BUSINESS AREAS
Information by area represents a basic tool in the
management of the BBVA Group’s various businesses. In this
section we discuss the more significant aspects of the activities
and earnings of the Group’s five business areas, along with
those of the main units within each, plus Corporate Activities.
Specifically, it includes the income statement, the balance sheet
and a set of relevant management indicators: the loan book,
deposits, off-balance sheet funds, ROE, efficiency,
non-performing assets and coverage.
In 2010, certain changes were made in the criteria applied in
2009 in terms of the composition of some of the different
business areas. These changes affected:
The United States and Wholesale Banking & Asset
Management: in order to give a global view of the Group’s
business in the United States, we decided to include the
New York office, formerly in WB&AM, in the United
States area. This change is consistent with BBVA’s current
method of reporting its business units.
South America. The adjustment for the hyperinflation will
be included in 2010 in the accounting statements for
Banco Provincial (Venezuela); this will also be carried out
for the 2009 statements to make them comparable. At
year-end 2009, said impact was included under Corporate
Activities.
Likewise, a modification has been made in the allocation of
certain costs from the corporate headquarters to the business
areas that affect rent expenses and sales of IT services, though
to a lesser extent. This has meant that the data for 2009 has
been reworked to ensure that the different years are
comparable.
The configuration of the business areas and their composition
are as follows:
Spain and Portugal, which includes: the Retail Banking
network in Spain, including the segments of private
individual customers, private banking and small business
and retail banking in the domestic market; Corporate and
Business Banking, which handles the needs of the SMEs,
corporations, government and developers in the domestic
market; and all other units, among which are Consumer
Finance, BBVA Seguros and BBVA Portugal.
Mexico: includes the banking, pensions and insurance
businesses in the country.
United States: encompasses the Group’s business in the
United States and in the Commonwealth of Puerto Rico.
South America: includes the banking, pensions and
insurance businesses in South America.
Wholesale Banking & Asset Management, composed of:
Corporate and Investment Banking (including the activities
of the European and Asian offices with large corporate
customers); global markets (trading floor business and
distribution in Europe and Asia); asset management
(mutual and pension funds in Spain); the Group’s own long
maturing equity portfolios and private equity activities
(Valanza S.C.R); and Asia (through the Group’s holding in
the CITIC group). Additionally, WB&AM is also present in
the above businesses in Mexico, South America and the
United States, but its activity and results are included in
these business areas for the purposes of this report.
As well as the units indicated, all the areas also have
allocations of other businesses that include eliminations and
other items not assigned to the units.
Finally, the area of 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 recorded
in the corresponding business areas. It also includes the
Industrial and Financial Holdings unit and the Group’s
non-international real estate businesses.
Furthermore, as usual in the case of the Latin America units,
both constant exchange rates and year-on-year current
exchange variation rates have been applied.
The Group compiles reporting information on as
disaggregated a level as possible, and all data relating to the
businesses these units manage is recorded in full. These basic
units are then aggregated in accordance with the
organizational structure established by the Group at higher
level units and, finally, the business segments themselves.
Similarly, all the companies making up the Group are also
assigned to the different units according to their activity.
Once the composition of each business area has been defined,
certain management criteria are applied, of which the
following are particularly important:
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