BBVA estimates potential goodwill adjustment of Ä1 billion for its U.S. operations

Top Quote Taking into account current available data and profit forecasts, the BBVA Group estimates a potential adjustment to the goodwill of its U.S. unit due to macroeconomic factors and to the new regulatory framework. This accounting adjustment would not have any negative impact on the Groupís liquidity, solvency or dividend policy. End Quote
  • (1888PressRelease) January 23, 2012 - BBVA evaluates goodwill across the Group on an annual basis. For the U.S. franchise, there is a potential goodwill adjustment due to a slower than anticipated economic recovery, an extended environment of low interest rates and the growing impact of new regulatory requirements. The net value of this adjustment would be approximately Ä1 billion and would be included in the 2011 results.

    This accounting adjustment would be a non-cash item and would not impact the Groupís dividend policy. The accounting treatment of goodwill means the adjustment would not negatively impact the Groupís capital position. The adjustment would result in an increase of about Ä400 million in the Groupís core capital due to the tax treatment that corresponds to goodwill.

    The Groupís commitment to its U.S. franchise remains intact. Despite the macroeconomic factors and the regulatory environment that have caused this adjustment, the BBVA Groupís performance in the worldís largest economy has been positive in 2011.

    During the second half of 2011 international organizations revised their growth expectations for the U.S. The OCDE lowered its 2012 growth expectations from 3.1% to 2.0%. The European Commission also lowered its estimate from 2.7% to 1.5% and the IMF from 2.7% to 1.8%.

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