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At the close of the second quarter core capital stands at €11.49 billion, which is a year-on-year increase of 8.0%. This is lower than the 10.3% increase in risk-weighted assets and the ratio is 5.8% compared to 6.0% at 31-Mar-05. The decline is due to the incorporation of Laredo National Bancshares which joined the group in May. The incorporation of this bank generated €434m in goodwill and increased risk-weighted assets by €1.21 billion. Without the acquisition of Laredo, core capital would be 6.1%. Tier I is 7.7% after the early amortisation of €256m in preference shares on 20-Apr-05 (April 1998 with a fixed coupon of 6.35%). As a result the ratio of preference shares to core equity fell to 23.7% at 30-Jun-05, compared to 25.8% at 30-Jun-04. Other eligible capital mainly includes subordinated debt and revaluation reserves. It comes to €9.05 billion and thus Tier II is 4.6%. On 23-May-05 BBVA issued €500m of subordinated debt to institutional investors, which matures in May 2017. The BIS ratio stands at 12.2% (12.5% ex-Laredo), compared to 12.5% in March 2005 and 12.0% in June 2004. On 29-Mar-05, BBVA announced that its board had approved a share buyback programme of up to 3.5% of capital stock at a price not greater than €14.5 per share up to 30-Sep-05. The purpose of this programme was to reduce capital at the end of the programme by amortising any treasury stock at that date, in accordance with CE Regulation 2273/2003. The balance of this programme at 30-Jun-05 was the repurchase of 14.3m shares, which represent 0.4% of capital stock.
Ratings
During the second quarter meetings were held in connection with the annual review of BBVA’s ratings. All agencies confirmed their ratings for the bank.
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