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BBVA charges against results 1.123 billion for the depreciation of its participation in Telefónica

The bank claims that it maintains a share in the telecommunications company above 5%

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BBVA charges against results 1.123 billion for the depreciation of its participation in Telefónica

The BBVA group reported on night of Tuesday 9 January that "as a result of evolution of Telefonica's quotation, at 31st December 2017 handicaps in this portfolio amounted to 1.123 billion euros". The entity presided by Francisco Gonzalez says that it maintains a share in capital of Telefónica "more than 5% that is registered in accounting category of financial assets available for sale". BBVA has a 6.96% stake in Telefónica since July 2006, according to CNMV's records.

At 30 June 2017, latent handicaps of that share amounted to 880 million euros and were registered by reducing group's net worth. However, poor evolution of Telefónica on stock market in second half of year has increased handicaps to 1.123 billion. In last six months, Telefónica's shares have fallen by 7.3%.

In relevant event sent this Tuesday evening to CNMV, bank explains that "at end of year 2017, pursuant to Accounting regulations IAS 39, as described in intermediate financial statements consolidated to 30 June 2017 , it is considered that se handicaps should be recorded with charge to results. "

The bank also reports that this negative impact of 1.123 billion euros "will be reflected in consolidated result attributed to BBVA group in consolidated annual accounts for year 2017 that will be submitted to governing body for its formulation".

More information
  • BBVA sells to Cerberus part of its real estate business for 4 billion
  • BBVA agreed to sell its Chilean subsidiary to Scotiabank for 1.85 billion
It will not affect heritage or dividend

Finally, it ensures that handicap "would not affect neir net worth or CET1 of BBVA group", technical name of highest quality capital, "since latent handicaps are already deduced from m. Nor would it mean a cash out or a change in amount of dividend payment that is expected to be proposed to board of directors. "

On Tuesday 9, BBVA closed in stock with a rise of 0.37%, up to 7.262 euros, while Telefónica finished session at 8.373 euros, with a rise of 0.04%.

Until September 2017, BBVA obtained a net profit of 3.449 billion, 23.3% more than in same period of 2016. That is to say: The entity won in 2017 in nine months practically same as in 12 months of 2016.

On 29 November last, BBVA announced sale to Cerberus 64% of its real estate business for about 4 billion in second half of 2018. The bank said not to expect great benefits with operation, but if a slight increase in capital. The entity was disposed of a real estate portfolio that in 2016 was a loss of about 600 million. In addition, new International Accounting regulations would force it to raise provisions on se assets. The operation came one day after sale of 68.2% of BBVA Chile to Bank of Nova Scotia (Scotiabank), for 1.85 billion euros.


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