Mexico, Chile, Peru and the dollar area. Its aggregate
hedging was close to 30%. In addition to this
corporate-level hedging, dollar positions are held at a
local level by some of the subsidiary banks. The Group
also hedges its foreign exchange exposure on expected
2010 results in the Americas. In the first three months
of this year, the favorable performance of most of the
currencies in the Americas has had a positive effect on
the Group’s equity and income statement, although the
devaluation of the Venezuelan bolivar in January has
meant that the final effect is practically neutral in
earnings and slightly positive in the balance sheet and
business of the Group. For the rest of 2010, the same
prudent and proactive policy will be pursued in
managing the Group’s foreign exchange exposure.
The unit also actively manages the structural
interest-rate exposure on the Group’s balance sheet.
This keeps the performance of short and medium-term
net interest income more uniform by cutting out
interest-rate fluctuations. In the first quarter the results
of this management have been highly satisfactory.
Strategies had been implemented to provide a hedge
against a less positive economic outlook in Europe for
the whole of 2010, while the risk on the balance sheets
in the United States and Mexico are limited. These
strategies are managed both with hedging derivatives
(caps, floors, swaps, FRAs) and with balance-sheet
instruments (mainly government bonds with the highest
credit and liquidity ratings). At the close of March the
Group held asset portfolios denominated in euros, U.S.
dollars and Mexican pesos.
HOLDINGS IN INDUSTRIAL AND FINANCIAL
COMPANIES
This unit is responsible for managing the portfolio of
industrial and financial investments in companies
operating in the telecommunications, media, electricity,
oil, gas and financial sectors. Like Asset/Liability
Management, this unit lies within the Group’s Finance
Division.
BBVA applies strict requirements to this portfolio
regarding risk-control procedures, economic capital
consumption and return on investment, diversifying
investments across different sectors. It also applies
dynamic hedging management strategies to holdings. In
the first quarter of the year it invested €126m and
divested €87m.
As of 31-Mar-10, the market value of the portfolio of
the unit of Holdings in Industrial & Financial
Companies portfolio was €4,416m, with unrealized
capital gains of €1,205m.
REAL ESTATE MANAGEMENT
Given the current economic conditions and the future
outlook, BBVA has created a Real Estate Management
unit to provide specialized management of the real estate
assets it has acquired from foreclosures, exchanges as
repayment of debt, purchases from distressed customers
and the assets in BBVA Propiedad, the real estate fund.
| 1Q10 |
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