of the issuer.

At the AGM held on March 13, 2009 the shareholders resolved to delegate to the Board of Directors, in accordance with Article 153.1.b) of the Spanish Corporations Act, the power to increase capital, on one or several occasions, by a maximum par value equal to 50% of the Company’s subscribed andpaid-up share capital at the date of the resolution, i.e. €918,252,434.60. Article 159.2 of the Corporations Act empowers the Board to exclude the preferred subscription right in relation to these share issues, although these powers will be limited to 20% of the Company’s share capital. The directors have the legally established time limit in which to increase the capital, i.e., five years. So far BBVA has not issued any shares under this authorization.

At the AGM held on March 14, 2008 the shareholders resolved to delegate to the Board of Directors for a five-year period the right to issue bonds, convertibleand/or exchangeable into Bank shares for a maximum total of €9,000 million. The powers include the right to establish the different aspects and conditions of each issue, including the power to exclude the preferential subscription rights of shareholders in accordance with the Corporations Act, to determine the basis and methods of conversion and to increase capital stock in the amount considered necessary. In virtue of this authorization, the Board of Directors agreed at its meeting on July 27, 2009 to issue €2,000 million euros of convertible bonds, excluding the right to preferential subscription.

Previously, the AGM held on March 18, 2006 had agreed to delegate to the Board of Directors the faculty to issue, within a maximum legal period of five years as of said date, on one or several occasions, directly or through subsidiary companies fully underwritten by the Bank, any kind of debt instruments through debentures, any class of bonds, promissory notes, any class of commercial paper or warrants, which may be totally or partially exchangeable for equity that the Company or another company may already have issued, or via contracts for difference (CFD), or any other senior or secured nominative or bearer debt securities (including mortgage-backed bonds) in euros or any other currency that can be subscribed in cash or kind, with or without the incorporation of rights to the securities (warrants), subordinated or not, with a limited or open-ended term. The total maximum nominal amount authorized is €105,000 million. This amount was increased by €30,000 million by the Ordinary General Stockholders’ Meeting held on March 16, 2007, by €50,000 million by the AGM on March 14 2008, and by an additional €50,000 million by the AGM on March 13, 2009. Accordingly, the maximum total nominal amount delegated by the General Meeting was €235,000 million.

28.   SHARE PREMIUM

The amounts under this heading in the accompanying consolidated balance sheets total €12,453, €12,770 and €12,770 million as of 31 December, 2009, 2008 and 2007, respectively.

The change in the balance in 2009 is the result of a charge of €317 million corresponding to the payment to shareholders on April 20, 2009 as a complement to dividends for 2008, which was approved at the AGM on March 13, 2009 (see Note 4)

This payment consisted in a total of 60,451,115 treasury stock (see Note 30) at one (1) share for each sixty-two (62) held by shareholders at market close on April 9, 2009. These shares are valued at €5.25 each (the average weighted price per share of Banco Bilbao Vizcaya Argentaria, S.A. in the Spanish stock market (continuous market) on March 12, the day before that of the AGM mentioned above.

The amended Spanish Corporation Act expressly permits the use of the share premium balance to increase capital and establishes no specific restrictions as to its use.

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29.   RESERVES

The breakdown of the balance under this heading in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 is as follows:

	2009		2008		2007
	Millions of euros
Legal reserve		367		367		348
Restricted reserve for retired capital		88		88		88
Restricted reserve for Parent Company shares		470		604		912
Restricted reserve for redenomination of capital in euros		2		2		2
Revaluation Royal Decree-Law 7/1996		48		82		85
Voluntary reserves		2,918		1,927		822
Consolidation reserves attributed to the
Bank and dependents consolidated companies		8,181		6,340		3,803
Total		12,074		9,410		6,060

29.1.   LEGAL RESERVE

Under the amended Corporations Act, 10% of any profit made each year must be transferred to the legal reserve until the balance of this reserve reaches 20% of the share capital. This limit had already been reached the 20% by Banco Bilbao Vizcaya Argentaria, S.A. as of December 31, 2009. The legal reserve can be used to increase the share capital provided that the remaining reserve balance does not fall below 10% of the increased capital.

To the extent mentioned above, and until the legal reserve exceeds 20% of capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose.

29.2.   RESTRICTED RESERVES

Pursuant to the amended Spanish Corporations Act, a restricted reserve is recognized resulting from the reduction of the nominal value of each share in April 2000, and another restricted reserve resulting from the amount of treasury stock held by the Bank at each period-end, as well as by the amount of customer loans outstanding at those dates that were granted for the purchase of, or are secured by, the Bank’s shares.

Finally, pursuant to Law 46/1998 on the introduction of the euro, a restricted reserve is recognized as a result of the rounding effect of the redenomination of the share capital in euros.

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29.3.   REVALUATION OF ROYAL DECREE-LAW 7/1996 (REVALUATION AND REGULARIZATION OF THE BALANCE SHEET)

Prior to the merger, Banco de Bilbao, S.A. and Banco de Vizcaya, S.A. availed themselves of the legal provisions applicable to the regularization and revaluation of balance sheets. Thus, on December 31, 1996, Banco Bilbao Vizcaya, S.A. revalued its tangible assets pursuant to Royal Decree-Law 7/1996 of June 7 by applying the maximum coefficients authorized, up to the limit of the market value arising from the existing valuations. The resulting increases in the cost and depreciation of tangible fixed assets were calculated and allocated as follows:

	2009
	Millions of euros
Legal revaluations and regularizations of tangible assets:
Cost		187
Less:
Single revaluation tax (3%)		(6	)
Balance as of December 31, 1999		181
Rectification as a result of review by the tax authorities in 2000		(5	)
Transfer to voluntary reserves		(128	)
Total		48

Following the review of the balance of the “Revaluation Reserve pursuant to Royal Decree-Law 7/1996”, June 7, account by the tax authorities in 2000, this balance could only be used, free of tax, to offset recognized losses and to increase share capital until January 1, 2007. From that date, the remaining balance of this account can also be allocated to unrestricted reserves, provided that the surplus has been depreciated or the revalued assets have been transferred or derecognized.

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29.4.   RESERVES AND LOSSES AT CONSOLIDATED COMPANIES:

The breakdown, by company or corporate group, of the balances under these headings in the accompanying consolidated balance sheets as of December 31, 2009, 2008 and 2007 is as follows:

	2009			2008			2007
	Millions of euros
Fully and proportionately consolidated companies
BBVA Bancomer Group		4,022			3,489			2,782
BBVA Chile Group		419			248			155
BBVA Banco Provincial Group		413			198			84
BBVA Continental Group		127			95			79
BBVA Puerto Rico Group		72			44			43
BBVA USA Bancshares Group		71			(84	)		23
BBVA Portugal Group		(207	)		(220	)		(236	)
BBVA Colombia Group		(209	)		(264	)		(313	)
BBVA Banco Francés Group		(139	)		(305	)		(441	)
BBVA Luxinvest, S.A.		1,239			1,232			1,295
Corporacion General Financiera, S.A.		1,229			979			965
BBVA Seguros, S.A.		1,052			862			681
Anida Grupo Inmobiliario, S.L.		401			380			296
Cidessa Uno, S.L.		746			298			197
BBVA Suiza, S.A.		233			222			197
Bilbao Vizcaya Holding, S.A.		166			150			104
Finanzia, Banco de Crédito, S.A.		146			144			139
Compañía de Cartera e Inversiones, S.A.		123			121			(10	)
Banco Industrial de Bilbao, S.A.		96			114			95
BBVA Panama, S.A.		118			108			85
Almacenes Generales de Depósito, S.A.E.		105			97			90
BBVA Ireland Public Limited Company		103			103			97
Participaciones Arenal, S.L.		(181	)		(182	)		(182	)
Banco de Crédito Local, S.A.		—			(243	)		(243	)
BBVA International Investment Corporation		—			(418	)		(424	)
Rest		(55	)		117			(10	)
Subtotal		10,090			7,285			5,548
Using the equity method:		309			609			451
Corp. IBV Participaciones Empresariales, S.A.		249			437			428
CITIC Group		31			151			(5	)
Tubos Reunidos, S.A.		51			53			66
Rest		(22	)		(32	)		(38	)
Total		10,399			7,894			5,999

For the purpose of allocating the reserves and accumulated losses at the consolidated companies shown in the above table, the transfers of reserves arising from the dividends paid and transactions between these companies are taken into account in the period in which they took place.

As at December 31, 2009, 2008 and 2007, the individual financial statements of the subsidiaries giving rise to the balances recognized in “Reserves and losses at consolidated companies — Fully and proportionately

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consolidated companies” in the table above included €2,410 million €2,217 million and €1,706 million, respectively, of restricted reserves, all of which are restricted for the companies’ shares.

30.   TREASURY STOCK

In 2009, 2008 and 2007 the Group companies performed the following transactions with shares issued by the Bank:

	2009						2008						2007
	Number of			Millions of			Number of			Millions of			Number of			Millions of
	Shares			Euros			Shares			Euros			Shares			Euros
Balance as of January 1		61,539,883			720			15,836,692			389			8,306,205			147
+ Purchases		688,601,601			6,431			1,118,942,855			14,096			921,700,213			16,156
− Sales and other changes		(733,499,430	)		(6,835	)		(1,073,239,664	)		(13,745	)		(914,169,726	)		(16,042	)
+/− Derivatives over BBVA shares		—			(92	)		—			(20	)		—			128
Balance at end of year		16,642,054			224			61,539,883			720			15,836,692			389
Of which:
Held by BBVA		8,900,623			128			4,091,197			143			291,850			129
Held by Corporación General Financiera, S.A.		7,740,902			96			57,436,183			577			15,525,688			260
Held by other subsidiaries		529			—			12,503			—			19,154			—
Average purchase price in euros		9.34						12.6						17.53
Average selling price in euros		8.95						12.52						17.51
Net gain or losses on transactions (Shareholders’ funds-Reserves)		(238	)					(172	)					(26	)

The amount under the heading of “Sales and other changes” in the above table in 2009 includes the allocation of treasury stock to the shareholders as an additional remuneration to complement the dividends for 2008 (see Note 28).

The percentages of treasury stock held by the Group in 2009, 2008 and 2007 were as follows:

	2009						2008						2007
	Min			Max			Min			Max			Min			Max
% treasury stock		0.020	%		2.850	%		0.318	%		3.935	%		0.136	%		1.919	%

The number of shares of BBVA accepted in pledge as of December 31, 2009, 2008 and 2007 was as follows:

	2009			2008			2007
Number of shares in pledge		92,503,914			98,228,254			96,613,490
Nominal value		0.49			0.49			0.49
% of share capital		2.47	%		2.62	%		2.58	%

The number of BBVA shares owned by third parties but managed by a company in the Group as of December 31, 2009, 2008 and 2007 was as follows:

	2009			2008			2007
Number of shares property of third parties		82,319,422			104,534,298			105,857,665
Nominal value		0.49			0.49			0.49
% of share capital		2.20	%		2.79	%		2.80	%

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31.   VALUATION ADJUSTMENTS

The breakdown of the balance under this heading in the accompanying consolidated balance sheets as of December 2009, 2008 and 2007 is as follows:

	Note		2009			2008			2007
			Millions of euros
Available-for-sale financial assets		12.4		1,951			931			3,546
Cash flow hedging				188			207			(50	)
Hedging of net investments in foreign transactions				219			247			297
Exchange differences		2.2.16		(2,236	)		(2,231	)		(1,588	)
Non-current assets held for sale				—			—			—
Entities accounted for using the valuation method				(184	)		(84	)		47
Other valuation adjustments				—			—			—
Total				(62	)		(930	)		2,252

The balances recognized under these headings are presented net of tax.

32.   NON-CONTROLLING INTEREST

The breakdown by consolidated company of the balance under the heading “Non-controlling interest” of consolidated equity as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
BBVA Colombia Group		30		26		23
BBVA Chile Group		280		194		195
BBVA Banco Continental Group		391		278		246
BBVA Banco Provincial Group		590		413		267
BBVA Banco Francés Group		127		88		87
Other companies		45		50		62
Total		1,463		1,049		880

The amount share in net income in 2009, 2008 and 2007 of the non-controlling interests in the Group was as follows. These amounts are recognized in the heading “Non-controlling interest” of the accompanying consolidated income statements:

	2009		2008		2007
	Millions of euros
BBVA Colombia Group		6		5		5
BBVA Chile Group		64		31		43
BBVA Banco Continental Group		126		97		76
BBVA Banco Provincial Group		148		175		106
BBVA Banco Francés Group		33		44		36
Other companies		8		13		23
Total		385		365		289

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33.   CAPITAL BASE AND CAPITAL MANAGEMENT

Capital base

Bank of Spain Circular 3/2008, of May 22, on the calculation and control of minimum capital base requirements, regulates the minimum capital base requirements for Spanish credit institutions — both as individual entities and as consolidated groups — and how to calculate them, as well as the various internal capital adequacy assessment processes they should have in place and the information they should disclose to the market.

Circular 3/2008 implements Spanish legislation on capital base and consolidated supervision of financial institutions, as well as adapting Spanish law to the relevant European Union Directives, in compliance with the Accord by the Basel Committee on Banking Supervision (Basel II).

The minimum capital base requirements established by Circular3/2008 are calculated according to the Group’s exposure to credit and dilution risk, counterparty and liquidity risk relating to the trading portfolio, exchange rate risk and operational risk. In addition, the Group must fulfill the risk concentration limits established in said Circular and the internal Corporate Governance obligations.

In 2009 and 2008, the solvency ratios were calculated in accordance with the criteria under Bank of Spain Circular 3/2008. In 2007 these ratios were still subject to the criteria under the previous circular (Bank of Spain Circular 5/1993, March 26).

As of December 31, 2009, 2008 and 2007, the Group’s capital exceeded the minimum capital base level required by regulations in force on each date as shown below:

	2009(*)			2008			2007
	Millions of euros
Basic equity		27,114			22,107			19,115
Common Stock		1,837			1,837			1,837
Parent company reserves		20,892			21,394			18,389
Reserves in consolidated companies		1,600			(626	)		—
Non-controlling interests		1,245			928			760
Other equity instruments		7,130			5,391			4,491
Deductions (Goodwill and others)		(8,177	)		(9,998	)		(9,654	)
Attributed net income (less dividends)		2,587			3,181			3,292
Additional equity		12,116			12,543			13,924
Other deductions		(2,133	)		(957	)		(1,786	)
Additional equity due to mixed group(**)		1,305			1,129			1,160
Total Equity		38,402			34,822			32,413
Minimum equity required		23,282			24,124			25,386

(*)	Provisional data.
(**)	Mainly insurance companies in the Group.

Capital management

Capital management in the Group has a twofold aim: to preserve the level of capitalization, in accordance with the business objectives in all the countries in which it operates; and, at the same time, to maximize the return on shareholders’ funds through the efficient allocation of capital to the different units, good management of the balance sheet and appropriate use of the various instruments forming the basis of the Group’s equity: stock, preferential stock and subordinate debt.

This capital management is carried out in accordance with the criteria of the Bank of Spain Circular 3/2008, both in terms of determining the capital base and the solvency ratios. This regulation allows each entity to apply its own internal ratings based (IRB) approach to risk and capital management.

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The Group carries out an integrated management of these risks, in accordance with its internal policies (see Note 7) and its internal capital estimation model has received the Bank of Spain’s approval for certain portfolios.

Capital is allocated to each business area (see Note 6) according to economic risk capital (CaR) criteria, which are based on the concept of unexpected loss with a specific confidence level, as a function of a solvency target determined by the Group. This target is established at two levels: adjusted core capital, which determines the allocated capital and serves as a reference to calculate the return generated on equity (ROE) by each business; and total capital, which determines the additional allocation in terms of subordinate debt and preferred securities.

Because of its sensitivity to risk, ERC is an element linked to policies for managing the actual businesses. The procedure provides a harmonized basis for assigning capital to businesses according to the risks incurred and makes it easier to compare returns.

34.   FINANCIAL GUARANTEES AND DRAWABLE BY THIRD PARTIES

The breakdown of the balances of these items as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Contingent exposures —
Collateral, bank guarantees and indemnities		26,266		27,649		27,997
Rediscounts, endorsements and acceptances		45		81		58
Rest		6,874		8,222		8,804
		33,185		35,952		36,859
Contingent commitments —
Drawable by third parties:		84,925		92,663		101,444
Credit institutions		2,257		2,021		2,619
Government and other government agency		4,567		4,221		4,419
Other resident sectors		29,604		37,529		42,448
Non-resident sector		48,497		48,892		51,958
Other commitments		7,398		6,234		5,496
Total		92,323		98,897		106,940

Since a significant portion of these amounts will reach maturity without any payment obligation materializing for the consolidated companies, the aggregate balance of these commitments cannot be considered as an actual future requirement for financing or liquidity to be provided by the Group to third parties.

In 2009, 2008 and 2007 no issuances of debt securities carried out by associate entities, jointly controlled entities (accounted for using the equity method) or non-Group entities have been guaranteed.

35.   ASSETS ASSIGNED TO OTHER OWN AND THIRD-PARTY OBLIGATIONS

In addition to those mentioned in other notes in these annual financial statements as at December 31, 2009 and 2008 and 2007 (see Notes 13 and 26) the assets of consolidated entities that guaranteed their own obligations amounted to €81,231 million, €76,259 million and €58,406 million. This amount mainly corresponds to assets allocated as collateral for certain lines of short-term finance assigned to the Group by the Bank of Spain and to the issue of long-term mortgage-backed securities (Note 23.4) which, pursuant to the Mortgage Market Act, are admitted as third-party collateral.

As of December 31, 2009, 2008 and 2007, none of the Group’s assets were linked to any additional third-party obligations apart from those described in the various notes to these accompanying consolidated annual financial statements.

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36.   OTHER CONTINGENT ASSETS AND LIABILITIES

As of December 31, 2009, 2008 and 2007, there were no significant contingent assets or liabilities registered in the financial statements attached.

37.   PURCHASE AND SALE COMMITMENTS AND FUTURE PAYMENT OBLIGATIONS

The breakdown of sale and purchase commitments of the BBVA Group as of December 31, 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Financial instruments sales with repurchase commitments		29,409		32,569		50,982
Financial instruments purchase with resale commitments		7,023		11,515		11,423

Below is a breakdown of the maturity of other future payment obligations (in addition to those described in Note 16.1 for property leases) maturing after December 31, 2009:

	Up to
	1 Year		1 to 3 Years		3 to 5 Years		Over 5 Years		Total
	Millions of euros
Finance leases		—		—		—		—		—
Operating leases		159		88		108		213		568
Purchase commitments		240		16		2		—		258
Technology and systems projects		178		16		2		—		196
Other projects		62		—		—		—		62
Total		399		104		110		213		826

38.   TRANSACTIONS FOR THE ACCOUNT OF THIRD PARTIES

As of December 31, 2009, 2008 and 2007, the details of the most significant items under this heading were as follows:

	2009		2008		2007
	Millions of euros
Financial instruments entrusted by third parties		530,109		510,019		567,263
Conditional bills and other securities received for collection		4,428		5,208		20,824
Securities received in credit		489		71		632

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As of December 31, 2009, 2008 and 2007, the off-balance sheet customer funds were as follows:

	2009		2008		2007
	Millions of euros
Off balance sheet customer funds		133,537		114,840		165,314
- Commercialized by the Group
- Investment companies and mutual funds		39,849		37,076		63,487
- Pension funds		57,264		42,701		59,143
- Saving insurance contracts		9,814		10,398		10,437
- Customer portfolios managed on a discretionary basis		26,501		24,582		31,936
Of which:
Portfolios managed on a discretionary		10,757		12,176		18,904
- Commercialized by the Group managed by third parties outside the Group
- Investment companies and mutual funds		85		59		156
- Pension funds		24		24		128
- Saving insurance contracts		—		—		27

39.   INTEREST INCOME AND EXPENSES

39.1.   Interest And Similar Income

The breakdown of the most significant interest and similar income earned by the Group in 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Central Banks		254		479		458
Loans and advances to credit institutions		631		1,323		1,664
Loans and advances to customers		18,119		23,580		19,208
Government and other government agency		485		736		668
Resident sector		7,884		11,177		9,281
Non resident sector		9,750		11,667		9,259
Debt securities		3,342		3,706		3,472
Trading		1,570		2,241		2,028
Investment		1,772		1,465		1,444
Rectification of income as a result of hedging transactions
		177		175		177
Insurance activity income		940		812		821
Other income		312		329		376
Total		23,775		30,404		26,176

The amounts recognized in consolidated equity during the year in connection with hedging derivatives and the amounts derecognized from consolidated equity and taken to the consolidated income statement during the year are disclosed in the accompanying consolidated statements of recognized income and expense.

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The following table shows the adjustments in income resulting from hedge accounting, broken down by type of hedge.

	2009			2008		2007
	Millions of euros
Cash flow hedging		295			152		133
Fair value hedging		(118	)		23		44
		177			175		177

The breakdown of the balance of this heading in the accompanying consolidated income statements by geographical area is as follows:

	2009		2008		2007
	Millions of euros
Domestic market		11,224		15,391		13,709
Foreign		12,551		15,013		12,467
European Union		1,089		1,974		1,652
OECD		7,153		8,671		7,336
Rest of countries		4,309		4,368		3,479
Total		23,775		30,404		26,176

39.2.   Interest And Similar Expenses

The breakdown of the balance under this heading in the accompanying consolidated income statements is as follows:

	2009			2008		2007
	Millions of euros
Bank of Spain and other central banks		202			384		365
Deposits from credit institutions		1,511			3,115		3,119
Customers deposits		4,312			9,057		7,840
Debt certificates		2,681			3,631		3,658
Subordinated liabilities		1,397			1,121		868
Rectification of expenses as a result of hedging transactions		(1,215	)		421		(327	)
Cost attributable to pension funds		274			254		241
Insurance		679			571		616
Other charges		52			164		168
Total		9,893			18,718		16,548

The following table shows the adjustments in expenses resulting from hedge accounting, broken down by type of hedge.

	2009			2008			2007
	Millions of euros
Cash flow hedging		(35	)		(33	)		(24	)
Fair value hedging		(1,180	)		454			(303	)
		(1,215	)		421			(327	)

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39.3.   Average Return On Investments And Average Borrowing Cost

The detail of the average return on investments in 2009, 2008 and 2007 was as follows:

	2009						2008						2007
	Average				Interest		Average				Interest		Average				Interest
ASSETS	Balances		Expenses		Rates (%)		Balances		Expenses		Rates (%)		Balances		Expenses		Rates (%)
	Millions of euros
Cash and balances with central banks		18,638		253		1.36		14,396		479		3.32		16,038		458		2.86
Securities portfolio and derivatives		138,030		4,207		3.05		118,356		4,659		3.94		107,236		4,386		4.09
Loans and advances to credit institutions		26,152		697		2.66		31,229		1,367		4.38		39,509		1,777		4.50
Euros		16,190		353		2.18		21,724		933		4.30		29,522		1,138		3.85
Foreign currency		9,962		344		3.45		9,505		434		4.57		9,987		639		6.39
Loans and advances to customers		328,969		18,498		5.62		321,498		23,720		7.38		275,647		19,290		7.00
Euros		222,254		9,262		4.17		218,634		13,072		5.98		201,045		10,747		5.35
Foreign currency		106,715		9,236		8.65		102,864		10,648		10.35		74,602		8,543		11.45
Other finance income		—		120		—		—		179		—		—		265		—
Other assets		31,180		—		—		32,377		—		—		22,770		—		—
ASSETS/INTEREST AND SIMILAR INCOME		542,969		23,775		4.38		517,856		30,404		5.87		461,200		26,176		5.68

The average borrowing cost in 2009, 2008 and 2007 was as follows:

	2009						2008						2007
	Average				Interest		Average				Interest		Average				Interest
LIABILITIES	Balances		Expenses		Rates (%)		Balances		Expenses		Rates (%)		Balances		Expenses		Rates (%)
	Millions of euros
Deposits from central banks and credit institutions		74,017		2,143		2.89		77,159		3,809		4.94		65,822		3,469		5.27
Euros		35,093		967		2.75		32,790		1,604		4.89		27,388		1,261		4.60
Foreign currency		38,924		1,176		3.02		44,369		2,205		4.97		38,434		2,209		5.75
Customer deposits		249,106		4,056		1.63		237,387		8,390		3.53		205,740		7,013		3.41
Euros		116,422		1,326		1.14		115,166		3,765		3.27		109,605		3,133		2.86
Foreign currency		132,684		2,730		2.06		122,221		4,625		3.78		96,135		3,880		4.04
Debt certificates and subordinated liabilities		120,228		3,098		2.58		119,249		6,100		5.12		116,247		5,658		4.87
Euros		91,730		2,305		2.51		96,764		5,055		5.22		99,612		4,675		4.67
Foreign currency		28,498		793		2.78		22,485		1,045		4.65		16,635		983		5.91
Other finance expenses		—		596		—		—		418		—		—		408		—
Other liabilities		70,020		—		—		56,867		—		—		48,776		—		—
Equity		29,598		—		—		27,194		—		—		24,615		—		—
LIABILITIES+EQUITY/INTEREST AND SIMILAR EXPENSES		542,969		9,893		1.82		517,856		18,717		3.61		461,200		16,548		3.59

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The change in the balance under the headings “Interest and similar income” and “Interest and similar expenses” in the accompanying consolidated income statements between 2009 and 2008 is the result of changing prices (price effect) and changing volume of activity (volume effect), as can be seen below:

	Volume Price-Effect 2009/2008
	Volume			Price			Total
	Effect(1)			Effect(2)			Effect
	Millions of euros
Cash and balances with central banks		141			(366	)		(225	)
Securities portfolio and derivatives		774			(1,226	)		(452	)
Loans and advances to credit institutions		(222	)		(448	)		(670	)
Euros		(238	)		(342	)		(580	)
Foreign currency		21			(112	)		(91	)
Loans and advances to customers		551			(5,774	)		(5,222	)
Euros		216			(4,027	)		(3,810	)
Foreign currency		399			(1,811	)		(1,412	)
Other financial income		—			(59	)		(59	)
INTEREST AND SIMILAR INCOME		1,474			(8,104	)		(6,629	)
Deposits from central banks and credit institutions		(155	)		(1,512	)		(1,667	)
Euros		113			(750	)		(637	)
Foreign currency		(271	)		(759	)		(1,029	)
Customer deposits		414			(4,748	)		(4,334	)
Euros		41			(2,480	)		(2,439	)
Foreign currency		396			(2,291	)		(1,895	)
Debt certificates and subordinated liabilities		50			(3,052	)		(3,002	)
Euros		(263	)		(2,481	)		(2,744	)
Foreign currency		280			(537	)		(285	)
Other finance expense		—			178			178
INTEREST AND SIMILAR EXPENSES		908			(9,733	)		(8,825	)
NET INTEREST INCOME								2,197

(1)	The volume effect is calculated as the result of the interest rate of the initial period multiplied by the difference between the average balances of both periods
(2)	The price effect is calculated as the result of the average balance of the last period multiplied by the difference between the interest rates of both periods.

40.   DIVIDEND INCOME

The balances for this heading in the accompanying consolidated income statements correspond to dividends on shares and capital instruments other than those from shares in entities accounted for using the equity method (see Note 41), as can be seen in the breakdown below:

	2009		2008		2007
	Millions of euros
Dividends from:
Financial assets held for trading		131		110		121
Available-for-sale financial assets		312		337		227
Total		443		447		348

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41.   SHARE OF PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD

The profit contributed by the entities accounted for using the equity method in 2009, 2008 and 2007 was as follows:

	2009			2008			2007
	Millions of euros
CITIC Group		164			18			7
Corporación IBV Participaciones Empresariales, S.A.		18			233			209
Tubos Reunidos, S.A.		1			20			20
Occidental Hoteles Management, S.L		(31	)		(9	)		(6	)
Hestenar, S.L		(13	)		(1	)		—
Las Pedrazas Golf, S.L		(7	)		—			—
Servired Española de Medios de Pago, S.A.		(2	)		26			—
Rest		(10	)		6			11
Total		120			293			241

42.   FEE AND COMMISSION INCOME

The breakdown of the balance under this heading in the accompanying consolidated income statements for 2009, 2008 and 2007 by geographical area was as follows:

	2009		2008		2007
	Millions of euros
Commitment fees		97		62		55
Contingent liabilities		260		243		229
Documentary credits		42		45		38
Bank and other guarantees		218		198		191
Arising from exchange of foreign currencies and banknotes
		14		24		24
Collection and payment services		2,573		2,655		2,567
Securities services		1,636		1,895		2,089
Counseling on and management of one-off transactions
		7		9		16
Financial and similar counseling services		43		24		23
Factoring transactions		27		28		25
Non-banking financial products sales		83		96		87
Other fees and commissions		565		503		488
Total		5,305		5,539		5,603

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43.   FEE AND COMMISSION EXPENSES

The breakdown of the balance under this heading in the accompanying consolidated income statements for 2009, 2008 and 2007 by geographical area was as follows:

	2009		2008		2007
	Millions of euros
Brokerage fees on lending and deposit transactions		7		8		7
Fees and commissions assigned to third parties		610		728		612
Other fees and commissions		258		276		424
Total		875		1,012		1,043

44.   NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES

The breakdown of the balance under this heading in the accompanying consolidated income statements for 2009, 2008 and 2007 was as follows:

	2009			2008			2007
	Millions of euros
Financial assets held for trading		321			265			709
Other financial assets designated at fair value through profit or loss		79			(17	)		43
Other financial instruments not designated at fair value through profit or loss		492			1,080			793
Available-for-sale financial assets		504			996			709
Loans and receivables		20			13			63
Rest		(32	)		71			21
Total		892			1,328			1,545

The balance under this heading in the accompanying consolidated income statements, broken down by the nature of the financial instruments, was as follows:

	2009			2008			2007
	Millions of euros
Debt instruments		875			(143	)		(6	)
Equity instruments		1,271			(1,986	)		1,026
Loans and advances to customers		38			106			88
Derivatives		(1,318	)		3,305			409
Customer deposits		(2	)		13			—
Rest		28			33			28
Total		892			1,328			1,545

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The breakdown of the balance of the impact of the derivatives (trading and hedging) on this heading in the accompanying consolidated income statements was as follows:

	2009			2008			2007
	Millions of euros
Trading derivatives		(1,264	)		3,239			417
Interest rate agreements		(213	)		568			482
Security agreements		(993	)		2,621			(95	)
Commodity agreements		(2	)		42			8
Credit derivative agreements		(130	)		217			50
Foreign-exchange agreements		64			(152	)		(29	)
Other agreements		10			(57	)		—
Hedging derivatives ineffectiveness		(54	)		66			(8	)
Fair value hedging		(55	)		66			8
Hedging derivative		58			2,513			(805	)
Hedged item		(113	)		(2,447	)		798
Cash flow hedging		1			—			—
Total		(1,318	)		3,305			409

In addition, in 2009 €52 million have been recognized under the heading “Net exchange differences” in the accompanying consolidated income statement, through foreign exchange derivative trading.

45.   OTHER OPERATING INCOME AND EXPENSES

The breakdown of the balance under the heading “Other operating income” in the accompanying consolidated income statements was as follows:

	2009		2008		2007
	Millions of euros
Income on insurance and reinsurance contracts		2,567		2,512		2,605
Financial income from non-financial services		493		485		655
Of which:
Real estate agencies		42		40		279
Rest of operating income		340		562		329
Of which:
Net operating profit from rented buildings		57		20		11
Total		3,400		3,559		3,589

The breakdown of the balance under the heading “Other operating expense” in the accompanying consolidated income statements was as follows:

	2009		2008		2007
	Millions of euros
Expenses on insurance and reinsurance contracts		1,847		1,896		2,052
Change in inventories		417		403		467
Rest of operating expenses		889		794		532
Of which:
Contribution to guaranteed banks deposits funds		323		251		225
Total		3,153		3,093		3,051

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46.   ADMINISTRATION COSTS

46.1  PERSONNEL EXPENSES

The breakdown of the balance under this heading in the accompanying consolidated income statements for 2009, 2008 and 2007 was as follows:

	Note		2009		2008		2007
			Millions of euros
Wages and salaries				3,607		3,593		3,297
Social security costs				531		566		546
Transfers to internal pension provisions		26.2		44		56		56
Contributions to external pension funds		26.1		68		71		58
Other personnel expenses				401		430		378
Total				4,651		4,716		4,335

The breakdown of number of employees in the Group in 2009, 2008 and 2007, by professional categories and geographical areas, was as follows:

	Average Number of Employees
	2009		2008		2007
Spanish banks
Executives		1,043		1,053		1,102
Other line personnel		20,700		21,268		21,672
Clerical staff		5,296		6,152		6,849
Branches abroad		653		720		745
		27,692		29,193		30,368
Companies abroad
Mexico		26,675		27,369		26,568
Venezuela		5,935		6,154		5,793
Argentina		4,156		4,242		3,955
Colombia		4,289		4,382		4,639
Peru		4,222		3,836		3,349
United States		10,705		12,029		6,767
Other		4,839		4,918		4,780
		60,821		62,930		55,851
Pension fund managers		5,642		8,470		8,969
Other non-banking companies		10,261		11,343		9,327
Total		104,416		111,936		104,515

The breakdown of the average number of employees in the Group in 2009, 2008 and 2007, by professional category and gender, was as follows:

	2009				2008				2007
	Average Number				Average Number				Average Number
	Male		Female		Male		Female		Male		Female
Executive managers		1,667		330		1,629		316		1,667		318
Other line personnel		23,438		16,921		23,392		19,927		24,506		16,337
Clerical staff		25,650		36,410		29,335		37,337		28,993		32,694
Total		50,755		53,661		54,356		57,580		55,166		49,349

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The total number of employees in the Group as of December 31, 2009, 2008 and 2007, broken down by professional category and gender, was as follows:

	2009				2008				2007
	Total Number of Employees				Total Number of Employees				Total Number of Employees
	Male		Female		Male		Female		Male		Female
Executive managers		1,646		328		1,627		319		1,656		314
Other line personnel		21,960		18,687		22,983		19,092		24,515		19,034
Clerical staff		26,913		34,187		29,169		35,782		31,127		35,267
Total		50,519		53,202		53,779		55,193		57,298		54,615

Equity-instrument-based employee remuneration

Settlement of the long-term share remuneration plan2006-2008

The settlement of the long-term share remuneration plan of2006-2008 was approved by the AGM held on March 13, 2009.

Given that the Group ranked third among the 13 benchmark banks, the Total Shareholders’ Return (“TSR”) applied in the settlement of the plan meant a multiplier of 1.42, applying this multiplier to the theoretical number of shares allocated to each beneficiary, this gave a total of 13,677,226 shares to be delivered across the whole Group. The final price of the shares allocated as remuneration was set at €6.25 per share.

Multi-Year Variable Share-Based Remuneration Plan for the BBVA Executive Team2009-2010

At the Annual General Meeting held on March 13, 2009, the Bank’s shareholders approved a long-term share-based remuneration plan for the members of the Group’s executive team (“the Plan”). The Plan entered into force on April 15, 2009 and will end on December 31, 2010. Its settlement is planned for April 15, 2011.

This Plan consists of the promise to give ordinary BBVA shares to members of the Group’s management team including executive board directors and members of the Steering Team of BBVA (see Note 56).

At the start of the Plan, each of the beneficiaries was assigned an initial number of “units”. At the expiry of the Plan, the final number of shares to be delivered to each beneficiary will be calculated by multiplying the number of “units” allocated by a coefficient ranging from 0 to 2. The value of the coefficient will be established by comparing the performance of the Bank’s TSR (share appreciation plus dividends) over the term of the Plan with the performance of the same indicator for 18 other leading European and U.S. banks.

The amount of the obligation that will be registered in the consolidated financial statements during the period of the Plan will be determined by multiplying the number of the “units” by the estimated average price of the share at the moment of the settlement of the Plan.

As of December 31, 2009, the estimated number of “units” was 6,849,553 in the Group as a whole, including executive directors and the BBVA’s Management Committee members (see Note 56).

The amount of the Plan will be accrued throughout its life. The expense registered for the period from April 15 to December 31, 2009 amounted to €11 million and is recognized under the heading “Personnel expenses — Other” in the Group’s accompanying consolidated income statement for the year 2009 with a charge to “Stockholders’ Funds — Other equity instruments” in the consolidated balance sheet as of December 31, 2009, net of tax effect.

Compass long-term incentive plan

The board of directors of Compass Bancshares (“Compass”) approved a long-term restricted share plan to provide incentives to certain officers and key employees of Compass Bancshares and its subsidiaries. This plan enters into effect in 2008 and has a duration of three years.

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The plan represents an obligation by Compass Bancshares to deliver an equivalent number of BBVA American Depository Shares that may not be sold, transferred, pledged or assigned during a designated restriction period, but which otherwise have voting and dividend rights associated with BBVA American Depository Shares during the restriction periodand/or the assignation of restricted share units, each of these units representing the obligation of Compass to deliver an equivalent number of ADS once the restriction period has ended, assuming the fulfillment of certain criteria.

The initial maximum number of BBVA ADS available for distribution under this Plan was 1,320,911 (1 ADS is equivalent to one BBVA ordinary share) representing a 0.035% of the common stock of the Bank. In November, approval was granted to increase the number of ADS under this Plan by 1,692,916.

A total of 821,511 “restricted share units” have been assigned to 380 employee beneficiaries, representing 0.022% of the share capital of the Bank, with restriction periods in 2009, 2010, and 2011.

The expense associated in 2009 reached $9.1 million (equivalent to €6.5 million). It is recognized under the heading “Personnel expenses — Other personnel expenses” in the consolidated income statement for the year, and a balancing entry has been made under the heading “Stockholders’ funds — Other equity instruments” in the consolidated balance sheet as of December 31, 2009, net of tax effect.

46.2  GENERAL AND ADMINISTRATIVE EXPENSES

The breakdown of the balance under this heading in the accompanying consolidated income statements for 2009, 2008 and 2007 was as follows:

	2009		2008		2007
	Millions of euros
Technology and systems		577		598		539
Communications		254		260		236
Advertising		262		273		248
Property, fixtures and materials		643		617		520
Of which:
Rents expenses(*)		304		268		205
Taxes		266		295		258
Other administration expenses		1,009		997		1,117
Total		3,011		3,040		2,918

(*) The consolidated companies do not expect to terminate the lease contracts early.

47.   DEPRECIATION AND AMORTIZATION

The breakdown of the balance under this heading in the accompanying consolidated income statements for 2009, 2008 and 2007 was as follows:

	Note		2009		2008		2007
			Millions of euros
Tangible assets depreciation charge		19		435		443		426
For own use				416		435		418
Investment properties				11		1		1
Operating lease				8		8		7
Intangible assets depreciation charge		20.2		262		256		151
Total				697		699		577

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48.   PROVISIONS (NET)

The net allowances charged to the income statement under the headings “Provision for pensions and similar obligations”, “Provisions for contingent exposures and commitments”, “Provisions for taxes and other legal contingencies” and “Other provisions” (Note 25) for the years 2009, 2008 and 2007 were as follows:

	2009			2008			2007
	Millions of euros
Provisions for pensions and similar obligations		552			985			135
Provisions for contingent exposures and commitments		(170	)		(119	)		48
Provisions for taxes, other legal contingents and other provisions		76			565			52
Total		458			1,431			235

49.   IMPAIRMENT (LOSSES) ON FINANCIAL ASSETS (NET)

The details of impairment on financial assets broken down by the nature of these assets for the years 2009, 2008 and 2007 were as follows:

	Note		2009			2008			2007
			Millions of euros
Available-for-sale financial assets		12		277			145			1
Debt securities				167			144			1
Other equity instruments				110			1			—
Held-to-maturity investments		14		(3	)		(1	)		—
Loans and receivables		7		5,199			2,797			1,902
Of which:
Recovery of written-off assets		7		187			192			226
Total				5,473			2,941			1,903

50.   IMPAIRMENT LOSSES ON OTHER ASSETS (NET)

The details of impairment losses of non-financial assets broken down by the nature of these assets for the years 2009, 2008 and 2007 were as follows:

	Note		2009		2008			2007
			Millions of euros
Goodwill		20.1 y 17		1,100		—			—
Other intangible assets		20.2		—		1			1
Tangible assets		19		155		13			12
For own use				62		(8	)		(12	)
Investment properties				93		(6	)		—
Inventories		22		334		26			—
Rest				29		5			—
Total				1,618		45			13

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51.   GAINS (LOSSES) ON DERECOGNIZED ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE

The breakdown of the balances under these headings in the accompanying consolidated income statements was as follows:

	2009			2008			2007
	Millions of euros
Gains
Disposal of investments in entities		6			27			2
Disposal of intangible assets and other		28			75			39
Losses:
Disposal of investments in entities		(2	)		(14	)		(7	)
Disposal of intangible assets and other		(12	)		(16	)		(21	)
Total		20			72			13

52.   GAINS AND LOSSES IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS

The details under the heading “Gains and losses in non-current assets held for sale not classified as discontinued operations” in the accompanying consolidated income statement for 2009, 2008 and 2007 were as follows:

	2009			2008			2007
	Millions of euros
Gains for real estate		986			61			366
Impairment of non-current assets held for sale		(127	)		(40	)		(22	)
Gains on sale ofavailable-for-sale financial assets		—			727			847
Total		859			748			1,191

“Net gains on property sales” above refer mainly to the Group’s sales of property with leaseback in Spain (€914 million) in 2009, the sale of a Bancomer property in 2008 (€61 million) and the sale of four of the Bank’s properties in Madrid in 2007 (€279 million) (see Note 16.1).

The “Gains (losses) onavailable-for-sale financial assets” correspond to the transactions of participations sales of Bradesco in 2008 and Iberdrola in 2007.

53.   CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities increased in 2009 by €2,567 million, compared with the decrease of €1,992 million in 2008. The most significant changes occurred in the headings of“Available-for-sale financial assets”, “Loans and receivables” and “Financial liabilities at amortized cost” and “Financial assets held for trading”.

Cash flows from investment activities decreased in 2009 by €643 million, compared with to the decrease of €2,865 million in 2008. The most significant changes are included under the headings “Tangible assets” and “Investment in subsidiaries and other business units”.

Cash flows from financing activities decreased in 2009 by €74 million, compared with the decrease of €2,271 million in 2008. The most significant movements are shown in the line detailing the acquisition and amortization of own equity instruments.

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The table below breaks down the main cash flows related to investing activities as of December 31, 2009, 2008 and 2007:

			2009
			Cash flows of investment activities
2009	Note		Investments (−)		Divestments (+)
Tangible assets		19		931		793
Intangible assets		20		380		147
Investments		17		2		1
Subsidiaries and other business units				7		32
Non-current assets and liabilities associated held for sale		16		920		780
Held-to-maturity investments		14		156		—
Other settlements related with investment activities				—		—

			2008
			Cash flows of investment activities
2008	Note		Investments (−)		Divestments (+)
Tangible assets		19		1,199		168
Intangible assets		20		402		31
Investments		17		672		9
Subsidiaries and other business units				1,559		13
Non-current assets and liabilities associated held for sale		16		515		374
Held-to-maturity investments		14		—		283
Other settlements related with investment activities				270		874

			2007
			Cash flows of investment activities
2007	Note		Investments (−)		Divestments (+)
Tangible assets		19		1,836		328
Intangible assets		20		134		146
Investments		17		690		227
Subsidiaries and other business units				7,082		11
Non-current assets and liabilities associated held for sale		16		487		744
Held-to-maturity investments		14		—		321
Other settlements related with investment activities				719		1,184

54.   ACCOUNTANT FEES AND SERVICES

The details of the fees for the services contracted by the companies of the Group in 2009 with their respective auditors and other audit companies were as follows:

	Millions of euros
Audits of the companies audited by firms belonging to the Deloitte worldwide organisation		13.1
Fees for audits conducted by other firms		—
Other reports required pursuant to applicable legislation and tax regulations issued by the national supervisory bodies of the countries in which the Group operates, reviewed by firms belonging to the Deloitte worldwide organisation		5.2

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Other companies in the Group contracted other services as at December 31, 2009, as follows:

	Millions of euros
Firms belonging to the Deloitte worldwide organisation		2.0
Other firms		7.4

The services provided by our accountants meet the independence requirements established under Law 44/2002, of 22 November, on Measures Reforming the Financial System and by the Sarbanes-Oxley Act of 2002 adopted by the Securities and Exchange Commission (SEC); accordingly they did not include the performance of any work that is incompatible with the auditing function.

55.   RELATED PARTIES TRANSACTIONS

As financial institutions, BBVA and other companies in the Group engage in transactions with related parties in the normal course of their business. All these transactions are of little relevance and are carried out in normal market conditions.

55.1  TRANSACTIONS WITH SIGNIFICANT SHAREHOLDERS

As of December 31, 2009, the balances of transactions with significant shareholders (see Note 27) correspond to “Customer deposits”, at €39 million, “Loans and advances to customers”, at €37 million and “Contingent exposures, at €17 million, all of them in normal market conditions.

55.2  TRANSACTIONS WITH THE BBVA GROUP

The balances of the main aggregates in the accompanying consolidated balance sheets arising from the transactions carried out by the Group with associates and jointly controlled companies accounted for using the equity method (see Note 2.1), as of December 31, 2009, 2008 and 2007, were as follows:

	2009		2008		2007
	Millions of euros
Assets:
Loans and advances to credit institutions		45		27		32
Loans and advances to customers		613		507		610
Liabilities:
Deposits from credit institutions		3		1		—
Customers deposits		76		23		55
Debt certificates		142		344		440
Memorandum accounts:
Contingent exposures		36		37		129
Contingents commitments		340		415		443

The balances of the main aggregates in the accompanying consolidated income statements resulting from transactions with associated and jointly controlled entities that consolidated by the equity method in 2009, 2008 and 2007, were as follows:

	2009		2008		2007
	Millions of euros
Income statement:
Financial Revenues		18		36		33
Financial Expenses		6		22		18

There are no other material effects on the accompanying consolidated financial statements of the Group in 2009 arising from dealings with these companies, other than the effects arising from using the equity method (see Note 2.1), and from the insurance policies to cover pension or similar commitments (see Note 25).

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As of December, 2009, 2008 and 2007, the notional amount of the futures transactions arranged by the Group with the main companies mentioned above amounted to approximately €569 million, €101 million and €74 million on December 31, 2008 and 2009, respectively (of which €474 million in 2009 correspond to futures transactions with the CITIC Group).

In addition, as part of its normal activity, the Group has entered into agreements and commitments of various types with shareholders of subsidiaries and associates, which have no material effects on the consolidated financial statements.

55.3   TRANSACTIONS WITH MEMBERS OF THE BOARD OF DIRECTORS AND MANAGEMENT COMMITTEE

The information on the remuneration of members of the Board of Directors of BBVA and of the Group’s Management Committee is included in Note 56.

The amount disposed of the loans granted to members of Board of Directors as of December 31, 2009 amounted to €806 thousand.

The amount disposed of the loans granted as of December 31, 2009 to the Management Committee, excluding the executive directors, amounted to €3,912 thousand.

As of December 31, 2009, there were no guarantees provided on behalf of members of the Bank’s Management Committee.

As of December 31, 2009, the loans granted to parties related to key personnel (the members of the Board of Directors of BBVA and of the Management Committee as mentioned above) amounted to €51,882 thousand. As of December 31, 2009, the other exposure (guarantees, financial leases and commercial loans) to parties related to key personnel amounted to €24,514 thousand.

55.4  TRANSACTIONS WITH OTHER RELATED PARTIES

As of December 31, 2009, the Group did not present any transactions with other related parties that did not belong to the normal course of their business, that was not under market conditions and that was relevant for the equity, income or the entity and financial situation of this entity.

56.   REMUNERATION OF THE BOARD OF DIRECTORS AND MEMBERS OF THE BANK’S MANAGEMENT COMMITTEE

Remuneration and other benefits of the members of the Board of Directors and members of the Management Committee.

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•  Remuneration of non-executive directors

The remuneration paid to individual non-executive members of the Board of Directors in 2009 is indicated below, broken down by type of remuneration:

									Appointments and
	Board		Standing Committee		Audit		Risk		Compensation		Total
	Thousand of euros
Tomás Alfaro Drake		129		—		71		—		—		200
Juan Carlos Álvarez Mezquíriz		129		167		—		—		42		338
Rafael Bermejo Blanco		129		—		179		107		—		415
Ramón Bustamante y de La Mora		129		—		71		107		—		307
José Antonio Fernández Rivero(*)		129		—		—		214		—		343
Ignacio Ferrero Jordi		129		167		—		—		42		338
Román Knörr Borrás		129		167		—		—		—		296
Carlos Loring Martínez de Irujo		129		—		71		—		107		307
Enrique Medina Fernández		129		167		—		107		—		403
Susana Rodríguez Vidarte		129		—		71		—		42		242
Total (**)		1,290		668		463		535		233		3,189

(*)	Mr. José Antonio Fernández Rivero, apart from the amounts detailed in the table above, also received a total of €652 thousand in early retirement benefit as a former director of BBVA.
(**)	In addition, Mr. Richard C. Breeden, who resigned as director on March 13, 2009, received a total of €87 thousand in 2009 as remuneration for his position on the Board.

•  Remuneration of executive directors

The remuneration paid to individual executive directors in 2009 is indicated below, broken down by type of remuneration:

			Variable
	Fixed Remunerations		Remunerations(*)		Total
	Thousand of euros
Chairman & CEO		1,928		3,416		5,343
President & COO(**)		783		1,256		2,039
Total		2,710		4,672		7,382

(*)	The figures relate to variable remuneration for 2008 paid in 2009.
(**)	The remuneration paid to the current COO appointed on September 29, 2009, includes the remuneration received as Director of Resources and Media in the period for which he occupied this position.

In addition, the previous COO, who resigned on September 29, 2009, received €1,065 thousand as fixed remuneration for 2009 and €2,861 thousand as variable remuneration for 2008.

The previous Company Secretary, who resigned as executive of the Bank on December 22, 2009, received €650 thousand in 2009 as fixed remuneration and €815 thousand as variable remuneration for 2008.

In addition, those who were executive directors in 2009 have received remuneration in kind and in other forms for a joint total of €144 thousand.

The executive directors accrued variable remuneration for 2009, to be paid in 2010, amounting to €3,388 thousand in the case of the Chairman and CEO and €1,482 thousand in the case of the COO.

The previous COO has accrued €2,811 thousand euros for this item and the previous Company Secretary €805 thousand, both amounts to be paid in 2010.

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These amounts are recognized under the item “Other liabilities — Accruals” on the liability side of the consolidated balance sheet as of December 31, 2009.

•  Remuneration of the members of the Management Committee (*)(

The remuneration paid in 2009 to the members of BBVA’s Management Committee amounted to €6,257 thousand in fixed remuneration and €10,804 thousand in variable remuneration accrued in 2008 and paid in 2009.

In addition, the members of the Management Committee received remuneration in kind and other items totaling €453 thousand in 2009.

•  Termination of the long-term stock remuneration plan(2006-2008) for executive directors and members of the Management Committee

BBVA’s Ordinary AGM held on March 13, 2009, approved the liquidation of the Long-Term Stock Remuneration Plan for2006-2008 (“the Plan”) under the terms established at its start. The number of BBVA shares to be given to its beneficiaries were calculated in accordance with BBVA’s TSR compared with the international financial institutions used as a reference.

The termination of the Plan was formalized on March 30, 2009, and the number of Banco Bilbao Vizcaya Argentaria, S.A. shares distributed to the executive directors was as follows:

	No Assigned
	Theoretical Shares		Multiplier Ratio		Number of Shares
Chairman & CEO		320,000		1.42		454,400
President & COO		125,000		1.42		177,500

(*) The shares given to the former President and COO and to the former Company Secretary as a result of the liquidation of the Plan were 383,400 and 142,000 shares, respectivery

The total number of shares allocated to Management Committee members at the time the Plan was terminated, excluding executive directors, was 1,191,116.

•  variable multi-year stock remuneration program for2009-2010 for executive directors and members of the Management Committee

The AGM held on March 13, 2009 approved a Multi-Year Variable Retribution Program for shares for the years2009-2010 (“the Program”) for members of the management team, including the executive directors and members of the Management Committee.

The Program allocates each beneficiary a certain number of units depending on his level of responsibility. At the end of the Program, this could give rise to an allocation of BBVA shares, should the initial requirements be met.

The precise number of shares to be given to each beneficiary of the Program is determined by multiplying the number of units allocated by a coefficient of between 0 and 2. This coefficient reflects the relative performance of BBVA’s total stockholder return (TSR) during the period2009-2010 compared with the TSR of a group of the Bank’s international peers.

The number of units assigned to executive directors (*)( was 215,000 in the case of the Chairman and CEO and 131,707 in the case of the COO.

((*) This section includes information on the members of the Management Committee as of December 31, 2009, excluding the executive directors.

((*) The units initially assigned to the previous COO and the previous Company Secretary were reduced as a result of their retirement, in accordance with a scale calculated according to the time they had worked in their executive functions in the Bank and the total duration of the program, this was 48,293 and 29,024 units, respectively.

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The total number of units assigned under this Program to the Management Committee members who held this position on December 31, 2009, excluding executive directors, was 817,464.

•  Scheme for remuneration of non-executive directors with deferred DISTRIBUTION OF SHARES

The Bank’s AGM on March 18, 2006 resolved under agenda item eight to establish a remuneration scheme using deferred distribution of shares to the Bank’s non-executive directors, to replace the earlier post-employment scheme in place for these directors.

The plan assigns a number of “theoretical shares” each year to non-executive director beneficiaries equivalent to 20% of the total remuneration paid to each in the previous year, using the average of BBVA share closing prices from the trading sessions prior to the annual general meeting approving the financial statements for the years covered by the scheme. These shares, where applicable, are to be distributed when the beneficiaries cease to be directors on any grounds other than serious dereliction of duties.

The number of theoretical shares allocated to non-executive director beneficiaries under the deferred share distribution scheme approved by the AGM for 2009, corresponding to 20% of the total remuneration paid to each in 2008, is set out below:

	Theoretical		Accumulated
Directors	Shares		Theoretical Shares
Tomás Alfaro Drake		5,645		9,707
Juan Carlos Álvarez Mezquíriz		9,543		33,511
Rafael Bermejo Blanco		11,683		15,989
Ramón Bustamante y de la Mora		8,661		32,648
José Antonio Fernández Rivero		9,663		24,115
Ignacio Ferrero Jordi		9,543		34,083
Román Knörr Borrás		8,335		27,838
Carlos Loring Martínez de Irujo		8,667		20,418
Enrique Medina Fernández		11,351		44,708
Susana Rodríguez Vidarte		6,854		20,450
Total		89,945		263,467

•  Pension commitments

The provisions registered as of December 31, 2009 for pension commitments to the COO are €13,753 thousand, including both those accumulated as director of the Group and those resulting from his current position as COO. As of this date, there are no other pension obligations to executive directors.

In 2009 the Board of Directors determined the pension rights corresponding to the Chairman of the Board, as he had reached the age of 65 and had consolidated his right to a retirement pension, calculated in accordance with the actuarial criteria applicable to the Bank at €79,775 thousand euros, of which €72,547 thousand had already been charged to the results of previous years, and had been externalized as an insurance policy whose benefits could not be received until the Chairman of the Board ceased his executive duties. Thus as of December 31, 2009, all the pension commitments of the bank to the Chairman of the Board had been met.

In addition, the Board of Directors determined the pension rights of the previous COO as a result of his early retirement. They amounted to €68,674 thousand, of which €52,495 thousand had already been charged to the results of previous years, which had been externalized as an insurance policy, so as of December 31, 2009, all the pension commitments of the Bank to the previous COO had been met.

Finally, the Board of Directors determined the pension rights of the previous Company Secretary as a result of his early retirement. They were set at €13,511 thousand, of which €8,710 thousand had already been charged to the results of earlier years. This amount had been satisfied as a compensation for his pension rights, so as of December 31, 2009 all the Bank’s pension commitments to the previous Company Secretary had been met.

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In addition, insurance premiums amounting to €79 thousand were paid on behalf of the non-executive members on the Board of Directors.

The provisions registered as of December 31, 2009 for pension commitments for the Management Committee members, excluding executive directors, amounted to €45,535 thousand. Of these, €8,371 thousand were charged against 2009 earnings.

•  termination of the contractual relationship.

The contract terms and conditions established for the Bank’s executive directors entitled them to receive indemnity should they leave. The Bank no longer assumes these obligations, and consequently as of December 31, 2009 there are no obligations to pay indemnity to executive directors.

In the case of the COO, the provisions of his contract stipulate that in the event that he loses this position for any reason other than of his own will, retirement, invalidity or serious dereliction of duty, he will take early retirement with a pension that may be received as a life annuity or a capital sum equal to 75% of his pensionable salary if this should occur before he reaches 55 years of age, or 85% after this age.

57.   DETAILS OF THE DIRECTORS’ HOLDINGS IN COMPANIES WITH SIMILAR BUSINESS ACTIVITIES

Pursuant to the third paragraph of Article 127 the Spanish Corporations Act, introduced by Law 26/2003 of 17 July amending Securities Market Act24/1988 of July 28, and the revised Corporations Act, in order to reinforce the transparency of listed companies, there follows a list of the companies engaging in an activity that is identical, similar or complementary to that which constitutes the corporate purpose of BBVA, and in which the members of the Board of Directors have a direct or indirect ownership interest as of December 31, 2009. In no case do they engage in executive or administrative functions at these companies.

		Investments		Type of Ownership
Surname (s) and First Name	Company	Number of Shares		Interest
Alfaro Drake, Tomás	—		—		—
Alvarez Mezquiriz, Juan Carlos	—		—		—
Bermejo Blanco, Rafael	Banco Santander		4,400		Direct
	Banco Popular Español		11,213		Direct
Bustamante y de la Mora, Ramón	—		—		—
Cano Fernández, Ángel	—		—		—
Fernández Rivero, José Antonio	—		—		—
Ferrero Jordi, Ignacio	BNP Paribas		420		Indirect
González Rodríguez, Francisco	—		—		—
Knörr Borrás, Román	—		—		—
Loring Martínez de Irujo, Carlos	—		—		—
Maldonado Ramos, José	—		—		—
Medina Fernández, Enrique	Banco Popular Español		43.4246		Indirect
	Bankinter		47.9168		Indirect
Rodríguez Vidarte, Susana	—		—		—

58.   OTHER INFORMATION

58.1  ENVIRONMENTAL IMPACT

Given the activities in which the Group companies engage, the Group has no environmental liabilities, expenses, assets, provisions or contingencies that could have a significant effect on its consolidated equity, financial situation and profits. Consequently, there is no item in the Group’s 2009 consolidated financial statements that

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requires disclosure in an environmental information report pursuant to the Ministry of Economy Order of October 8, 2001, and no specific disclosure of information on environmental matters is included in these statements.

58.2.  DETAIL OF AGENTS OF CREDIT INSTITUTIONS

The list of BBVA agents as required by Article 22 of Royal Decree 1245/1995 of July 14, of the Ministry of Economy and Finance, is included in the Bank’s individual financial statements for 2009.

58.3.   REPORT ON THE ACTIVITY OF THE CUSTOMER CARE SERVICE AND THE CUSTOMER OMBUDSMAN

The report on the activity of the Customer Care Service and the Customer Ombudsman required pursuant to Article 17 of Ministry of Economy and Finance Order ECO/734/2004 of March 11, is included in the Management Report accompanying these consolidated annual financial statements.

58.4   OTHER INFORMATION

On March 15, 2002, the Bank of Spain initiated proceedings against BBVA and 16 of its former directors and executives, as a result of the existence of funds (approximately €225 million) belonging to BBV that were not included in the entity’s financial statements until they were voluntarily regularized by being recognized in the 2000 consolidated income statement as non-recurrent income, for which the related corporation tax was recognized and paid. BBVA notified the Bank of Spain of these matters on January 19, 2001.

On May 22, 2002, the Board of the Spanish Securities and Exchange Commission (CNMV) commenced proceedings against BBVA for possible contravention of Article 99 ñ) of the Securities Market Act for the same events as those which gave rise to the proceedings initiated by the Bank of Spain.

The start of legal proceedings to determine possible criminal responsibility of the individuals involved in these events triggered the suspension of the above administrative proceedings until a definitive criminal judgment was issued. These criminal proceedings ended with a definitive court judgment in 2007, with none of those involved being convicted. The end of these criminal proceedings meant that the administrative proceedings could bere-opened. The Bank of Spain and the Spanish National Securities Market Commission (CNMV) announced the lifting of the suspension to their proceedings on June 13, 2007 and July 26, 2007 respectively.

On July 18, 2008, the board of the Bank of Spain sanctioned BBVA with a fine of one million euros for a serious breach as typified in article 5.p) of the “Ley de Disciplina e Intervención de las Entidades de Crédito” (Law regulating the conduct of financial entities) and also imposed various sanctions on the managers and executives responsible for such conduct none of whom are presently members of the Board of Directors, or hold executive office at BBVA.

On July 18, 2008, the Ministry of Economy and Finance sanctioned the entity with a fine of two million euros, as a result of the proceeding initiated by the CNMV, for a very serious breach under Article 99 ñ) of the Stock Markets Act.

Both decisions were confirmed by the Ministry for Economy and Finance on administrative appeal.

59.   SUBSEQUENT EVENTS

Since January 1, 2010 until the preparation of these annual consolidated financial statements, no other significant events have taken place affecting the Group’s results or its equity position.

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60.   DIFFERENCES BETWEEN EU-IFRS REQUIRED TO BE APPLIED UNDER THE BANK OF SPAIN’S CIRCULAR 4/2004 AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND OTHER REQUIRED DISCLOSURES.

As described in Note 1, the accompanying Consolidated Financial Statements of the BBVA Group are presented in the formats stipulated by the Bank of Spain’s Circular and were prepared by applying the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004. Such formats and accounting principles vary in certain respects from those generally accepted in the United States (“U.S. GAAP”).

Following is a summary of the main differences between EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 and U.S. GAAP:

•   Net income attributed to parent company and Shareholders’ equity reconciliation between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP(*)	A
•   Consolidated Financial Statements	B
•   Main disclosures required by U.S. accounting regulations for banks and additional disclosures required under U.S. GAAP	C

(*) BBVA is availing itself of the accommodation in Item 17(c)(2)(iv) ofForm 20-F with respect to the application of IAS 21 for highly inflationary economies (Venezuela). Therefore, this reconciliation has been prepared in accordance with Item 18 ofForm 20-F which is different from that required by US GAAP. See Item 16 bellow and the discussion under Venezuela for additional information.

The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts and allocations of assets and liabilities and disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimated but any difference should not be material.

IFRS 1First-time adoption of International Financial Reporting Standardsprovides a number of exemptions and exceptions from full retrospective application. Net income attributed to parent company, shareholders’ equity and the reconciliation to U.S. GAAP shown below would have been different if the EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004 had been applied fully retrospectively.

A)   NET INCOME ATTRIBUTED TO PARENT COMPANY AND SHAREHOLDERS’ EQUITY RECONCILIATION BETWEEN EU-IFRS REQUIRED TO BE APPLIED UNDER THE BANK OF SPAIN’S CIRCULAR 4/2004 AND U.S. GAAP.

Accounting practices used by the Bank in preparing the Consolidated Financial Statements conform to EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, but do not conform to U.S. GAAP. A summarized reconciliation of shareholders’ equity as of December 31, 2009, 2008 and 2007 and net income attributed to parent company for the years ended December 31, 2009, 2008 and 2007 to U.S. GAAP is set forth below.

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The following tables set forth the adjustments to consolidated net income attributed to parent company and to consolidated shareholders’ equity which would be required if U.S. GAAP had been applied to the accompanying Consolidated Financial Statements:

			Increase (Decrease)
			Year Ended December 31,
	Item #		2009			2008			2007
			(Millions of euros, except per share data)
NET INCOME
Net income for the year under EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004				4,595			5,385			6,415
Net income attributed to non-controlling interests under EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004				(385	)		(365	)		(289	)
Net income attributed to parent company under EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004				4,210			5,020			6,126
Adjustments to conform to U.S. GAAP:
Business combination with Argentaria		1		(22	)		(36	)		(31	)
Valuation of assets		2		(910	)		(32	)		110
Valuation of financial instruments		3		—			—			(9	)
Accounting of goodwill		4		713			(2	)		(118	)
Accounting of derivatives		6		(34	)		(128	)		29
Loans adjustments		7		—			(1,152	)		(924	)
Pension plan cost		8		(221	)		—			—
Tax effect of U.S. GAAP adjustments and deferred taxation		9		89			402			226
Net income attributed to parent company in accordance with U.S. GAAP(*)				3,825			4,070			5,409
Other comprehensive income, (loss) net of tax:
Foreign currency translation adjustments and others				(76	)		(1,001	)		(1,873	)
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period, net of tax				943			(2,657	)		487
Derivative instruments and hedging activities				(4	)		175			285
Comprehensive income (losses) in accordance with U.S. GAAP (*)		10		4,688			587			4,308
Net income per share (Euros)(see Note 60.11)				1.03			1.10			1.50

(*) In accordance with Item 18 ofForm 20-F.

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			Increase (Decrease)
			Year Ended December 31,
	Item #		2009			2008			2007
			(Millions of euros)
TOTAL EQUITY
Total equity under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004				30,763			26,705			27,943
Non-controlling interests under IFRS				(1,463	)		(1,049	)		(880	)
Total equity without non-controlling interests under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004				29,300			25,656			27,063
Adjustments to conform to U.S. GAAP:
Business combination with Argentaria		1		5,447			5,469			5,505
Valuation of assets		2		(984	)		(74	)		(41	)
Valuation of financial instruments		3		18			36			57
Accounting of goodwill		4		3,332			2,573			2,877
Adjustments related to inflation-due to IFRS-1		5		(199	)		(192	)		(221	)
Accounting of derivatives		6		7			35			160
Loans adjustments		7		—			36			1,188
Tax effect of U.S. GAAP adjustments and deferred taxation		9		(749	)		(795	)		(1,203	)
Total shareholders’ equity in accordance with U.S. GAAP(*) (**)				36,172			32,744			35,384

(*)	In accordance with Item 18 ofForm 20-F.
(**)	Under US GAAP “Shareholders’ equity” is equivalent to “Total equity” net of “Non controlling interest in subsidiaries”.

The differences included in the tables above are explained in the following items:

1.   Business Combination with Argentaria-

Banco Bilbao Vizcaya, S.A. and Argentaria, Caja Postal y Banco Hipotecario, S.A. (Argentaria) merged, being January 28, 2000 the date from which such merger was legally effective. According to Spanish GAAP at that date, this business combination was accounted for using the method of pooling of interest and therefore no goodwill was accounted. IFRS 1First-time adoption of International Financial Reporting Standardsgrants an exemption to apply IFRS 3Business Combinations prospectively and thus not to restate business combinations that occurred before the date of transition to IFRS, which is January 1, 2004. Therefore, this merger has been accounted for using the method of pooling of interest and no goodwill was accounted. Since the transaction did not comply with the U.S. GAAP requirements for pooling of interest method, under U.S. GAAP this business combination was accounted for using the purchase method. The excess of the fair value of the new shares issued in exchange for the Argentaria shares over the net worth of Argentaria under U.S. GAAP as of the date of the merger, was

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approximately €6,316 million and was calculated considering the necessary adjustments to the net worth of Argentaria as of January 28, 2000 under Spanish GAAP, as described below:

	(Millions of euros)
Approximate Argentaria net worth as of January 28, 2000 under Spanish GAAP		3,454
(i) Reversal of the net effect of the restatement of fixed assets and equity securities		(129	)
(ii) Reduction for employees and third party loans issued to purchase shares of capital stock		(123	)
(iii) Goodwill amortization adjustments		101
(iv) Up-front premium reversal		108
(v) Valuation of investment securities		1,926
(vi) Effect of adjustments to conform to U.S. GAAP for investments in affiliated Companies		(87	)
(vii) Tax effect of above mentioned adjustments		(608	)
(viii) Other adjustments		35
Subtotal		1,223
Approximate Argentaria net worth as of January 28, 2000 under U.S. GAAP		4,677

i.   Revaluation of property and equity securities

Certain of the Spanish and foreign consolidated companies had stepped up (increased) the cost and accumulated depreciation of property and equipment and, where appropriate, the carrying values of their equity investment securities pursuant to the relevant local legislation. Also, the buildings and equity securities owned by certain of the companies in the Group, whose shareholders’ meetings adopted merger resolutions in 1991, were stepped up. Under U.S. GAAP these step ups are not permitted to be reflected in the financial statements.

ii. — Employee and other third party loans

Certain Group banks granted loans to shareholders, employees and customers for the acquisition of Argentaria, Caja Postal y Banco Hipotecario, S.A. shares. Under Spanish GAAP, these loans were recorded in the Consolidated Financial Statements under the caption “Credit, Loans and Discounts”. Under U.S. GAAP, these loans should be recorded as a reduction of total shareholders’ equity because the only recourse for collection is the shares themselves.

iii. — Goodwill

Under Spanish GAAP, the general policy of the Group was to amortize goodwill over a maximum period of 10 years. However, a different period was used to amortize goodwill in some of the subsidiaries acquired. Until 2001, for purposes of calculating the effect of applying U.S. GAAP, goodwill arising on acquisitions was amortized in 10 years. Since July 2001, as required by SFAS 142 (ASC 350), goodwill is no longer amortized.

Additionally, in 1998 and as a result of the merger, goodwill from Banco Exterior de España, S.A. was fully written off for Spanish GAAP purposes. Until June 2001, under U.S. GAAP this goodwill was amortized over the estimated economic life as there was no economic or fair value basis for the impairment made under Spanish GAAP. Since July 2001, as required by SFAS 142 (ASC 350), goodwill is no longer amortized.

iv. — Up-front premium reversal

In 1998 the Bank arranged hedging transactions for which it paid a premium, which was recorded under the “Extraordinary Losses” caption in the income statement for 1998, to mitigate the adverse effect of the negative spread that arise between the average return on the mortgage loans financed by certain mortgage bonds and the fixed interest rates of such mortgage bonds. Under U.S. GAAP, the premium was recognized at inception as an asset, amortized over the life of the hedging transaction and that upon adoption of SFAS 133 (ASC 815), the

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derivative has been recorded at fair value through income, as it does not qualify for hedge accounting under U.S. GAAP.

v. — Valuation of investment securities

Under SFAS 115 (ASC320-10-35-1b),available-for-sale securities shall be measured at fair value and the unrealized holding gains and losses shall be reported in “Other comprehensive income”.

vi. — Investments in affiliated companies

Under Spanish GAAP, investments in non-consolidated listed affiliated companies owned over 3% and in non-consolidated unlisted affiliated companies owned over 20% were recorded by the equity method. Under U.S. GAAP investments in affiliated companies over 20% but less than 50% are accounted for by the equity method and those exceeding 50% by the consolidation method. Listed investments of less than 20% are accounted for at market value.

The excess of the fair value of the new shares issued in exchange for the Argentaria shares over the net worth of Argentaria, was allocated to the following specific items:

	Millions of
2000	euros
Net lending		611
Investment securities-held to maturity		306
Premises and equipment		129
Other assets and liabilities		(113	)
Long term debt		(173	)
Tax effect		(220	)
Goodwill		5,776
		6,316

For U.S. GAAP purposes, BBVA amortizes the excess of the fair value assigned to the specific items over their remaining economic life. The amortization of the excess allocated to specific assets and liabilities was €22 million (net of tax), €36 million (net of tax) and €31��million (net of tax) in 2009, 2008 and 2007, respectively.

Until December 31, 2001 BBVA amortized the goodwill on a straight line basis over a period of 25 years. Since January, 2002 BBVA stopped the amortization of the remaining goodwill pursuant to SFAS 142 (ASC 350), and it has been assigned to different reporting units and tested for impairment as described in Note 2.2.11. As of December 31, 2009 goodwill was €5,333 million.

The adjustment to total shareholders’ equity, that reflects both effects, was €5,447 million, €5,469 million and €5,505 million as of December 31, 2009, 2008 and 2007, respectively.

2.   Valuation of assets-

This adjustment basically relates to the following:

•  Revaluation of property

As described in Note 29.3. of the Consolidated Financial Statements, certain of the Spanish and foreign consolidated companies restated the cost and accumulated depreciation of property and equipment pursuant to the relevant legislation.

Fixed asset depreciation is computed on that restated value and the total amount charged to income is deductible for corporate income tax purposes. In addition, results on sales or dispositions of fixed assets are determined as the difference between the selling price and the net restated value.

Under U.S. GAAP these revaluations are not permitted to be reflected in the financial statements.

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The amounts of the adjustments indicated below have been calculated to reflect the reversal of the additional depreciation on the revalued property and equipment (€4 million, €4 million and €5 million for the years ended December 31, 2009, 2008 and 2007, respectively) and the additional income that would have resulted if the Group had not restated the fixed assets that have been sold (€9 million and €6 million and €123 million for the years ended December 31, 2009, 2008 and 2007, respectively). The adjustment to total shareholders’ equity reflects the reversal of the unamortized revaluation surplus (a decrease of €135 million, €148 million and €158 million as of December 31, 2009, 2008 and 2007, respectively).

•  Valuation of property

In accordance with the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, certain property and equipment items were revalued and, therefore, this value was used as deemed cost on January 1, 2004 taking into consideration that, at the date of the revaluation, this deemed cost was comparable to fair value.

Under U.S. GAAP, these adjustments to the deemed cost are not permitted due to the fact that they do not reflect an actual impairment.

Consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect in the income statement the additional depreciation on the revalued property and equipment (€3 million, €3 million and €3 million for the years ended December 31, 2009, 2008 and 2007, respectively) and the additional income (losses) related to property and equipment with different book value under U.S. GAAP which have been sold (losses of €39 million as of December 31, 2008). The adjustment to total shareholders’ equity reflects the reversal of the adjustments to the attributed cost (an increase of €64 million, €67 million and €109 million as of December 31, 2009, 2008 and 2007, respectively).

•  Sale and leaseback of fixed assets

In 2009, 1,150 properties (offices and other singular buildings) belonging to the Group in Spain were reclassified to heading “Non-current assets held for sale” at an amount of €426 million, for which a sales plan had been established. As of December 31, 2008, these assets were recognized under the heading “Tangible assets — Property, plants and equipment — For own use” of the accompanying consolidated balance sheets.

In 2009, the Bank sold 971 properties in Spain of the aforementioned to investments not related to BBVA Group for a total sale price of €1,263 million at market prices, without making funds available to the buyers to pay the price of these transactions. At the same time the Bank signed long-term operating leases with these investors on the aforementioned properties for periods of 15, 20, 25 or 30 years (according to the property) and renewable. The sale agreements also established call options for each of the properties at the termination of each of the lease agreements so that the Bank can repurchase these properties. The repurchasing price of these call options will be the market value as determined by an independent expert.

Under EU-IFRS (IAS 17), we accounted for this transaction as a sale and lease-back because of:

•  We considered that there is no reasonable certainty that the repurchase option will be exercised, because it is at fair value, and there are no other indicators that we expect would economically force us to exercise the repurchase option; and

•  We completed an analysis of the other main factors of the transaction and concluded that the lease agreements had the characteristics of operating leases, the sale price and lease payments were at fair value so, in effect, there had been a normal sale transaction and the gain on the sale of the properties was recognized immediately in the consolidated statement of income for the year 2009.

Under U.S. GAAP (ASC840-40-25-13) this transaction does not qualify as a sale and lease-back because the existence of a repurchase option of the properties at fair value implies a continuing involvement of the seller-lessee and, consequently, the transaction cannot be considered as a sale.

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Accordingly, in order to account for the transaction in conformity with the financing method under SFAS 98 (ASC840-40-25-13), we have made an adjustment to:

•  undo the sale, place the properties under repurchase agreement back in the accounting books (€301 million) and continue to depreciate them for the year 2009 (€4 millions);

•  eliminate the profit on sale (€914 million of income as of the date of the transaction) and create a liability for the total amount of the cash received; and

•  reclassify the operating leases rental payments incurred by the Group (€28 million for the year 2009) as interest expense.

3.   Valuation of financial instruments-

Group’s criteria of accounting for such securities are described in Note 2.2.1. The recognition, measurement and disclosure criteria included in IAS 32 and 39, were applied retrospectively to January 1, 2004 (the date of transition to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004). Certain debt securities were recognized at fair value of that date under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 through total shareholders’ equity. Therefore, there is an adjustment in the reconciliation of shareholders’ equity to U.S. GAAP to reflect the reversal of the adjustments to the fair value.

4.   Accounting of goodwill-

The breakdown of this adjustment is as follows:

	Total Shareholders’ Equity									Net Income Attributed to Parent Company
	2009			2008			2007			2009		2008			2007
	Millions of euros
Goodwill previous to IFRS 1		981			981			981			—		—			—
Reversal of step acquisition		2,330			2,310			2,648			—		—			—
Step acquisition of BBVA Bancomer		(1,171	)		(1,170	)		(1,200	)		2		1			(100	)
Acquisition and impairment of Compass		1,095			398			405			711		—			—
Others		97			54			43			—		(3	)		(18	)
Adjustment 4 in reconciliation to U.S. GAAP		3,332			2,573			2,877			713		(2	)		(118	)

The main reasons that generate a difference between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP in goodwill are the following:

Adjustments related to goodwill previous to IFRS 1

The item “Goodwill previous to IFRS 1” refer to certain impairments or amortizations of goodwill accounted for under Spanish GAAP previous to the date of adoption of IFRS-1. These impairments or amortizations were not acceptable under U.S. GAAP because they did not satisfy the SFAS 142 (ASC 350) requirements. Therefore, there is an adjustment in the reconciliation of shareholders’ equity to U.S. GAAP to reflect the reversal of these impairments and amortizations of goodwill recorded prior to January 1, 2004.

Reversal of step acquisition

Investments acquired subsequent to obtaining control over a company (i.e. transactions involving the purchase of equity interests from minority shareholders) were treated as “equity transactions”. The amount of goodwill recorded under prior GAAP, at January 1, 2004, transition date to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, was recorded on the transactions performed after control was obtained. These amounts were charged to “non-controlling interests” and the surplus amount was charged to total shareholders’ equity.

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Under U.S. GAAP, these acquisitions are accounted for using the “purchase method” and, consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect the reversal of goodwill recorded prior to January 1, 2004, and the increase of shareholders’ equity.

Step Acquisition of BBVA Bancomer

On March 20, 2004, BBVA completed the tender offer on 40.6% of the capital stock of Grupo Financiero BBVA Bancomer, S.A. de C.V. (“Bancomer”). The final number of shares presented in the offer and accepted by BBVA was 3,660,295,210, which represent 39.45% of the capital stock of Bancomer. Following the acquisition of these shares through the tender offer, the ownership interest held by BBVA in the capital of Bancomer was 98.88%. Lastly, as of December 31, 2006, as a result of the purchase of shares subsisting in the market, BBVA’s holding in Bancomer increased to 99.96%.

BBVA Bancomer, S.A. de C.V. has been consolidated by Group BBVA since July 2000, when the merger of Grupo Financiero BBV-Probursa, S.A. de C.V. (a wholly-owned subsidiary of BBVA) and Grupo Financiero BBVA Bancomer, S.A. de C.V. was carried out.

Since March 20, 2004 the BBVA Group’s consolidated income statement reflected a decrease in “Non-controlling interests” caption related to the business combination described above while the rest of consolidated the income statement’s captions did not change because Bancomer was already a fully consolidated company before the acquisition of non controlling interest.

The cash paid for the acquired entity was €3,324 million. In connection with this business combination there are no contingent payments, options, or commitments specified in the acquisition agreement.

Under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, the business combination is registered as equity transaction and no amounts were allocated to assets or liabilities of the company acquired.

Under U.S. GAAP, after allocating the purchase price to all acquired assets and assumed liabilities of the company acquired, the goodwill was €1,060 million. The entire amount of goodwill was allocated to the Mexico reporting unit. This unit is included in the “Mexico” segment. The reconciliation of the net worth acquired and the fair value of the assets and liabilities acquired for purposes of U.S. GAAP was as follows:

	Millions of
	euros
Net worth acquired		1,207
Investment securities		(32	)
Net loans and leases		622
Premises and equipment		(28	)
Intangible assets		970
Other Assets		189
Time Deposits		(124	)
Long term debt		(50	)
Other liabilities		(490	)
Fair value under U.S. GAAP		2,264

The identified intangible assets were related to “core deposits”, which were calculated according to the purchase method and were amortized over a period of 40 months. As of December 31, 2009, all core deposits are amortized. Additionally, the allocated amount of net loans and leases were amortized over a weighted-average period of 3 years.

The “Other liabilities” caption includes basically temporary differences arising from different accounting and tax values of assets and liabilities allocated in the acquisition. Because the amounts allocated to certain assets are non deductible under Spanish Tax Law, additional goodwill and the corresponding deferred tax liabilities have been considered under U.S. GAAP.

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Since Bancomer was consolidated by Group BBVA at July 1, 2000, there are no purchased research and development assets that were acquired and written off.

Acquisition of Compass

On February 16, 2007, BBVA entered into a definitive agreement to acquire 100% of the share capital of Compass. On September 7, 2007, BBVA completed the acquisition.

Under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, the amount of goodwill was calculated at the date in which BBVA obtained the control (September 7, 2007). Under US GAAP, EITF IssueNo. 99-12,Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combinationprovides guidance on the measurement date to be used in a business combination.EITF 99-12 specifies that the value of acquirer’s marketable equity securities issued to effect a purchase business combination should be determinated, pursuant to the guidance in paragraph 22 of FASB Statement No. 141 (ACS805-20), Business Combinations, based on the market price of the securities over a reasonable period of time before and after the terms of the acquisition are agreed to and announced. The date of measurement of the value of the acquirer’s marketable equity securities should not be influenced by the need to obtain shareholder or regulatory approvals. In addition, paragraph 7 of Issue 2 ofEITF 99-12 states that the measurement date is the earliest date, from the date the terms of the acquisition are agreed to and announced to the date of financial applications of the formula do not result in a change in the number of shares or the amount of other consideration. According to this BBVA considered the announcement date (February 16, 2007) as the measurement date under US GAAP. Consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect the different amount of goodwill.

This difference resulted in a reconciling item to shareholders’ equity (an increase of €384 million, €398 million and €405 million as of December 31, 2009, 2008 and 2007, respectively).

Goodwill impairment test

As indicated in Note 20.1 of the Consolidated Financial Statements, the Group performed the goodwill impairment test under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

As of December 31, 2009, the results of the goodwill impairment test estimated impairment losses of €1,097 million in the United States cash-generating unit (“CGU”) which were recognized under “Impairment losses on other assets (net) — Goodwill and other tangible assets” in the income statement for 2009 (Note 50). The impairment loss of this unit is attributed to the significant decline in economic and credit conditions in the states in which the Group operates in the United States. The valuations have been verified by an independent expert, not the Group’s statutory auditor.

In accordance with the applicable accounting guidance under U.S. GAAP, the Group performs annual tests to identify potential impairment of goodwill. The tests are required to be performed annually and more frequently if events or circumstances indicate a potential impairment may exist. In the first step (“step one”) of the impairment test, the Group compares the fair value of each reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test is required to be performed to measure the amount of impairment loss, if any. The second step (“step two”) of the impairment test compares the implied fair value of goodwill attributed to each reporting unit to the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination; the Group allocates the fair value determined in the step one for the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Group tested its identified reporting units for impairment as of December 31, 2009. This test indicated a goodwill impairment of €385 million within the United States and Puerto Rico reporting unit; accordingly, the Group recorded this goodwill impairment charges in 2009. The impairment recognized in the United States and Puerto Rico reporting unit is attributed to the decrease in revenues caused by the significant decline in U.S. economic conditions.

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Both the step one fair values of the reporting units and the step two allocations of the fair values of the reporting units’ assets and liabilities are based upon management’s estimates and assumptions. Although management has used the estimates and assumptions it believes to be most appropriate in the circumstances, it should be noted that even relatively minor changes in certain valuation assumptions used in management’s calculations would result in significant differences in the results of the impairment tests.

There is a difference in the impairment test of goodwill because under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 there is no step two as required by U.S. GAAP. This difference resulted in a reconciling item to the Net income for the year ended December 31, 2009. This adjustment reflects the reversal of the excess of charges in 2009 to the United States and Puerto Rico reporting unit’s goodwill amounted to €711 million as of December 31, 2009.

Continued declines in economic factors in the U.S. during 2010, especially in the banking sector, could negatively impact future goodwill impairment tests for the Group, resulting in further goodwill impairment charges.

As of December 31, 2008 and 2007, there were no losses due to impairments in the value of the reporting units’ goodwill under both GAAPs.

Under U.S. GAAP, the main BBVA Group’s goodwill assigned to each Reporting Unit as of December 31, 2009, 2008 and 2007 for annual impairment test purposes are the following:

	2009		2008		2007
	Millions of euros
Spain and Portugal		4,294		4,286		4,353
Global Businesses		1,489		1,489		1,410
Pensions in South America		252		208		251
México		2,302		2,265		2,713
Chile		104		86		104
United States and Puerto Rico		6,472		7,098		6,698
Colombia		205		193		204

5.   Adjustments related to inflation-due to IFRS-1

After the transition date to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, which is January 1, 2004, none of the functional currencies of the consolidated subsidiaries and associates and their branches located abroad relate to hyperinflationary economies, except for Venezuela which is discussed in Item 16 below. Accordingly, excluding Venezuela, as of December 31, 2009, 2008 and 2007 it was not necessary to adjust the financial statements of any of the consolidated subsidiaries or associates to correct for the effect of inflation.

In accordance to the exemption provided by IFRS 1 First-time Adoption of International Financial Reporting Standards, the cumulative effect of inflation recorded prior to January 1, 2004 (transition date to EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004) mainly relating to items of property, plant and equipment has not been removed. Therefore, the previous GAAP restated amounts have been used as deemed cost of property, plant and equipment as of the transition date.

Under U.S. GAAP, in prior years the financial statements of operating units in a highly inflationary economy were remeasured as if the functional currency of the operating unit were the same as that of the parent reporting currency. For the purposes of this requirement, a highly inflationary economy is one that has cumulative inflation of approximately 100 percent or more over a 3 year period. None of the countries where BBVA owned subsidiaries are highly inflationary countries through 2009.

The adjustment reflects the reversal of the charges to shareholders’ equity arising from inflation registered in dependent companies established in “non highly inflationary economies” (decrease of €199 million, €192 million and €221 million as of December 31, 2009, 2008 and 2007, respectively).

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6.   Accounting of derivatives-

As of December 31, 2009, the main differences between IAS 39 and SFAS 133 (ASC 815) that have resulted in reconciling items to net income and shareholders’ equity between IFRS and U.S. GAAP were as follows:

Fair value option

The EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 allows for the designation of a financial asset or a financial liability as held at fair value through the profit or loss if one of the criteria described in IAS 39 is met.

FAS 115 (ASC 320) allows for the designation of a financial asset or a financial liability as held for trading only if these are acquired and held primarily for resale in the near term to make a profit from short-term movements in market prices.

As of December 31, 2009, 2008 and 2007, we maintained certain financial assets and financial liabilities registered at fair value through the profit or loss under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 which did not meet the conditions to be designated as financial asset or financial liability held for trading under SFAS 115 (ASC 320). With the adoption of SFAS 155 (ASC815-15-25) those financial assets and financial liabilities meet the conditions to be designated as financial asset or financial liability held for trading. However, SFAS 155 (ASC815-15-25) not allow retrospective application and for that reason we maintain an adjustment in the reconciliation to U.S. GAAP to reflect in the net income attributable to parent company (a decrease of €6 million, a decrease of €116 million and an increase of €10 million for the years ended December 31, 2009, 2008 and 2007, respectively) and shareholders’ equity (a decrease of €76 million, a decrease of €70 million and an increase of €40 million as of December 31, 2009, 2008 and 2007, respectively).

Retrospective application

As of December 31, 2003, in accordance with Spanish GAAP, certain fair value hedges of fixed income securities and cash flow hedges of exchange rate risk were considered to be speculative in our U.S. GAAP reconciliation adjustment, since the required documentation was not available at the date on which the aforementioned hedges were designated as such.

As of January 1, 2004, the transition date to the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, these transactions continued to be designated as hedges, since they met all the requirements for hedge accounting.

As of December 31, 2004, in accordance with U.S. GAAP the Group maintained the criteria established in prior years and considered these transactions to be speculative, which accounted for a portion of the reconciliation adjustment for derivatives and hedges.

Consequently, there is an adjustment in the reconciliation to U.S. GAAP to reflect in the net income (a decrease of €34 million, a decrease of €10 million and an increase of €17 million for the years ended December 31, 2009, 2008 and 2007, respectively) and in shareholders’ equity (an increase of €69 million, €96 million and €109 million as of December 31, 2009, 2008 and 2007, respectively) the speculative nature of these transactions under U.S. GAAP.

Methods used to assess hedge effectiveness

Even though the methodology to assess the hedge effectiveness is the same under both GAAPs, there are certain adjustments made in order to validate the hedge effectiveness that is permitted under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and not under U.S. GAAP.

The EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 allows to designate a hedging instrument as hedging only a portion of the time period to maturity, and therefore adjust the effectiveness test to comply with the hedging objective. Under U.S. GAAP such hedges are not allowed.

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Consequently, in 2009, 2008 and 2007 there is an adjustment to reverse these partial hedging transactions under U.S. GAAP. This difference resulted in a reconciling item to net income (an increase of €6 million, a decrease of €2 million and an increase of €3 million for the years ended December 31, 2009, 2008 and 2007, respectively) and shareholders’ equity (a increase of €14 million, a increase of €9 million and an increase of €11 million as of December 31, 2009, 2008 and 2007, respectively) in the reconciliation to U.S. GAAP.

The fair value of derivatives that afforded hedge accounting treatment under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 but did not qualify as hedges under U.S. GAAP as of December 31, 2009, 2008 and 2007 amounted negative to €4 million, €8 million and €114 million, respectively.

The fair value of derivatives that afforded hedge accounting treatment under the EU-IFRS required to be applied under the Bank of Spain��s Circular 4/2004 and qualify as hedges under U.S. GAAP as of December 31, 2009, 2008 and 2007 amounted to €2,290 million, €2,615 million and negative to €643 million, respectively.

7.   Loans adjustments-

We described in Note 2.2.1.b of the Consolidated Financial Statements, our methodology to estimate the “Allowance for loan losses” under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004. The “Allowance for loan losses” under U.S. GAAP is calculated by using our internal risk models based on our historical experience.

Given the increase in past-due loans beginning in mid-2007 as a result of the economic crisis, during 2008 our best estimate for the impairment of the loan portfolio required a provision for loan losses under U.S. GAAP of €3,956 million, which was €1,152 million higher than the provision required to be recorded under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

For this reason, we have included an adjustment in the reconciliation of net income attributed to parent company in 2008 which resulted in a decrease of €1,152 million, in net income attributed to parent company in accordance with U.S. GAAP.

As a result of the foregoing, as of December 31, 2008, the “Allowance for loan losses” under U.S. GAAP was very similar to the “Allowance for loan losses” under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004: €7,412 million under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 versus €7,384 million under U.S. GAAP.

As of December 31, 2009, there is no significant difference in the “Allowance for loan losses” under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP; for that reason there is no adjustment in the reconciliation to US GAAP that affected net income attributed to parent company statement and shareholders’ equity for that concept.

8.   Pension plan cost-

Under U.S. GAAP, the Group recognized the actuarial gains or losses in the income statement for the year when these losses have been incurred instead of using the corridor approach.

Under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004, as we mentioned in Note 2.2.12 in the accompanying Consolidated Financial Statements, the Group recognizes the actuarial gains or losses arising on certain defined benefit post-employment commitments directly under the heading “Reserves” in the accompanying consolidated balance sheets.

For this reason, we have included an adjustment in the reconciliation of net income attributed to parent company for the year ended 2009 which resulted in a decrease of €221 million in net income attributed to parent company in accordance with U.S. GAAP.

9.   Tax effect of U.S. GAAP adjustments and deferred taxation-

The previous adjustments to net income attributed to parent company and shareholders’ equity do not include their related effects on corporate tax (except for the adjustments mentioned in Item 1, part of Item 4 and Item 5),

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which are disclosed under “Tax effect of U.S. GAAP adjustments and deferred taxation” item in the respective reconciliation statements.

As described in Note 2.2.10 of the Consolidated Financial Statements deferred tax assets and liabilities include temporary differences measured at the amount expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities and their tax bases, and tax loss and tax credit carryforwards. These amounts are measured at the tax rates that are expected to apply in the year when the asset will be realized or the liability settled.

As a result of the application of Statement of Financial Accounting Standards No. 109 (ASC740-10), Accounting for Income Taxes, the timing differences originated by the revaluation of property and equity securities and by certain provision for coverage of loan losses have been reversed.

On July 13, 2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (ASC740-10). This statement was issued to provide additional guidance and clarification on accounting for uncertainty in income tax positions. The interpretation prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions, as well as increased disclosure requirements with regards to uncertain tax positions.

This interpretation of FASB Statement No. 109 (ASC740-10) uses a two-step approach wherein a tax benefit is recognized if a position is more likely than not to be sustained. The amount of the benefit is then measured to be the highest tax benefit which is greater than fifty percent likely to be realized. FIN 48 (ASC 740) also sets out disclosure requirements to enhance transparency of an entity’s tax reserves.

As a result of the application of FIN 48 (ASC740-10), the Group recorded a decrease €59 million and €66 million in retained earnings as of December 31, 2009 and 2008, respectively and a decrease of €19 million and an increase of €7 million in net income attributed to parent company as of December 31, 2009 and 2008, respectively. Consequently, FIN 48 (ASC740-10) provokes a decrease of €78 million and €59 million in shareholders’ equity as of as of December 31, 2009 and 2008, respectively.

The Group is currently under audit by taxing authorities in major taxing jurisdictions around the world. It is thus reasonably possible that changes in the gross balance of unrecognized tax benefits may occur within the next 12 months (an estimate of the range of such gross changes cannot be made), but the Group does not expect such audits to result in amounts that would cause a significant change to its effective tax rate.

In the reconciliation to U.S. GAAP, the Group has recorded deferred tax assets of positive €302 million, positive €107 million and negative €243 million as of December 31, 2009, 2008 and 2007 and deferred tax liabilities of negative €987 million, €814 million and €887 million as of December 31, 2009, 2008 and 2007, respectively.

SFAS 109 (ASC740-10) requires providing a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. As of December 31, 2009, 2008 and 2007 the valuation allowance was €20 million, €22 million and €22 million, respectively.

As required by SFAS 109 (ASC740-10), the effects of the change in Spanish tax laws were included in income (see Note 21.3 of the Consolidated Financial Statements).

The following is a reconciliation of the income tax provision under IFRS to that under U.S. GAAP:

	2009			2008			2007
	Millions of euros
Income tax provision under IFRS		1,141			1,541			2,079
Tax effect of U.S. GAAP adjustments and deferred taxation		(103	)		(416	)		(283	)
Of which: Adjustments of deferred tax liability/assets for enacted changes in tax laws of U.S. adjustments		—			—			—
Income tax provision under U.S. GAAP		1,038			1,125			1,796

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The following is a reconciliation of the deferred tax assets and liabilities recorded under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and those that should be recorded under SFAS 109 (ASC740-10):

	2009						2008						2007
	Deferred			Deferred			Deferred			Deferred			Deferred			Deferred
	Tax Assets			Tax Liabilities			Tax Assets			Tax Liabilities			Tax Assets			Tax Liabilities
	Millions of euros
As reported under the EU-IFRS required to be applied under the Bank of Spain’s Circular4/2004		4,993			(1,669	)		5,055			(1,282	)		4,310			(2,235	)
Less-
Timing differences recorded under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and reversed in the reconciliation to U.S. GAAP		—			(921	)		(11	)		(708	)		(358	)		(712	)
Tax effect of the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to U.S. GAAP reconciliation adjustments		—			—			(1	)		—			(3	)		—
Plus-
Tax effect of the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 to U.S. GAAP reconciliation adjustments		302			(66	)		119			(106	)		118			(175	)
As reported under SFAS 109 (ASC 740) (gross)		5,295			(2,656	)		5,162			(2,096	)		4,067			(3,122	)
Valuation reserve		(20	)		—			(22	)		—			(22	)		—
As reported under SFAS 109 (net)		5,275			(2,656	)		5,140			(2,096	)		4,045			(3,122	)

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The following is an analysis of deferred tax assets and liabilities as of December 31, 2009, 2008 and 2007 estimated in accordance with U.S. GAAP:

	December 31,
	2009			2008			2007
	(Millions of euros)
Deferred Tax assets
Loan loss reserves		1,632			1,440			1,057
Unrealized losses on securities pension liability		1,485			1,684			1,551
Fixed assets		286			44			47
Net operating loss carryforward		26			38			121
Investments and derivatives		89			359			15
Goodwill		2			557			594
Other		1,775			1,040			682
Total deferred tax assets		5,295			5,162			4,067
Valuation reserve		(20	)		(22	)		(22	)
Net tax asset		5,275			5,140			4,045
Deferred tax liabilities
Unrealized gains on securities pension liability		(22	)		(1	)		—
Unrealized gains on investments		(719	)		(220	)		(1,471	)
Gains on sales of investments		(232	)		(115	)		(107	)
Fixed assets		(91	)		(11	)		(38	)
Goodwill		(969	)		(775	)		(796	)
Other		(622	)		(974	)		(710	)
Total deferred tax liabilities		(2,656	)		(2,096	)		(3,122	)

Reconciliation between the federal statutory tax rate and the effective income tax rate is as follows:

	2009			2008			2007
	% percentages
Corporate income tax at the standard rate		30.00			30.00			32.50
Decrease arising from permanent differences		(11.04	)		(9.96	)		(7.86	)
Adjustments to the provision for prior years’ corporate income tax and other taxes		0.92			2.21			(0.15	)
Income tax provision under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004		19.89			22.25			24.49
Tax effect of U.S. GAAP adjustments and deferred taxation		(0.11	)		(2.03	)		0.52
Income tax provision under U.S. GAAP		19.78			20.22			23.97

10.   Other Comprehensive Income-

SFAS No. 130 (ASC220-10), Reporting Comprehensive Income establishes standards for disclosing information related to comprehensive income and its components in a full set of general-purpose financial statements.

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

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The accumulated balances of other comprehensive income as of December 31, 2009, 2008 and 2007 were as follows:

	Foreign
	Currency
	Translation			Unrealized			Gains on			Other
	Adjustments			Gains on			Derivative			Comprehensive
	and Others			Securities			Instruments			Income
	Millions of euros
Balance as of December 31, 2007		(5,165	)		3,727			302			(1,137	)
Changes in 2008		(1,001	)		(2,657	)		175			(3,483	)
Balance as of December 31, 2008		(6,166	)		1,070			477			(4,619	)
Changes in 2009		(76	)		943			(4	)		863
Balance as of December 31, 2009		(6,242	)		2,013			473			(3,757	)

Taxes allocated to each component of other comprehensive income as of December 31, 2009, 2008 and 2007 were as follows:

	2009									2008									2007
	Before			Tax			Net of			Before			Tax			Net of			Before			Tax			Net of
	Tax			Expense or			Tax			Tax			Expense or			Tax			Tax			Expense or			Tax
	Amount			benefit			Amount			Amount			Benefit			Amount			Amount			Benefit			Amount
	Millions of euros
Foreign currency translations adjustment and others		(76	)		—			(76	)		(1,001	)		—			(1,001	)		(1,873	)		—			(1,873	)
Unrealized gains on securities:
Unrealized holding gains arising during the period		1,221			(278	)		943			(3,454	)		797			(2,657	)		633			(146	)		487
Derivatives Instruments and Hedging Activities		(5	)		1			(4	)		228			(53	)		175			370			(85	)		285
Other comprehensive income		1,140			(277	)		863			(4,227	)		744			(3,483	)		(871	)		(231	)		(1,102	)

11.   Earnings per share-

SFAS No. 128 (ASC 260), Earnings per Share, specifies the computation, presentation and disclosure requirements for earnings per share (EPS).

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator), which may include contingently issuable shares where all necessary conditions for issuance have been satisfied. Diluted earnings per share include the determinants of basic earnings per share and, in addition, give effect to dilutive potential common shares that were outstanding during the period.

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The computation of basic and diluted earnings per share for the years ended December 31, 2009, 2008 and 2007 is presented in the following table:

	2009		2008		2007
	Millions of euros, except per share data
Numerator for basic earnings per share:
Income available to common shareholders (IFRS)(*)		4,228		5,020		6,126
Income available to common shareholders (U.S. GAAP):		3,825		4,070		5,409
Numerator for diluted earnings per share:
Income available to common shareholders (IFRS)(*)		4,228		5,020		6,126
Income available to common shareholders (U.S. GAAP):		3,843		4,070		5,409
Denominator for basic earnings per share:
IFRS(*)		3,758,316,634		3,706,204,569		3,593,940,198
US GAAP		3,719,162,366		3,706,204,569		3,593,940,198
Denominator for diluted earnings per share:
IFRS(*)		3,758,316,634		3,706,204,569		3,593,940,198
US GAAP		3,758,316,634		3,706,204,569		3,593,940,198
IFRS(*)
Basic earnings per share (Euros)		1.12		1.35		1.70
Diluted earnings per share (Euros)		1.12		1.35		1.70
U.S. GAAP
Basic earnings per share (Euros)		1.03		1.10		1.50
Diluted earnings per share (Euros)		1.02		1.10		1.50

(*) EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004

12.   FIN 46-R- (ASC 810)

We arranged the issuance of preferred shares using special purpose vehicles (See Note 23.4.3.2 of the Consolidated Financial Statements). Our preferred security transactions are based on the following model:

•  We are the sponsor in the issuance of certain debentures by special purpose vehicles (SPEs) (the issuer of preference shares) that we incorporated and for which we hold 100% of the common stock and voting rights.

The SPEs issue preferred securities to 3rd party investors. The terms of the preferred securities are issued in perpetuity with fixed dividend coupon and can be called by the SPEs.

•  The SPEs lend both the proceeds raised from the preferred securities and the common stock back to us through intercompany loans with fixed maturities and fixed interest rate similar to that the dividend coupon on the preferred securities issued by the SPEs. Consequently, the SPEs use the cash received from interest payments on BBVA loans to pay dividends to the preferred securities holders.

•  We guarantee the dividend payments on the preferred securities.

We consolidated the SPEs under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 according to SIC 12 as we controlled them. However, under U.S. GAAP, BBVA does not consolidate the special purpose vehicle (issuer) as we have concluded that we are not the primary beneficiary as considered byFIN 46-R for the reasons described below.

We as sponsor of the issuer of the preference shares neither have a significant residual interest held since our common shares are not viewed as equity at risk as our investment is returned back to us through the intercompany loan, nor the loan payable to the special purpose vehicle would be considered variable interests since they assume variability. Additionally, the fact that BBVA unconditionally guarantees the trust preferred securities is not relevant, since BBVA is guaranteeing its own obligations.

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Under U.S. GAAP we consider the investments in the common stock of this class of special purpose vehicles as equity-method investees.

As a result of the deconsolidation of the SPEs, the loans received from the SPEs are presented as financial liabilities under U.S. GAAP.

Consequently, the deconsolidation of the entities described in Note 23.4.3.2 of the Consolidated Financial Statements, has no impact on shareholders’equity or net income attributed to parent company under U.S. GAAP. These financial instruments that are presented under EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 in the caption “Subordinated liabilities — preferences shares” are presented under U.S. GAAP under the caption “Time deposits” (€5,188 million).

13.   Statement of Financial Accounting Standards No. 157 (ASC 820): “Fair Value Measurement”-

In September 2006, the FASB issued this Statement that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2008, and periods within those fiscal years. The disclosure about fair value measurements is presented in Notes 7 and 8 of the Consolidated Financial Statements.

14.   Other Accounting Standards-

Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (ASC 805 — Business Combinations)

This revision was issued in December 2007, and is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This Statement replaces FASB Statement No. 141(ASC 805 — Business Combinations), Business Combinations and establishes principles and requirements for how the acquirer:

1. Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree.

2. Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase

3. Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) should be used for all business combinations and for an acquirer to be identified for each business combination.

The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (ASC 810 — Consolidation)

This Statement was issued in December 2007, and is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). It amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called non controlling interests were reported in the consolidated statement of

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financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity.

The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (ASC815-10-50 — Derivatives and Hedging)

In March 2008 the FASB issued FASB Statement No. 161 (ASC815-10-50),Disclosures about Derivative Instruments and Hedging Activities.The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows.

FASB Statement No. 161 (ASC815-10-50)achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk — related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments.

This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

The adoption of this new statement did not have any effect in our results of operations, financial position or cash flows.

Statement of Financial Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance Contracts — an interpretation of FASB Statement No. 60” (ASC 944 — Financial Services — Insurance)

Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60 (ASC 944),Accounting and Reporting by Insurance Enterprises.That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5 (ASC450-10),Accounting for Contingencies.This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 (ASC 944) applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts.

This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.

The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

Statement of Financial Accounting Standards No. 165 — Subsequent Events (ASC 855 — Subsequent Events)

The objective of this Statement is to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth:

1. The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements.

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2. The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements.

3. The disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

This Statement is effective for interim or annual financial statements ending after June 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

Statement of Financial Accounting Standards No. 168 (ASC 105) “Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles”

This FASB Statement No. 168 (ASC 105) “Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles” — a replacement of FASB Statement No. 162. SFAS 168 (ASC 105) establishes the FASB Accounting Standards CodificationTM as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with US GAAP. FAS 168 (ASC 105) is effective for financial statements issued for interim and annual periods ending after September 15, 2009, for most entities. On the effective date, all non-SEC accounting and reporting standards were superseded. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

FSPFAS 107-1 y APB28-1 — Interim Disclosures about Fair Value of Financial Instruments (ASC825-10-50 — Financial instruments)

This FASB Staff Position amends FASB Statement No. 107(ASC825-10-50) and APB Opinion No. 28 (ASC270-10) to require disclosures about fair value of financial instruments. This FSP also amends APB Opinion No. 28 (ASC270-10), Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim reporting periods ending after June 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

FSPNo. FAS 115-2 andFAS 124-2 — Recognition and Presentation ofOther-Than-Temporary Impairments (ASC 320 — Investments — Debt and Equity Securities)

This FASB Staff Position amends theother-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and expand the required disclosures.

If the fair value of a debt security is less than its amortized cost basis at the balance sheet date, an entity shall assess whether the impairment is other than temporary. Under the FSP,another-than-temporary impairment of a debt security is considered to have occurred in the following circumstances:

•  The entity intends to sell the security. The difference between the investment amortized cost basis and its fair value at the balance sheet date is recognized in earnings.

•  It is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis. The difference between the investment amortized cost basis and its fair value at the balance sheet date is recognized in earnings.

•  The entity does not expect to recover the entire amortized cost basis of the security. Theother-than-temporary impairment shall be separated into a) the amount representing the credit loss (recognized in earnings) and b) the amount related to other factors (recognized in other comprehensive income). The previous amortized cost basis less other-then-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment.

After another-than-temporary impairment, an entity shall account for theother-than-temporarily-impaired debt security as if the debt security had been purchased on the measurement date of the other-than temporary impairment at an amortized cost basis equal to the previous amortized cost basis less theother-than-temporary impairment recognized in earnings.

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The FSP is effective for interim and annual reporting periods ending after June 15 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

FSPFAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions” (ASC 860 — Transfers and Servicing)

The objective of this FSP is to provide guidance on accounting for a transfer of a financial asset and a repurchase financing. This FSP presumes that an initial transfer of a financial asset and a repurchase financing are considered part of the same arrangement (linked transaction) under Statement 140. However, if certain criteria are met, the initial transfer and repurchase financing shall not be evaluated as a linked transaction and shall be evaluated separately under Statement 140. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows. This standard is effective for financial statements issued for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years.

FSP FAS 141(R)-1 — Accounting for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from Contingencies (ASC805-20 Business Combinations — Identifiable Assets and Liabilities, and Any Noncontrolling Interest)

This FASB Staff Position amends and clarifies FASB Statement No. 141 (revised 2007),Business Combinations,to address application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. Application issues included, among others, are the following:

a) Determining the acquisition-date fair value of a litigation-related contingency.

b) Distinguishing between a contractual and noncontractual contingency.

c) Dealing with situations in which a target entity may have determined that a loss contingency should be recognized in accordance with Statement 5 because the entity intends to settle out of court but the liability does not meet the more-likely-than-not threshold for recognition of a noncontractual contingency.

d) Derecognizing a liability arising from a contingency recognized as of the acquisition date.

e) Disclosing potentially prejudicial information in financial statements.

This FSP is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

FSPFAS 142-3, “Determination of the Useful Life of Intangible Assets” (ASC 275 — Risks and Uncertainties)

The objective of this FSP is to amend the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142 (ASC 350), Goodwill and Other Intangible Assets.

This FSP states that in developing assumptions about renewal or extension used to determine the useful life of a recognized intangible asset, an entity shall consider its own historical experience in renewing or extending similar arrangements, adjusted for the entity-specific factors in paragraph 11 of Statement 142. In the absence of that experience, an entity shall consider the assumptions that market participants would use about renewal or extension (consistent with the highest and best use of the asset by market participants), adjusted for the entity-specific factors in paragraph 11 of Statement 142. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

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FSPFAS 157-2 “Effective Date of FASB Statement No. 157” (ASC 820 — Fair Value Measurements and Disclosures)

In February 2008, the FASB released a proposed FASB Staff Position (FSPSFAS 157-2 — Effective Date of FASB Statement No. 157 (ASC 820)) which, delayed the effective date of SFAS No. 157 (ASC 820) “Fair Value Measurements” until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all non-financial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of this new statement at the required effective date did not have a significant effect in our results of operations, financial position or cash flows.

FSPFAS 157-4 — Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (ASC 820 — Fair Value Measurements and Disclosures)

This FASB Staff Position provides additional guidance for estimating fair value in accordance with FASB Statement No. 157(ASC 820), Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. It emphasizes that, even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.

This FSP is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

FSP APB14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (ASC470-20 debt — Debt with Conversion and Other Options)

This FSP applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. It clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

FSP EITF03-6-1 — Determining Whether Instruments Granted in Share-Based Payment transactions Are Participating Securities (ASC 260 — Earnings Per Share)

This FASB Staff Position addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128 (ASC260-15-60-B),Earnings per Share.

This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period EPS data presented shall be adjusted retrospectively to conform with the provisions of this FSP. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

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ASUNo. 2009-12 Fair Value Measurements and Disclosures (ASC820-10) — Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

This ASU amends Subtopic820-10, Fair Value Measurements and Disclosures, for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The amendments permit, as practical expedient, a reporting entity to measure the fair value of an investment on the basis of the net asset value per share of the investment, if the net asset value of the investment is calculated in a manner consistent with the measurement principles of ASC 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the investments of the investee in accordance with ASC 820. The Update also requires additional disclosures by mayor category of investment about the attributes of investments. This ASU is effective for interim and annual periods ending after December 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

Accounting Standard Update (“ASU”)No. 2010-01 Equity (ASC 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force)

This ASU clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or shares with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying ASC 505 and 2060 (equity and earnings per share). This ASU is effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

ASUNo. 2010-02 Consolidation (ASC 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary — a Scope Clarification

This ASU amends the scope of the decrease in ownership provisions of the subtopic810-10 and related guidance to clarify that it applies to the following:

•  A subsidiary or group of assets that is a business or nonprofit activity.

•  A subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture.

•  An exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture).

The amendments also clarify that the decrease in ownership guidance in ASC810-10 does not apply to the following transactions even if they involve businesses:

•  Sales of in substance real state.

•  Conveyances of oil and gas mineral rights.

The amendments are effective beginning in the period that an entity adopts Statement 160. If an entity has adopted previously Statement 160 (ASC810-10) as of the date the amendments are included in the Accounting Standards Codification, the amendments in this Update are effective beginning in the first interim period or annual reporting period ending on or after December 15, 2009. The adoption of this new statement did not have a significant effect in our results of operations, financial position or cash flows.

ASU2010-05 Compensation (ASC 718): Escrowed Share Arrangements and the presumption of Compensation

This ASU clarifies the SEC staff position on overcoming the presumption that for certain shareholders escrowed share arrangements represent compensation. Historically, the SEC staff has expressed the view that an escrowed share arrangement involving the release of shares to certain shareholders based on performance-related criteria is presumed to be compensatory. The amendments clarify that when evaluating whether the presumption of

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compensation has been overcome, registrants should consider the substance of the arrangement, including whether the arrangement was entered into for purposes unrelated to, and not contingent upon, continued employment. The SEC staff believes that an escrowed share arrangement in which the shares are automatically forfeited if employment terminates is compensation.

15.   New Accounting Standards

Statement of Financial Accounting Standards No. 166 — Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140 (ASC 860 — Transfers and Servicing)

The Board’s objective in issuing this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets.

On and after the effective date of this SFAS, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities (as defined under previous accounting standards) should be evaluated for consolidation by reporting entities in accordance with the applicable consolidation guidance. If the evaluation on the effective date results in consolidation, the reporting entity should apply the transition guidance provided in the pronouncement that requires consolidation.

This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

Statement of Financial Accounting Standards No. 167 — Amendments to FASB Interpretation No. 46(R) (ASC 810 — Consolidation)

This Statement amends Interpretation 46(R) (ASC 810) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics:

a. The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance.

b. The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

ASUNo. 2009-5 Fair Value Measurements and Disclosures (ASC820-10) — Measuring Liabilities at Fair Value

This ASU amends Subtopic820-10, Fair Value Measurements and Disclosures — Overall, to clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques:

1. A valuation technique that uses:

•  The quoted prices of the identical liability when traded as an asset

•  Quoted prices for similar liabilities or similar liabilities when traded as assets.

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2. Another valuation technique that is consistent with the principles of ASC 820, for example a present value technique, or a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability.

The Update will be effective for the first reporting period (including interim periods) beginning after August 2009. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

ASUNo. 2009-13 Revenue Recognition (ASC605-25) — Multiple-Deliverable Revenue Arrangements

This ASU provides amendments to the criteria in Subtopic605-25 for separating consideration in multiple-derivable arrangements to establish a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor- specific objective evidence if available, third-party evidence if vendor- specific objective evidence is not available, or estimated selling price if neither vendor- specific objective evidence nor third- party evidence is available.

The amendments eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. The ASU also requires that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis.

The Update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

ASUNo. 2009-14 Software (ASC985-605) — Certain Revenue Arrangements That Include Software Elements

This ASU changes the accounting model for revenue arrangements that include both tangible products and software elements. Tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are no longer within the scope of the software revenue guidance in subtopic958-605. Additionally, the amendments establish that if an undelivered element relates to a deliverable within the scope of Subtopic985-605 and a deliverable excluded from the scope of Subtopic985-605, the undelivered element shall be bifurcated into a software deliverable and a nonsoftware deliverable.

The Update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. A vendor is required to adopt the amendments in the same period using the same transition method that it uses to adopt the amendments in Update2009-13 Revenue Recognition (ASC605-25) — Multiple-Deliverable Revenue Arrangements. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

ASUNo. 2009-15 — Accounting for Own-Share Lending Agreements in Contemplation of Convertible Debt Issuance

This ASU modifies Subtopic470-20 Debt — Debt with Conversion and Other options. ASC470-20 addresses the issues arisen when an entity for which the cost to an investment banking firm or third- party investors of borrowing its shares is prohibitive enters into share-lending arrangements that are executed separately but in connection with a convertible debt offering.

The amendments establish that at the date of issuance, the share lending arrangement shall be measured at fair value and recognised as an issuance cost, with an offset to additional paid-in capital in the financial statements of the entity. The loaned shares will be excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings- per- share calculation. Additionally, if it becomes probable that the counterparty to a share- lending arrangement will default, the issuer of the share- lending arrangement shall recognize an expense equal to the fair value of the

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unreturned shares, net of the fair value of probable recoveries, with an offset to additional paid- in capital and subsequent changes in the amount of the probable recoveries should also be recognized in earnings.

The Update will be effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years for arrangement outstanding as of the beginning of those fiscal years. Additionally the amendments shall be applied retrospectively for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

ASU2010-06 Fair Value Measurements and Disclosures (ASC 820): Improving Disclosures about Fair Value Measurements

This ASU provides amendments to Subtopic820-10 that require new disclosures and clarify existing disclosures related to Fair Value Measurements. Entities will be required to present new disclosures about transfers in and out Levels 1 and 2 and about purchases, sales, issuances and settlements in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). The amendments also clarify existing disclosures to require disclosures about fair value measurement for each class of assets and liabilities and about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3.

The Update will be effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in Level 3, that will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

ASU2010-09 Subsequent Events (ASC 855)- Amendments to Certain Recognition and Disclosure Requirements

This ASU modifies as follows Subtopic855-10, in order to alleviate potential conflicts with current SEC requirements:

•  An entity that is a SEC filer is required to evaluate subsequent events through the date that the financial statements are issued, but is not required to disclose the date through which subsequent events have been evaluated.

•  An entity that is a conduit bond obligor for conduit debt securities that are traded in a public market is required to evaluate subsequent events through the date that the financial statements are issued and must disclose such date.

•  All other entities will continue to be required to evaluate subsequent events through the date the financial statements are available to be issued, and must disclose such date

The scope of the reissuance disclosure requirements have been refined to apply only to “revised” financial statements. Revised financial statements include financial statements revised either as a result of (a) correction of an error or (b) retrospective application of U.S. generally accepted accounting principles. If the financial statements of an entity, other than an SEC filer, are revised, as defined, the entity should retain the initial date, but also disclose the date through which subsequent events have been evaluated in the revised financial statements.

For entities, other than conduit bond obligors, the provisions of ASU2010-09, Amendments to Certain Recognition and Disclosure Requirements, are effective upon issuance. Conduit bond obligors will be required to apply the ASU’s requirements in fiscal periods ending after June 15, 2010.

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ASU2010-10 Consolidation (ASC 810): Amendments for Certain Investment Funds

This ASU amends ASC 810 to defer the application of the consolidation requirements resulting from the issuance of Statement 167 for a reporting entity’s interest in an entity (1) that has all the attributes of an investment company or (2) for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies.

An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of variable interest entities in Subtopic810-10 (before the Statement 167 amendments) or other applicable consolidation guidance, such as the guidance for the consolidation of partnerships in Subtopic810-20.

The amendments in this Update will be effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009, and for interim periods within that first annual reporting period. The effective date coincides with the effective date for the Statement 167 amendments to ASC 810. Early application is not permitted.

ASU2010-11 Derivatives and Hedging (ASC 815) — Scope Exception Related to Embedded Credit Derivatives

This ASU amends Subtopic815-15 to clarify the scope exception underparagraphs 815-15-15-8 through15-9 for embedded credit derivative features related to the transfer of credit risk in the form of subordination.

The amendments establish that the embedded credit derivative feature related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another is not subject to the application ofSection 815-15-25. Thus, only the embedded credit derivative feature between the financial instruments created by subordination is not subject to the application ofSection 815-15-25 and should not be analyzed under that Section for potential bifurcation from the host contract and separate accounting as a derivative.

The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.

16.   Other information — Venezuela

As indicated in Note 2.2.23 of the Consolidated Financial Statements, the Venezuelan economy was considered to be hyperinflationary as defined by the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004. Accordingly, as of December 31, 2009, it was necessary to adjust the financial statements of the Group’s subsidiaries established in Venezuela to correct them for the effect of inflation.

However, until 2010 the Venezuelan economy has not met the requirements to be considered highly inflationary economy under U.S. GAAP.

This difference, along with differences in accounting for the effects of hyperinflation, would result in a reconciling item to the Consolidated Financial Statements as of and for the year ended December 31, 2009. However, as BBVA accounts for hyperinflationary economies in accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates”, it is availing itself of the accommodation in Item 17(c)(2)(iv) ofForm 20-F to exclude from the reconciliation to US GAAP the effects of differences in accounting for Venezuela as a highly inflationary economy. Therefore, the reconciliation complies with Item 18 ofForm 20-F, which is different from the requirements of US GAAP in this regard.

B)   CONSOLIDATED FINANCIAL STATEMENTS

1.   Differences relating to the financial statements presentation-

In addition to differences described in Note 60.A affecting net incomeand/or shareholders’ equity, there are differences relating to the financial statements presentation between the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and U.S. GAAP presentation following the formatting guidelines in

F-178

Regulation S-X of the Securities and Exchange Commission of the United States. Although these differences do not cause differences between both GAAP reported net incomeand/or shareholders’ equity.

2.   Consolidated Financial Statements underRegulation S-X-

Following are the consolidated balance sheets of the BBVA Group as of December 31, 2009, 2008 and 2007 and the consolidated statement of income for each of the years ended December 31, 2009, 2008 and 2007, in the format for banks and bank holding companies required byRegulation S-X of the Securities and Exchange Commission of the United States of America, and, accordingly, prepared under U.S. GAAP (after reconciliation adjustments described above in Note 60.A)

F-179

BANCO BILBAO VIZCAYA ARGENTARIA GROUP

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009, 2008 AND 2007

	2009			2008			2007
	Millions of euros
ASSETS
Cash and due from banks		7,568			11,862			4,982
Interest-bearing deposits in other banks		28,350			31,831			33,727
Securities purchased under agreements to resell		3,652			6,480			6,870
Trading securities		72,070			75,063			63,496
Investments securities		69,978			53,416			53,694
Net Loans and leases:
Loans and leases, net of unearned income		331,693			340,958			316,743
Less: Allowance for loan losses		(8,720	)		(7,384	)		(5,931	)
Hedging derivatives		3,663			3,929			1,097
Premises and equipment, net		6,353			6,462			4,764
Investments in affiliated companies		2,922			1,467			1,535
Intangible assets		852			780			811
Goodwill in consolidation		15,128			15,634			15,741
Accrual accounts		581			383			604
Others assets		11,008			8,693			12,436
Total assets		544,098			549,574			510,569
LIABILITIES AND EQUITY
Liabilities
Demand deposits		101,182			92,854			66,381
Savings deposits		50,639			46,732			40,523
Time deposits		152,933			166,322			133,311
Due to Bank of Spain		10,930			37			8,210
Trading account liabilities		32,830			43,009			19,273
Hedging derivatives		1,306			1,226			1,807
Short-term borrowings		68,985			61,832			56,993
Long-term debt		60,316			76,302			118,128
Taxes payable		3,194			2,372			2,992
Accounts payable		5,624			7,420			6,239
Accrual accounts		2,079			1,918			1,820
Pension allowance		6,246			6,359			5,967
Other provisions		2,313			2,319			2,374
Others liabilities		8,054			7,242			10,475
Total liabilities		506,631			515,944			474,493
Shareholders’ equity
Common stock		1,836			1,836			1,836
Additional paid-in capital		12,453			12,770			12,770
Dividends		(1,000	)		(1,820	)		(1,661	)
Other capital instruments		(224	)		(720	)		(389	)
Retained earnings		23,107			20,678			22,828
Total shareholders’ equity		36,172			32,744			35,384
Non-controlling interest		1,295			886			692
Total Equity		37,467			33,630			36,076
Total liabilities and equity		544,098			549,574			510,569

F-180

BANCO BILBAO VIZCAYA ARGENTARIA GROUP

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED
DECEMBER 31, 2009, 2008 AND 2007

	2009				2008			2007
	Millions of euros
Interest Income
Interest and fees on loans and leases		18,670				24,141			19,191
Interest on deposits in other banks		1,489				1,722			1,684
Interest on securities purchased under agreements to resell		201				517			649
Interest on investment securities		3,829				4,479			4,176
Total interest income		24,188				30,859			25,700
Interest Expense
Interest on deposits		(6,139	)			(12,982	)		(8,465	)
Interest on Bank of Spain&Deposit Guarantee Fund		(79	)			(368	)		(359	)
Interest on short-term borrowings		(1,504	)			(2,168	)		(2,078	)
Interest on long term debt		(1,749	)			(3,199	)		(5,015	)
Total interest expense		(9,471	)			(18,717	)		(15,917	)
Net Interest Income		14,718				12,142			9,783
Provision for loan losses		(5,199	)			(3,956	)		(2,832	)
Net Interest Income after provision for loan losses		9,519				8,186			6,951
Non-interest income
Contingent liabilities (collected)		260				243			229
Collection and payments services (collected)		2,573				2,656			2,567
Securities services (collected)		1,636				1,895			2,089
Other transactions (collected)		835				746			707
Ceded to other entities and correspondents (paid)		(572	)			(662	)		(570	)
Other transactions (paid)		(263	)			(326	)		(299	)
Gains (losses) from:
Affiliated companies’ securities		122				306			252
Investment securities		231				1,579			1,751
Foreign exchange, derivatives and other, net		970				382			974
Other gains (losses)		3,474				3,657			2,237
Total non-interest income		9,267				10,473			9,937
Non-interest expense				��
Salaries and employee benefits		(4,651	)			(4,716	)		(4,335	)
Occupancy expense of premise, depreciation and maintenance, net		(1,306	)			(1,348	)		(986	)
General and administrative expenses		(2,368	)			(2,423	)		(2,198	)
Impairment of goodwill		(388	)			—			—
Net provision for specific allowances		(680	)			(1,431	)		(210	)
Other expenses		(4,145	)			(3,182	)		(1,665	)
Total non-interest expense		(13,539	)			(13,100	)		(9,394	)
Income before taxes		5,248				5,559			7,494
Income tax expense		(1,038	)			(1,124	)		(1,796	)
Net income		4,210				4,435			5,698
Less: net income attributed to the non-controlling interests		(385	)			(365	)		(289	)
Net income attributed to parent company		3,825				4,070			5,409

F-181

3.   Consolidated Statements of Changes in Shareholders’ equity -

Composition of shareholders’ equity (considering the final dividend) as of December 31, 2009, 2008 and 2007, is presented in Note 27, 28, 29 and 30. The variation in shareholders’ equity under U.S. GAAP as of December 31, 2009, 2008 and 2007 is as follows:

	2009			2008			2007
	Millions of euros
Balance at the beginning of the year		32,746			35,385			30,461
Net income for the year		3,825			4,070			5,409
Dividends paid		(1,000	)		(1,820	)		(1,661	)
Capital increase		—			—			3,288
Other comprehensive income		863			(3,481	)		(1,101	)
Foreign Currency Translation Adjustment and others		(76	)		(1,001	)		(1,873	)
Unrealized Gains and losses on Securities		943			(2,656	)		487
Derivatives Instruments and Hedging Activities		(4	)		176			285
Other variations		(262	)		(1,410	)		(1,012	)
Balance at the end of the year		36,172			32,744			35,384

F-182

C)  MAIN DISCLOSURES REQUIRED BY U.S. ACCOUNTING REGULATIONS FOR BANKS AND ADDITIONAL DISCLOSURES REQUIRED UNDER U.S. GAAP

1.   Investment Securities-

The breakdown of the Group’s investment securities portfolio by issuer is as follows:

	2009									2008									2007
	Amortized				Unrealized		Unrealized			Amortized				Unrealized		Unrealized			Amortized				Unrealized		Unrealized
	Cost		Fair Value		Gains		Losses			Cost		Fair Value		Gains		Losses			Cost		Fair Value		Gains		Losses
												(Millions of euros)
DEBT SECURITIES -
AVAILABLE FOR SALE PORTFOLIO
Domestic-		24,577		24,869		487		(195	)		11,743		11,910		229		(62	)		10,088		10,161		150		(77	)
Spanish Government		18,312		18,551		309		(70	)		6,233		6,371		138		—			5,226		5,274		79		(31	)
Other debt securities		6,265		6,318		178		(125	)		5,510		5,539		91		(62	)		4,862		4,887		71		(46	)
International-		31,868		32,202		1,067		(733	)		28,108		27,920		586		(774	)		26,725		27,175		737		(287	)
United States -		6,804		6,805		174		(173	)		10,573		10,442		155		(286	)		9,051		9,056		50		(45	)
U.S. Treasury and other U.S. Government agencies		414		416		4		(2	)		444		444		—		—			60		61		1		—
States and political subdivisions		214		221		7		—			382		396		15		(1	)		515		518		5		(2	)
Other debt securities		6,176		6,168		163		(171	)		9,747		9,602		140		(285	)		8,476		8,477		44		(43	)
Other countries -		25,064		25,397		893		(560	)		17,535		17,478		431		(488	)		17,674		18,119		687		(242	)
Securities of other foreign Governments		17,058		17,363		697		(392	)		9,624		9,653		261		(232	)		10,844		11,278		562		(128	)
Other debt securities		8,006		8,034		196		(168	)		7,911		7,825		170		(256	)		6,830		6,841		125		(114	)
TOTAL AVAILABLE FOR SALE PORTFOLIO		56,445		57,071		1,554		(928	)		39,851		39,830		815		(836	)		36,813		37,336		887		(364	)
HELD TO MATURITY PORTFOLIO
Domestic-		2,626		2,624		29		(31	)		2,392		2,339		7		(60	)		2,402		2,271		—		(131	)
Spanish Government		1,674		1,682		21		(13	)		1,412		1,412		7		(7	)		1,417		1,349		—		(68	)
Other debt securities		952		942		8		(18	)		980		927		—		(53	)		985		922		—		(63	)
International-		2,811		2,869		71		(13	)		2,890		2,882		25		(33	)		3,182		3,063		—		(119	)
TOTAL HELD TO MATURITY PORTFOLIO		5,437		5,493		100		(44	)		5,282		5,221		32		(93	)		5,584		5,334		—		(250	)
TOTAL DEBT SECURITIES		61,882		62,564		1,654		(972	)		45,133		45,051		847		(929	)		42,397		42,670		887		(614	)

F-183

	2009									2008									2007
	Amortized		Fair Value		Unrealized		Unrealized			Amortized		Fair Value		Unrealized		Unrealized			Amortized		Fair Value		Unrealized			Unrealized
	Cost		(1)		Gains		Losses			Cost		(1)		Gains		Losses			Cost		(1)		Gains			Losses		��
												(Millions of euros)
EQUITY SECURITIES -
AVAILABLE FOR SALE PORTFOLIO
Domestic-		3,683		5,409		1,738		(12	)		3,582		4,675		1,189		(96	)		3,783		7,164		3,386			(5	)
Equity listed		3,657		5,383		1,738		(12	)		3,545		4,639		1,189		(95	)		3,710		7,032		3,322			—
Equity Unlisted		26		26		—		—			37		36		—		(1	)		73		132		64			(5	)
International-		948		1,041		121		(28	)		3,408		3,275		8		(141	)		2,841		3,932		1,115			(24	)
United States-		641		737		104		(8	)		665		654		—		(11	)		490		489		—			(1	)
Equity listed		16		8		—		(8	)		39		28		—		(11	)		420		419		—			(1	)
Equity Unlisted		625		729		104		—			626		626		—		—			70		70		—			—
Other countries-		307		304		17		(20	)		2,743		2,621		8		(130	)		2,351		3,443		1,115			(23	)
Equity listed		250		242		12		(20	)		2,545		2,416		1		(130	)		2,242		3,346		1,127			(23	)
Equity Unlisted		57		62		5		—			198		205		7		—			109		97		(12	)		—
TOTAL AVAILABLE FOR SALE PORTFOLIO		4,631		6,450		1,859		(40	)		6,990		7,950		1,197		(237	)		6,624		11,096		4,501			(29	)
TOTAL EQUITY SECURITIES		4,631		6,450		1,859		(40	)		6,990		7,950		1,197		(237	)		6,624		11,096		4,501			(29	)
TOTAL INVESTMENT SECURITIES		66,513		69,014		3,513		(1,012	)		52,123		53,001		2,044		(1,166	)		49,021		53,766		5,388			(643	)

(1) The Fair Values are determined based on period-end quoted market prices for listed securities and on management’s estimate for unlisted securities.

F-184

The total amount of losses amounted to €1,461 million, €1,368 million and €702 million as of December 31, 2009, 2008 and 2007, respectively.

	2009			2008			2007
	Millions of euros
Equity securities		(226	)		(26	)		(25	)
Debt securities		(223	)		(176	)		(34	)
(1) Total impairmentsother-than-temporary (charged to income under both GAAP)		(449	)		(202	)		(59	)
Equity securities		(40	)		(237	)		(29	)
Debt securities		(972	)		(929	)		(614	)
(2) Total temporary unrealized losses		(1,012	)		(1,166	)		(643	)
(1)+(2) Total losses		(1,461	)		(1,368	)		(702	)

As of December 31, 2009, 2008 and 2007, most of our unrealized losses correspond to other debt securities (bothAvailable-for-sale andHeld-to-maturity securities).

As of December 31, 2009, the fair value of the debt securities is below its amortized cost. We have evaluated this decline in fair value to determine whether it is other than temporary and we have not recognized anyother-than-temporary impairment for these securities the period ended December 31, 2009 due to the payment deadlines for interests have been met for all debt securities, there is no evidence that the issuer will not continue meeting the payment terms and the future payments of principal and interest are sufficient to recover the cost of the debt securities.

As of December 31, 2009, the unrealized losses that correspond to equity securities have been considered temporary and we have not recognized anyother-than-temporary impairment for those investments because the unrealized losses related to they have mainly arisen due to the negative evolution of the markets affected by the economic situation.

F-185

An analysis of the carrying amount of investments, exclusive of valuation reserves, by contractual maturity and fair value of the debt securities portfolio is shown below:

	December 31, 2009
	Carrying Amount
			Due After One		Due After Five
	Due in One		Year to Five		Years to Ten		Due After Ten
	Year or Less		Years		Years		Years		Total
	(Millions of euros)
AVAILABLE-FOR-SALE PORTFOLIO(*)
Domestic
Spanish government		127		10,536		5,116		2,772		18,551
Other debt securities		576		4,422		283		1,037		6,318
Total Domestic		703		14,958		5,399		3,809		24,869
International
United States		838		2,586		1,597		1,784		6,805
U.S. Treasury and other U.S. government agencies		223		53		0		140		416
States and political subdivisions		36		84		79		22		221
Other U.S. securities		579		2,449		1,518		1,622		6,168
Other countries		2,254		9,318		3,614		10,211		25,397
Securities of other foreign governments		934		5,929		2,454		8,046		17,363
Other debt securities of other countries		1,320		3,389		1,160		2,165		8,034
Total International		3,092		11,904		5,211		11,995		32,202
TOTALAVAILABLE-FOR-SALE		3,795		26,862		10,610		15,804		57,071
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		5		181		1,425		63		1,674
Other debt securities		50		486		294		122		952
Total Domestic		55		667		1,719		185		2,626
Total International		215		790		1,590		216		2,811
TOTALHELD-TO-MATURITY		270		1,457		3,309		401		5,437
TOTAL DEBT SECURITIES		4,065		28,319		13,919		16,205		62,508

F-186

	December 31, 2009
	Market Value
			Due After One		Due After Five
	Due in One		Year to Five		Years to Ten		Due After Ten
	Year or Less		Years		Years		Years		Total
	(Millions of euros)
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		5		181		1,433		63		1,682
Other debt securities		50		482		287		123		942
Total Domestic		55		663		1,720		186		2,624
Total International		217		808		1,623		221		2,869
TOTALHELD-TO-MATURITY		272		1,471		3,343		407		5,493

	December 31, 2008
	Carrying Amount
			Due After One		Due After Five
	Due in One		Year to Five		Years to Ten		Due After Ten
	Year or Less		Years		Years		Years		Total
	(Millions of euros)
AVAILABLE-FOR-SALE PORTFOLIO(*)
Domestic
Spanish government		119		6,694		4,003		3,829		14,645
Other debt securities		1,067		3,732		278		835		5,912
Total Domestic		1,186		10,426		4,281		4,664		20,557
International
United States		985		3,083		1,784		1,410		7,262
U.S. Treasury and other U.S. government agencies		160		18		—		245		423
States and political subdivisions		70		145		159		52		426
Other U.S. securities		755		2,920		1,625		1,113		6,413
Other countries		2,603		9,799		5,438		3,960		21,800
Securities of other foreign governments		666		7,483		4,018		2,088		14,255
Other debt securities of other countries		1,937		2,316		1,420		1,872		7,545
Total International		3,588		12,882		7,222		5,370		29,062
TOTALAVAILABLE-FOR-SALE		4,774		23,308		11,503		10,034		49,619
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		110		118		1,053		54		1,335
Other debt securities		54		212		550		128		944
Total Domestic		164		330		1,603		182		2,279
Total International		85		918		1,594		223		2,820
TOTALHELD-TO-MATURITY		249		1,248		3,197		405		5,099
TOTAL DEBT SECURITIES		5,023		24,556		14,700		10,439		54,718

F-187

	December 31, 2008
	Market Value
			Due After One		Due After Five
	Due in One		Year to Five		Years to Ten		Due After Ten
	Year or Less		Years		Years		Years		Total
	(Millions of euros)
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		110		119		1,055		54		1,338
Other debt securities		52		203		525		122		902
Total Domestic		162		322		1,580		176		2,240
Total International		83		924		1,607		226		2,840
TOTALHELD-TO-MATURITY		245		1,246		3,187		402		5,080

	December 31, 2007
	Carrying Amount
			Due After One		Due After Five
	Due in One		Year to Five		Years to Ten		Due After Ten
	Year or Less		Years		Years		Years		Total
	(Millions of euros)
AVAILABLE-FOR-SALE PORTFOLIO(*)
Domestic
Spanish government		437		796		1,062		2,980		5,274
Other debt securities		453		2,935		326		1,173		4,887
Total Domestic		890		3,731		1,388		4,153		10,161
International
United States		1,006		3,818		2,169		2,062		9,055
U.S. Treasury and other U.S. government agencies		14		43		3		—		61
States and political subdivisions		54		114		181		169		518
Other U.S. securities		938		3,661		1,985		1,893		8,477
Other countries		1,792		4,812		5,532		5,983		18,119
Securities of other foreign governments		498		2,408		4,199		4,173		11,278
Other debt securities of other countries		1,294		2,404		1,333		1,810		6,841
Total International		2,798		8,630		7,701		8,045		27,175
TOTALAVAILABLE-FOR-SALE		3,688		12,361		9,089		12,198		37,336
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		5		292		1,066		54		1,417
Other debt securities		4		193		661		127		985
Total Domestic		9		485		1,727		181		2,402
Total International		282		936		1,738		227		3,182
TOTALHELD-TO-MATURITY		291		1,421		3,465		408		5,584
TOTAL DEBT SECURITIES		3,979		13,782		12,554		12,606		42,921

F-188

	December 31, 2007
	Market Value
			Due After One		Due After Five
	Due in One		Year to Five		Years to Ten		Due After Ten
	Year or Less		Years		Years		Years		Total
	(Millions of euros)
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		5		278		1,015		52		1,349
Other debt securities		3		180		619		119		922
Total Domestic		8		458		1,634		171		2,271
Total International		271		901		1,673		218		3,063
TOTALHELD-TO-MATURITY		279		1,359		3,307		389		5,334

(*) As we describe in Note 2.2.1 carrying amount and market value are the same for “Trading portfolio” and “Available for sale portfolio”

Under both EU-IFRS and U.S. GAAP, the methodology used to estimate the fair value of non-traded or unlisted securities is as follows (see Note 2.2.1.b):

•  Debt securities: fair value is considered to be the present value of the cash flows, using market interest rates (discounted cash flows).

•  Equity securities: in the cases of equity instruments whose fair value cannot be determined in a sufficiently objective manner are measured at acquisition cost. In some cases in which trigger events indicate that a specific investment could be impaired, a specific valuation of fair value is used and all available factors are considered by management to determine the fair value under both GAAP. If it is available a valuation of the company, it is used as a better measure of fair value under both GAAP.

These methodologies include an evaluation of credit risk, market conditions (volatility, interest rate evolution, macroeconomic variables, etc...) or future expectations.

As of December 31, 2009, 2008 and 2007 the net gains from sales ofavailable-for-sale securities amounted to €504 million, €1,723 million and €1,556 million, respectively (see Notes 44 and 52). As of December 31, 2009, 2008 and 2007 the gross realized gains on those sales amounted to €672 million, €1,150 million and €1,635 million, respectively. As of December 31, 2009, 2008 and 2007 the gross realized losses on those sales amounted to €167 million (of which €70 million corresponds to debt securities and €97 million corresponds to other equity instruments), €154 million (of which €58 million corresponds to debt securities and €96 million corresponds to other equity instruments) and €79 million (of which €38 million corresponds to debt securities and €41 million corresponds to other equity instruments), respectively.

2.   Loans and Accounting by Creditors for Impairment of a Loan-

The balance of the recorded investment in impaired loans (substandard loans) and of the related valuation allowance as of June 30, 2009 is as follows:

	2009
	Millions
	of euros
Impaired loans requiring no reserve		66
Impaired loans requiring valuation allowance		15,131
Total impaired loans		15,197
Valuation allowance on impaired loans		4,827

The roll-forward allowance is shown in Note 7.1 of the Consolidated Financial Statements.

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The related amount of interest income recognized during the time within that period that the loans were impaired was:

	2009
	Millions
	of euros
Interest revenue that would have been recorded if accruing		1,485
Net interest revenue recorded		192

3.   Investments in and Indebtedness of and to Affiliates-

For aggregated summarized financial information with respect to significant affiliated companies for the year ended December 31, 2009 see Note 17 and Appendix IV for detailed information of investments in associates.

4.   Deposits-

The breakdowns of deposits from credit entities and customers as of December 31, 2009, 2008 and 2007, by domicile and type are included in Note 23.

As of December 31, 2009, 2008 and 2007, the time deposits, both domestic and international, (other than interbank deposits) in denominations of €69,416 thousand (approximately US$100 thousand) or more were €96,164 billion, €97.92 billion and €96.75 billion, respectively.

5.   Short-Term Borrowings-

The information about “Short-Term borrowings” required under S-X Regulations is as follows:

	As of December 31,
	2009					2008					2007
	Amount		Average Rate			Amount		Average Rate			Amount		Average Rate
	(In millions of euro, except %)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
As of December 31		26,171		2.43	%		28,206		4.66	%		39,902		5.20	%
Average during year		30,811		2.71	%		34,729		5.62	%		42,461		5.13	%
Maximum quarter-end balance		28,849		—			34,202		—			44,155		—
Bank promissory notes:
As of December 31		29,578		0.50	%		20,061		3.70	%		5,810		3.69	%
Average during year		27,434		1.28	%		15,661		4.57	%		6,975		3.96	%
Maximum quarter-end balance		29,578		—			20,061		—			7,133		—
Bonds and Subordinated debt :
As of December 31		13,236		2.54	%		13,565		4.66	%		11,281		4.49	%
Average during year		14,820		3.20	%		12,447		5.18	%		12,147		5.21	%
Maximum quarter-end balance		13,904		—			15,822		—			15,761		—
Total short-term borrowings as of December 31		68,985		1.62	%		61,832		4.35	%		56,993		4.91	%

As of December 31, 2009, 2008 and 2007, short-term borrowings include €17,419 million, €13,018 million and €33,233 million, respectively, of securities sold under agreements to repurchase from Bank of Spain and other Spanish and foreign financial institutions.

6.   Long Term Debt-

See Note 23 of the Consolidated Financial Statements.

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7.   Derivative Financial Instruments and Hedging Activities-

The breakdown of the Derivative Financial Instruments is shown in Notes 10 and 15 of the Consolidated Financial Statements.

7.1.   Objectives for the holding of positions in derivatives and strategies for the achievement of these objectives

See Note 15 of the Consolidated Financial Statements.

7.1.1.   Risk Management Policies

See Note 7 of the Consolidated Financial Statements.

7.1.2.   Transactions whose risks are hedged for U.S. GAAP purposes

U.S. GAAP (SFAS 133 — ASC 815) is more restrictive than IAS 39, Financial Instruments: recognition and measurement, on the types of risks that may be hedged and therefore certain hedging relationships have been discontinued under U.S. GAAP.

Paragraph 21.f. of SFAS 133 (ASC 815) defines the risks that may be hedged as only one of (or a combination of) the following:

(a) the risk of changes in the overall fair value of the entire hedged item,

(b) the risk of changes in its fair value attributed to changes in the designated benchmark interest rate (referred to as interest rate risk),

(c) the risk of changes in its fair value attributed to changes in the related foreign currency exchange rates (referred to as foreign exchange risk) and

(d) the risk of changes in its fair value attributed to both changes in the obligor’s creditworthiness and changes in the spread over the benchmark interest rate with respect to the hedged item’s credit sector at inception of the hedge (referred to as credit risk).

The same paragraph states that an entity may not simply designate prepayment risk as the risk being hedged for a financial asset unless it is represented by an embedded option in the hedged instrument.

Transactions whose risks are hedged for U.S. GAAP purposes are:

1. Available for sale fixed rate debt securities: this risk is hedged using interest-rate derivatives (interest-rate swaps through which the fixed-coupon of the bond is exchanged for a variable return).

2. Long term fixed rate debt issued: this risk is hedged using interest-rate derivatives (interest-rate swaps which replicate, on the collection leg, the payment resulting from the issue and transform it into a variable cost for the Bank).

3. Foreign currency of a net investment in a foreign subsidiary: the risk of a net investment in a foreign operation is exchanged for the currency in which the investment is denominated.

4. Available for sale equity securities: this risk is hedged using equity swaps through which the risk of variation in the price per books of the portfolio is transferred to the counterparty.

5. Fixed rate loans: this risk is hedged using interest-rate derivatives (interest-rate swaps through which the fixed-coupon of the loans is exchanged for a variable return).

6. Floating interest rate loans in foreign currencies: this risk is hedged using currency swaps.

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7.2.   Accounting for Derivative Instruments and Hedging Activities

Under SFAS 133 (ASC 815) the accounting for changes in fair value of a derivative instrument depends on its intended use and the resulting designation.

If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item attributed to the hedged risk are recognized in earnings.

If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in Other Comprehensive Income and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

The gain or loss on a hedging derivative instrument that is designated as, and is effective as, an economic hedge of the net investment in a foreign operation is reported in the same way as a translation adjustment to the extent it is effective as a hedge. The ineffective portion of net investment hedges is reported in earnings.

Hedging transactions must be formally documented, designated and the company must describe the way the effectiveness is going to be assessed.

On the other hand when the derivative is designated as a trading transaction the changes in the fair value must be recognized in earnings.

7.3.   Additional disclosures required by U.S. GAAP: Fair Value Methods

The methods used by the Group in estimating the fair value of its derivative instruments are as follows:

Forward purchases/sales of foreign currency

Estimated fair value of these financial instruments is based on active market prices.

Forward purchases/sales of government debt securities

Estimated fair value of these financial instruments is based on active market prices, since they are mostly traded in organised markets.

Options and financial futures

Derivatives traded in organised markets are valued based on quoted market prices.

For options and futures traded in OTC markets, the fair value is estimated based on theoretical year-end closing prices. These year-end closing prices are calculated according to generally accepted models estimating the amounts the Group would receive or pay based upon the yield curve/ volatilities prevailing at year-end or prices.

Forward rate agreements and interest rate swaps

Fair values of these contracts are estimated based on the discounted future cash flows related to the interest rates to be collected or paid, using for this purpose the yield curve prevailing at year-end.

8.   Pension liabilities-

See Notes 2.2.12 and 26 of the Consolidated Financial Statements for a detail of the pension commitments under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

9.   Employers’ Disclosures about Postretirement Benefit Plan Assets (FAS 132(R)-1) (ASC715-20)

Employee benefits corporate policies are defined by BBVA Group as part of the coordination framework established between the headquarters and each of the countries in which it operates.

In order to manage the assets related to defined benefit plans, BBVA Group has set the corresponding corporate investment policy. The investment policy currently in force is designed according to the criteria of prudence and aimed to minimize the financial risks in plan assets.

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The main principles of this policy are summarized below:

ü	Fixed income as the only category of allowed assets. Preference for government bonds
ü	No currency risk allowed in asset allocation
ü	Requirement of specific levels of liquidity in order to meet the expected cash flow liabilities
ü	Systematized controls in duration, limiting the asset-liabilities duration gaps
ü	Standardized limitation in inflation risk

Local adaptation of the corporate investment policy is taking place gradually along the countries in which the Group operates, taking into account the particularities of each market. This implies the need for unifying the diversity of the local investment policies previously in force, considering the specific local legislations and regulations -especially with regards to investment decision making processes — .

On average, as at December 31, 2009 the degree of local implementation of the current investment policy for plan assets is, in its most significant aspects, well advanced with nearly 90% of assets invested in fixed income (mostly government bonds) and around 8% in equity and 2% in other assets.

Measurement of plan assets is set using market quoted prices as the underlying assets are market quoted and priced instruments. In addition, no significant concentrations of risks within plan assets have been identified as at December 31, 2009 and investments of the plans are deemed to be sufficiently diversified.

10.   Disclosures about Fair Value of Financial Instruments(SFAS 107- ASC825-10)-

See Note 8 of the Consolidated Financial Statements for disclosures about Fair Value of Financial Instruments, as required by SFAS No. 107 (ASC825-10).

11.   Segment Information-

See Note 6 of the Consolidated Financial Statements, for a detail of the segment information under the EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004.

12.   Business combination in 2009-

See Note 3 for details of the effect on income statement of business combinations produced during 2008.

13.   FIN 48 (ASC605-15)-

As of December 31, 2009, December 31, 2008 and December 31, 2007, the Group’s unrecognized tax benefits, including related interest expense and penalties was €1,052 million, €1,136 million and €1,006 million , respectively, of which €683 million, if recognized, would reduce the annual effective tax rate. As the Group is presently under audit by number of tax authorities, it is reasonably possible that unrecognized tax benefits could change significantly over the next 12 months. The Group does not expect that any such changes would have a material impact on its annual effective tax rate.

Due to the inherent complexities arising from the nature of the Group’s businesses, and from conducting business are being taxed in a substantial number of jurisdictions, significant judgements and estimates are required to be made. Agreement of tax liabilities between BBVA and the many tax jurisdictions in which Group files tax

F-193

returns may not be finalized for several years. Thus, the Group’s final tax-related assets and liabilities may ultimately be different than those currently reported.

The following is a roll-forward of the Company’s FIN 48 (ASC605-15)unrecognized tax benefits from December 31, 2007 to December 31, 2009.

	In millions of euros
Total unrecognized tax benefits as of December 31, 2007		1,006
Net amount of increases for current year’s tax positions		11
Gross amount of increases for prior years’ tax positions		124
Gross amount of decreases for prior years’ tax positions		(4	)
Foreign exchange and acquisitions		(1	)
Total unrecognized tax benefits at December 31, 2008		1.136
Net amount of increases for current year’s tax positions		3
Gross amount of increases for prior years’ tax positions		113
Gross amount of decreases for prior years’ tax positions		(9	)
Foreign exchange, acquisitions and others		(191	)
Total unrecognized tax benefits at December 31, 2009		1.052

The Group classifies interest as interest expense but penalties are classified as tax expense. During the year 2009, the Group recognized approximately 44 million in interest and penalties. The Group had approximately 299 million for the payment of interest and penalties accrued at December 31, 2009.

The following are the major tax jurisdictions in which the Company and its affiliates operate and the earliest tax year subject to examination:

Jurisdiction	Tax year
Spain		2004-2009
United States		2004-2009
Puerto Rico		2003-2009
Peru		2006-2009
Colombia		2003-2009
Argentina		2004-2009
Venezuela		2003-2009
Mexico		2006-2009

14.,   Disclosures about Derivative Instruments and Hedging Activities SFAS. 161 (ASC815-10-50 — Derivatives and Hedging)

In March 2008 the FASB issued FASB Statement No. 161 (ASC815-10-50),Disclosures about Derivative Instruments and Hedging Activities.The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

See Note 10, 15, 33 and 44 of the Consolidated Financial Statements for disclosures about derivative instruments and hedging activities, as required by SFAS No. 161(ASC815-10-50)

F-194

15.   Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered-

In accordance with Reg. S-XRule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered, BBVA International Preferred, S.A. (Unipersonal) — issuer of registered preferred securities guaranteed by Banco Bilbao Vizcaya Argentaria, S.A. — do not file the financial statements required for a registrant byRegulation S-X as BBVA International Preferred, S.A. (Unipersonal) is 100% owned finance subsidiary of Banco Bilbao Vizcaya Argentaria, S.A. who fully and unconditionally guarantees the preferred securities (Serie “C” is listed in the United States). No other subsidiary of the Bank guarantees such securities. We are not aware of any legal or economic restrictions on the ability of this subsidiary to transfer funds to our parent company in the form of cash dividends, loans or advances, capital repatriation or otherwise. There is no assurance that in the future such restrictions will not be adopted.

F-195

APPENDIX I. FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008

	2009		2008(*)
	Millions of euros
ASSETS
CASH AND BALANCES WITH CENTRAL BANKS		3,286		2,687
FINANCIAL ASSETS HELD FOR TRADING		57,532		59,987
Loans and advances to credit institutions		—		—
Loans and advances to customers		—		—
Debt securities		22,833		14,953
Equity instruments		4,996		5,605
Trading derivatives		29,703		39,429
Memorandum item: Loaned or advanced as collateral		12,665		5,012
OTHER FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS		—		—
Loans and advances to credit institutions		—		—
Loans and advances to customers		—		—
Debt securities		—		—
Equity instruments		—		—
Memorandum item: Loaned or advanced as collateral		—		—
AVAILABLE-FOR-SALE FINANCIAL ASSETS		35,964		18,726
Debt securities		30,610		11,873
Equity instruments		5,354		6,853
Memorandum item: Loaned or advanced as collateral		23,777		7,694
LOANS AND RECEIVABLES		256,355		272,114
Loans and advances to credit institutions		27,863		45,274
Loans and advances to customers		228,491		226,836
Debt securities		1		4
Memorandum item: Loaned or advanced as collateral		40,040		4,683
HELD-TO-MATURITY INVESTMENTS		5,437		5,282
Memorandum item: Loaned or advanced as collateral		1,178		729
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK		—		—
HEDGING DERIVATIVES		3,082		3,047
NON-CURRENT ASSETS HELD FOR SALE		570		149
INVESTMENTS		22,120		21,668
Associates		2,296		452
Jointly controlled entities		17		4
Subsidiaries		19,807		21,212
INSURANCE CONTRACTS LINKED TO PENSIONS		1,883		1,996
TANGIBLE ASSETS		1,464		1,895
Property, plants and equipment		1,461		1,884
For own use		1,461		1,884
Other assets leased out under an operating lease		—		—
Investment properties		3		11
Memorandum item: Acquired under financial lease		—		—
INTANGIBLE ASSETS		246		166
Goodwill		—		—
Other intangible assets		246		166
TAX ASSETS		3,188		3,568
Current		448		320
Deferred		2,740		3,248
OTHER ASSETS		718		735
TOTAL ASSETS		391,845		392,020

(*) Presented for comparison purposes only.

I-1

APPENDIX I (Continued). FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008

	2009			2008(*)
	Millions of euros
LIABILITIES AND EQUITY
FINANCIAL LIABILITIES HELD FOR TRADING		31,943			40,538
Deposits from central banks		—			—
Deposits from credit institutions		—			—
Customers deposits		—			—
Debt certificates		—			—
Trading derivatives		28,577			37,885
Short positions		3,366			2,653
Other financial liabilities		—			—
OTHER FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS		—			—
Deposits from central banks		—			—
Deposits from credit institutions		—			—
Customer deposits		—			—
Debt certificates		—			—
Subordinated liabilities		—			—
Other financial liabilities		—			—
FINANCIAL LIABILITIES AT AMORTIZED COST		328,389			322,197
Deposits from central banks		20,376			13,697
Deposits from credit institutions		40,201			43,972
Customer deposits		180,407			188,311
Debt certificates		69,453			58,837
Subordinated liabilities		14,481			13,332
Other financial liabilities		3,471			4,048
FAIR VALUE CHANGES OF THE HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK		—			—
HEDGING DERIVATIVES		1,014			824
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE		—			—
PROVISIONS		6,790			7,071
Provisions for pensions and similar obligations		5,426			5,651
Provisions for taxes and other legal contingencies		—			—
Provisions for contingent exposures and commitments		201			387
Other provisions		1,163			1,033
TAX LIABILITIES		715			633
Current		—			—
Deferred		715			633
OTHER LIABILITIES		1,317			1,044
TOTAL LIABILITIES		370,168			372,307
STOCKHOLDERS’ FUNDS		20,034			18,562
Common Stock		1,837			1,837
Issued		1,837			1,837
Unpaid and uncalled(-)		—			—
Share premium		12,453			12,770
Reserves		3,893			3,070
Other equity instruments		10			71
Equity component of compound financial instruments		—			—
Other equity instruments		10			71
Less: Treasury stock		(128	)		(143	)
Income attributed to the parent company		2,981			2,835
Less: Dividends and remuneration		(1,012	)		(1,878	)
VALUATION ADJUSTMENTS		1,643			1,151
Available-for-sale financial assets		1,567			937
Cash flow hedging		80			141
Hedging of net investment in a foreign transactions		—			—
Exchange differences		(4	)		73
Non-current assets helf for sale		—			—
Other valuation adjustments		—			—
TOTAL EQUITY		21,677			19,713
TOTAL LIABILITIES AND EQUITY		391,845			392,020

(*) Presented for comparison purposes only.

I-2

APPENDIX I (Continued). FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA
ARGENTARIA, S.A.

INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009			2008(*)
	Millions of euros
INTEREST AND SIMILAR INCOME		11,420			15,854
INTEREST AND SIMILAR EXPENSES		(5,330	)		(12,178	)
NET INTEREST INCOME		6,090			3,676
DIVIDEND INCOME		1,773			2,318
FEE AND COMMISSION INCOME		1,948			2,034
FEE AND COMMISSION EXPENSES		(303	)		(359	)
NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES		96			632
Financial instruments held for trading		(133	)		(2	)
Other financial instruments at fair value through profit or loss		—			—
Other financial instruments not at fair value through profit or loss		229			634
Rest		—			—
NET EXCHANGE DIFFERENCES		259			(20	)
OTHER OPERATING INCOME		81			83
OTHER OPERATING EXPENSES		(98	)		(100	)
GROSS INCOME		9,846			8,264
ADMINISTRATION COSTS		(3,337	)		(3,324	)
Personnel expenses		(2,251	)		(2,258	)
General and administrative expenses		(1,086	)		(1,066	)
DEPRECIATION AND AMORTIZATION		(243	)		(219	)
PROVISIONS (NET)		(269	)		(1,327	)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)		(1,698	)		(996	)
Loans and receivables		(1,518	)		(900	)
Other financial instruments not at fair value through profit or loss		—			—
		(180	)		(96	)
NET OPERATING INCOME		4,299			2,398
IMPAIRMENT LOSSES ON OTHER ASSETS (NET)		(1,746	)		(8	)
Goodwill and other intangible assets		—			—
Other assets		(1,746	)		(8	)
GAINS (LOSSES) ON DERECOGNIZED ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE		3			—
NEGATIVE GOODWILL		—			—
GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS		892			736
INCOME BEFORE TAX		3,448			3,126
INCOME TAX		(467	)		(291	)
PRIOR YEAR INCOME FROM CONTINUING TRANSACTIONS		2,981			2,835
INCOME FROM DISCONTINUED TRANSACTIONS (NET)		—			—
NET INCOME		2,981			2,835

(*) Presented for comparison purposes only.

I-3

APPENDIX I (Continued). FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA
ARGENTARIA, S.A.

STATEMENTS OF RECOGNIZED INCOME AND EXPENSES FOR THE YEARS ENDED
DECEMBER 31, 2009 AND 2008

	2009			2008(*)
	Millions of euros
STATEMENT OF RECOGNIZED INCOME AND EXPENSES
NET INCOME FOR THE YEAR		2,981			2,835
OTHER RECOGNIZED INCOME (EXPENSES)		492			(1,737	)
Available-for-sale financial assets		1,028			(2,838	)
Valuation gains/losses		1,045			(1,727	)
Amounts removed to income statement		(17	)		(1,111	)
Reclassifications		—			—
Cash flow hedging		(85	)		310
Valuation gains/losses		(80	)		298
Amounts removed to income statement		(5	)		12
Amounts removed to the initial book value of the hedged items		—			—
Other reclassifications		—			—
Hedging of net investment in foreign transactions		—			—
Valuation gains/losses		—			—
Amounts removed to income statement		—			—
Other reclassifications		—			—
Exchange differences		(79	)		86
Valuation gains/losses		(6	)		104
Amounts removed to income statement		(73	)		(18	)
Other reclassifications		—			—
Non-current assets held for sale		—			—
Valuation gains and losses		—			—
Amounts removed to income statement		—			—
Other reclassifications		—			—
Actuarial gains and losses on pension plans		—			—
Rest of recognized income and expenses		—			—
Income tax		(372	)		705
TOTAL RECOGNIZED INCOME/EXPENSE		3,473			1,098

I-4

APPENDIX I (Continued). FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	Stockholders’ Funds
									Other			Less:						Less:			Total
			Share						Equity			Treasury			Profit For			Dividends and			Stockholders’			Valuation			Total
	Capital		Premium			Reserves			Instruments			Stock			the Year			Remunerations			Funds			Adjustments			Equity
	Millions of euros
Balances as of January 1, 2009		1,837		12,770			3,070			71			(143	)		2,835			(1,878	)		18,562			1,151			19,713
Effects of changes in accounting policies		—		—			—			—			—			—			—			—			—			—
Effect of correction of errors		—		—			—			—			—			—			—			—			—			—
Adjusted initial balance		1,837		12,770			3,070			71			(143	)		2,835			(1,878	)		18,562			1,151			19,713
Total recognized income/expense		—		—			—			—			—			2,981			—			2,981			492			3,473
Other changes in equity		—		(317	)		823			(61	)		15			(2,835	)		866			(1,509	)		—			(1,509	)
Capital increases		—		—			—			—			—			—			—			—			—			—
Capital reduction		—		—			—			—			—			—			—			—			—			—
Conversion of financial liabilities into capital		—		—			—			—			—			—			—			—			—			—
Increase of other equity instruments		—		—			—			5			—			—			—			5			—			5
Reclassification of financial liabilities to other equity instruments		—		—			—			—			—			—			—			—			—			—
Reclassification of other equity instruments to financial liabilities		—		—			—			—			—			—			—			—			—			—
Dividend distribution/Remuneration		—		—			—			—			—			—			(1,012	)		(1,012	)		—			(1,012	)
Transactions including treasury shares and other equity instruments (net)		—		—			(99	)		—			15			—			—			(84	)		—			(84	)
Transfers between total equity entries		—		—			957			—			—			(2,835	)		1,878			—			—			—
Increases/reductions due to business combinations		—		—			—			—			—			—			—			—			—			—
Payments with equity instruments		—		(317	)		—			(66	)		—			—			—			(383	)		—			(383	)
Rest of increases/reductions in total equity		—		—			(35	)		—			—			—			—			(35	)		—			(35	)
Balances as of December 31, 2009		1,837		12,453			3,893			10			(128	)		2,981			(1,012	)		20,034			1,643			21,677
Balances as of January 1, 2008		1,837		12,770			2,257			49			(129	)		3,612			(1,679	)		18,717			2,888			21,605
Effects of changes in accounting policies		—		—			—			—			—			—			—			—			—			—
Effect of correction of errors		—		—			—			—			—			—			—			—			—			—
Adjusted initial balance		1,837		12,770			2,257			49			(129	)		3,612			(1,679	)		18,717			2,888			21,605
Total recognized income/expense		—		—			—			—			—			2,835			—			2,835			(1,737	)		1,098
Other changes in equity		—		—			813			22			(14	)		(3,612	)		(199	)		(2,990	)		—			(2,990	)
Capital increases		—		—			—			—			—			—			—			—			—			—
Capital reductions		—		—			—			—			—			—			—			—			—			—
Conversion of financial liabilities into capital		—		—			—			—			—			—			—			—			—			—
Increase of other equity instruments		—		—			—			22			—			—			—			22			—			22
Reclassification of financial liabilities to other equity instruments		—		—			—			—			—			—			—			—			—			—
Reclassification of other equity instruments to financial liabilities		—		—			—			—			—			—			—			—			—			—
Dividend distribution		—		—			—			—			—			(1,038	)		(1,878	)		2,916			—			2,916
Transactions including treasury shares and other equity instruments (net)		—		—			(74	)		—			(14	)		—			—			(88	)		—			(88	)
Transfers between total equity entries		—		—			895			—			—			(2,574	)		1,679			—			—			—
Increases/reductions due to business combinations		—		—			—			—			—			—			—			—			—			—
Payments with equity instruments		—		—			—			—			—			—			—			—			—			—
Rest of increases/reductions in total equity		—		—			(8	)		—			—			—			—			(8	)		—			(8	)
Balances as of December 31, 2008		1,837		12,770			3,070			71			(143	)		2,835			(1,878	)		18,562			1,151			19,713

(*) Presented for comparison purposes only.

I-5

APPENDIX I (Continued). FINANCIAL STATEMENTS OF BANCO BILBAO VIZCAYA
ARGENTARIA, S.A.

CASH FLOW STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009			2008(*)
	Millions of euros
CASH FLOWS FROM OPERATING ACTIVITIES(1)		2,372			(7,399	)
Profit for the year		2,981			2,835
Adjustments to obtain the cash flow from operating activities:		934			(2,232	)
Amortization		243			219
Other adjustments		691			(2,451	)
Net increase/decrease in operating assets		(2,022	)		46,475
Financial assets held for trading		(2,455	)		18,807
Other financial assets at fair value through profit or loss		—			—
Available-for-sale financial assets		17,238			(754	)
Loans and receivables		(15,759	)		25,792
Other operating assets		(1,046	)		2,630
Net increase/decrease in operating liabilities		(4,032	)		38,182
Financial liabilities held for trading		(8,594	)		21,814
Other financial liabilities at fair value through profit or loss		—			—
Financial liabilities at amortized cost		5,668			18,351
Other operating liabilities		(1,106	)		(1,983	)
Collection/Payments for income tax		467			291
CASH FLOWS FROM INVESTING ACTIVITIES(2)		(656	)		(217	)
Investment		2,306			1,491
Tangible assets		268			282
Intangible assets		138			112
Investments in associates		1,039			696
Subsidiaries and other business units		—			—
Non-current assets held for sale and associated liabilities		436			131
Held-to-maturity investments		425			—
Other settlements related with investment activities		—			270
Divestments		1,650			1,274
Tangible assets		6			14
Intangible assets		—			—
Investments in associates		21			7
Other business units		—			—
Non-current assets held for sale and associated liabilities		1,350			949
Held-to-maturity investments		257			284
Other collections related to investing activities		16			20
CASH FLOWS FROM FINANCING ACTIVITIES(3)		(1,118	)		(1,912	)
Investment		7,785			11,360
Dividends		1,638			2,860
Subordinated liabilities		1,682			600
Amortization of own equity instruments		—			—
Acquisition of own equity instruments		4,232			7,900
Other items relating to financing activities		233			—
Divestments		6,667			9,448
Subordinated liabilities		2,927			1,295
Issuance of own equity instruments		—			—
Disposal of own equity instruments		3,740			7,747
Other items relating to financing activities		—			406
EFFECT OF EXCHANGE RATE CHANGES(4)		1			(1	)
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS(1+2+3+4)		599			(9,529	)
CASH OR CASH EQUIVALENTS AT BEGINNING OF YEAR		2,687			12,216
CASH OR CASH EQUIVALENTS AT END OF YEAR		3,286			2,687

COMPONENTS OF CASH AND EQUIVALENT AT END OF YEAR	2009		2008(*)
Cash		650		668
Balance of cash equivalent in central banks		2,636		2,019
Other financial assets		—		—
Less: Bank overdraft refundable on demand		—		—
TOTAL CASH OR CASH EQUIVALENTS AT END OF YEAR		3,286		2,687

(*) Presented for comparison purposes only.

I-6

APPENDIX II. Additional information on consolidated subsidiaries composing the BBVA Group

									Investee Data
																				Profit (Loss)
			% of Voting Rights						Net											for the
			Controlled by the Bank						Carrying			Assets as of		Liabilities as of			Equity			Period Ended
Company	Location	Activity	Direct		Indirect		Total		Amount			31.12.09		31.12.09			31.12.09			31.12.09
									Thousand of euros(*)
ADMINISTRAD. DE FONDOS PARA EL RETIRO-BANCOMER,S.A DE C.V.	MEXICO	PENSIONS		17.50		82.50		100.00		322,688			163,686		19,680			94,793			49,213
ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA, S.A. (AFP PROVIDA)	CHILE	PENSIONS		12.70		51.62		64.32		258,163			472,233		79,197			288,299			104,737
ADPROTEL STRAND, S.L.	SPAIN	REAL ESTATE		—		100.00		100.00		3			319,717		319,962			3			(248	)
AFP GENESIS ADMINISTRADORA DE FONDOS Y FIDEICOMISOS, S.A.	ECUADOR	PENSIONS		—		100.00		100.00		3,879			6,527		2,649			1,006			2,872
AFP HORIZONTE, S.A.	PERU	PENSIONS		24.85		75.15		100.00		39,118			62,782		18,804			23,906			20,072
AFP PREVISION BBV-ADM.DE FONDOS DE PENSIONES S.A.	BOLIVIA	PENSIONS		75.00		5.00		80.00		2,063			10,723		5,123			3,487			2,113
ALMACENES GENERALES DE DEPOSITO, S.A.E. DE	SPAIN	PORTFOLIO		83.90		16.10		100.00		12,649			118,816		3,010			110,134			5,672
ALTITUDE INVESTMENTS LIMITED	UNITED KINGDOM	IN LIQUIDATION		51.00		—		51.00		615			762		386			1,275			(899	)
AMERICAN FINANCE GROUP, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		13,337			14,540		1,203			13,346			(9	)
ANIDA CARTERA SINGULAR, S.L.	SPAIN	PORTFOLIO		—		100.00		100.00		(555,210	)		221,961		359,008			(36,509	)		(100,538	)
ANIDA DESARROLLOS INMOBILIARIOS, S.L	SPAIN	REAL ESTATE		—		100.00		100.00		239,854			565,607		312,344			287,027			(33,764	)
ANIDA DESARROLLOS SINGULARES, S.L.	SPAIN	REAL ESTATE		—		100.00		100.00		(106,837	)		1,190,622		1,484,451			(23,463	)		(270,366	)
ANIDA GERMANIA IMMOBILIEN ONE, GMBH	GERMANY	REAL ESTATE		—		100.00		100.00		4,330			19,872		15,511			4,336			25
ANIDA GRUPO INMOBILIARIO, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		198,357			440,882		460,954			532,053			(552,125	)
ANIDA INMOBILIARIA, S.A. DE C.V.	MEXICO	PORTFOLIO		—		100.00		100.00		108,055			86,029		3			86,715			(689	)
ANIDA INMUEBLES ESPAÑA Y PORTUGAL, S.L	SPAIN	REAL ESTATE		—		100.00		100.00		3			129,120		136,751			3			(7,634	)
ANIDA OPERACIONES SINGULARES, S.L	SPAIN	REAL ESTATE		—		100.00		100.00		(30,226	)		1,772,683		2,065,885			(13,198	)		(280,004	)
ANIDA PROYECTOS INMOBILIARIOS, S.A. DE C.V.	MEXICO	REAL ESTATE		—		100.00		100.00		85,564			113,976		28,413			85,814			(251	)
ANIDA SERVICIOS INMOBILIARIOS, S.A. DE C.V.	MEXICO	REAL ESTATE		—		100.00		100.00		307			913		608			815			(510	)
ANIDAPORT INVESTIMENTOS IMOBILIARIOS, UNIPESSOAL, LTDA	PORTUGAL	REAL ESTATE		—		100.00		100.00		5			23,538		24,031			5			(498	)
APLICA SOLUCIONES ARGENTINAS, S.A.	ARGENTINA	SERVICES		—		100.00		100.00		1,424			2,350		826			1,518			6
APLICA SOLUCIONES GLOBALES, S.L.	SPAIN	SERVICES		100.00		—		100.00		57			77,770		75,672			810			1,288
APLICA TECNOLOGIA AVANZADA, S.A. DE C.V.	MEXICO	SERVICES		100.00		—		100.00		4			44,932		38,762			692			5,478
APOYO MERCANTIL S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		986			133,261		132,275			788			198
ARAGON CAPITAL, S.L.	SPAIN	PORTFOLIO		99.90		0.10		100.00		37,925			32,883		24			32,803			56
ARIZONA FINANCIAL PRODUCTS, INC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		658,953			664,232		5,280			639,051			19,901
ATUEL FIDEICOMISOS, S.A.	ARGENTINA	SERVICES		—		100.00		100.00		6,307			6,328		21			5,509			798
AUTOMERCANTIL-COMERCIO E ALUGER DE VEICULOS AUTOM.,LDA	PORTUGAL	FINANCIAL SERV.		—		100.00		100.00		5,300			55,169		46,374			9,373			(578	)
BAHIA SUR RESORT, S.C.	SPAIN	IN LIQUIDATION		99.95		—		99.95		1,436			1,438		15			1,423			—
BANCO BILBAO VIZCAYA ARGENTARIA (PANAMA), S.A.	PANAMA	BANKING		54.11		44.81		98.92		19,464			1,374,863		1,212,287			133,378			29,198
BANCO BILBAO VIZCAYA ARGENTARIA (PORTUGAL), S.A.	PORTUGAL	BANKING		9.52		90.48		100.00		278,916			7,009,350		6,762,697			242,062			4,591
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.	CHILE	BANKING		—		68.18		68.18		447,965			9,188,004		8,530,441			570,131			87,432
BANCO BILBAO VIZCAYA ARGENTARIA PUERTO RICO, S.A.	PUERTO RICO	BANKING		—		100.00		100.00		165,725			3,815,865		3,450,005			436,123			(70,263	)
BANCO BILBAO VIZCAYA ARGENTARIA URUGUAY, S.A.	URUGUAY	BANKING		100.00		—		100.00		17,049			625,593		573,821			51,725			47
BANCO CONTINENTAL, S.A.	PERU	BANKING		—		92.08		92.08		638,802			7,263,761		6,570,044			472,382			221,335
BANCO DE PROMOCION DE NEGOCIOS, S.A.	SPAIN	BANKING		—		99.82		99.82		15,152			33,107		204			32,523			380
BANCO DEPOSITARIO BBVA, S.A.	SPAIN	BANKING		—		100.00		100.00		1,595			1,100,017		1,015,173			52,989			31,855
BANCO INDUSTRIAL DE BILBAO, S.A.	SPAIN	BANKING		—		99.93		99.93		97,220			278,987		14,733			192,227			72,027
BANCO OCCIDENTAL, S.A.	SPAIN	BANKING		49.43		50.57		100.00		16,384			17,913		337			17,058			518
BANCO PROVINCIAL OVERSEAS N.V.	NETHERLANDS ANTILLES	BANKING		—		100.00		100.00		30,085			317,243		286,421			23,057			7,765
BANCO PROVINCIAL S.A. — BANCO UNIVERSAL	VENEZUELA	BANKING		1.85		53.75		55.60		148,879			11,265,237		10,092,078			686,661			486,498
BANCOMER FINANCIAL SERVICES INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		1,783			652		(1,131	)		1,843			(60	)
BANCOMER FOREIGN EXCHANGE INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		5,524			6,684		1,160			4,018			1,506
BANCOMER PAYMENT SERVICES INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		35			24		(11	)		37			(2	)
BANCOMER TRANSFER SERVICES, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		16,642			72,931		55,942			7,185			9,804
BBV AMERICA, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		479,328			880,229		—			889,260			(9,031	)
BBVA & PARTNERS ALTERNATIVE INVESTMENT A.V., S.A.	SPAIN	SECURITIES		70.00		—		70.00		1,331			10,126		3,663			5,839			624
BBVA ASESORIAS FINANCIERAS, S.A.	CHILE	FINANCIAL SERV.		—		100.00		100.00		2,759			3,536		776			931			1,829
BBVA ASSET MANAGEMENT ADMINISTRADORA GENERAL DE FONDOS S.A.	CHILE	FINANCIAL SERV.		—		100.00		100.00		13,567			15,183		1,619			8,877			4,687
BBVA ASSET MANAGEMENT, S.A., SGIIC	SPAIN	FINANCIAL SERV.		17.00		83.00		100.00		11,436			186,612		92,058			58,428			36,126
BBVA AutoRenting SPA	ITALY	SERVICES		—		100.00		100.00		64,160			264,399		234,275			29,687			437
BBVA BANCO DE FINANCIACION S.A.	SPAIN	BANKING		—		100.00		100.00		64,200			2,338,428		2,265,989			72,277			162
BBVA BANCO FRANCES, S.A.	ARGENTINA	BANKING		45.65		30.36		76.01		51,151			4,293,968		3,752,431			389,329			152,208
BBVA BANCOMER FINANCIAL HOLDINGS, INC.	UNITED STATES	PORTFOLIO		—		100.00		100.00		34,156			28,917		(5,409	)		38,756			(4,430	)

II-1

									Investee Data
																			Profit (Loss)
			% of Voting Rights						Net										for the
			Controlled by the Bank						Carrying			Assets as of		Liabilities as of		Equity			Period Ended
Company	Location	Activity	Direct		Indirect		Total		Amount			31.12.09		31.12.09		31.12.09			31.12.09
									Thousand of euros(*)
BBVA BANCOMER GESTION, S.A. DE C.V.	MEXICO	FINANCIAL SERV.		—		100.00		100.00		23,476			28,348		4,872		9,309			14,167
BBVA BANCOMER OPERADORA, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		26,623			180,141		153,517		110,564			(83,940	)
BBVA BANCOMER SERVICIOS ADMINISTRATIVOS, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		343			8,200		7,857		973			(630	)
BBVA BANCOMER, S.A. DE C.V.	MEXICO	BANKING		—		100.00		100.00		5,173,428			59,039,672		53,869,257		4,190,965			979,450
BBVA BRASIL BANCO DE INVESTIMENTO, S.A.	BRASIL	BANKING		100.00		—		100.00		16,166			40,040		5,549		33,566			925
BBVA BROKER, CORREDURIA DE SEGUROS Y REASEGUROS, S.A.	SPAIN	FINANCIAL SERV.		99.94		0.06		100.00		297			29,906		3,756		20,630			5,520
BBVA CAPITAL FINANCE, S.A.	SPAIN	FINANCIAL SERV.		100.00		—		100.00		60			2,988,033		2,987,801		222			10
BBVA CAPITAL FUNDING, LTD.	CAYMAN ISLANDS	FINANCIAL SERV.		100.00		—		100.00		0			945,645		943,992		1,623			30
BBVA CARTERA DE INVERSIONES,SICAV,S.A.	SPAIN	VARIABLE CAPITAL		100.00		—		100.00		118,449			119,042		174		111,546			7,322
BBVA COLOMBIA, S.A.	COLOMBIA	BANKING		76.20		19.23		95.43		262,780			6,484,031		5,796,408		564,896			122,727
BBVA COMERCIALIZADORA LTDA	CHILE	FINANCIAL SERV.		—		100.00		100.00		(723	)		267		989		(356	)		(366	)
BBVA COMPASS CONSULTING & BENEFITS, INC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		12,194			12,501		307		11,694			500
BBVA COMPASS INVESTMENT SOLUTIONS, INC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		37,893			40,893		2,999		32,527			5,367
BBVA CONSOLIDAR SEGUROS, S.A.	ARGENTINA	INSURANCES		87.78		12.22		100.00		6,331			39,680		22,513		14,556			2,611
BBVA CONSULTING ( BEIJING) LIMITED	CHINA	FINANCIAL SERV.		—		100.00		100.00		477			339		31		386			(78	)
BBVA CONSULTORIA, S.A.	SPAIN	SERVICES		—		100.00		100.00		2,115			3,550		617		2,148			785
BBVA CORREDORA TECNICA DE SEGUROS LIMITADA	CHILE	FINANCIAL SERV.		—		100.00		100.00		5,590			7,784		2,194		1,092			4,498
BBVA CORREDORES DE BOLSA, S.A.	CHILE	SECURITIES		—		100.00		100.00		35,008			381,675		346,669		27,980			7,026
BBVA DINERO EXPRESS, S.A.U	SPAIN	FINANCIAL SERV.		100.00		—		100.00		2,186			8,306		3,489		4,153			664
BBVAE-COMMERCE, S.A.	SPAIN	SERVICES		100.00		—		100.00		30,878			35,804		3		35,217			584
BBVA FACTORING LIMITADA (CHILE)	CHILE	FINANCIAL SERV.		—		100.00		100.00		4,568			18,864		14,298		3,473			1,093
BBVA FIDUCIARIA , S.A.	COLOMBIA	FINANCIAL SERV.		—		100.00		100.00		17,052			19,462		2,394		12,882			4,186
BBVA FINANCE (UK), LTD.	UNITED KINGDOM	FINANCIAL SERV.		—		100.00		100.00		3,324			23,498		12,645		10,749			104
BBVA FINANCE SPA	ITALY	FINANCIAL SERV.		100.00		—		100.00		4,648			6,747		1,294		5,341			112
BBVA FINANCIAMIENTO AUTOMOTRIZ, S.A.	CHILE	PORTFOLIO		—		100.00		100.00		115,284			115,344		60		102,261			13,023
BBVA FINANZIA, S.p.A	ITALY	FINANCIAL SERV.		50.00		50.00		100.00		38,300			454,316		426,266		28,115			(65	)
BBVA FUNDOS, S.Gestora Fundos Pensoes,S.A.	PORTUGAL	FINANCIAL SERV.		—		100.00		100.00		998			6,957		594		4,802			1,561
BBVA GEST, S.G.DE FUNDOS DE INVESTIMENTO MOBILIARIO, S.A.	PORTUGAL	FINANCIAL SERV.		—		100.00		100.00		998			7,089		255		6,308			526
BBVA GLOBAL FINANCE LTD.	CAYMAN ISLANDS	FINANCIAL SERV.		100.00		—		100.00		—			540,013		536,513		3,487			13
BBVA GLOBAL MARKETS B.V.	NETHERLANDS	FINANCIAL SERV.		100.00		—		100.00		18			17		—		18			(1	)
BBVA GLOBAL MARKETS RESEARCH, S.A.	SPAIN	FINANCIAL SERV.		99.99		0.01		100.00		501			5,079		2,469		2,087			523
BBVA HORIZONTE PENSIONES Y CESANTIAS, S.A.	COLOMBIA	PENSIONS		78.52		21.43		99.95		40,171			105,548		32,071		56,392			17,085
BBVA INMOBILIARIA E INVERSIONES, S.A.	CHILE	REAL ESTATE		—		68.11		68.11		3,998			23,752		17,882		6,716			(846	)
BBVA INSTITUIÇAO FINANCEIRA DE CREDITO, S.A.	PORTUGAL	FINANCIAL SERV.		—		100.00		100.00		43,626			458,190		419,067		36,402			2,721
BBVA INTERNATIONAL LIMITED	CAYMAN ISLANDS	FINANCIAL SERV.		100.00		—		100.00		1			503,508		500,957		2,471			80
BBVA INTERNATIONAL PREFERRED, S.A.U	SPAIN	FINANCIAL SERV.		100.00		—		100.00		60			1,787,316		1,670,937		226			116,153
BBVA INVERSIONES CHILE, S.A.	CHILE	FINANCIAL SERV.		61.22		38.78		100.00		580,584			938,225		9,575		806,727			121,923
BBVA IRELAND PUBLIC LIMITED COMPANY	IRELAND	FINANCIAL SERV.		100.00		—		100.00		180,381			1,200,253		855,432		322,089			22,732
BBVA LEASIMO — SOCIEDADE DE LOCAÇAO FINANCEIRA, S.A.	PORTUGAL	FINANCIAL SERV.		—		100.00		100.00		11,576			34,932		24,510		10,333			89
BBVA LEASING S.A. COMPAÑÍA DE FINANCIAMIENTO COMERCIAL (COLOMBIA)	COLOMBIA	FINANCIAL SERV.		—		100.00		100.00		19,376			110,077		90,701		17,225			2,151
BBVA LUXINVEST, S.A.	LUXEMBOURG	PORTFOLIO		36.00		64.00		100.00		255,843			1,511,080		92,105		1,408,179			10,796
BBVA MEDIACION OPERADOR DE BANCA-SEGUROS VINCULADO, S.A.	SPAIN	FINANCIAL SERV.		—		100.00		100.00		60			82,530		71,288		6,166			5,076
BBVA NOMINEES LIMITED	UNITED KINGDOM	SERVICES		100.00		—		100.00		—			1		—		1			—
BBVA PARAGUAY, S.A.	PARAGUAY	BANKING		100.00		—		100.00		22,598			766,239		693,781		44,852			27,606
BBVA PARTICIPACIONES INTERNACIONAL, S.L	SPAIN	PORTFOLIO		92.69		7.31		100.00		273,365			347,381		457		342,426			4,498
BBVA PATRIMONIOS GESTORA SGIIC, S.A.	SPAIN	FINANCIAL SERV.		99.98		0.02		100.00		3,907			30,180		3,989		20,143			6,048
BBVA PENSIONES, SA, ENTIDAD GESTORA DE FONDOS DE PENSIONES	SPAIN	PENSIONS		100.00		—		100.00		12,922			74,200		34,797		25,939			13,464
BBVA PLANIFICACION PATRIMONIAL, S.L.	SPAIN	FINANCIAL SERV.		80.00		20.00		100.00		1			495		2		504			(11	)
BBVA PRIVANZA (JERSEY), LTD.	JERSEY	INACTIVE		—		100.00		100.00		20,610			22,350		10		23,321			(981	)
BBVA PROPIEDAD F.I.I	SPAIN	OTHER		—		95.69		95.69		1,409,194			1,544,210		64,529		1,579,706			(100,025	)
BBVA PUERTO RICO HOLDING CORPORATION	PUERTO RICO	PORTFOLIO		100.00		—		100.00		322,837			166,136		10		166,186			(60	)
BBVA RE LIMITED	IRELAND	INSURANCES		—		100.00		100.00		656			57,561		34,125		18,149			5,287
BBVA RENTING, S.A.	SPAIN	FINANCIAL SERV.		—		100.00		100.00		20,976			840,090		754,149		93,802			(7,861	)
BBVA RENTING, SPA	ITALY	SERVICES		—		100.00		100.00		8,453			43,917		36,026		8,277			(386	)

II-2

									Investee Data
																	Profit (Loss)
			% of Voting Rights						Net								for the
			Controlled by the Bank						Carrying		Assets as of		Liabilities as of		Equity		Period Ended
Company	Location	Activity	Direct		Indirect		Total		Amount		31.12.09		31.12.09		31.12.09		31.12.09
									Thousand of euros(*)
BBVA SECURITIES HOLDINGS, S.A.	SPAIN	PORTFOLIO		99.86		0.14		100.00		13,334		53,408		31,775		18,292		3,341
BBVA SECURITIES INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		23,957		31,664		6,130		20,578		4,956
BBVA SECURITIES OF PUERTO RICO, INC	PUERTO RICO	FINANCIAL SERV.		100.00		—		100.00		4,726		6,576		936		5,130		510
BBVA SEGUROS COLOMBIA, S.A.	COLOMBIA	INSURANCES		94.00		6.00		100.00		9,339		35,238		22,128		11,726		1,384
BBVA SEGUROS DE VIDA COLOMBIA, S.A.	COLOMBIA	INSURANCES		94.00		6.00		100.00		13,242		271,906		236,231		32,537		3,138
BBVA SEGUROS DE VIDA, S.A.	CHILE	INSURANCES		—		100.00		100.00		37,780		365,173		327,395		29,905		7,873
BBVA SEGUROS INC.	PUERTO RICO	FINANCIAL SERV.		—		100.00		100.00		174		4,147		524		2,599		1,024
BBVA SEGUROS, S.A., DE SEGUROS Y REASEGUROS	SPAIN	INSURANCES		94.30		5.65		99.95		414,612		11,582,821		10,544,608		778,929		259,284
BBVA SENIOR FINANCE, S.A.U.	SPAIN	FINANCIAL SERV.		100.00		—		100.00		60		13,644,130		13,643,784		283		63
BBVA SERVICIOS, S.A.	SPAIN	SERVICES		—		100.00		100.00		354		17,003		4,172		8,535		4,296
BBVA SOCIEDAD DE LEASING INMOBILIARIO, S.A.	CHILE	FINANCIAL SERV.		—		97.49		97.49		12,120		54,429		41,995		11,257		1,177
BBVA SUBORDINATED CAPITAL S.A.U	SPAIN	FINANCIAL SERV.		100.00		—		100.00		130		3,657,266		3,656,866		233		167
BBVA SUIZA, S.A. (BBVA SWITZERLAND)	SUIZA	BANKING		39.72		60.28		100.00		55,795		1,106,702		790,062		298,628		18,012
BBVA TRADE, S.A.	SPAIN	PORTFOLIO		—		100.00		100.00		6,379		19,206		11,035		8,123		48
BBVA U.S. SENIOR S.A.U.	SPAIN	FINANCIAL SERV.		100.00		—		100.00		132		2,222,160		2,222,059		176		(75	)
BBVA USA BANCSHARES, INC.	UNITED STATES	PORTFOLIO		100.00		—		100.00		8,555,593		8,211,206		9,404		9,579,533		(1,377,731	)
BBVA VALORES COLOMBIA, S.A. COMISIONISTA DE BOLSA	COLOMBIA	SECURITIES		0.00		100.00		100.00		4,018		4,678		650		2,939		1,089
BCL INTERNATIONAL FINANCE. LTD.	CAYMAN ISLANDS	FINANCIAL SERV.		100.00		—		100.00		—		40,336		40,342		4		(10	)
BIBJ MANAGEMENT, LTD.	JERSEY	INACTIVE		—		100.00		100.00		—		—		—		—		—
BIBJ NOMINEES, LTD.	JERSEY	INACTIVE		—		100.00		100.00		—		—		—		—		—
BILBAO VIZCAYA AMERICA B.V.	NETHERLANDS	PORTFOLIO		—		100.00		100.00		746,000		564,988		189		463,549		101,250
BILBAO VIZCAYA HOLDING, S.A.	SPAIN	PORTFOLIO		89.00		11.00		100.00		34,771		235,582		15,142		214,970		5,470
BLUE INDICO INVESTMENTS, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		18,228		25,181		87		50,934		(25,840	)
BROOKLINE INVESTMENTS, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		33,969		32,395		535		31,871		(11	)
C B TRANSPORT ,INC	UNITED STATES	SERVICES		—		100.00		100.00		11,872		13,490		1,618		14,028		(2,156	)
CANAL COMPANY, LTD.	JERSEY	INACTIVE		—		100.00		100.00		28		834		8		842		(16	)
CAPITAL INVESTMENT COUNSEL, INC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		19,524		20,977		1,452		18,755		770
CARTERA E INVERSIONES S.A., CIA DE	SPAIN	PORTFOLIO		100.00		—		100.00		60,541		207,082		44,124		173,972		(11,014	)
CASA DE BOLSA BBVA BANCOMER, S.A. DE C.V.	MEXICO	FINANCIAL SERV.		—		100.00		100.00		51,427		64,478		13,048		27,684		23,746
CASA de CAMBIO MULTIDIVISAS, SA DE CV	MEXICO	IN LIQUIDATION		—		100.00		100.00		149		148		—		147		1
CIA. GLOBAL DE MANDATOS Y REPRESENTACIONES, S.A.	URUGUAY	IN LIQUIDATION		—		100.00		100.00		108		174		2		172		—
CIDESSA DOS, S.L.	SPAIN	PORTFOLIO		—		100.00		100.00		12,244		12,164		117		11,799		248
CIDESSA UNO, S.L.	SPAIN	PORTFOLIO		—		100.00		100.00		4,754		942,337		126		687,846		254,365
CIERVANA, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		53,164		69,418		3,042		67,352		(976	)
COMERCIALIZADORA CORPORATIVA SAC	PERU	FINANCIAL SERV.		—		99.99		99.99		129		284		156		125		3
COMERCIALIZADORA DE SERV.FINANCIER., S.A.	COLOMBIA	SERVICES		—		100.00		100.00		510		1,120		559		509		52
COMPASS ASSET ACCEPTANCE COMPANY, LLC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		336,445		336,445		—		329,562		6,883
COMPASS AUTO RECEIVABLES CORPORATION	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		2,900		2,901		1		2,900		—
COMPASS BANCSHARES, INC	UNITED STATES	PORTFOLIO		—		100.00		100.00		8,192,333		8,812,708		620,377		9,569,404		(1,377,073	)
COMPASS BANK	UNITED STATES	BANKING		—		100.00		100.00		8,637,425		48,357,800		39,720,373		9,988,121		(1,350,694	)
COMPASS CAPITAL MARKETS, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		5,109,507		5,109,507		—		4,988,515		120,992
COMPASS CUSTODIAL SERVICES, INC	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1		—
COMPASS FINANCIAL CORPORATION	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		6,331		50,031		43,700		6,290		41
COMPASS GP, INC.	UNITED STATES	PORTFOLIO		—		100.00		100.00		31,793		40,144		8,352		31,341		451
COMPASS INSURANCE AGENCY, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		121,414		131,005		9,593		114,873		6,539
COMPASS INVESTMENTS, INC.	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1		—
COMPASS LIMITED PARTNER, INC.	UNITED STATES	PORTFOLIO		—		100.00		100.00		4,418,760		4,419,169		409		4,318,121		100,639
COMPASS LOAN HOLDINGS TRS, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		53,907		55,705		1,798		53,873		34
COMPASS MORTGAGE CORPORATION	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		1,785,485		1,786,404		917		1,767,557		17,930
COMPASS MORTGAGE FINANCING, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		24		24		—		24		—
COMPASS MULTISTATE SERVICES CORPORATION	UNITED STATES	SERVICES		—		100.00		100.00		2,604		2,657		54		2,603		—
COMPASS SOUTHWEST, LP	UNITED STATES	BANKING		—		100.00		100.00		3,627,266		3,643,363		16,098		3,530,458		96,807
COMPASS TEXAS ACQUISITION CORPORATION	UNITED STATES	INACTIVE		—		100.00		100.00		1,571		1,588		16		1,573		(1	)
COMPASS TEXAS MORTGAGE FINANCING, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		24		24		—		24		—
COMPASS TRUST II	UNITED STATES	INACTIVE		—		100.00		100.00		—		1		—		1		—
COMPASS TRUST IV	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		8		486,080		486,073		6		1
COMPASS WEALTH MANAGERS COMPANY	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1		—

II-3

									Investee Data
																			Profit (Loss)
			% of Voting Rights						Net										for the
			Controlled by the Bank						Carrying			Assets as of		Liabilities as of		Equity			Period Ended
Company	Location	Activity	Direct		Indirect		Total		Amount			31.12.09		31.12.09		31.12.09			31.12.09
									Thousand of euros(*)
COMPAÑIA CHILENA DE INVERSIONES, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		232,976			173,294		2,341		171,000			(47	)
COMUNIDAD FINANCIERA ÍNDICO, S.L.	SPAIN	SERVICES		—		100.00		100.00		16			212		51		369			(208	)
CONSOLIDAR A.F.J.P., S.A.	ARGENTINA	PENSIONS		46.11		53.89		100.00		4,623			36,987		26,523		17,840			(7,376	)
CONSOLIDAR ASEGURADORA DE RIESGOS DEL TRABAJO, S.A.	ARGENTINA	INSURANCES		87.50		12.50		100.00		28,772			170,840		137,864		31,212			1,764
CONSOLIDAR CIA. DE SEGUROS DE RETIRO, S.A.	ARGENTINA	INSURANCES		33.79		66.21		100.00		47,242			569,458		498,108		56,316			15,034
CONSOLIDAR COMERCIALIZADORA, S.A.	ARGENTINA	FINANCIAL SERV.		—		100.00		100.00		2,343			7,171		4,828		3,760			(1,417	)
CONTINENTAL BOLSA, SDAD. AGENTE DE BOLSA, S.A.	PERU	SECURITIES		—		100.00		100.00		4,283			9,668		5,386		3,604			678
CONTINENTAL DPR FINANCE COMPANY	CAYMAN ISLANDS	FINANCIAL SERV.		—		100.00		100.00		—			176,153		176,153		—			—
CONTINENTAL S.A. SOCIEDAD .ADMINISTRADORA DE FONDOS	PERU	FINANCIAL SERV.		—		100.00		100.00		5,943			7,054		1,112		5,767			175
CONTINENTAL SOCIEDAD TITULIZADORA, S.A.	PERU	FINANCIAL SERV.		—		100.00		100.00		393			463		69		399			(5	)
CONTRATACION DE PERSONAL, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		1,938			6,791		4,853		1,296			642
CORPORACION DE ALIMENTACION Y BEBIDAS, S.A.	SPAIN	PORTFOLIO		—		100.00		100.00		138,508			164,282		1,325		162,122			835
CORPORACION GENERAL FINANCIERA, S.A.	SPAIN	PORTFOLIO		100.00		—		100.00		452,431			1,477,996		18,708		1,420,370			38,918
CORPORACION INDUSTRIAL Y DE SERVICIOS, S	SPAIN	PORTFOLIO		—		100.00		100.00		1,251			3,791		—		4,998			(1,207	)
DESARROLLADORA Y VENDEDORA DE CASAS, S.A	MEXICO	REAL ESTATE		—		100.00		100.00		13			13		1		16			(4	)
DESARROLLO URBANISTICO DE CHAMARTIN, S.A.	SPAIN	REAL ESTATE		—		72.50		72.50		41,383			76,167		19,106		57,211			(150	)
DESITEL TECNOLOGIA Y SISTEMAS, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		1,372			1,375		2		1,321			52
DEUSTO, S.A. DE INVERSION MOBILIARIA	SPAIN	PORTFOLIO		—		100.00		100.00		14,122			18,374		1,962		16,504			(92	)
DINERO EXPRESS SERVICIOS GLOBALES, S.A.	SPAIN	FINANCIAL SERV.		100.00		—		100.00		2,042			2,218		213		5,578			(3,573	)
EL ENCINAR METROPOLITANO, S.A.	SPAIN	REAL ESTATE		—		98.93		98.93		5,343			7,242		1,859		5,326			57
EL OASIS DE LAS RAMBLAS, S.L.	SPAIN	REAL ESTATE		—		70.00		70.00		167			493		236		153			104
ELANCHOVE, S.A.	SPAIN	PORTFOLIO		100.00		—		100.00		1,500			4,100		1,591		2,337			172
EMPRESA INSTANT CREDIT, C.A	VENEZUELA	IN LIQUIDATION		—		100.00		100.00		—			—		—		—			—
ESPANHOLA COMERCIAL E SERVIÇOS, LTDA	BRASIL	FINANCIAL SERV.		100.00		—		100.00		—			655		293		4,975			(4,613	)
ESTACION DE AUTOBUSES CHAMARTIN, S.A.	SPAIN	SERVICES		—		51.00		51.00		31			31		—		31			—
EUROPEA DE TITULIZACION, S.A., S.G.F.T	SPAIN	FINANCIAL SERV.		87.50		—		87.50		1,974			17,688		1,281		10,262			6,145
FIDEIC. No.711, EN BANCO INVEX, S.A. INSTITUCION DE BANCA MÚLTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO ANTES(FIDEIC. INVEX 1a EMIS.)	MEXICO	FINANCIAL SERV.		—		100.00		100.00		—			112,243		107,529		2,777			1,937
FIDEICOMISO28991-8 TRADING EN LOS MCADOS FINANCIEROS	MEXICO	FINANCIAL SERV.		—		100.00		100.00		1,607			1,607		—		1,220			387
FIDEICOMISO29764-8 SOCIO LIQUIDADOR POSICION DE TERCEROS	MEXICO	FINANCIAL SERV.		—		100.00		100.00		14,969			15,228		259		12,884			2,085
FIDEICOMISO BBVA BANCOMER SERVICIOS No F/47433-8, S.A.	MEXICO	FINANCIAL SERV.		—		100.00		100.00		34587			50471		15884		32965			1622
FIDEICOMISO N.847 EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. 4 EMISION)	MEXICO	FINANCIAL SERV.		—		100.00		100.00		25.00			269,166		269,456		(4,310	)		4,020
FIDEICOMISO No.402900-5 ADMINISTRACION DE INMUEBLES	MEXICO	FINANCIAL SERV.		—		100.00		100.00		2333			2536		186		2350			—
FIDEICOMISO No.752 EN BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO(FIDEIC.INVEX 2a EMISION)	MEXICO	FINANCIAL SERV.		—		100.00		100.00		—			50,683		48,762		945			976
FIDEICOMISO No.781en BANCO INVEX, S.A.,INSTITUCION DE BANCA MULTIPLE, INVEX GRUPO FINANCIERO, FIDUCIARIO (FIDEIC. 3ra EMISION)	MEXICO	FINANCIAL SERV.		—		100.00		100.00		—			276,505		271,800		(9,392	)		14,097
FIDEICOMISO SOCIO LIQUIDADOR DE OP.FINANC.DERIVADAS	MEXICO	FINANCIAL SERV.		—		100.00		100.00		10,498			10,703		206		9,721			776
FINANCEIRA DO COMERCIO EXTERIOR S.A.R	PORTUGAL	INACTIVE		100.00		—		100.00		51			36		—		37			(1	)
FINANCIERA AYUDAMOS S.A. DE C.V., SOFOMER	MEXICO	FINANCIAL SERV.		—		100.00		100.00		4,222			5,424		1,201		4,696			(473	)
FINANCIERA ESPAÑOLA, S.A.	SPAIN	PORTFOLIO		85.85		14.15		100.00		4,522			6,858		1		6,810			47
FINANZIA AUTORENTING, S.A.	SPAIN	SERVICES		27.13		72.87		100.00		47,026			613,307		600,056		42,932			(29,681	)
FINANZIA, BANCO DE CREDITO, S.A.	SPAIN	BANKING		—		100.00		100.00		210,615			7,633,026		7,438,854		330,828			(136,656	)
FRANCES ADMINISTRADORA DE INVERSIONES, S.A.	ARGENTINA	FINANCIAL SERV.		—		100.00		100.00		6,053			9,103		3,048		5,191			864
FRANCES VALORES SOCIEDAD DE BOLSA, S.A.	ARGENTINA	FINANCIAL SERV.		—		100.00		100.00		1,492			2,497		1,005		1,667			(175	)
FUTURO FAMILIAR, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		296			629		333		194			102
GENTE BBVA, S.A.	CHILE	FINANCIAL SERV.		—		100.00		100.00		(1,909	)		553		2,464		(387	)		(1,524	)
GESTION DE PREVISION Y PENSIONES, S.A.	SPAIN	PENSIONS		60.00		—		60.00		8,830			25,426		1,692		20,873			2,861
GESTION Y ADMINISTRACION DE RECIBOS, S.A.	SPAIN	SERVICES		—		100.00		100.00		150			3,666		831		1,887			948
GFIS HOLDINGS INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		8,941			8,941		1		6,238			2,702
GOBERNALIA GLOBAL NET, S.A.	SPAIN	SERVICES		—		100.00		100.00		947			2,781		1,228		1,303			250
GRAN JORGE JUAN, S.A.	SPAIN	REAL ESTATE		100.00		—		100.00		110,115			468,642		408,189		82,803			(22,350	)
GRANFIDUCIARIA	COLOMBIA	FINANCIAL SERV.		—		90.00		90.00		—			231		114		145			(28	)
GRELAR GALICIA, S.A.	SPAIN	PORTFOLIO		—		100.00		100.00		4,720			4,721		—		4,687			34
GRUPO FINANCIERO BBVA BANCOMER, S.A. DE	MEXICO	FINANCIAL SERV.		99.97		—		99.97		6,677,124			6,026,397		860		4,875,864			1,149,673
GUARANTY BUSINESS CREDIT CORPORATION	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		23,974			25,419		1,446		23,987			(14	)
GUARANTY FINANCIAL INSURANCE SOLUTIONS INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		8,941			10,916		1,974		6,239			2,703
GUARANTY PLUS HOLDING COMPANY	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		(20,689	)		41,594		62,283		(15,761	)		(4,928	)

II-4

									Investee Data
																		Profit (Loss)
			% of Voting Rights						Net									for the
			Controlled by the Bank						Carrying		Assets as of		Liabilities as of		Equity			Period Ended
Company	Location	Activity	Direct		Indirect		Total		Amount		31.12.09		31.12.09		31.12.09			31.12.09
									Thousand of euros(*)
GUARANTY PLUS PROPERTIES LLC-2	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		32,341		32,461		120		36,489			(4,148	)
GUARANTY PLUS PROPERTIES LLC-3	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES LLC-4	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES LLC-5	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES LLC-6	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES LLC-7	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES LLC-8	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES LLC-9	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
GUARANTY PLUS PROPERTIES, INC-1	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		9,022		9,033		12		9,311			(290	)
HIPOTECARIA NACIONAL MEXICANA INCORPORAT	UNITED STATES	REAL ESTATE		—		100.00		100.00		170		275		105		199			(29	)
HIPOTECARIA NACIONAL, S.A. DE C.V.	MEXICO	FINANCIAL SERV.		—		100.00		100.00		136,901		169,708		12,384		151,751			5,573
HOLDING CONTINENTAL, S.A.	PERU	PORTFOLIO		50.00		—		50.00		123,678		677,228		4		462,416			214,808
HOLDING DE PARTICIPACIONES INDUSTRIALES 2000, S.A.	SPAIN	PORTFOLIO		—		100.00		100.00		3,618		4,487		—		4,470			17
HOMEOWNERS LOAN CORPORATION	UNITED STATES	INACTIVE		—		100.00		100.00		7,390		7,817		428		7,423			(34	)
HUMAN RESOURCES PROVIDER	UNITED STATES	SERVICES		—		100.00		100.00		818,763		818,808		45		815,892			2,871
HUMAN RESOURCES SUPPORT, INC.	UNITED STATES	SERVICES		—		100.00		100.00		817,323		817,401		77		814,595			2,729
IBERDROLA SERV.FINANCIER., E.F.C., S.A.	SPAIN	FINANCIAL SERV.		—		84.00		84.00		7,290		9,585		17		9,567			1
IBERNEGOCIO DE TRADE (antes IBERTRADE, LTD.)	SPAIN	SERVICES		—		100.00		100.00		1,583		1,688		105		1,587			(4	)
INGENIERIA EMPRESARIAL MULTIBA, S.A. DE C.V.	MEXICO	SERVICES		—		99.99		99.99		—		—		—		—			0
INMOBILIARIA BILBAO, S.A.	SPAIN	REAL ESTATE		—		100.00		100.00		3,837		3,838		1		3,810			27
INMUEBLES Y RECUPERACION.CONTINENTAL,S.A	PERU	REAL ESTATE		—		100.00		100.00		1,722		5,735		4,014		317			1,404
INVERAHORRO, S.L.	SPAIN	PORTFOLIO		100.00		—		100.00		474		56,713		57,503		516			(1,306	)
INVERSIONES ALDAMA, C.A.	VENEZUELA	IN LIQUIDATION		—		100.00		100.00		—		—		—		—			—
INVERSIONES BANPRO INTERNATIONAL INC. N.V.	NETHERLANDS ANTILLES	IN LIQUIDATION		48.00		—		48.00		11,390		32,337		930		23,640			7,767
INVERSIONES BAPROBA, C.A.	VENEZUELA	FINANCIAL SERV.		100.00		—		100.00		1,307		1,314		130		891			293
INVERSIONES P.H.R.4, C.A.	VENEZUELA	IN LIQUIDATION		—		60.46		60.46		—		48		—		48			—
INVERSIONES T, C.A.	VENEZUELA	IN LIQUIDATION		—		100.00		100.00		—		—		—		—			—
INVERSORA OTAR, S.A.	ARGENTINA	PORTFOLIO		—		99.96		99.96		2,472		52,064		5		34,808			17,251
INVESCO MANAGEMENT No 1, S.A.	LUXEMBOURG	FINANCIAL SERV.		—		100.00		100.00		9,857		10,366		539		9,986			(159	)
INVESCO MANAGEMENT No 2, S.A.	LUXEMBOURG	FINANCIAL SERV.		—		100.00		100.00		—		11,063		19,627		(7,687	)		(877	)
JARDINES DE SARRIENA, S.L.	SPAIN	REAL ESTATE		—		85.00		85.00		152		499		327		338			(166	)
LIQUIDITY ADVISORS, L.P	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		825,654		828,255		2,598		822,032			3,625
MARQUES DE CUBAS 21, S.L.	SPAIN	REAL ESTATE		100.00		—		100.00		2,869		7,544		5,801		1,838			(95	)
MEDITERRANIA DE PROMOCIONS I GESTIONS INMOBILIARIES, S.A.	SPAIN	INACTIVE		—		100.00		100.00		1,187		1,248		60		1,197			(9	)
MIRADOR DE LA CARRASCOSA, S.L.	SPAIN	REAL ESTATE		—		65.77		65.77		14,724		38,866		21,824		17,057			(15	)
MISAPRE, S.A. DE C.V.	MEXICO	FINANCIAL SERV.		—		100.00		100.00		14,312		18,399		6,039		14,202			(1,842	)
MULTIASISTENCIA OPERADORA S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		67		678		611		32			35
MULTIASISTENCIA SERVICIOS S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		165		1,288		1,123		17			148
MULTIASISTENCIA, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		11,566		20,208		7,593		9,463			3,152
MULTIVAL, S.A.	SPAIN	PORTFOLIO		—		100.00		100.00		112		255		143		114			(2	)
OCCIVAL, S.A.	SPAIN	INACTIVE		100.00		—		100.00		8,211		9,889		9		9,818			62
OPCION VOLCAN, S.A.	MEXICO	REAL ESTATE		—		100.00		100.00		54,003		57,734		3,730		49,936			4,068
OPPLUS OPERACIONES Y SERVICIOS, S.A. (Antes STURGES)	SPAIN	SERVICES		100.00		—		100.00		1,067		18,946		14,345		2,919			1,682
OPPLUS S.A.C	PERU	SERVICES		—		100.00		100.00		600		1,621		945		591			85
PARTICIPACIONES ARENAL, S.L.	SPAIN	INACTIVE		—		100.00		100.00		7,552		7,665		112		6,683			870
PENSIONES BANCOMER, S.A. DE C.V.	MEXICO	INSURANCES		—		100.00		100.00		103,660		1,751,823		1,648,158		41,884			61,781
PHOENIX LOAN HOLDINGS, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		419,685		437,335		17,650		420,352			(667	)
PI HOLDINGS NO. 1, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		42,743		43,347		603		45,496			(2,752	)
PI HOLDINGS NO. 3, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		15,044		15,331		287		14,094			950
PI HOLDINGS NO. 4, INC.	UNITED STATES	INACTIVE		—		100.00		100.00		1		1		—		1			—
PORT ARTHUR ABSTRACT & TITLE COMPANY	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		1,740		2,093		353		2,081			(341	)
PREMEXSA, S.A. DE C.V.	MEXICO	FINANCIAL SERV.		—		100.00		100.00		375		725		303		335			87
PRESTACIONES ADMINISTRATIVAS LIMITADA — PROEX LIMITADA	CHILE	FINANCIAL SERV.		—		100.00		100.00		447		1,445		997		38			410
PREVENTIS, S.A.	MEXICO	INSURANCES		—		90.27		90.27		6,624		19,751		12,520		4,016			3,215
PRO-SALUD, C.A	VENEZUELA	SERVICES		—		58.86		58.86		—		—		—		—			—
PROMOCION EMPRESARIAL XX, S.A.	SPAIN	PORTFOLIO		100.00		—		100.00		1,522		12,260		11,139		1,930			(809	)
PROMOTORA DE RECURSOS AGRARIOS, S.A.	SPAIN	SERVICES		100.00		—		100.00		139		124		—		125			(1	)

II-5

									Investee Data
																			Profit (Loss)
			% of Voting Rights						Net										for the
			Controlled by the Bank						Carrying			Assets as of		Liabilities as of		Equity			Period Ended
Company	Location	Activity	Direct		Indirect		Total		Amount			31.12.09		31.12.09		31.12.09			31.12.09
									Thousand of euros(*)
PROMOTORA RESIDENCIAL GRAN EUROPA, S.L.	SPAIN	REAL ESTATE		—		58.50		58.50		227			387		—		426			(39	)
PROVIDA INTERNACIONAL, S.A.	CHILE	PENSIONS		—		100.00		100.00		39,129			39,136		10		27,322			11,804
PROVINCIAL DE VALORES CASA DE BOLSA, C.A.	VENEZUELA	FINANCIAL SERV.		—		90.00		90.00		2,668			13,841		10,162		3,457			222
PROVINCIAL SDAD.ADMIN.DE ENTIDADES DE INV.COLECTIVA, C.A.	VENEZUELA	FINANCIAL SERV.		—		100.00		100.00		2,104			2,095		100		1,678			317
PROVIVIENDA, ENTIDAD RECAUDADORA Y ADMIN.DE APORTES, S.A.	BOLIVIA	PENSIONS		—		100.00		100.00		604			1,444		790		505			149
PROXIMA ALFA INVESTMENTS (IRELAND) LIMITED	IRELAND	FINANCIAL SERV.		—		100.00		100.00		317			344		29		330			(15	)
PROXIMA ALFA INVESTMENTS (UK) LLP	UNITED KINGDOM	FINANCIAL SERV.		—		51.00		51.00		—			2,143		2,747		167			(771	)
PROXIMA ALFA INVESTMENTS (USA) LLC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		6,689			1,393		314		17,054			(15,975	)
PROXIMA ALFA INVESTMENTS HOLDINGS (USA) II INC.	UNITED STATES	PORTFOLIO		—		100.00		100.00		67			63		40		23			—
PROXIMA ALFA INVESTMENTS HOLDINGS (USA) INC.	UNITED STATES	PORTFOLIO		—		100.00		100.00		—			6,693		3,243		3,450			—
PROXIMA ALFA INVESTMENTS, SGIIC, S.A.	SPAIN	FINANCIAL SERV.		100.00		—		100.00		—			2,780		11,884		11,205			(20,309	)
PROXIMA ALFA MANAGING MEMBER LLC	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		—			—		—		(24	)		24
PROXIMA ALFA SERVICES LTD.	UNITED KINGDOM	FINANCIAL SERV.		—		100.00		100.00		—			3,265		212		3,050			3
PROYECTOS EMPRESARIALES CAPITAL RIESGO I, S.C.R, SIMP. S.A.	SPAIN	VENTURE CAPITAL		100.00		—		100.00		114,609			89,963		29		132,114			(42,180	)
PROYECTOS INDUSTRIALES CONJUNTOS, S.A. D	SPAIN	PORTFOLIO		—		100.00		100.00		3,148			7,504		3,811		3,770			(77	)
RESIDENCIAL CUMBRES DE SANTA FE, S.A. DE	MEXICO	REAL ESTATE		—		100.00		100.00		8,682			9,752		1,522		8,614			(384	)
RIVER OAKS BANK BUILDING, INC.	UNITED STATES	REAL ESTATE		—		100.00		100.00		14,915			15,834		919		14,454			461
RIVER OAKS TRUST CORPORATION	UNITED STATES	INACTIVE		—		100.00		100.00		1			1		—		1			—
RIVERWAY HOLDINGS CAPITAL TRUST I	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		216			7,202		6,986		193			23
RWHC, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		500,734			501,210		476		499,579			1,155
S.GESTORA FONDO PUBL.REGUL.MERCADO HIPOT	SPAIN	FINANCIAL SERV.		77.20		—		77.20		138			213		67		146			—
SCALDIS FINANCE, S.A.	BELGICA	PORTFOLIO		—		100.00		100.00		3,416			3,657		143		3,519			(5	)
SEGUROS BANCOMER, S.A. DE C.V.	MEXICO	INSURANCES		24.99		75.01		100.00		322,887			1,882,969		1,653,645		108,425			120,899
SEGUROS PROVINCIAL, C.A.	VENEZUELA	INSURANCES		—		100.00		100.00		36,397			66,334		29,931		14,003			22,400
SERVICIOS CORPORATIVOS BANCOMER, S.A. DE	MEXICO	SERVICES		—		100.00		100.00		350			1,118		768		89			261
SERVICIOS CORPORATIVOS DE SEGUROS, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		746			4,072		3,323		446			303
SERVICIOS EXTERNOS DE APOYO EMPRESARIAL, S.A DE C.V.	MEXICO	SERVICES		—		100.00		100.00		2,886			4,067		1,180		2,346			541
SERVICIOS TECNOLOGICOS SINGULARES, S.A.	SPAIN	SERVICES		—		100.00		100.00		—			16,001		18,048		(198	)		(1,849	)
SMARTSPREAD LIMITED (UK)	UNITED KINGDOM	SERVICES		—		99.78		99.78		—			125		11		242			(128	)
SOCIEDAD DE ESTUDIOS Y ANALISIS FINANC., S.A.	SPAIN	COMERCIAL		100.00		—		100.00		114,518			194,234		104		194,467			(337	)
SOCIETE INMOBILIERE BBV D’ILBARRIZ	FRANCE	REAL ESTATE		—		100.00		100.00		1,688			1,716		33		1,739			(56	)
SOUTHEAST TEXAS TITLE COMPANY	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		491			703		212		682			(191	)
SPORT CLUB 18, S.A.	SPAIN	PORTFOLIO		100.00		—		100.00		26,423			43,322		18,138		26,243			(1,059	)
ST. JOHNS INVESTMENTS MANAGMENT CO	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		3,417			3,593		177		3,532			(116	)
STATE NATIONAL CAPITAL TRUST I	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		326			10,739		10,413		314			12
STATE NATIONAL STATUTORY TRUST II	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		216			7,166		6,950		207			9
STAVIS MARGOLIS ADVISORY SERVICES, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		20,021			20,660		639		19,660			361
TEXAS LOAN SERVICES, LP	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		818,714			819,612		900		813,921			4,791
TEXAS REGIONAL STATUTORY TRUST I	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		1,076			35,828		34,752		1,034			42
TEXASBANC CAPITAL TRUST I	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		540			17,992		17,452		520			20
TMF HOLDING INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		6,820			6,843		23		6,804			16
TRAINER PRO GESTION DE ACTIVIDADES, S.A.	SPAIN	REAL ESTATE		—		100.00		100.00		2,886			3,261		—		3,238			23
TRANSITORY CO	PANAMA	REAL ESTATE		—		100.00		100.00		141			1,780		1,640		144			(4	)
TUCSON LOAN HOLDINGS, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		381,983			382,061		77		377,254			4,730
TWOENC, INC.	UNITED STATES	FINANCIAL SERV.		—		100.00		100.00		(1,080	)		1,036		2,117		(1,080	)		(1	)
UNICOM TELECOMUNICACIONES S.DE R.L. DE C.V.	MEXICO	SERVICES		—		99.98		99.98		—			3		3		—			—
UNIDAD DE AVALUOS MEXICO, SA DE CV	MEXICO	FINANCIAL SERV.		—		100.00		100.00		1,387			1,588		510		871			207
UNITARIA GESTION DE PATRIMONIOS INMOBILIARIOS	SPAIN	SERVICES		—		100.00		100.00		2,410			2,627		3		2,601			23
UNIVERSALIDAD “E5”	COLOMBIA	FINANCIAL SERV.		—		100.00		100.00		—			4,032		2,388		1,452			192
UNIVERSALIDAD — BANCO GRANAHORRAR	COLOMBIA	FINANCIAL SERV.		—		100.00		100.00		—			3,125		1,489		(338	)		1,974
UNIVERSALIDAD TIPS PESOSE-9	COLOMBIA	FINANCIAL SERV.		—		100.00		100.00		—			105,975		102,477		(519	)		4,017
UNO-E BANK, S.A.	SPAIN	BANKING		67.35		32.65		100.00		174,751			1,382,368		1,274,638		140,662			(32,932	)
URBANIZADORA SANT LLORENC, S.A.	SPAIN	INACTIVE		60.60		0.00		60.60		—			108		—		108			—
VALANZA CAPITAL RIESGO S.G.E.C.R. S.A. UNIPERSONAL	SPAIN	VENTURE CAPITAL		100.00		0.00		100.00		1,200			16,263		1,517		7,171			7,575
VIRTUAL DOC, S.L.	SPAIN	SERVICES		—		70.00		70.00		252			744		422		504			(182	)
VISACOM, S.A. DE C.V.	MEXICO	SERVICES		—		100.00		100.00		915			915		—		870			45

(*) Information on foreign companies at exchange on 31.12.09

II-6

APPENDIX III. Additional information on the jointly controlled companies accounted for under the proportionate consolidation method in the BBVA Group

			% of Voting Rights
			Controlled by the Bank								Investee Data
									Net								Profit (Loss)
									Carrying		Assets		Liabilities		Equity		for the Period
Company	Location	Activity	Direct		Indirect		Total		Amount		31.12.09		31.12.09		31.12.09		Ended 31.12.09
									Thousand of euros (*)
ALTURA MARKETS, SOCIEDAD DE VALORES, S.A.	SPAIN	SECURITIES		50.00		—		50.00		12,600		952,234		915,091		27,341		9,802
DISTRANSA RENTRUCKS, S.A.	SPAIN	FINANCIAL SERV.		—		42.92		42.92		11,675		58,366		47,008		13,324		(1,966	)
ECASA, S.A.	CHILE	FINANCIAL SERV.		—		51.00		51.00		3,847		4,886		1,039		158		3,689
FORUM DISTRIBUIDORA, S,A,	CHILE	FINANCIAL SERV.		—		51.04		51.04		5,673		54,033		47,622		5,877		534
FORUM SERVICIOS FINANCIEROS, S.A.	CHILE	FINANCIAL SERV.		—		51.00		51.00		54,261		551,872		474,393		50,037		27,442
INVERSIONES PLATCO, C.A	VENEZUELA	FINANCIAL SERV.		—		50.00		50.00		11,270		31,991		9,451		26,564		(4,024	)
PSA FINANCE ARGENTINA COMPAÑIA FINANCIERA, S.A.	ARGENTINA	FINANCIAL SERV.		—		50.00		50.00		9,353		74,488		55,782		11,906		6,800

Information on foreign companies at exchange rate on12/31/09

III-1

APPENDIX IV. Additional information on investments and jointly controlled companies accounted for under the equity method in the BBVA Group

(Including the most significant entities, jointly representing 98% of all investment in this collective)

			% of Voting Rights						Net		Investee Data
			Controllend by the Bank						Carrying								Profit
Company	Location	Activity	Direct		Indirect		Total		Amount		Assets		Liabilities		Equity		(Loss)
									Thousand of euros
ADQUIRA ESPAÑA, S.A.	SPAIN	SERVICES		—		40.00		40.00		3,096		20,609		11,181		8,401		1,027	(2)
ALMAGRARIO, S.A.	COLOMBIA	SERVICES		—		35.38		35.38		4,297		26,494		5,200		18,126		3,168	(3)
AUREA, S.A. (CUBA)	CUBA	REAL ESTATE		—		49.00		49.00		3,848		8,859		484		8,336		39	(2)
BBVA ELCANO EMPRESARIAL II, S.C.R., S.A.	SPAIN	VENTURE CAPITAL		45.00		—		45.00		48,566		84,607		423		88,622		(4,438	)(2)
BBVA ELCANO EMPRESARIAL, S.C.R., S.A.	SPAIN	VENTURE CAPITAL		45.00		—		45.00		48,594		84,607		423		88,621		(4,437	)(2)
CAMARATE GOLF, S.A.(*)	SPAIN	REAL ESTATE		—		26.00		26.00		4,568		39,396		18,764		17,798		2,835	(2)
CHINA CITIC BANK LIMITED CNCB	CHINA	BANKING		10.07		—		10.07		1,893,783		125,126,663		115,052,412		8,768,056		1,306,195	(2)
CITIC INTERNATIONAL FINANCIAL HOLDINGS LIMITED CIFH	HONG-KONG	FINANCIAL SERVICES		29.68		—		29.68		401,832		13,911,177		10,366,544		2,436,101		1,108,532	(1)(2)
COMPAÑIA ESPAÑOLA DE FINANCIACION DEL DESARROLLO S.A.	SPAIN	FINANCIAL SERVICES		21.82		—		21.82		12,170		63,052		12,600		48,248		2,204	(3)
COMPAÑIA MEXICANA DE PROCESAMIENTO, S.A. DE C.V.	MEXICO	SERVICES		—		50.00		50.00		3,646		8,338		1,875		5,416		1,047	(2)
CORPORACION IBV PARTICIPACIONES EMPRESARIALES, S.A.(*)	SPAIN	PORTFOLIO		—		50.00		50.00		157,098		1,196,635		298,600		317,025		581,010	(1)(2)
FERROMOVIL 3000, S.L.(*)	SPAIN	SERVICES		—		20.00		20.00		5,964		678,770		651,300		29,503		(2,033	)(2)
FERROMOVIL 9000, S.L.(*)	SPAIN	SERVICES		—		20.00		20.00		4,319		428,236		408,826		18,679		731	(2)
FIDEIC. F 404015 0 BBVA BANCOMER LOMAS III	MEXICO	REAL ESTATE		—		25.00		25.00		5,069		—		—		—		—	(4)
FIDEICOMISO F/70191-2 PUEBLA(*)	MEXICO	REAL ESTATE		—		25.00		25.00		6,655		44,360		11,668		28,189		4,503	(2)
FIDEICOMISO F/403853-5 BBVA BANCOMER SERVICIOS ZIBATA(*)	MEXICO	REAL ESTATE		—		30.00		30.00		19,980		—		—		—		—	(4)
FIDEICOMISO F/401555-8 CUATRO BOSQUES(*)	MEXICO	REAL ESTATE		—		50.00		50.00		4,132		8,072		14		8,055		3	(2)
FIDEICOMISO HARES BBVA BANCOMER F/47997-2(*)	MEXICO	REAL ESTATE		—		50.00		50.00		15,367		29,076		388		27,669		1,019	(2)
GRUPO PROFESIONAL PLANEACION Y PROYECTOS, S.A. DE C.V.(*)	MEXICO	SERVICES		—		44.39		44.39		6,118		25,201		16,671		7,468		1,062	(1)(2)
I+D MEXICO, S.A. DE C.V.(*)	MEXICO	SERVICES		—		50.00		50.00		15,491		68,938		40,625		23,434		4,879	(2)
IMOBILIARIA DUQUE D’AVILA, S.A.(*)	PORTUGAL	REAL ESTATE		—		50.00		50.00		5,211		26,138		16,504		9,848		(214	)(5)
INMUEBLES MADARIAGA PROMOCIONES, S.L.(*)	SPAIN	REAL ESTATE		50.00		—		50.00		3,707		18,717		4,055		6,313		8,349	(3)
JARDINES DEL RUBIN, S.A.(*)	SPAIN	REAL ESTATE		—		50.00		50.00		2,206		15,579		2,320		9,623		3,636	(2)
LAS PEDRAZAS GOLF, S.L.(*)	SPAIN	REAL ESTATE		—		50.00		50.00		8,519		74,827		47,548		29,630		(2,351	)(2)
OCCIDENTAL HOTELES MANAGEMENT, S.L	SPAIN	SERVICES		—		38.53		38.53		84,360		871,949		508,676		384,752		(21,479	)(1)(2)
PARQUE REFORMA SANTA FE, S.A. DE C.V.	MEXICO	REAL ESTATE		—		30.00		30.00		4,027		66,363		55,103		9,923		1,337	(2)
PROMOTORA METROVACESA, S.L	SPAIN	REAL ESTATE		—		50.00		50.00		8,790		76,015		61,525		16,486		(1,995	)(3)
ROMBO COMPAÑIA FINANCIERA, S.A.	ARGENTINA	FINANCIAL SERVICES PENSION FUND MANAGEMENT		—		40.00		40.00		9,083		121,179		101,955		15,472		3,752	(2)
SERVICIOS DE ADMINISTRACION PREVISIONAL, S.A.	CHILE	COMPANIES		—		37.87		37.87		4,079		7,977		2,824		7,871		(2,718	)(2)
SERVICIOS ELECTRONICOS GLOBALES, S.A. DE C.V.	MEXICO	SERVICES		—		46.14		46.14		4,193		12,571		3,902		7,964		705	(2)
SERVICIOS ON LINE PARA USUARIOS MULTIPLES, S.A. (SOLIUM)(*)	SPAIN	SERVICES		—		66.67		66.67		3,648		7,842		4,941		2,699		203	(2)
SERVIRED SOCIEDAD ESPAÑOLA DE MEDIOS DE PAGO, S.A.	SPAIN	FINANCIAL SERVICES		20.42		0.93		21.35		20,399		159,257		7,666		48,782		102,809	(2)
TELEFONICA FACTORING, S.A.	SPAIN	FINANCIAL SERVICES		30.00		—		30.00		3,247		76,165		65,833		6,848		3,484	(2)
TUBOS REUNIDOS, S.A.	SPAIN	INDUSTRIAL		—		23.36		23.36		51,645		749,991		510,146		157,999		81,846	(1)(2)
VITAMEDICA S.A DE C.V.(*)	MEXICO	INSURANCES		—		50.99		50.99		2,409		8,487		3,601		4,652		234	(2)
REST OF ENTITIES										41,488
								TOTAL		2,921,604		144,146,148		128,294,596		12,666,608		3,184,944

Data relating to the lastest financial statements approved at the date of preparation of these notes to the consolidated financial statements.

For the companies abroad the exchange rates rulig at the reference date are applied,

(1)	Consolidated Data
(2)	Financial statements as of December 31, 2008
(3)	Financial statements as of December 31, 2007
(4)	New incorporation
(5)	Financial statements as of December 31, 2006
(*)	Jointly controlled companies accounted for using tne equity method

IV-1

APPENDIX V. Changes and notification of investments in the BBVA Group in 2009

BUSINESS COMBINATIONS AND OTHER ACQUISITIONS OR INCREASE OF INTEREST OWNERSHIP IN CONSOLIDATED SUBSIDIARIES AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USING THE PROPORTIONATE METHOD

							%Voting Rights
			Price Paid in the
			Transaction +
			Expenses Directly			Fair Value of
			Attributed to the			Equity Instruments
			Acquisition			Issued for the				Voting Rights
	Type of		(Thounsand of			Acquisition of the	Acquired in the			Controlled after the			Effective Date (or
Company	Transaction	Activity	Euros)			Company	Period (Net)			Acquisition			Notification Date)
	Thounsand €
FIDEICOMISO28991-8 TRADING EN LOS MCADOS FINANCIEROS	ACQUISITION	FINANCIAL SERV.		1,212				100.000	%		100.000	%		28/01/2009
UNIVERSALIDAD TIPS PESOSE-9	FOUNDING	FINANCIAL SERV.		—				100.000	%		100.000	%		29/01/2009
EUROPEA DE TITULIZACION, S.A. S.G.F.T.	ACQUISITION	FINANCIAL SERV.		159				1.516	%		87.504	%		28/02/2009
ANIDA INMUEBLES ESPAÑA Y PORTUGAL, S.L.	FOUNDING	REAL ESTATE		3				100.000	%		100.000	%		17/03/2009
COMPASS TRUST IV	FOUNDING	FINANCIAL SERV.		8				100.000	%		100.000	%		27/03/2009
BBVA CONSULTING(BEIJING) LIMITED	FOUNDING	FINANCIAL SERV.		400				100.000	%		100.000	%		28/05/2009
MIRADOR DE LA CARRASCOSA, S.L.*	ACQUISITION	REAL ESTATE		5,000				9.865	%		65.769	%		30/06/2009
ADPROTEL STRANDS, S.L.	FOUNDING	REAL ESTATE		—				100.000	%		100.000	%		28/07/2009
ANIDAPORT INVESTIMENTOS IMOBILIARIOS, UNIPESSOAL, LTDA	FOUNDING	REAL ESTATE		5				100.000	%		100.000	%		25/09/2009
GUARANTY BUSINESS CREDIT CORPORATION	FOUNDING	FINANCIAL SERV.		25,922				100.000	%		100.000	%		25/09/2009
AMERICAN FINANCE GROUP, INC.	FOUNDING	FINANCIAL SERV.		13,933				100.000	%		100.000	%		25/09/2009
GFIS HOLDINGS INC	FOUNDING	FINANCIAL SERV.		6,290				100.000	%		100.000	%		25/09/2009
GUARANTY FINANCIAL INSURANCE SOLUTIONS INC.	FOUNDING	FINANCIAL SERV.		6,290				100.000	%		100.000	%		25/09/2009
TMF HOLGING INC	FOUNDING	FINANCIAL SERV.		10,132				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS HOLDING COMPANY	FOUNDING	FINANCIAL SERV.		(15,547	)			100.000	%		100.000	%		25/09/2009
RWHC, INC	FOUNDING	FINANCIAL SERV.		492,924				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES, INC-1	FOUNDING	FINANCIAL SERV.		9,264				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-2	FOUNDING	FINANCIAL SERV.		35,769				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-3	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-4	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-5	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-6	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-7	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-8	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GUARANTY PLUS PROPERTIES LLC-9	FOUNDING	FINANCIAL SERV.		1				100.000	%		100.000	%		25/09/2009
GRUPO FINANCIERO BBVA BANCOMER, S.A. DE C.V.	ACQUISITION	FINANCIAL SERV.		1				0.001	%		99.966	%		30/09/2009
BBVA GLOBAL MARKETS B.V.	FOUNDING	FINANCIAL SERV.		—				100.000	%		100.000	%		25/11/2009
BBVA ASESORIAS FINANCIERAS, S.A.	ACQUISITION	FINANCIAL SERV.		243				1.398	%		100.000	%		30/12/2009
BBVA LEASING S.A.COMPAÑIA DE FINANCIAMIENTO COMERCIAL	ACQUISITION	FINANCIAL SERV.		67				0.001	%		100.000	%		30/12/2009
COMERCIALIZADORA DE SERVICIOS FINANCIEROS, S.A.	ACQUISITION	SERVICES		—				0.016	%		99.996	%		30/12/2009

(*) Notifications.

V-1

DISPOSALS OF INTEREST OWNERSHIP IN CONSOLIDATED SUBSIDIARIES AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

						% Voting Rights
			Profit (Loss)
			in the
			Transaction						Totally Controlled			Effective Date (or
Company	Type of Transaction	Activity	(Thounsand €)			% Sold			after the Disposal			Notification Date)
	Thounsand €
FIDEICOMISO INVEX 228	LIQUIDATION	FINANCIAL SERV.		(1	)		100.000	%		0.000	%		02/01/2009
FIDEICOMISO INVEX 367	LIQUIDATION	FINANCIAL SERV.		—			100.000	%		0.000	%		02/01/2009
FIDEICOMISO INVEX 393	LIQUIDATION	FINANCIAL SERV.		—			100.000	%		0.000	%		02/01/2009
FIDEICOMISO INVEX 411	LIQUIDATION	FINANCIAL SERV.		—			100.000	%		0.000	%		02/01/2009
BEXCARTERA, SICAV, S.A.	LIQUIDATION	PORTFOLIO		362			80.783	%		0.000	%		28/01/2009
MILANO GESTIONI, SRL	MERGER	REAL ESTATE		—			100.000	%		0.000	%		02/01/2009
COMPASS UNDERWRITERS, INC.	MERGER	INSURANCE		—			100.000	%		0.000	%		02/02/2009
CONSOLIDAR CIA. DE SEGUROS DE VIDA, S.A.	MERGER	INSURANCE		—			100.000	%		0.000	%		01/04/2009
BANKER INVESTMENT SERVICES, INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		13/04/2009
TSB PROPERTIES, INC,	MERGER	REAL ESTATE		—			100.000	%		0.000	%		13/04/2009
VALLEY MORTGAGE COMPANY, INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		08/04/2009
STATE NATIONAL PROPERTIES LLC	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		13/04/2009
TARUS, INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		23/04/2009
COMPASS ARIZONA ACQUISITION, CORP	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		09/04/2009
COMPASS SECURITIES	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		09/04/2009
MEGABANK FINANCIAL CORPORATION	MERGER	SERVICES		—			100.000	%		0.000	%		13/04/2009
WESTERN BANCSHARES OF ALBUQUERQUE, INC.	MERGER	SERVICES		—			100.000	%		0.000	%		17/04/2009
WESTERN MANAGEMENT CORPORATION	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		13/04/2009
ARIZONA KACHINA HOLDINGS, INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		13/04/2009
COMPASS FIDUCIARY SERVICES, LTD, INC,	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		09/04/2009
FIRS TIER CORPORATION	MERGER	SERVICES		—			100.000	%		0.000	%		20/05/2009
AAI HOLDINGS ,INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		28/05/2009
BBVA FACTORING E.F.C. S.A.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		30/06/2009
BANCO DE CREDITO LOCAL, S.A.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		30/06/2009
PALADIN BROKERAGE SOLUTIONS, INC.(2)	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		12/06/2009
FW CAPITAL I	LIQUIDATION	SERVICES		—			100.000	%		0.000	%		12/06/2009
BBVA BANCOMER ASSET MANAGEMENT INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		01/07/2009
BBVA BANCOMER HOLDINGS CORPORATION	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		01/07/2009
BBVA INVESTMENTS, INC.	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		01/07/2009
BBVA INTERNATIONAL INVESTMENT CORPORATION	MERGER	FINANCIAL SERV.		—			100.000	%		0.000	%		17/08/2009
BBVA BANCOMER SERVICIOS, S.A,	MERGER	BANKING		—			99.999	%		0.000	%		01/08/2009
BBVA BANCOMER USA	MERGER	BANKING		—			100.000	%		0.000	%		10/09/2009
CENTRAL BANK OF THE SOUTH	MERGER	BANKING		—			100.000	%		0.000	%		10/09/2009
HYDROX HOLDINGS, INC,	MERGER	SERVICES		—			100.000	%		0.000	%		24/09/2009
PERI 5,1 S.L	LIQUIDATION	REAL ESTATE		1			54.990	%		0.000	%		30/09/2009
FIDEICOMISO 474031 MANEJO DE GARANTIAS	LIQUIDATION	FINANCIAL SERV.		(4	)		100.000	%		0.000	%		30/11/2009
BBVA(SUIZA) S.A. OFICINA DE REPRESENTACION	LIQUIDATION	FINANCIAL SERV.		264			100.000	%		0.000	%		30/11/2009
MONTEALIAGA, S.A.	MERGER	REAL ESTATE		—			100.000	%		0.000	%		03/12/2009
BBVA INSERVEX, S.A.	LIQUIDATION	SERVICES		(25	)		100.000	%		0.000	%		29/12/2009
INENSUR BRUFNETE, S.L	MERGER	REAL ESTATE		—			100.000	%		0.000	%		03/12/2009
EXPLOTACIONES AGROPECUARIAS VALDELAYEGUA, S.A.	MERGER	REAL ESTATE		—			100.000	%		0.000	%		03/12/2009
PROYECTO MUNDO AGUILON, S.A.	MERGER	REAL ESTATE		—			100.000	%		0.000	%		03/12/2009
MONESTERIO DESARROLLOS, S.L	MERGER	REAL ESTATE		—			100.000	%		0.000	%		03/12/2009
MARINA LLAR, S.L.	MERGER	REAL ESTATE		—			100.000	%		0.000	%		03/12/2009
MERCURY TRUST LIMITED	LIQUIDATION	FINANCIAL SERV.		(692	)		100.000	%		0.000	%		18/12/2009
ATREA HOMES IN SPAIN LTD	LIQUIDATION	SERVICES		340			100.000	%		0.000	%		28/12/2009

* Notifications

V-2

BUSINESS COMBINATIONS AND OTHER ACQUISITIONS OR INCREASE OF INTEREST OWNERSHIP IN ASSOCIATED AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD

Price Paid in the

Transaction +

Expenses Directly

Fair value of

Attributed to the

Equity Instruments

% Voting Rights

Acquisition

Issued for the

Voting Rights

Type of

(Thounsand of

Acquisition of

Acquired in the

Controlled after the

Effective Date (or

Company

Transaction

Activity

Euros)

the Company

Period (Net)

Acquisition

Notification Date)

FIDEIC.F/404015-0 BBVA BANCOMER LOMAS III

FOUNDING

REAL ESTATE

2,689

25.000

%

25.000

%

18/06/2009

OPERADORA ZIBATA S.DE RL.L. DE C.V.

FOUNDING

REAL ESTATE

1

30.000

%

30.000

%

30/06/2009

CORPORACION SUICHE 7B, C.A.

ACQUISITION

FINANCIAL SERV.

497

19.795

%

19.795

%

30/06/2009

CAJA VENEZOLANA DE VALORES, S.A.

ACQUISITION

FINANCIAL SERV.

192

16.093

%

16.093

%

30/06/2009

ECONTA GESTION INTEGRAL, S.L.*

ACQUISITION

SERVICES

822

10.085

%

70.085

%

30/06/2009

CHINA CITIC BANK LIMITED CNCB **

ACQUISITION

BANKING

1,847,801

10.070

%

10.070

%

09/01/2009

*	Notifications
**	Transfer fromAvailable-For-Sale, after Bank of Spain authoritation to be considered a relevant investment.

DISPOSAL OF INTEREST OWNERSHIP IN ASSOCIATES AND JOINTLY CONTROLLED COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD

Profit (Loss) in

% Voting Rights

the Transaction

Totally Controlled

Effective Date (or

Company

Type of Transaction

Activity

(Thounsand €)

% Sold

after the Disposal

Notification Date)

AIR MILES ESPAÑA, S.A.

DISPOSAL

COMERCIAL

1,313

22.999

%

0.000

%

23/02/2009

UNITARIA PINAR, S.L.

LIQUIDATION

REAL ESTATE

—

50.000

%

0.000

%

19/02/2009

TUBOS REUNIDOS, S.A.

DISPOSAL

INDUSTRIAL

92

0.040

%

23.828

%

03/09/2009

* Notifications

V-3

APPENDIX VI. Fully consolidated subsidiaries with more than 10% owned by non-Group
shareholders as of 31 December, 2009

		% of Voting Rights
		Controlled by the Bank
Company	Activity	Direct		Indirect		Total
ALTITUDE INVESTMENTS LIMITED	IN LIQUIDATION		51.00		—		51.00
BANCO BILBAO VIZCAYA ARGENTARIA CHILE, S.A.	BANKING		—		68.18		68.18
BANCO PROVINCIAL S.A. — BANCO UNIVERSAL	BANKING		1.85		53.75		55.60
BBVA & PARTNERS ALTERNATIVE INVESTMENT A.V., S.A.	BROKERING		70.00		—		70.00
BBVA INMOBILIARIA E INVERSIONES, S.A.	REAL ESTATE		—		68.11		68.11
DESARROLLO URBANISTICO DE CHAMARTÍN, S.A.	REAL ESTATE		—		72.50		72.50
EL OASIS DE LAS RAMBLAS, S.L.	REAL ESTATE		—		70.00		70.00
ESTACIÓN DE AUTOBUSES CHAMARTÍN, S.A.	SERVICES		—		51.00		51.00
GESTIÓN DE PREVISIÓN Y PENSIONES, S.A.	PENSIONS		60.00		—		60.00
HOLDING CONTINENTAL, S.A.	PORTFOLIO		50.00		—		50.00
IBERDROLA SERVICIOS FINANCIEROS, E.F.C, S.A.	FINANCIAL SERV.		—		84.00		84.00
INVERSIONES BANPRO INTERNATIONAL INC. N.V.	PORTFOLIO		48.00		—		48.00
INVERSIONES P.H.R.4, C.A.	IN LIQUIDATION		—		60.46		60.46
JARDINES DE SARRIENA, S.L.	REAL ESTATE		—		85.00		85.00
MIRADOR DE LA CARRASCOSA, S.L.	REAL ESTATE		—		65.77		65.77
PROMOTORA RESIDENCIAL GRAN EUROPA, S.L.	REAL ESTATE		—		58.50		58.50
PRO-SALUD, C.A.	SERVICES		—		58.86		58.86
VIRTUAL DOC, S.L.	SERVICES		—		70.00		70.00

VI-1

APPENDIX VII. BBVA’s Group securitization fund

			Total Securitized		Securitized
		Origination Date	Exposures at the		Exposures
Securitization	Company	(Month/Year)	Origination Date		Total
	(Thousand of euros)
HIPOTECARIO 2 FTH	BBVA, S.A.	12/1998		1,051,771		90,816
BBVA-1 F.T.A	BBVA, S.A.	02/2000		1,112,800		4,417
BCL MUNICIPIOS I FTA	BBVA, S.A.	06/2000		1,205,000		207,536
BBVA-2 FTPYME ICO FTA	BBVA, S.A.	12/2000		900,000		24,544
GC GENCAT II FTA	BBVA, S.A.	03/2003		950,000		16,110
BBVA AUTOS I FTA	BBVA, S.A.	10/2004		1,000,000		194,371
BBVA-3 FTPYME FTA	BBVA, S.A.	11/2004		1,000,000		160,868
BBVA HIPOTECARIO 3 FTA	BBVA, S.A.	06/2005		1,450,000		473,418
BBVA-4 PYME FTA	BBVA, S.A.	09/2005		1,250,000		208,396
GAT FTGENCAT 2005 FTA	BBVA, S.A.	12/2005		700,000		67,434
BBVA AUTOS 2 FTA	BBVA, S.A.	12/2005		1,000,000		459,889
BBVA CONSUMO 1 FTA	BBVA, S.A.	05/2006		1,500,000		695,609
BBVA-5 FTPYME FTA	BBVA, S.A.	10/2006		1,900,000		642,710
BBVA CONSUMO 2 FTA	BBVA, S.A.	11/2006		1,500,000		914,022
BBVA RMBS 1 FTA	BBVA, S.A.	02/2007		2,500,000		1,926,480
BBVA RMBS 2 FTA	BBVA, S.A.	03/2007		5,000,000		3,821,577
BBVA-FINANZIA AUTOS 1 FTA	FINANZIA BANCO DE CREDITO, S.A.	04/2007		800,000		473,216
BBVA-6 FTPYME FTA	BBVA, S.A.	06/2007		1,500,000		668,977
BBVA LEASING 1 FTA	BBVA, S.A.	06/2007		2,500,000		1,478,871
BBVA RMBS 3 FTA	BBVA, S.A.	07/2007		3,000,000		2,525,578
BBVA EMPRESAS 1 FTA	BBVA, S.A.	11/2007		1,450,000		647,412
BBVA RMBS 4 FTA	BBVA, S.A.	11/2007		4,900,000		3,880,534
BBVA-7 FTGENCAT FTA	BBVA, S.A.	02/2008		250,000		137,508
BBVA CONSUMO 3 FTA	BBVA, S.A.	04/2008		975,000		220,462
BBVA CONSUMO 3 FTA	FINANZIA BANCO DE CREDITO, S.A.	04/2008		975,000		496,468
BBVA RMBS 5 FTA	BBVA, S.A.	05/2008		5,000,000		4,376,918
BBVA-8 FTPYME FTA	BBVA, S.A.	07/2008		1,100,000		739,428
BBVA RMBS 6 FTA	BBVA, S.A.	11/2008		4,995,000		4,490,079
BBVA RMBS 7 FTA	BBVA, S.A.	11/2008		8,500,000		7,356,542
BBVA EMPRESAS 2 FTA	BBVA, S.A.	03/2009		2,850,000		2,268,925
BBVA RMBS 8 FTA	BBVA, S.A.	07/2009		1,220,000		1,180,921
BBVA CONSUMO 4 FTA	FINANZIA BANCO DE CREDITO, S.A.	12/2009		1,100,000		672,158
BBVA CONSUMO 4 FTA	BBVA, S.A.	12/2009		1,100,000		411,871
BBVA EMPRESAS 3 FTA	BBVA, S.A.	12/2009		2,600,000		2,585,140
2 PS Interamericana	BBVA CHILE	09/2004		17,590		6,251
	BBVA SDAD. LEASING
2 PS Interamericana	HABITACIONAL BHIF	09/2004		11,828		9,044
	BBVA SDAD. LEASING
2 PS RBS (ex ABN)	HABITACIONAL BHIF	09/2001		7,690		5,619
4 PS Itau	FORUM SERVICIOS FINANCIEROS (*)	09/2006		11,885		1,884
23 PS BICE	FORUM SERVICIOS FINANCIEROS (*)	02/2006		11,864		805
FannieMae — Lender No. 227300000	COMPASS BANK	12/2001		170,773		24,192
FannieMae — Lender No. 227300027	COMPASS BANK	12/2003		259,111		96,237
Mortgages — LLC 2004-R1	COMPASS BANK	03/2004		410,222		98,975
PEP80040F110	BBVA BANCO CONTINENTAL	12/2007		17,354		10,846
BACOMCB 07	BANCOMER	12/2007		139,706		106,115
BACOMCB 08	BANCOMER	03/2008		61,025		48,064
BACOMCB 08U	BANCOMER	08/2008		301,002		229,222
BACOMCB08-2	BANCOMER	12/2008		307,759		261,996
BACOMCB 09,09-2,09-3	BANCOMER	08/2009		345,889		308,199
CBBACOM09-4, 09U	BANCOMER	12/2009		85,178		85,178
BBVA UNIVERSALIDAD E9	BBVA COLOMBIA	12/2008		47,871		36,701
BBVA UNIVERSALIDAD E10	BBVA COLOMBIA	03/2009		25,246		20,443
BBVA UNIVERSALIDAD E11	BBVA COLOMBIA	05/2009		16,666		14,182
BBVA UNIVERSALIDAD E12	BBVA COLOMBIA	08/2009		26,773		23,326
TOTAL				71,110,003		45,906,484

(*) Proportionate consolidation method

VII-1

APPENDIX VIII. Reconciliation of the consolidated financial statements for the year 2007
prepared in accordance with the models of Bank of Spain Circular 6/2008 with respect to those
prepared in accordance with Bank of Spain Circular 4/2004.

The Group’s consolidated financial statements for 2007, which are presented for comparison purposes in these annual consolidated financial statements, have been modified with respect to those originally prepared by the Group at the time in accordance with the model used in the consolidated financial statements for 2007, in order to adapt them to the disclosure and presentation requirements set out in the Bank of Spain Circular 6/2008. This change in format has no effect on the equity or on profit attributed to the Group.

The main differences between the two models of financial statements are as follows:

•  Consolidated balance sheet:  Compared with the consolidated balance sheet forming part of the consolidated financial statements as at December 31, 2007, the balance sheet included in these accompanying consolidated financial statements presents the following differences:

•  Under the heading “Tangible assets — Tangible fixed assets”, twosub-headings: “Tangible assets — For own use” and “Tangible assets — Other assets leased out under an operating lease”. These are included in the asset side of the consolidated balance sheet forming part of the Group’s consolidated financial statements for 2007.

•  Under “Loans and advances to credit institutions” and “Loans and advances to customers,” it includes all the amounts previously classified in under “Other financial assets” in the heading “Loans and receivables” in the asset side of consolidated balance sheet forming part of the Group’s consolidated financial statements for 2007.

•  It includes the heading “Other assets — Other,” which combines the items “Prepayments” and “Other assets” presented in the asset side of consolidated balance sheet forming part of the Group’s consolidated financial statements for 2007.

•  It includes on the liability side of the balance sheet “Other liabilities”, which combines the “Accrued expenses” and “Other liabilities” headings included on the consolidated balance sheet forming part of the annual financial statements at December 31, 2007.

•  Consolidated income statement:  With respect to the form of consolidated income statement used in the consolidated financial statements at December 31, 2007, the consolidated income statement presented in these consolidated financial statements presents the following differences:

It does not include “Intermediation margin”, but introduces a new margin called “Net interest income” representing the difference between “Interest and similar income” and “Interest expense and similar charges”. Both “Interest and similar income” and “Interest expense and similar charges” include income and expenses of this nature arising from the insurance business and non-financial activities.

As explained in the previous paragraph dealing with “Interest and similar income” and “Interest expense and similar charges”, income and expense arising on the Group’s insurance activities are no longer offset. Rather, they are now recognized in the corresponding income or expense captions of the consolidated income statement, with the resulting effect on each of the margins and on the captions comprising that statement.

It includes a new margin called “Gross income”. “Ordinary margin” is no longer included. This new “Gross income” is similar to the previous “Ordinary margin” except for the fact that it includes other operating income and expense which previously did not form part of the ordinary margin. In addition, the new model includes interest income and charges arising on non-financial activities and comprises other items previously recognized under “Other gains” and “Other losses”.

It eliminates the captions “Sales and income from the provision of non-financial services” and “Sales cost” from the consolidated income statement. These amounts are now recognized primarily under “Other operating income” and “Other operating expenses,” respectively, in the consolidated income statement.

VIII-1

“Personnel costs” and “General and administrative expenses” include amounts previously recognized under “Other gains” and “Other losses” in the earlier model.

“Impairment losses (net)” is now presented as two headings: “Impairment on financial assets (net)”, which comprises net impairment on financial assets other than equity instruments classified as shareholdings; and “Impairment losses on other assets (net)”, which includes net impairment losses on equity instruments classified as shareholdings and on non-financial assets.

It eliminates the headings “Financial income from non-financial activities” and “Financial expense on non-financial activities.” These amounts are now recognized under “Interest and similar income” and “Interest expense and similar charges,” respectively, in the consolidated income statement.

It eliminates “Operating margin” and creates “Net operating income.” These measures of profit differ, basically, in that the latter includes the financial interest income and expense arising on the Group’s non-financial activity, net impairment losses on financial instruments and net provisions, as well as the amounts previously recognized under “Other gains” and “Other losses” in the earlier statement format.

It does not include “Other gains” and “Other losses,” Instead it includes the following new headings: “Gains/(losses) on derecognized assets not classified as non-current assets held for sale,” “Negative goodwill” and “Gains/(losses)on non-current assets held for sale not classified as discontinued operations” which comprise, basically, the captions that previously formed part of the two eliminated headings mentioned above.

VIII-2

Below is a reconciliation between the consolidated income statement for 2007, prepared by the Group in accordance with the model of the Bank of Spain Circular 4/2004 and the model of the Bank of Spain Circular 6/2008.

Income Statement in Accordance										Income Statement in Accordance
With Bank of Spain Circular 4/2004	2007			Reconciliation			2007			With Bank of Spain Circular 6/2008
INTEREST AND SIMILAR INCOME LESS INTEREST EXPENSE AND SIMILAR CHARGES		9,422			206
								9,628		NET INTEREST INCOME
INCOME FROM EQUITY INSTRUMENTS		348			—			348		INCOME FROM EQUITY INSTRUMENTS
NET INTEREST INCOME		9,769						9,976
SHARE OR PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD		242			—			242		INCOME BY EQUITY METHOD
NET FEE INCOME		4,723			(164	)		4,559		NET FEE INCOME
INSURANCE ACTIVITY INCOME		729			(729	)
GAINS OR LOSSES ON FINANCIAL ASSETS AND LIABILITIES AND EXCHANGE DIFFERENCES (NET)		2,670			(714	)		1,956		INCOME FROM INSURANCE ACTIVITIES (NET) AND EXCHANGE DIFFERENCES (NET)
					538			538		OTHER OPERATING INCOME AND EXPENSES (NET)
GROSS INCOME		18,133			(862	)		17,271		GROSS INCOME
COST OF SALES (NET)		188			(188	)
ADMINISTRATION COST		(7,053	)		(200	)		(7,253	)	ADMINISTRATION COST
AMORTISATION		(577	)		—			(577	)	AMORTISATION
OTHER OPERATING INCOME (NET)		(146	)		146
								9,441
					(1,903	)		(1,903	)	IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)
					(235	)		(235	)	PROVISION EXPENSE (NET)
NET OPERATING INCOME		10,544			(3,241	)		7,303		OPERATING INCOME
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)		(1,938	)		1,925			(13	)	IMPAIRMENT LOSSES OF REST ASSETS (NET)
PROVISION EXPENSE (NET)		(210	)		210
FINANCIAL INCOME AND EXPENSES FROM NON-FINANCIAL ACTIVITIES		1			(1	)
OTHER GAINS AND LOSSES (NET)		97			(97	)
					13			13		GAINS (LOSSES) IN WRITTEN OFF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE
					—			—		NEGATIVE GOODWILL
					1,191			1,191		GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS
INCOME BEFORE TAX		8,495			—			8,495		INCOME BEFORE TAX
INCOME TAX		(2,080	)		—			(2,080	)	INCOME TAX
INCOME FROM ORDINARY ACTIVITIES		6,415			—			6,415		INCOME FROM ORDINARY ACTIVITIES
INCOME FROM DISCONTINUED OPERATIONS (NET)		—			—			—		INCOME FROM DISCONTINUED OPERATIONS (NET)
INCOME FOR THE YEAR (+/-)		6,415			—			6,415		CONSOLIDATED INCOME FOR THE YEAR
INCOME ATRIBUTED TO MINORITY INTEREST		(289	)		—			(289	)	INCOME ATRIBUTED TO MINORITY INTEREST
INCOME ATRIBUTED TO THE GROUP		6,126			—			6,126		INCOME ATRIBUTED TO THE GROUP

VIII-3

•  Consolidated statement of recognized income and expense and consolidated statement of total changes in equity:

The consolidated statement of changes in equity and the comprehensive statement of changes in consolidated equity: The “Statement of changes in consolidated equity” and the details of changes in consolidated equity broken down in notes in the consolidated financial statements of the Group as at December 31, 2007 have been replaced by the consolidated statement of recognized income and expense and the comprehensive income statement, respectively, which are included in the consolidated financial statements and present, basically, the following significant differences:

•  The comprehensive income statement and the consolidated statement of recognized income and expense presented in these consolidated financial statements should be understood as the two parts of the former consolidated statement of changes in equity and replace the aforementioned statements presented in the statutory financial statements for 2007. The statement of recognized income and expense does not include “Other financial liabilities at fair value” and the related balance is recognized under “Other recognized income and expense”.

•  The statement of recognized income and expense includes “Actuarial gains/(losses) on pension plans”, for the recognition of changes in equity resulting from the recording of such actuarial gains and losses, if appropriate, against reserves; “Entities accounted for using the equity method”, which includes the changes in consolidated equity valuation adjustments arising from the application of the equity method to associates and jointly controlled entities; and “Other recognized income and expense”, for the recognition of the items recognized as consolidated equity valuation adjustments and not included in any other specific line item in this statement.

•  The statement of recognized income and expense includes the line item “Income tax” for the recognition of the tax effect of the items recognized directly in equity, except for “Entities accounted for using the equity method”, which is presented net of the related tax effect. Accordingly, each item recognized in equity valuation adjustments is recognized gross.

•  All the items recognized as valuation adjustments in the format of the consolidated statement of changes in equity included in the consolidated financial statements for 2007 were presented net of the related tax effect.

•  The consolidated statement of recognized income and expense no longer includes the effect on equity of changes in accounting policies or of errors allocable to prior years.

Consolidated cash flow statement:  The format of consolidated cash flow statement included in these consolidated financial statements contains, at the end of the statement, a detail of the items composing cash and cash equivalents, which was not included in the consolidated cash flow statement presented in the Group’s consolidated financial statements for the year ended 31 December 2007. Also, certain disclosures relating to certain operating assets and liabilities, adjustments to profit or loss and cash flows from financing activities are eliminated; the wording and disclosures relating to certain items which compose the cash flows from investing activities are changed.

VIII-4

APPENDIX IX. CONSOLIDATED BALANCE SHEETS HELD IN FOREIGN CURRENCIES AS AT DECEMBER 31, 2009, 2008 AND 2007

			Mexican		Other Foreign
2009	USD		Pesos		Currencies		Total
			Millions of euros
Assets -		78,113		55,497		44,661		178,271
Cash and balances with Central Banks		3,198		5,469		4,278		12,945
Financial assets held for trading		2,607		12,121		2,459		17,187
Available-for-sale financial assets		8,451		7,277		5,227		20,955
Loans and receivables		59,400		27,618		27,953		114,971
Investments in entities accounted for using the equity method		5		112		2,328		2,445
Tangible assets		753		777		653		2,183
Other		3,699		2,123		1,763		7,585
Liabilities-		123,678		50,123		46,305		220,106
Financial liabilities held for trading		893		2,507		968		4,368
Financial liabilities at amortised cost		121,735		43,300		42,502		207,537
Other		1,050		4,316		2,835		8,201

			Mexican		Other Foreign
2008	USD		Pesos		Currencies		Total
			Millions of euros
Assets -		86,074		52,819		42,215		181,108
Cash and balances with Central Banks		2,788		5,179		3,612		11,579
Financial assets held for trading		4,137		13,184		3,003		20,324
Available-for-sale financial assets		10,321		5,613		4,846		20,780
Loans and receivables		65,928		26,168		28,072		120,168
Investments in entities accounted for using the equity method		5		103		481		589
Tangible assets		802		729		485		2,016
Other		2,093		1,843		1,716		5,652
Liabilities-		119,107		50,103		45,719		214,929
Financial liabilities held for trading		1,192		3,919		1,057		6,168
Financial liabilities at amortised cost		116,910		42,288		42,097		201,295
Other		1,005		3,896		2,565		7,466

			Mexican		Other Foreign
2007	USD		Pesos		Currencies		Total
			Millions of euros
Assets -		73,296		58,449		37,238		168,983
Cash and balances with Central Banks		1,785		5,459		2,853		10,097
Financial assets held for trading		5,963		20,203		2,395		28,561
Available-for-sale financial assets		10,477		5,227		5,455		21,159
Loans and receivables		52,311		26,436		24,240		102,987
Investments in entities accounted for using the equity method		5		72		446		523
Tangible assets		737		823		466		2,026
Other		2,018		229		1,383		3,630
Liabilities-		95,939		53,021		40,723		189,683
Financial liabilities held for trading		1,441		18		434		1,893
Financial liabilities at amortised cost		93,835		49,647		38,129		181,611
Other		663		3,356		2,160		6,179

IX-1

APPENDIX X. Details of the most significant outstanding subordinated debt and preferred
securities issued by the Bank or entities in the Group consolidated as of December 31, 2009, 2008
and 2007

Issuer		2009		2008		2007
		Millions of euros
ISSUES IN EUROS
BBVA
july-96	EUR		27		27		27	9.37	%	22-dic-16
july-03	EUR		—		—		600	4.32	%	17-jul-13
november-03	EUR		750		750		750	4.50	%	12-nov-15
octuber-04	EUR		992		992		992	4.37	%	20-oct-19
february-07	EUR		297		297		297	4.50	%	16-feb-22
march-08	EUR		125		125		—	6.03	%	03-mar-33
july-08	EUR		100		100		—	6.20	%	04-jul-23
september-09	EUR		2,000		—		—	5.00	%	15-oct-14
BBVA CAPITAL FUNDING, LTD.(*)
october-97	EUR		—		229		229	6.00	%	24-dic-09
july-99	EUR		73		73		73	6.35	%	16-oct-15
february-00	EUR		442		497		497	6.38	%	25-feb-10
october-01	EUR		60		60		60	5.73	%	10-oct-11
october-01	EUR		40		40		40	6.08	%	10-oct-16
october-01	EUR		50		50		50	1.34	%	15-oct-16
november-01	EUR		55		55		55	1.42	%	02-nov-16
december-01	EUR		56		56		56	1.41	%	20-dic-16
BBVA SUBORDINATED CAPITAL, S.A.U.(*)
may-05	EUR		456		484		497	1.02	%	23-may-17
october-05	EUR		130		150		150	1.04	%	13-oct-20
october-05	EUR		231		250		250	0.99	%	20-oct-17
october-06	EUR		900		1,000		1,000	1.03	%	24-oct-16
april-07	EUR		700		750		750	0.97	%	03-abr-17
april-07	EUR		100		100		100	3.43	%	04-abr-22
may-08	EUR		50		50		—	4.75	%	19-may-23
july-08	EUR		20		20		—	6.11	%	22-jul-18
BBVA BANCOMER, S.A. de C.V.
may-07	EUR		560		610		596	5.00	%	17-may-17
ALTURA MARKETS A.V., S.A.
november-07	EUR		2		3		3	2.72	%	29-nov-17
ISSUES IN FOREIGN CURRENCY
BBVA PUERTO RICO, S.A.
september-04	USD		35		36		34	1.69	%	23-sep-14
september-06	USD		26		27		25	5.76	%	29-sep-16
september-06	USD		21		22		21	0.81	%	29-sep-16
BBVA GLOBAL FINANCE, LTD.(*)
december-95	USD		139		144		136	7.00	%	01-dic-25
BANCO BILBAO VIZCAYA ARGENTARIA, CHILE	CLP		336		287		283	Several		Several
BBVA BANCOMER, S.A. de C.V.
july-05	USD		241		360		340	5.00	%	22-jul-15
september-06	MXN		132		130		156	5.24	%	18-sep-14
may-07	USD		345		360		340	6.00	%	17-may-22
july-08	MXN		63		62		—	5.54	%	16-jul-18
october-08	MXN		158		156		—	5.58	%	24-sep-18
december-08	MXN		146		143		—	5.94	%	26-nov-20
january-09	MXN		2		—		—	5.94	%	26-nov-20
february-09	MXN		2		—		—	5.94	%	26-nov-20
march-09	MXN		1		—		—	5.94	%	26-nov-20
april-09	MXN		1		—		—	5.94	%	26-nov-20
june-09	MXN		138		—		—	6.23	%	07-jun-19
july-09	MXN		5		—		—	6.23	%	07-jun-19
september-09	MXN		1		—		—	6.23	%	07-jun-19

(*) The issues of BBVA Capital Funding, Ltd., BBVA Subordinated Capital, S.A.U. and BBVA Global Finance, LTD. are guaranteed (secondary liability) by the Bank.

X-1

Issuer		2009		2008		2007
		Millions of euros
BBVA CAPITAL FUNDING, LTD.
october-95	JPY		75		79		60	6.00	%	26-oct-15
BBVA SUBORDINATED CAPITAL, S.A.U
october-05	JPY		150		159		122	2.75	%	22-oct-35
october-05	GBP		277		315		409	0.79	%	21-oct-15
march-06	GBP		325		315		409	5.00	%	31-mar-16
march-07	GBP		282		262		343	5.75	%	11-mar-18
RIVERWAY HOLDING CAPITAL TRUST I
march-01	USD		7		7		7	10.18	%	08-jun-31
TEXAS REGIONAL STATUTORY TRUST I
february-04	USD		35		36		34	3.10	%	17-mar-34
COMPASS BANCSHARES INC
july-01	USD		—		—		2	10.18	%	31-jul-31
STATE NATIONAL CAPITAL TRUST I
july-03	USD		10		11		10	3.30	%	30-sep-33
STATE NATIONAL STATUTORY TRUST II
march-04	USD		7		7		7	3.04	%	17-mar-34
TEXASBANC CAPITAL TRUST I
july-04	USD		17		18		17	2.88	%	23-jul-34
COMPASS BANK
august-99	USD		—		128		124	8.10	%	15-ago-09
april-99	USD		—		72		69	6.45	%	01-may-09
march-05	USD		195		201		188	5.50	%	01-abr-20
march-06	USD		180		186		175	5.90	%	01-abr-26
sep-07	USD		242		250		236	6.40	%	01-oct-17
BBVA COLOMBIA, S.A.
august-06	COP		136		128		135	7.69	%	28-ago-11
BBVA PARAGUAY, S.A.
Several	PYG		2		2		—	Several		Several
Several	USD		6		6		—	Several		Several
BANCO CONTINENTAL, S.A.
december-06	USD		21		22		20	2.10	%	15-feb-17
may-07	PEN		10		9		9	5.85	%	07-may-22
may-07	USD		14		14		14	6.00	%	14-may-27
june-07	PEN		14		14		12	3.47	%	18-jun-32
september-07	USD		14		14		14	1.82	%	24-sep-17
november-07	PEN		13		12		11	3.56	%	19-nov-32
february-08	USD		14		14		—	6.47	%	28-feb-28
june-08	USD		21		22		—	3.11	%	15-jun-18
july-08	PEN		11		11		—	3.06	%	08-jul-23
september-08	PEN		12		12		—	3.09	%	09-sep-23
november-08	USD		14		14		—	3.15	%	15-feb-19
december-08	PEN		7		7		—	4.19	%	15-dic-33
TOTAL			12,117		10,785		10,834

X-2

	2009				2008				2007
			Amount				Amount				Amount
Preferred Securities	Currency		Issued		Currency		Issued		Currency		Issued
BBVA International, Ltd.
December 2002		EUR		500		EUR		500		EUR		500
BBVA Capital Finance, S.A.U
December 2003		EUR		350		EUR		350		EUR		350
July 2004		EUR		500		EUR		500		EUR		500
December 2004		EUR		1,125		EUR		1,125		EUR		1,125
December 2008		EUR		1,000		EUR		1,000		—		—
BBVA International Preferred, S.A.U
September 2005		EUR		85		EUR		550		EUR		550
September 2006		EUR		164		EUR		500		EUR		500
April 2007		USD		600		USD		600		USD		600
July 2007		GBP		31		GBP		400		GBP		400
October 2009		EUR		645		—		—		—		—
October 2009		GBP		251		—		—		—		—
Banco Provincial, S.A. — Banco Universal
October 2007		VEF		150		BS		150		BS		150
November 2007		VEF		58		BS		58		BS		58
Phoenix Loan Holdings Inc.
January 2008		USD		25		USD		21		—		—

X-3

APPENDIX XI. Consolidated income statements for the first and second half of 2009 and 2008.

	Six Months Ended			Six Months Ended			Six Months Ended			Six Months Ended
	June 30, 2009			December 31, 2009			June 30, 2008			December 31, 2008
	Millions of euros
INTEREST AND SIMILAR INCOME		12,911			10,864			14,782			15,622
INTEREST AND SIMILAR EXPENSES		(6,053	)		(3,840	)		(9,227	)		(9,491	)
NET INTEREST INCOME		6,858			7,024			5,555			6,131
DIVIDEND INCOME		248			195			241			206
SHARE OF PROFIT OR LOSS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD		27			93			173			119
FEE AND COMMISSION INCOME		2,638			2,667			2,778			2,762
FEE AND COMMISSION EXPENSES		(457	)		(418	)		(493	)		(518	)
NET GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES		446			446			1,017			310
NET EXCHANGE DIFFERENCES		352			300			142			89
OTHER OPERATING INCOME		1,755			1,645			1,931			1,628
OTHER OPERATING EXPENSES		(1,487	)		(1,666	)		(1,718	)		(1,375	)
GROSS INCOME		10,380			10,286			9,626			9,352
ADMINISTRATION COSTS		(3,734	)		(3,928	)		(3,816	)		(3,940	)
Personnel expenses		(2,291	)		(2,360	)		(2,343	)		(2,373	)
General and administrative expenses		(1,443	)		(1,568	)		(1,473	)		(1,567	)
DEPRECIATION AND AMORTIZATION		(354	)		(343	)		(338	)		(361	)
PROVISIONS (NET)		(152	)		(306	)		(612	)		(819	)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (NET)		(1,945	)		(3,528	)		(1,164	)		(1,777	)
NET OPERATING INCOME		4,195			2,181			3,696			2,455
IMPAIRMENT LOSSES ON OTHERASSETS (NET)		(271	)		(1,347	)		(6	)		(39	)
GAINS (LOSSES) ON DERECOGNIZED ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE		9			11			21			51
NEGATIVE GOODWILL		—			99			—			—
GAINS (LOSSES) IN NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS		70			789			779			(31	)
INCOME BEFORE TAX		4,003			1,733			4,490			2,436
INCOME TAX		(961	)		(180	)		(1,213	)		(328	)
PRIOR YEAR INCOME FROM CONTINUING TRANSACTIONS		3,042			1,553			3,277			2,108
INCOME FROM DISCONTINUED TRANSACTIONS (NET)		—			—			0			0
NET INCOME		3,042			1,553			3,277			2,108
Net Income attributed to parent company		2,799			1,411			3,108			1,911
Net income attributed to non-controlling interests		243			142			169			197

	Six Months Ended		Six Months Ended		Six Months Ended		Six Months Ended
	June 30, 2009		December 31, 2009		June 30, 2008		December 31, 2008
EARNINGS PER SHARE
Basic earnings per share		0.76		0.36		0.84		0.51
Diluted earnings per share		0.76		0.36		0.84		0.51

XI-1

APPENDIX XII. GLOSSARY

Adjusted acquisition cost	The acquisition cost of the securities less accumulated amortizations, plus interest accrued, but not net of any other valuation adjustments.
Amortized cost	The amortized cost of a financial asset is the amount at which it was measured at initial recognition minus principal repayments, plus or minus, as warranted, the cumulative amount taken to profit or loss using the effective interest rate method of any difference between the initial amount and the maturity amount, and minus any reduction for impairment or change in measured value.
Assets leased out under operating lease	Lease arrangements that are not finance leases are designated operating leases.
Associates	Companies in which the Group is able to exercise significant influence, without having control. Significant influence is deemed to exist when the Group owns 20% or more of the voting rights of an investee directly or indirectly.
Available-for-sale financial assets	Available-for-sale (AFS) financial assets are debt securities that are not classified as held-to-maturity investments or as financial assets designated at fair value through profit or loss (FVTPL) and equity instruments that are not subsidiaries, associates or jointly controlled entities and have not been designated as at FVTPL.
Basic earnings per share	Calculated by dividing profit or loss attributed to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period
Business combination	The merger of two or more entities or independent businesses into a single entity or group of entities.
Cash flow hedges	Derivatives that hedge the exposure to variability in cash flows attributed to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction and could effect profit or loss.
	Income and expenses relating to commissions and similar fees are recognized in the consolidated income statement using criteria that vary according to their nature. The most significant income and expense items in this connection are:
Commissions and fees	•   Feed and commissions relating linked to financial assets and liabilities measured at fair value through profit or loss, which are recognized when collected.
	•   Fees and commissions arising from transactions or services that are provided over a period of time, which are recognized over the life of these transactions or services.
	•   Fees and commissions generated by a single act are accrued upon execution of that act.
Contingencies	Current obligations arising as a result of past events, certain in terms of nature at the balance sheet date but uncertain in terms of amount and/or cancellation date, settlement of which is deemed likely to entail an outflow of resources embodying economic benefits.
Contingent commitments	Possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

XII-1

Contingent risks	Transactions through which the entity guarantees commitments assumed by third parties in respect of financial guarantees granted or other types of contracts.
Current tax assets	Taxes recoverable over the next twelve months.
Current tax liabilities	Corporate income tax payable on taxable profit for the year and other taxes payable in the next twelve months.
Debt obligations/certificates	Obligations and other interest-bearing securities that create or evidence a debt on the part of their issuer, including debt securities issued for trading among an open group of investors, that accrue interest, implied or explicit, whose rate, fixed or benchmarked to other rates, is established contractually, and take the form of securities or book-entries, irrespective of the issuer.
Deferred tax assets	Taxes recoverable in future years, including loss carryforwards or tax credits for deductions and tax rebates pending application.
Deferred tax liabilities	Income taxes payable in subsequent years.
Defined benefit commitments	Post-employment obligation under which the entity, directly or indirectly via the plan, retains the contractual or implicit obligation to pay remuneration directly to employees when required or to pay additional amounts if the insurer, or other entity required to pay, does not cover all the benefits relating to the services rendered by the employees when insurance policies do not cover all of the corresponding post-employees benefits.
Defined contribution commitments	Defined contribution plans are retirement benefit plans under which amounts to be paid as retirement benefits are determined by contributions to a fund together with investment earnings thereon. The employer’s obligations in respect of its employees current and prior years’ employment service are discharged by contributions to the fund.
Deposits from central banks	Deposits of all classes, including loans and money market operations, received from the Bank of Spain and other central banks.
Deposits from credit institutions	Deposits of all classes, including loans and money market operations received, from credit entities.
Deposits from customers	Redeemable cash balances received by the entity, with the exception of debt certificates, money market operations through counterparties and subordinated liabilities, that are not received from either central banks or credit entities. This category also includes cash deposits and consignments received that can be readily withdrawn.

XII-2

Diluted earnings per share	This calculation is similar to that used to measure basic earnings per share, except that the weighted average number of shares outstanding is adjusted to reflect the potential dilutive effect of any stock options, warrants and convertible debt instruments outstanding the year. For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of dilutive warrants of the entity. The assumed proceeds from these instruments shall be regarded as having been received from the issue of ordinary shares at the average market price of ordinary shares during the period. The difference between the number of ordinary shares issued and the number of ordinary shares that would have been issued at the average market price of ordinary shares during the period shall be treated as an issue of ordinary shares for no consideration. Such shares are dilutive and are added to the number of ordinary shares outstanding in the calculation of diluted earnings per share.
Early retirements	Employees that no longer render their services to the entity but which, without being legally retired, remain entitled to make economic claims on the entity until they formally retire.
Economic capital	Eligible capital for regulatory capital adequacy calculations.
Equity	The residual interest in an entity’s assets after deducting its liabilities. It includes owner or venturer contributions to the entity, at incorporation and subsequently, unless they meet the definition of liabilities, and accumulated net profits or losses, fair value adjustments affecting equity and, if warranted, minority interests.
Equity instruments	An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity method	The equity method is a method of accounting whereby the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the investee, adjusted for dividends received and other equity eliminations.
Exchange/translation differences	Gains and losses generated by currency trading and the differences arising on translating monetary items denominated in foreign currency to the functional currency, exchange differences on foreign currency non-monetary assets accumulated in equity and taken to profit or loss when the assets are sold and gains and losses realized on the disposal of assets at entities with a functional currency other than the euro.
Fair value	The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
Fair value hedges	Derivatives that hedge the exposure of the fair value of assets and liabilities to movements in interest rates and/or exchange rates designated as a hedged risk.

XII-3

Fees	See Commissions, fees and similar items
Financial guarantees	A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument, irrespective of its instrumentation. These guarantees may take the form of deposits, technical or financial guarantees, irrevocable letters of credit issued or confirmed by the entity, insurance contracts or credit derivatives in which the entity sells credit protection, among others.
Financial liabilities at amortized cost	Financial liabilities that do not meet the definition of financial liabilities designated at fair value through profit or loss and arise from the financial entities’ ordinary activities to capture funds, regardless of their instrumentation or maturity.
Full consolidation	•   In preparing consolidated financial statements, an entity combines the balance sheets of the parent and its subsidiaries line by line by adding together like items of assets, liabilities and equity. Intragroup balances and transactions, including amounts payable and receivable, are eliminated in full.
	•   Group entity income statement income and expense headings are similarly combined line by line into the consolidated income statement, having made the following consolidation eliminations: a) income and expenses in respect of intragroup transactions are eliminated in full. b) profits and losses resulting from intragroup transactions are similarly eliminated.
	•   The carrying amount of the parent’s investment and the parent’s share of equity in each subsidiary are eliminated.
Gains or losses on financial assets and liabilities, net	This heading reflects fair value changes in financial instruments - except for changes attributed to accrued interest upon application of the interest rate method and asset impairment losses (net) recognized in the income statement - as well as gains or losses generated by their sale - except for gains or losses generated by the disposal of investments in subsidiaries, jointly controlled entities and associates an of securities classified as held to maturity.
Goodwill	Goodwill acquired in a business combination represents a payment made by the acquirer in anticipation of future economic benefits from assets that are not able to be individually identified and separately recognized.
Hedges of net investments in foreign operations	Foreign currency hedge of a net investment in a foreign operation.
Held-to-maturity investments	Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.
Held for trading (assets and liabilities)	Financial assets and liabilities acquired or incurred principally for the purpose of selling or repurchasing them in the near term with a view to profiting from variations in their prices or by exploiting existing differences between their bid and ask prices.
	This category also includes financial derivatives not qualifying for hedge accounting, and in the case of borrowed securities, financial liabilities originated by the firm sale of financial assets acquired under repurchase agreements or received on loan (“short positions”).

XII-4

Impaired/doubtful/non-performing portfolio	Financial assets whose carrying amount is higher than their recoverable value, prompting the entity to recognize the corresponding impairment loss
Impaired financial assets	A financial asset is deemed impaired, and accordingly restated to fair value, when there is objective evidence of impairment as a result of one or more events that give rise to:
	1. A measurable decrease in the estimated future cash flows since the initial recognition of those assets in the case of debt instruments (loans and receivables and debt securities).
	2. A significant or prolonged drop in fair value below cost in the case of equity instruments.
Income from equity instruments	Dividends and income on equity instruments collected or announced during the year corresponding to profits generated by investees after the ownership interest is acquired. Income is recognized gross, i.e., without deducting any withholdings made, if any.
Insurance contracts linked to pensions	The fair value of insurance contracts written to cover pension commitments.
Inventories	Assets, other than financial instruments, under production, construction or development, held for sale during the normal course of business, or to be consumed in the production process or during the rendering of services. Inventories include land and other properties held for sale at the real estate development business.
Investment properties	Investment property is property (land or a building — or part of a building — or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for own use or sale in the ordinary course of business.
Jointly controlled entities	Companies over which the entity exercises control but are not subsidiaries are designated “jointly controlled entities”. Joint control is the contractually agreed sharing of control over an economic activity or undertaking by two or more entities, or controlling parties. The controlling parties agree to share the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. It exists only when the strategic financial and operating decisions require unanimous consent of the controlling parties.
Leases	A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time, a stream of cash flows that is essentially equivalent to the combination of principal and interest payments under a loan agreement.
Liabilities associated with non-current assets held for sale	The balance of liabilities directly associated with assets classified as non-current assets held for sale, including those recognized under liabilities in the entity’s balance sheet at the balance sheet date corresponding to discontinued operations.
Liabilities under insurance contracts	The technical reserves of direct insurance and inward reinsurance recorded by the consolidated entities to cover claims arising from insurance contracts in force at period-end.

XII-5

Loans and advances to customers	Loans and receivables, irrespective of their type, granted to third parties that are not credit entities and that are not classified as money market operations through counterparties.
Loans and receivables	Financing extended to third parties, classified according to their nature, irrespective of the borrower type and the instrumentation of the financing extended, including finance lease arrangements where the consolidated subsidiaries act as lessors.
Minority interests	Minority interest is that portion of the profit or loss and net assets of a subsidiary attributed to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent, including minority interests in the profit or loss of consolidated subsidiaries for the reporting period.
Non-current assets held for sale	A non-current asset or disposal group, whose carrying amount is expected to be realized through a sale transaction, rather than through continuing use, and which meets the following requirements:
	a) it is immediately available for sale in its present condition at the balance sheet date, i.e. only normal procedures are required for the sale of the asset.
	b) the sale is considered highly probable.
Other equity instruments	This heading reflects the increase in equity resulting from various forms of owner contributions, retained earnings, restatements of the financial statements and valuation adjustments.
Other financial assets/liabilities at fair value through profit or loss	•   Assets and liabilities that are deemed hybrid financial assets and liabilities and for which the fair value of the embedded derivatives cannot be reliably determined.
	•   These are financial assets managed jointly with “Liabilities under insurance contracts” valued at fair value, in combination with derivatives written with a view to significantly mitigating exposure to changes in these contracts’ fair value, or in combination with financial liabilities and derivatives designed to significantly reduce global exposure to interest rate risk.
	These headings include customer loans and deposits effected via so-called unit-linked life insurance contracts, in which the policyholder assumes the investment risk.
Own/treasury shares	The amount of own equity instruments held by the entity.
Personnel expenses	All compensation accrued during the year in respect of personnel on the payroll, under permanent or temporary contracts, irrespective of their jobs or functions, irrespective of the concept, including the current costs of servicing pension plans, own share based compensation schemes and capitalized personnel expenses. Amounts reimbursed by the state Social Security or other welfare entities in respect of employee illness are deducted from personnel expenses.
Post-employment benefits	Retirement benefit plans are arrangements whereby an enterprise provides benefits for its employees on or after termination of service.
Property, plant and equipment/tangible assets	Buildings, land, fixtures, vehicles, computer equipment and other facilities owned by the entity or acquired under finance leases.

XII-6

Proportionate consolidation method	The venturer combines and subsequently eliminates its interests in jointly controlled entities’ balances and transactions in proportion to its ownership stake in these entities.
	The venturer combines its interest in the assets and liabilities assigned to the jointly controlled operations and the assets that are jointly controlled together with other joint venturers line by line in the consolidated balance sheet. Similarly, it combines its interest in the income and expenses originating in jointly controlled businesses line by line in the consolidated income statement.
Provisions	Provisions include amounts recognized to cover the Group’s current obligations arising as a result of past events, certain in terms of nature but uncertain in terms of amount and/or cancellation date.
Provision expenses	Provisions recognized during the year, net of recoveries on amounts provisioned in prior years, with the exception of provisions for pensions and contributions to pension funds which constitute current or interest expense.
Provisions for contingent exposures and commitments	Provisions recorded to cover exposures arising as a result of transactions through which the entity guarantees commitments assumed by third parties in respect of financial guarantees granted or other types of contracts, and provisions for contingent commitments, i.e., irrevocable commitments which may arise upon recognition of financial assets.
Provisions for pensions and similar obligation	Constitutes all provisions recognized to cover retirement benefits, including commitments assumed vis-à-vis beneficiaries of early retirement and analogous schemes.
Reserves	Accumulated net profits or losses recognized in the income statement in prior years and retained in equity upon distribution. Reserves also include the cumulative effect of adjustments recognized directly in equity as a result of the retroactive restatement of the financial statements due to changes in accounting policy and the correction of errors.
Share premium	The amount paid in by owners for issued equity at a premium to the shares’ nominal value.
Short positions	Financial liabilities arising as a result of the final sale of financial assets acquired under repurchase agreements or received on loan.
Subordinated liabilities	Financing received, regardless of its instrumentation, which ranks after the common creditors in the event of a liquidation.

XII-7

Subsidiaries	Companies which the Group has the power to control. Control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than one half of an entity’s voting power, unless, exceptionally, it can be clearly demonstrated that ownership of more than one half of an entity’s voting rights does not constitute control of it. Control also exists when the parent owns half or less of the voting power of an entity when there is:
	•   an agreement that gives the parent the right to control the votes of other shareholders;
	•   power to govern the financial and operating policies of the entity under a statute or an agreement; power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body;
	•   power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body.
Tax liabilities	All tax related liabilities except for provisions for taxes.
Trading derivatives	The fair value in favor of the entity of derivatives not designated as accounting hedges.
Value at Risk (VaR)	Value at Risk (VaR) is the basic variable for measuring and controlling the Group’s market risk. This risk metric estimates the maximum loss that may occur in a portfolio’s market positions for a particular time horizon and given confidence level
	VaR figures are estimated following two methodologies:
	•   VaR without smoothing, which awards equal weight to the daily information for the immediately preceding last two years. This is currently the official methodology for measuring market risks vis-à-vis limits compliance of the risk.
	•   VaR with smoothing, which weights more recent market information more heavily. This is a metric which supplements the previous one.
	VaR with smoothing adapts itself more swiftly to the changes in financial market conditions, whereas VaR without smoothing is, in general, a more stable metric that will tend to exceed VaR with smoothing when the markets show less volatile trends, while it will tend to be lower when they present upturns in uncertainty.

XII-8