la Caixa Group Statutory Documentation for 2011

Transcription

1 la Caixa Group Statutory Documentation for 2011

2

3 2011 la Caixa Group Statutory Documentation for 2011

4 CAJA DE AHORROS Y PENSIONES DE BARCELONA - LA CAIXA Avinguda Diagonal, Barcelona, Spain Telephone: (34) Fax: (34) Telex: CAVEA E and CAIX E Website

5 CONTENTS Auditor s Report 5 Consolidated financial statements 6 Consolidated balance sheet 6 Income statement 8 Consolidated statement of recognized income and expense 9 Consolidated statement of total changes in equity 10 Statement of cash flows 12 Note to the consolidated financial statements 13 Management report 186 Annual corporate governance report 202 Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with IFRSs as adopted by the European Union (see Notes 1 and 42). In the event of a discrepancy, the Spanish-language version prevails.

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7 5 la Caixa Group: Statutory Documentation for 2011

8 Consolidated financial statements of la Caixa Group Consolidated balance sheet at December 31, 2011 and 2010, before appropriation of profit, in thousands of euros OF CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP Assets (*) Cash and balances with central banks (Note 9) 2,713,181 5,162,149 Held-for-trading portfolio (Note 10) 4,183,792 3,114,189 Debt instruments 1,841,771 1,173,891 Equity instruments 57,689 56,025 Trading derivatives 2,284,332 1,884,273 Memorandum items: Loaned or advanced as collateral 92,639 0 Other financial assets at fair value through profit or loss (Note 22) 210, ,485 Debt instruments 95,071 79,121 Equity instruments 115, ,364 Available-for-sale financial assets (Note 11) 35,117,185 40,128,171 Debt instruments 31,347,803 32,417,747 Equity instruments 3,769,382 7,710,424 Memorandum items: Loaned or advanced as collateral 584,198 7,151,200 Loans and receivables (Note 12) 185,268, ,151,820 Loans and advances to credit institutions 5,168,027 8,487,110 Loans and advances to customers 178,566, ,875,995 Debt instruments 1,534,187 1,788,715 Memorandum items: Loaned or advanced as collateral 47,907,330 46,632,495 Held-to-maturity investments (Note 13) 7,784,058 7,389,398 Memorandum items: Loaned or advanced as collateral 4,426,147 6,577,902 Adjustments to financial assets through macro-hedges 122,947 45,700 Hedging derivatives (Note 14) 13,573,424 10,013,406 Non-current assets held for sale (Note 15) 3,744,248 2,860,889 Investments (Note 16) 16,242,833 12,471,922 Associates 10,046,228 7,552,359 Jointly controlled entities 6,196,605 4,919,563 Insurance agreements related to pensions 0 0 Reinsurance assets (Note 17) 7,416 22,672 Property and equipment (Note 18) 5,203,142 5,150,130 Property and equipment 3,576,119 3,878,180 For own use 3,091,509 3,360,313 Leased under operating leases 125, ,852 Assigned to welfare projects (Note 25) 358, ,015 Investment property 1,627,023 1,271,950 Intangible assets (Note 19) 1,933,082 2,229,530 Goodwill 772,588 1,179,172 Other intangible assets 1,160,494 1,050,358 Tax assets 3,387,407 2,895,830 Current 1,138, ,624 Deferred (Note 26) 2,249,063 2,346,206 Other assets (Note 20) 2,914,200 2,880,930 Inventories 2,008,435 1,917,956 Other 905, ,974 Total assets 282,406, ,724,221 Memorandum items Contingent liabilities (Note 27) 9,432,597 9,101,003 Contingent commitments (Note 27) 49,180,647 52,084,088 (*) Presented for comparison purposes only. The accompanying Notes 1 to 42 and appendices 1 to 6 are an integral part of the consolidated balance sheet at December 31,

9 Consolidated balance sheet at December 31, 2011 and 2010, before appropriation of profit, in thousands of euros OF CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP Liabilities and Equity (*) Liabilities Held-for-trading portfolio (Note 10) 4,119,386 2,598,774 Trading derivatives 2,299,671 1,854,388 Short positions 1,819, ,386 Other financial liabilities at fair value through profit or loss (Note 22) 224, ,464 Customer deposits 224, ,464 Financial liabilities at amortized cost (Note 21) 213,756, ,822,918 Deposits from central banks 13,579,786 0 Deposits from credit institutions 9,951,510 19,041,396 Customer deposits 128,784, ,071,559 Marketable debt securities 44,610,375 47,286,756 Subordinated liabilities 13,493,232 13,117,235 Other financial liabilities 3,337,617 3,305,972 Adjustments to financial liabilities through macro-hedges 2,643,932 1,544,353 Hedging derivatives (Note 14) 9,784,561 7,657,744 Liabilities under insurance contracts (Note 22) 21,744,779 19,779,113 Provisions (Note 23) 3,003,021 2,974,762 Provisions for pensions and similar obligations 2,263,753 2,237,808 Provisions for taxes and other legal contingencies 109, ,424 Provisions for contingent liabilities and commitments 119, ,876 Other provisions 510, ,654 Tax liabilities 1,464,787 1,854,830 Current 249, ,083 Deferred (Note 26) 1,215,220 1,739,747 Welfare fund (Note 25) 886, ,630 Other liabilities (Note 20) 1,575,944 1,412,777 Total liabilities 259,204, ,744,365 Equity Own funds (Note 24) 17,619,108 17,421,121 Capital or endowment fund (Note 24) 3,006 3,006 Issued 3,006 3,006 Reserves (Note 24) 16,641,308 16,110,762 Accumulated reserves/(losses) 13,485,184 14,230,464 Reserves/(losses) of entities accounted for using the equity method 3,156,124 1,880,298 Profit attributable to the Group 974,794 1,307,353 Valuation adjustments (Note 24) 70,837 1,404,135 Available-for-sale financial assets 503,001 1,526,821 Cash flow hedges 361 (4,214) Exchange differences (38,160) 32,743 Entities accounted for using the equity method (394,365) (151,215) Non-controlling interests (Note 24) 5,511,935 3,154,600 Valuation adjustments 13, ,705 Other 5,498,181 2,772,895 Total Equity 23,201,880 21,979,856 Total Equity and Liabilities 282,406, ,724,221 (*) Presented for comparison purposes only. The accompanying Notes 1 to 42 and appendices 1 to 6 are an integral part of the consolidated balance sheet at December 31,

10 Income statement for the years ended December 31, 2011 and 2010, in thousands of euros OF CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP (*) Interest and similar income (Note 29) 7,581,056 6,915,864 Interest expense and similar charges (Note 30) (4,834,564) (3,763,512) Net interest income 2,746,492 3,152,352 Return on equity instruments (Note 31) 377, ,018 Share of profit (loss) of entities accounted for using the equity method 1,026, ,941 Fee and commission income (Note 32) 1,644,978 1,628,778 Fee and commission expense (Note 32) (108,775) (221,947) Gains/(losses) on financial assets and liabilities (net) (Note 33) 256, ,777 Held-for-trading portfolio 22,373 63,168 Other financial instruments not measured at fair value through profit or loss 159,261 46,069 Other 74,448 53,540 Exchange differences (net) (Note 33) 85,830 88,568 Other operating income (Note 34) 1,868,208 1,993,307 Income from insurance and reinsurance contracts 1,403,832 1,518,550 Revenue from provision of non-financial services 280, ,264 Other operating income 183, ,493 Other operating expenses (Note 34) (1,102,563) (1,238,624) Expenses from insurance and reinsurance contracts (544,305) (808,327) Changes in inventories (64,936) (75,100) Other operating expenses (493,322) (355,197) Gross income 6,794,411 6,959,170 Administrative expenses (3,057,577) (2,937,931) Personnel expenses (Note 35) (2,305,523) (2,165,834) Other general administrative expenses (Note 36) (752,054) (772,097) Depreciation and amortization (Notes 18 and 19) (371,047) (484,326) Provisions (net) (Note 23) (99,619) (191,067) Impairment losses on financial assets (net) (Note 37) (2,578,280) (2,195,010) Loans and receivables (2,230,244) (2,115,110) Other financial instruments not measured at fair value through profit or loss (348,036) (79,900) Profit from operations 687,888 1,150,836 Impairment losses on other assets (net) (Note 38) (610,501) (176,590) Goodwill and other intangible assets (7,878) (15,105) Other assets (602,623) (161,485) Gains/(losses) on disposal of assets not classified as non-current assets held for sale (Note 39) 691, ,244 Negative goodwill in business combinations 0 0 Gains/(losses) on non-current assets held for sale not classified as discontinued operations (Note 40) 95,987 4,314 Profit/loss before tax 865,063 1,439,804 Income tax (Note 26) 333, ,589 Mandatory transfer to welfare funds 0 0 Profit for the year from continuing operations 1,198,947 1,686,393 Profit from discontinued operations (net) 0 0 Consolidated profit for the year 1,198,947 1,686,393 Profit attributable to the Parent 974,794 1,307,353 Profit attributable to non-controlling interests (Note 24) 224, ,040 (*) Presented for comparison purposes only. The accompanying Notes 1 to 42 and appendices 1 to 6 are an integral part of the consolidated income statement for the year ended December 31,

11 Consolidated statement of recognized income and expense for the years ended December 31, 2011 and 2010, in thousands of euros OF CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP (*) A. Consolidated profit for the year 1,198,947 1,686,393 B. Other recognized income and expense (Note 24) (1,061,968) (224,921) Available-for-sale financial assets (962,942) (573,262) Revaluation gains/(losses) (886,766) (433,703) Amounts transferred to income statement (76,176) (139,559) Cash flow hedges 121 9,693 Revaluation gains/(losses) (6,324) (3,382) Amounts transferred to income statement 6,445 13,075 Hedges of net investment in foreign operations 0 0 Exchange differences (86,837) 281,873 Revaluation gains/(losses) (86,837) 281,873 Amounts transferred to income statement 0 0 Non-current assets held for sale 0 0 Actuarial gains/(losses) on pension plans 0 0 Entities accounted for using the equity method (290,147) (103,596) Revaluation gains/(losses) (290,147) (103,596) Other recognized income and expense 0 0 Income tax 277, ,371 C. Total recognized income and expense (A+B) 136,979 1,461,472 Attributable to the Parent 149,385 1,098,752 Attributable to non-controlling interests (12,406) 362,720 (*) Presented for comparison purposes only. The accompanying Notes 1 to 42 and appendices 1 to 6 are an integral part of the consolidated integral part of the statement of recognized income and expense for the year ended December 31,

12 Consolidated statement of total changes in equity for the years ended December 31, 2011 and 2010, in thousands of euros OF CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP QU Y U O P EQUITY 2011 CAPITAL / ENDOWMENT FUND ACCUMULATED RESERVES/(LOSSES) RESERVES/(LOSSES) OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD PROFIT ATTRIBUTABLE TO THE PARENT Opening balance at December 31, ,006 14,230,464 1,880,298 1,307,353 Adjustments due to changes in accounting policy Adjustments made to correct errors Adjusted opening balance 3,006 14,230,464 1,880,298 1,307,353 Total recognized income/(expense) 974,794 Other changes in equity 0 (745,280) 1,275,826 (1,307,353) Payment of dividends/remuneration to shareholders Transfers between equity items (603,137) 1,229,890 (917,353) Optional transfer to welfare funds (390,000) Other increases/(decreases) in equity (142,143) 45,936 Final balance at december 31, ,006 13,485,184 3,156, ,794 B E O EQUITY 2010 (*) CAPITAL / ENDOWMENT FUND ACCUMULATED RESERVES/(LOSSES) RESERVES/(LOSSES) OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD PROFIT ATTRIBUTABLE TO THE PARENT Opening balance at December 31, ,006 13,454,264 1,729,141 1,509,644 Adjustments due to changes in accounting policy Adjustments made to correct errors Adjusted opening balance 3,006 13,454,264 1,729,141 1,509,644 Total recognized income/(expense) 1,307,353 Other changes in equity 0 776, ,157 (1,509,644) Payment of dividends/remuneration to shareholders Transfers between equity items 437, ,946 (1,084,644) Increases/(decreases) due to business combinations (52,600) Optional transfer to welfare funds (425,000) Other increases/(decreases) in equity 391,102 (495,789) Final balance at December 31, ,006 14,230,464 1,880,298 1,307,353 (*) Presented for comparison purposes only. The accompanying Notes 1 to 42 and appendices 1 to 6 are an integral part of the consolidated statement of total changes in equity for the year ended December 31,

13 TOTAL EQUITY VALUATION ADJUSTMENTS NON-CONTROLLING INTERESTS TOTAL EQUITY 17,421,121 1,404,135 3,154,600 21,979, ,421,121 1,404,135 3,154,600 21,979, ,794 (825,409) (12,406) 136,979 (776,807) (507,889) 2,369,741 1,085,045 0 (133,587) (133,587) (290,600) (507,889) 798,489 0 (390,000) (390,000) (96,207) 1,704,839 1,608,632 17,619,108 70,837 5,511,935 23,201,880 TOTAL EQUITY VALUATION ADJUSTMENTS NON-CONTROLLING INTERESTS TOTAL EQUITY 16,696,055 1,612,736 3,094,540 21,403, ,696,055 1,612,736 3,094,540 21,403,331 1,307,353 (208,601) 362,720 1,461,472 (582,287) 0 (302,660) (884,947) 0 (287,026) (287,026) 0 0 (52,600) (52,600) (425,000) (425,000) (104,687) (15,634) (120,321) 17,421,121 1,404,135 3,154,600 21,979,856 11

14 Statement of cash flows for the years ended December 31, 2011 and 2010, in thousands of euros OF CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP (*) A. Cash flows from operating activities (7,830,926) 3,401,160 Consolidated profit for the year 1,198,947 1,686,393 Adjustments to obtain cash flows from operating activities 6,050,806 4,321,883 Depreciation and amortization 371, ,326 Other adjustments 5,679,759 3,837,557 Net increase/(decrease) in operating assets 1,640,110 8,111,271 Held-for-trading portfolio 988,572 (3,883,412) Other financial assets at fair value through profit or loss 3,169 21,774 Available-for-sale financial assets 230,131 (2,840,426) Loans and receivables (1,161,410) 12,182,869 Other operating assets 1,579,648 2,630,466 Net increase/(decrease) in operating liabilities (13,106,685) 5,750,744 Held-for-trading portfolio 1,520,612 1,184,249 Other financial liabilities at fair value through profit or loss 14,526 14,734 Financial liabilities at amortized cost (13,267,852) 4,993,432 Other operating liabilities (1,373,971) (441,671) Income tax (paid)/received (333,884) (246,589) B. Cash flows used in investing activities 1,467,749 (8,824,959) Payments 1,962,144 11,897,672 Property and equipment 466, ,849 Intangible assets 74,543 95,395 Investments 1,044, ,134 Subsidiaries and other business units 238, ,223 Non-current assets and associated liabilities held for sale 126,095 2,234,673 Held-to-maturity investments 11,660 7,389,398 Proceeds 3,429,893 3,072,713 Property and equipment 191, ,318 Investments 669,359 1,007,596 Subsidiaries and other business units 1,233,096 Non-current assets and associated liabilities held for sale 1,335,451 1,322,799 C. Cash flows from financing activities 3,918,511 5,464,974 Payments 4,184,621 3,087,026 Other payments related to financing activities 4,184,621 3,087,026 Proceeds 8,103,132 8,552,000 Subordinated liabilities 3,000,000 Other inflows related to financing activities 8,103,132 5,552,000 D. Effect of exchange rate changes (4,302) 1,603 E. Net increase/(decrease) in cash and cash equivalents (A+B+C+D) (2,448,968) 42,778 F. Cash and cash equivalents at the beginning of the year 5,162,149 5,119,371 G. Cash and cash equivalents at the end of the year 2,713,181 5,162,149 Memorandum items Components of cash and cash equivalents at the end of the year Cash 1,119,328 1,287,844 Cash equivalents at central banks 1,593,853 3,874,305 Total cash and cash equivalents at the end of the year 2,713,181 5,162,149 (*) Presented for comparison purposes only. The accompanying Notes 1 to 42 and appendices 1 to 6 are an integral part of the consolidated statement of cash flows for the year ended December 31,

15 Note to the consolidated financial statements of the la Caixa Group for 2011 CONTENTS PAGE 1. Corporate and other information 15 Corporate information 15 Reorganization of the la Caixa Group 15 Basis of presentation 18 Responsibility for the information and for the estimates made 22 Comparison of information and changes in scope of consolidation 22 Investments in credit institutions 23 Minimum reserve ratio 23 Deposit guarantee fund 23 Events after the reporting period Accounting policies and measurement bases Business combinations and basis of consolidation Financial instruments Derivatives and hedges Foreign currency transactions Recognition of income and expenses Transfers of financial assets Impairment of financial assets Mutual funds, pension funds and other assets under management Personnel expenses and post-employment obligations Income tax Property and equipment Intangible assets Inventories Non-current assets held for sale Insurance transactions Provisions and contingent liabilities Welfare projects Cash flow statement Risk management Credit risk Market risk Liquidity risk Operational risk Compliance risk Internal Audit Internal control over financial reporting Capital adequacy management Appropriation of profit Business combinations, acquisition and disposal of ownership interests in subsidiaries Segment information Remuneration and other benefits paid to key management personnel and executives Cash and balances with central banks Held-for-trading portfolio (assets and liabilities) Available-for-sale financial assets Loans and receivables Loans and advances to credit institutions Loans and advances to customers Debt instruments Impairment losses Held-to-maturity investments Hedging derivatives (assets and liabilities) Non-current assets held for sale

16 16. Investments Reinsurance assets Property and equipment Intangible assets Other assets and liabilities Financial liabilities at amortized cost Deposits from credit institutions Customer deposits Marketable debt securities Subordinated liabilities Other financial liabilities Liabilities under insurance contracts Provisions Equity Own funds Valuation adjustments Non-controlling interests Welfare projects Tax matters Contingent liabilities and commitments Other significant disclosures Third-party funds managed by the Group Asset securitizations Securities deposits and investment services Financial assets derecognized due to impairment Geographic distribution of business volume Interest and similar income Interest expense and similar charges Return on equity instruments Fees and commissions Gains/(losses) on financial assets and liabilities (net) Other operating income and expense Personnel expenses Other general administrative expenses Impairment losses on financial assets (net) Impairment losses on other assets (net) Gains/(losses) on disposal of assets not classified as non-current assets held for sale Gains/(losses) on non-current assets held for sale not classified as discontinued operations Related party transactions Other disclosure requirements Customer Ombudsman and Customer Care Service Environmental information 173 Appendix 1. la Caixa Group subsidiaries 175 Appendix 2. Joint ventures of the la Caixa Group (jointly controlled entities) 179 Appendix 3. Associates of the la Caixa Group 180 Appendix 4. Tax credit for reinvestment of extraordinary profit 182 Appendix 5. Companies filing joint tax returns 183 Appendix 6. Disclosure on the acquisition and disposal of stakes in subsidiaries in

17 Notes to the consolidated financial statements for the year ended December 31, 2011 CAIXA D ESTALVIS I PENSIONS DE BARCELONA AND COMPANIES COMPOSING THE LA CAIXA GROUP As required by current legislation governing the content of consolidated financial statements, these notes to the consolidated financial statements complete, extend and discuss the consolidated balance sheet, consolidated income statement, consolidated statement of other comprehensive income, the consolidated statement of total changes in equity and the consolidated statement of cash flows, and form an integral part thereof, in order to give a true and fair view of the equity and financial position of the la Caixa consolidated group at December 31, 2011, and the results of its operations, the changes in consolidated equity and the cash flows during the year then ended. 1. Corporate and other information Corporate information As a savings bank and in accordance with its Bylaws, Caixa d Estalvis i Pensions de Barcelona (hereinafter la Caixa ) is a private-law, non-profit financial institution providing beneficent welfare services, and is separate from any other company or entity. Its corporate purpose is to encourage all authorized forms of savings, to carry out beneficent welfare projects and to invest the related funds in safe and profitable assets of general interest. In accordance with its Bylaws, la Caixa carries on its business indirectly as a credit institution through a bank, CaixaBank, SA (hereinafter CaixaBank ), which in addition manages part of the investment portfolio of the Caixa d Estalvis i Pensions de Barcelona Group (the la Caixa Group or the Group ), focusing mainly on leading companies in the financial and insurance sectors. As a credit institution, subject to the rules and regulations issued by the Spanish and European Union economic and monetary authorities, la Caixa conducts universal banking activities, and provides substantial retail banking services. la Caixa is the parent of a group of subsidiaries that offer other products and services and which compose, together with it, a decision-making unit. Therefore, la Caixa is obliged to prepare, in addition to its own individual financial statements, consolidated financial statements for Caixa d Estalvis i Pensions de Barcelona Group (the la Caixa Group or the Group), which also includes interests in joint ventures and investments in associates. Reorganization of the la Caixa Group The enactment of Royal Decree-Law 11/2010, of July 9, on the governing bodies and other matters relating to the legal framework for savings banks, in addition to the modification of the consolidated text of the Catalan Savings Banks Law, through Royal Decree-Law 5/2010, introduced the possibility for a savings bank to conduct its financial activities indirectly through a bank. Under this legal framework, on January 27, 2011, the Boards of Directors of la Caixa, Criteria CaixaCorp, SA ( Criteria ) and MicroBank de la Caixa, SA ( MicroBank ) entered into a framework agreement (the Framework Agreement ) entailing the reorganization of the la Caixa Group in order to adapt to the new demands of national and international regulations and, specifically, to the new requirements of the Basel Committee on Banking Supervision (Basel III). The structure designed enables la Caixa to indirectly carry out its financial activity while upholding its commitment to social welfare. Approval was given at the Ordinary General Assembly of la Caixa and the Annual General Meeting of Criteria held April 28 and May 12, 2011, respectively, to all proposals set forth by the respective Boards of Directors regarding the reorganization of the la Caixa Group. 15

18 On June 30, 2011, the corporate transactions included in the Framework Agreement were completed, for legal and business purposes, which led to the transformation of Criteria into CaixaBank. In accordance with prevailing legislation, these transactions were accounted for retrospectively from January 1, 2011 (see Corporation information in this note), as indicated above. Pursuant to the accounting standards applicable to intra-group mergers and spin-offs require that assets and liabilities subject to such operations be valued at their carrying amount in the consolidated financial statements of the group in question. Consequently, the assets and liabilities included in the transactions listed below have been measured at their carrying amount in the la Caixa Group s consolidated financial statements at December 31, Following is a description of the main corporate transactions carried out within the reorganization of the la Caixa Group: a) the spin-off by la Caixa in favor of Microbank of the assets and liabilities making up its financial activity, except the stakes of la Caixa in Servihabitat XXI, SAU, Metrovacesa, SA and Inmobiliaria Colonial, SA, certain of its real estate assets and certain of its debt issues. la Caixa maintains its Welfare Fund and continues to finance and support charitable and welfare activities. The net carrying amount in la Caixa s individual balance sheet of the assets and liabilities spun off by la Caixa in favor of MicroBank is 11,591,982 thousand. At consolidated levels, the net assets and liabilities amount to 11,894,481 thousand, broken down as follows: Thousands of euros Net carrying amount in the separate balance sheet of la Caixa of the spun-off assets and liabilities 11,591,982 Reserves at la Caixa Group consolidated companies spun off in favor of MicroBank and other reserves 211,256 Net equity of MicroBank prior to the reorganization 91,243 Total equity of MicroBank post spin-off (*) 11,894,481 (*) MicroBank s equity post spin-off comprises the equity of the businesses received from Criteria. The market value of 100% of MicroBank s capital at January 1, 2011 was estimated at 9,515,585, equivalent to 0.8 times the equity of MicroBank. As indicated in the Framework Agreement, in determining this factor, the share prices of entities with similar profiles were considered, adjusting the multiples to take into account the better competitive position, credit quality and coverage level, and the absence of real-estate assets in the portfolio. This market value estimate is supported by several fairness opinions issued by independent experts. b) contribution to Criteria by la Caixa of all the shares of MicroBank post spin-off. In exchange, Criteria transferred the following to la Caixa : The equity holdings listed below, the consolidated carrying amount of which is 7,535,809 thousand and whose market value has been estimated at 7,471,340 thousand (both figures are at January 1, 2011). i) a direct 36.64% stake in Gas Natural SDG, SA; ii) a direct 20.72% stake in Abertis Infraestructuras, SA (hereinafter Abertis ) and a direct 50.1% stake in Inversiones Autopistas, SL (owner of 7.75% of Abertis) which, in total, represents a 24.61% stake in the share capital of Abertis; 16

19 iii) an indirect 24.03% stake in the share capital of Sociedad General de Aguas de Barcelona, SA, through holding a direct 24.26% stake in Hisusa, Holding de Infraestructuras y Servicios Urbanos, SA, owner of 99.04% of the share capital of Sociedad General de Aguas de Barcelona, SA; (iv) a direct and indirect 50% stake in PortAventura Entertainment, SA; and (v) a direct 100% stake in Mediterránea Beach & Golf Community, SA. The market values of these investments were estimated based on the following measurement criteria: Gas Natural SDG, SA and Abertis Infraestructuras, SA: average share price between December 27, 2010 and January 26, 2011, adjusted for dividends paid within the period Sociedad General de Aguas de Barcelona, SA: latest transaction price. PortAventura Entertainment, SA: Latest transaction EBITDA multiples, taking the updated EBITDA based on the latest closing. Mediterranea Beach & Golf Community, SA: net carrying amount of leased properties and third-party appraisal of land for residential, hotel and commercial use with completed development. 374,403,908 new shares of Criteria issued as part of a non-cash capital increase for 2,044,245 thousand. The unit value of the shares issued by Criteria was set at 5.46, equivalent to net asset value ( NAV ) without factoring in the impact of the reorganization of Criteria s assets on January 26, The combined amount of the capital increase ( 2,044,245 thousand) and the market value of the shareholdings and other assets delivered by Criteria to la Caixa ( 7,471,340 thousand) equal the market value of the MicroBank shares delivered to Criteria by la Caixa ( 9,515,585 thousand euros). c) the absorption of Criteria by MicroBank. This transaction gave Criteria the status of a credit institution with the corporate name CaixaBank, SA. CaixaBank is the listed bank through which la Caixa indirectly carries out its financial activity. The reorganization process described above also entailed the delivery to la Caixa Group employees of CaixaBank shares equivalent to 0.4% of total capital. Following Criteria s Annual General Meeting held on May 12, 2011, Criteria shareholders who had not voted in favor of the merger with MicroBank were given until June 14, 2011 to exercise their voluntary right of withdrawal. Upon expiry of this period, holders of 46,485,705 Criteria shares, representing 1.38% of prereorganization share capital, had exercised their right of withdrawal. As a result and pursuant to the resolution adopted at the Annual General Meeting of May 12, 2011, Criteria acquired the corresponding treasury shares at a price of per share (see note 24). Following the completion of these corporate transactions, CaixaBank became the owner of the stakes previously held by Criteria, in insurance companies, mutual fund managers and foreign financial entities, Telefónica, SA and Repsol-YPF, SA. Also within the scope of the reorganization of the la Caixa Group, the following transactions were carried out in the second half of 2011, with effect for accounting purposes from January 1, 2011: contribution, on August 1, 2011, by la Caixa to a non-listed holding company, called Criteria CaixaHolding, SAU, of all the shareholdings indicated in (b) above, as well as other assets not included in the spinoff of la Caixa in favor of MicroBank indicated in (a) above. la Caixa is Criteria CaixaHolding, SAU s sole shareholder. spin-off, on September 16, 2011, by CaixaBank in favor of a newly created entity, called Nuevo Micro Bank, SA, of the assets and liabilities of the microcredit activity carried out by MicroBank prior to the reorganization. 17

20 The following chart illustrates the reorganization of the la Caixa Group: Previous structure New structure Welfare projects 79.5% Banking (includes real estate assets) Welfare projects 81.5% 100% previously Criteria listed unlisted Insurance companies International banks Industrial and services portfolio Banking and insurance International banks Repsol + Telefónica Industrial portfolio Real-estate assets In connection with the foregoing, in order to bolster the CaixaBank Group s equity structure, Criteria (called CaixaBank after the reorganization) issued 1,500 million of subordinated bonds with mandatory conversion into CaixaBank shares in June 2011, for distribution through the la Caixa network (see note 24). The costs associated with the aforementioned transactions amounted to 116 million, of which 62 million related to Personnel expenses incurred in the delivery of CaixaBank shares to la Caixa Group employees. In addition, 39 million was recognized in Other general administrative expenses, including costs related to the advisory and design of the transaction, the adaptation to the new organizational structure and the communication, disclosure and dissemination of the reorganization. Expenses attributable directly to the issue of own equity instruments ( 15 million) were deducted directly from equity (see Note 24). Finally, within the procedure described in the preceding paragraphs, the 12.69% interest in Repsol-YPF, SA was recognized under associates, with effect from January 1, 2011 (see Notes 11 and 16) as the la Caixa Group then had significant influence over the company. Basis of presentation The consolidated financial statements have been prepared in accordance with the Commercial Code, International Financial Reporting Standards (hereinafter IFRSs) as adopted by the European Union through EU Regulations, in accordance with Regulation No 1606/2002 of the European Parliament and of the Council of July 19, 2002 and subsequent amendments, and bearing in mind the provisions of Bank of Spain Circular 4/2004 of December 22 on Public and Confidential Financial Reporting Rules and Formats for Credit Institutions, which constitutes the adaptation of the IFRSs adopted by the European Union to Spanish credit institutions. The financial statements were prepared from the accounting records of la Caixa and the other Group companies, and include certain adjustments and reclassifications required to apply the policies and criteria used by the Group companies on a consistent basis with those of la Caixa. Standards and interpretations issued by the International Accounting Standard Board (IASB) that became effective in 2011 At the date of authorization for issue of these consolidated financial statements, the following standards and interpretations were effective, the adoption of which by the Group did not have a significant impact on its consolidated financial statements. 18

21 IAS 32 Financial Instruments: Presentation (Amendment) The amendment clarifies the classification of rights issues for purchase of shares (rights, options or warrants) denominated in foreign currency. The amendment stipulates that rights issued to acquire a fixed number of shares for a fixed amount must be classified as equity, regardless of the currency in which the fixed amount is denominated, provided they meet the requirements of the standard. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments The interpretation sets forth accounting treatment for a debtor that issues equity instruments to a creditor to extinguish all or part of a financial liability. IAS 24 Related Party Disclosures (Revised) This introduces two new features: (a) partial exemption from the disclosure requirements when there is a relationship involving entities that are controlled or related to the government (or an equivalent government institution) and (b) revised definition of a related party, clarifying relationships that were previously not explicit in the standard. IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment) This amendment states that, in some circumstances, entities are not permitted to recognize as an asset some voluntary prepayments for minimum funding contributions. Standards and interpretations issued by IASB but not yet effective At the date of authorization for issue of these consolidated financial statements, the following standards and interpretations had been issued by the IASB but were not yet effective, either because their effective date is subsequent to the date of the consolidated financial statements or because they had not yet been endorsed by the European Union. The Group has assessed the impacts arising from these standards and interpretations and has elected not to early adopt them, where possible, because it would have no significant impact. 19

22 STANDARDS AND INTERPRETATIONS TITLE MANDATORY APPLICATION FOR ANNUAL PERIODS BEGINNING ON OR AFTER: Approved for use in the EU Amendment to IFRS 7 Financial instruments: Disclosures July 1, 2011 Not approved for use in the EU Amendment to IAS 12 Taxes January 1, 2012 Amendment to IAS 1 Presentation of Financial Statements July 1, 2012 Amendment to IFRS 7 Financial instruments: Disclosures January 1, 2013 IFRS 10 Consolidated Financial Statements January 1, 2013 IFRS 11 Joint Arrangements January 1, 2013 IFRS 12 Disclosure of Interests in Other Entities January 1, 2013 IFRS 13 Fair Value Measurement January 1, 2013 Amendment to IAS 19 Employee Benefits January 1, 2013 Amendment to IAS 27 Consolidated and Separate Financial Statements January 1, 2013 Amendment to IAS 28 Investments in Associates January 1, 2013 Interpretation of IFRIC 20 Stripping costs in the production phase of a surface mine January 1, 2013 Amendment to IAS 32 Financial instruments: Presentation January 1, 2014 IFRS 9 Financial instruments: Classification and Measurement January 1, 2015 IFRS7Financial Instruments: Disclosures (Amendment) This amendment clarifies and enhances the disclosure requirements in financial statements regarding transfers of financial assets. IAS 12 Income taxes (Amendment) The amendment includes an exception to the general principles of IAS 12 affecting deferred taxes on investment properties measured using the fair value model in IAS 40 Investment Property. In these cases, the amendment introduces, with respect to calculating deferred taxes, a presumption that recovery of the carrying amount will normally be through sale. This presumption is refuted when the investment property is depreciable and the business model entails holding the property to earn economic benefits through its future use rather than sale. IAS 1 Presentation of Financial Statements (Amendment) This amendment requires entities to present a total for profit or loss separately from other comprehensive income, distinguishing between those items that will be reclassified to profit or loss subsequently and those that will not be reclassified. IFRS7Financial Instruments: Disclosures (Amendment) The modification introduces new disclosure requirements for financial assets and financial liabilities shown net on the balance sheet, as well as for those financial instruments subject to a net compensation or similar agreement, regardless of whether they have been offset in accordance with IAS 32: Financial Instruments: Presentation. IFRS10Consolidated Financial Statements This standard was issued in conjunction with IFRS 11, IFRS 12 and the amendments to IAS 27 and IAS 28 (see below), replacing the current standards governing consolidation and recognition of subsidiaries, associates and joint ventures, as well as disclosure requirements. 20

23 Upon entry into force, this standard will replace the consolidation guidelines set out in the current IAS 27 Consolidated and Separate Financial Statements and in interpretation SIC 12 Consolidation Special Purpose Entities. The standard primarily modifies the definition of control, eliminating the risks/rewards approach set out in SIC 12. Control is now defined through three required elements: power over the investee; exposure or rights to variable returns from the investee; and the ability to use the power over the investee to affect the amount of the investor s returns. IFRS11Joint Arrangements Upon entry into force, IFRS 11 replaces the current IAS 31 Interests in Joint Ventures. The fundamental change compared to the prevailing standard is the elimination of the proportionate consolidation option for jointly controlled entities. Under IFRS 11, these entities should be accounted for using the equity method. The standard also modifies certain nuances when analyzing joint arrangements, focusing on whether or not the arrangement is structured through a separate vehicle. The standard also defines two types of joint arrangements: joint operations and joint ventures. IFRS12Disclosure of Interests in Other Entities IFRS 12 groups together and extends the scope of all disclosure requirements regarding interests in subsidiaries, associates, joint ventures or other investees. The primary change with respect to current disclosure requirements is the new obligation to disclose interests in unconsolidated structured entities. IFRS13Fair Value Measurement IFRS 13 aims to provide the sole guidance for calculating the fair value of assets and liabilities when fair value measurement is required or permitted by other IFRS. The new standard does not modify the prevailing measurement criteria established in other standards, and is applicable to measurements of both financial and non-financial assets and liabilities. In addition, IFRS 13 modifies the current definition of fair value, introducing new considerations, and increases consistency and comparability in fair value measurement by adopting the fair value hierarchy, which is conceptually similar to that set out for certain financial instruments in IFRS 7 Financial Instruments: Disclosures. IAS 19 Employee Benefits (Amendment) The most relevant modifications, which primarily affect defined benefit plans, are as follows: Elimination of the corridor approach, under which entities were able to defer a certain portion of their actuarial gains and losses. Following entry into force of this modification, all actuarial gains and losses must be recognized immediately. Relevant changes in grouping and presenting cost components in the statement of other comprehensive income. The entire cost of the obligation shall be presented in three separate components: service cost, net interest component and revaluation gains and losses. IAS 27 Consolidated and Separate Financial Statements (Amendment) This modification reissues the standard, given that from its entry into force its content will only refer to separate financial statements. IAS 28 Investments in Associates (Amendment) This modification reissues the standard, which now includes guidance on how to account for joint ventures, indicating that they shall henceforth be accounted for as associates, i.e., using the equity method. 21

24 IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine The interpretation sets out the accounting treatment of the costs of disposing of waste materials. IAS 32 Financial Instruments: Presentation (Amendment) This modification provides additional clarification regarding the requirements for offsetting financial assets and financial liabilities shown on the balance sheet. IFRS9Financial Instruments: Classification and Measurement IFRS 9 will eventually replace the section of IAS 39 that currently deals with classification and measurement. There are some major differences with respect to the current standard; e.g. approval of a new classification model based on only two categories: amortized cost and fair value, entailing the elimination of the current held-to-maturity investments and available-for-sale financial assets categories; a single impairment method for assets measured at amortized cost, and non-separation of embedded derivatives in finance contracts. Responsibility for the information and for the estimates made The financial statements of la Caixa and the consolidated financial statements of the la Caixa Group for 2011 were authorized for issue by the Board of Directors at a meeting held on February 23, These financial statements and the financial statements of the Group companies have not yet been approved by the General Assembly of the Parent and by the Annual General Meetings of the consolidated entities, respectively. However, the Board of Directors of la Caixa expects they will be approved without any changes. The financial statements of la Caixa and the consolidated financial statements of the la Caixa Group for 2010 were approved by the General Assembly held on April 28, 2011, and are presented solely for the purpose of comparison with the figures for The preparation of the consolidated financial statements required senior executives of CaixaBank and consolidated companies to make certain judgments, estimates and assumptions in order quantify certain of the assets, liabilities, revenues, expenses and obligations shown in them. These estimates relate primarily to: Impairment losses on certain financial assets (Notes 2.7 and 13) The measurement of goodwill (Notes 2.12 and 19) The useful life of and impairment losses on other intangible assets and property and equipment (Notes 2.11 and 2.12) The measurement of investments in jointly controlled entities and associates (Note 16) Actuarial assumptions used to measure liabilities arising from insurance contracts (Note 22) Actuarial assumptions used to measure post-employment liabilities and commitments (Note 23) The fair value of certain financial assets and liabilities (Note 2.2) These estimates were made on the basis of the best information available at the date of preparation of these consolidated financial statements. However, events may occur that make it necessary for them to be changed in future periods. The accounting principles and policies and the measurement bases established by the IFRSs are generally consistent with those established by Bank of Spain Circular 4/2004 and are described in Note 2. No criteria differing from such standards which may have a material effect have been applied. Comparison of information and changes in scope of consolidation IFRSs require that the information presented in the consolidated financial statements be consistent. In 2011, there were no significant amendments with respect to the accounting regulations applicable that affected the 22

25 comparability of information between financial years (see Note 2). The information related to December 31, 2010 contained in these consolidated financial statements is presented solely for purposes of comparison with the year ended December 31, The reorganization of the la Caixa Group explained in Note 1 did not produce any change in the scope of consolidation, nor did it affect the comparability of the information. The Group s equity was unchanged, but equity attributable to non-controlling interest was modified. Note 24 details the impact of the reorganization at January 1, 2011 on equity attributable to the Group and to non-controlling interests. The main variations in the scope of consolidation in 2011 are set out in Note 6. Investments in credit institutions In accordance with the provisions of Royal Decree 1245/1995 of July 14, the table below sets out the stakes equal to or greater than 5% of the capital or voting rights in a credit institution held by the la Caixa Group in 2011 and Investments in credit institutions that are subsidiaries of the la Caixa Group at December 31, 2011 are shown in Appendix 1. Investments in credit institutions CREDIT INSTITUTIONS Banco BPI, SA 30.10% 30.10% Boursorama, SA 20.73% 20.76% Grupo Financiero Inbursa 20.00% 20.00% The Bank of East Asia, LTd 17.00% 15.20% Erste Group Bank, AG 9.77% 10.10% At December 31, 2011 and 2010 no Spanish or foreign credit institution or group of which a credit institution forms part held a stake equal to or greater than 5% of the capital or voting rights of any of the credit institutions that are subsidiaries of the la Caixa Group. Minimum reserve ratio At December 31, 2011 and 2010, and throughout the 2011 and 2010 financial years, la Caixa complied with the minimum ratios required by applicable Spanish regulations. Deposit guarantee fund In 2011, the la Caixa Group made an annual contribution to the Savings Bank Deposit Guarantee Fund, the institution responsible for guaranteeing the money deposited and securities placed with savings banks. This contribution was 1/1000 of the calculation base. In 2011, amendments were made to regulation affecting contributions to the Deposit Guarantee Fund. The first amendment, introduced under Bank of Spain Circular 3/2011 of June 20, establishes additional contributions to existing funds for member institutions that arrange time deposits or settle demand deposits whose agreed remuneration exceeds the limits set by the Bank of Spain. These contributions are calculated and made quarterly, weighted at 400% of balances affected and applying the institution s ordinary percentage contribution. The first settlement in this connection was made in November. The second amendment, introduced under Royal Decree-Law 19/2011 of December 2, modifying Royal Decree- Law 16/2011 of October 14, creating the Deposit Guarantee Fund of Credit Institutions, aims to integrate the three deposit guarantee funds existing at that time (for savings banks, banking institutions and credit cooperatives), while guaranteeing the flexibility to strengthen the solvency and operating efficiency of the institutions. 23

26 The maximum annual contribution was also revised, from 2/1000 to 3/1000 of guaranteed deposits, compared to the 1/1000 in place until then for savings banks This new contribution percentage will be effective as from the first settlement made in The amounts accrued for contributions to the Deposit Guarantee Fund are recognized under Other operating expenses in the income statement (see Note 34). Events after the reporting period On December 15, 2011, the Board of Directors of CaixaBank agreed, pursuant to the authorization granted at the General Shareholders Meeting held on May 12, 2011, to issue the following bonds (the Bonds ): 1) subordinated mandatorily convertible and/or exchangeable bonds in CaixaBank shares with a par value of 100 each and a 6.5% nominal coupon (the Convertible/Exchangeable Bonds ) up to an amount excluding the pre-emptive subscription rights of shareholders of 1,469,275,800; (2) subordinated bonds series I/2012, with a par value of 100 each and a 4.06% APR (TAE) coupon (the Subordinated I ) up to a maximum amount of 2,100,000,000; and (3) subordinated bonds series II/2012, with a par value of 100 each and a 5.095% APR (TAE) coupon (the Subordinated II ) up to a maximum amount of 1,328,310,200. Of the outstanding face value of Convertible/Exchangeable Bonds, 50% will be mandatorily converted into and/or exchanged for shares of CaixaBank on June 30, The remaining 50% that has not been previously converted and/or exchanged will necessarily be converted into or exchanged for shares of CaixaBank on June 30, Both the Subordinated I and Subordinated II issues will have a 10-year maturity period from the disbursement date. For the purpose of the conversion and/or exchange of the Convertible/Exchangeable Bonds, the value of the CaixaBank shares will be the greater of: (i) 3.73 per share; and (ii) 100% of the average quoted price of CaixaBank shares during the last 15 stock exchange trading days of the repurchase offer acceptance period. The issues target holders of the Series A and Series B preference shares (participaciones preferentes) issued by Caixa Preference Limited (currently Caixa Preference, SAU) and the series I/2009 shares issued by la Caixa (with CaixaBank assuming the position as issuer by virtue of the spin-off by a Caixa in favor of Microbank of the assets and liabilities that made up the financial activity of la Caixa and the subsequent absorption of MicroBank, SA by CaixaBank) accepting the offer to buy back said preference shares held by them (see Note 21.4). The Preference Shares will be bought back at 100% of their par value (i.e. 1,000), to be paid in the following manner: i) To the holders of the Series A and Series B preference shares for each preference share: 300 in cash and 7 Subordinated I, subject to the irrevocable subscription application referred to below. ii) To the holders of the series I/2009 for each preference share: 300 in cash and 7 Subordinated II, subject to the irrevocable subscription application referred to below. As part of the purchase price, holders accepting the repurchase officer will receive the outstanding interest accrued and payable since the last interest payment date for each of the preference shares until the day, inclusive, prior to the effective preference share buyback date, rounded up or down to the nearest euro cent (the Accrued Interest ). Acceptance of the repurchase offer, which must be made between December 29, 2011 and January 31, 2012, can only be made in respect of all of the preference shares they own in each series; i.e., preference shareholders are not entitled to partially accept offers with respect to a given series. Furthermore, acceptance of the repurchase offer is conditional upon a simultaneous irrevocable subscription application for three Convertible/Exchangeable Bonds for every preference share repurchased. The holder accepting the offer will be obliged to reinvest the total price paid in cash (less then Accrued Interest) in the subscription of the Convertible/Exchangeable Bonds. 24