RESPONSIBLE FINANCE
Corporate Responsibility Report 2008
34
POLICY ON
FINANCING
THE DEFENCE
SECTOR
BBVA is one of the few
international financial
institutions with a policy on
financing the defence sector.
Since 2005 the BBVA Group
has had a specific rule on the financing of this sector.
This policy has been reviewed in 2008, with
the following modifications being made:
a) The General Framework is now called:
“Principles, Criteria and Rules of Procedure
for Defence Industry Lending Proposals”;
b) As a general policy, the BBVA Group will not
be involved in financing those operations
related to the arms trade in pursuance of the
requirements of the Group’s rule on the
financing of the defence sector;
c) The list of items involved in the operations
affected by the rule has been extended to
include cluster bombs and any weapons of
mass destruction (nuclear, chemical and/or
bacteriological);
d) The number of factors for assessing the
countries receiving the goods, used to decide
whether or not to operate with them, has
been reduced from seventeen to thirteen.
Moreover, as one of its commitments, the
BBVA Group regularly reviews this internal rule
with a view to adapting it at all times to the
criteria that inform the policy declared by local
authorities and international organisations. All
this is undertaken in keeping with the EU Code
of Conduct.
OVER-INDEB-
TEDNESS
2008 has been characterised
by economic and financial
instability, an atmosphere
of uncertainty, volatility in markets and rising
unemployment rates. All this has meant that the
spending power of both individuals and businesses
alike has been curtailed.
BBVA undertakes meticulous risk management,
analysing the capacity for repayment and all other
risks according to the precautionary principle, and
its management priorities continue to be efficiency,
credit quality, capital and liquidity.
This has meant that BBVA has managed to
moderate the rise in its default rate, which was
2.12% in 2008 due to the economic situation. This
figure is an important indicator of the prudent risk
management undertaken by BBVA. It is most
interesting to compare it with the data for 2007
(0.89%) and 2006 (0.83%).
Within an especially challenging scenario for
the financial system, which has forced the
governments of the world’s leading nations to
adopt extraordinary measures, BBVA has managed
to perform in a singularly positive manner that has
strengthened its position as regards its major
competitors.
BBVA is aware of the difficulties faced by some
customers as a result of the current economic
situation. The Bank therefore wishes to accompany
anybody, who, in a viable context, may require,
occasionally and as an extraordinary measure,
satisfactory solutions for both parties involving the
renegotiation of terms, the extension of interestfree
periods, flexibility in payments, etc.
Furthermore, this year BBVA has launched a
generous range of financial solutions to help
private customers and the self-employed to deal
with the current situation. (More details are
available in the chapter “Responsible Products
and Services”).
BBVA GROUP
PRESENCE IN
OFFSHORE
FINANCIAL
CENTRES
The BBVA Group shares the
approach taken by the Bank
of Spain (see the Report on
Banking Supervision in Spain,
2003) regarding the risks to
their reputation that financial
institutions may be exposed to in the pursuit of
their strategies if they do not consider the
implications arising from the location of their
businesses and the nature of the operations
pursued. Accordingly, in 2004 the BBVA Group
expressly outlined its policy on the operations of
establishments permanently domiciled in offshore
financial centres. In the wake of this statement,
the Group drew up an action plan to reduce the
number of financial centres of this type in which
BBVA operates (see Corporate Social
Responsibility Report 2004).
In addition to its policies on customer
admission and knowledge, the BBVA Group
pursues its operations and business in such
jurisdictions in strict compliance with current
legislation. For BBVA, its reputation is a strategic
objective, which means that the management of
the risks that may affect it requires priority
attention.
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