At the end of 2005 the BBVA Group’s capital base came to €26,045m, calculated in accordance with the criteria of the Bank for International Settlements (BIS). This is 14.2% higher than at 31-Dec-04. After deducting base capital required under the above criteria (8% of risk-weighted assets) the surplus came to €8,694m (up 6.0% on 2004).

Considerable growth in business volume and the appreciation of Latin-American currencies against the euro, led to an increase in risk-weighted assets. Furthermore the acquisitions made during the year gave rise to new capital requirements. The addition to the group of Banco Granahorrar in Colombia in December generated €267m in goodwill and an increase of €721m in risk-weighted assets.

Core capital came to €12,151m, a year-on-year increase of 14.5%. This was less than the 18.7% growth in risk-weighted assets and thus the ratio is now 5.6% compared to the figure of 5.8% recorded in September 2005 and December 2004.

After adding preference shares to core capital, Tier I rose 12.9% to €16,279m. At year-end it was 7.5% of risk-weighted assets (7.8% at 30-Sep-05 and 7.9% at 31-Dec-04). As a result, preference shares fell to 25.4% of core equity at 31-Dec-05, 1 percentage point less than a year earlier.

Other eligible capital, which mainly consists of subordinate debt and revaluation reserves, was €9,766m at the end of 2005, a year-on-year increase of 16.4%. Thus Tier II was 4.5%, compared to 4.8% at 30-Sep-05 and 4.6% at 31-Dec-04. Regarding subordinated debt, the group made an early cancellation of €750m issued by BBVA Capital Funding and BBVA Subordinated Capital Finance made four new issues for institutional investors in Europe. The issues were: €250m maturing in 2017, €150m maturing in 2020, 300m British pounds in 2020 and 20 billion yen maturing in 2035.

Following this, the BIS Ratio stands at 12.0%, compared to 12.7% at 30-Sep-05 and 12.5% at 31-Dec-04.

Ratings

In the fourth quarter, BBVA’s ratings by the various agencies remained unchanged.