The BCP assessment was conducted by Messrs. Jorge Cayazzo (MFD) and Saul Carpio (U.S. Office of the Comptroller of the Currency). The assessment took place from June 22 to July 1, 2005.
For purposes of this report the term banking system is generally used to denote commercial banks, saving banks (cajas), and credit cooperatives.
BSCH is the result of the 1999 merger of Banco Santander and Banco Central Hispanoamericano, while BBVA, is the result of the merger between Banco Bilbao Vizcaya and Argentaria Caja Postal, in 2000.
Under statistical provisioning, a provision for loan loss coverage of credit risk is required in addition to other loan provisions to mitigate risks that may be expected to accompany the next economic downturn.
This reflects BSCH acquisition of Abbey National in 2004, thereby becoming the eighth largest financial institution in the world (fourth in Europe) by market capitalization.
The Bank of Spain retains supervision of the book-entry public debt market.
The Special Commission to Foster Transparency and Security in the Markets and in Listed Companies (Aldama Commission) was established in June 2002 and issued its recommendations in January 2003. The Commission’s report emphasizes the need to balance increased self-regulation of issuers with greater transparency, notably through requiring regular reporting on corporate governance structures. The first set of reports were published on July 1, 2005.
In November 2004 the European Commission endorsed IAS 39 with the exception of certain provisions on the use of the full fair value option and on hedge fund accounting.
A high risk is defined as a risk that exceeds 10 percent of own funds.
A qualifying holding is defined as the direct or indirect possession of at least 10 percent of capital or voting rights in a company or the possibility of exerting a marked influence on the management of the company (at least 20 percent of the directors may be appointed by the institution in possession of the holding—Rule 10.2b of CBE 5/1993).
The current generic provision includes the former anti–cyclical provision, which was reformed to comply with the principles of the international accounting standards recently adopted in Spain.