Annual Report • May 28, 2014
Annual Report
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| BALANCE SHEET AND RESULTS (million euro) | Dec-13 Dec-13 |
Dec-12 Dec-12 |
% |
|---|---|---|---|
| Net Assets | 38,811 | 38,527 | +0.7% |
| Net Loans | 26,108 | 26,980 | -3.2% |
| Customers' Resources | 26,436 | 28,105 | -5.9% |
| Own Funds + Minority Interests + Subordinated Liabilities | 2,735 | 2,329 | +17.4% |
| Net Interest Income (excludind dividends) | 507.3 | 541.5 | -6.3% |
| Fees and Other Income | 281.1 | 318.0 | -11.6% |
| Operating Income | 821.0 | 987.1 | -16.8% |
| Net Operating Income | 354.5 | 528.1 | -32.9% |
| Income Before Taxes & Minority Interests | 124.6 | 73.4 | +69.9% |
| Net Income | 89.2 | 88.1 | +1.2% |
| RATIOS | Dec-13 Dec-13 |
Dec-12 Dec-12 |
% |
| ROE | 5.1% 5.1% |
6.4% | -1.3 p.p. |
| ROA | 0.2% 0.2% |
0.2% | +0.0 p.p. |
| Efficiency Ratio (including depreciation) | 56.8% | 46.5% | +10.3 p.p. |
| Tier I* ratio | 14.2% 14.2% |
11.4% | +2.8 p.p. |
| Core Capital* ratio | 12.4% 12.4% |
9.9% | +2.5 p.p. |
| NPL and Doubtful Loans Ratio | 3.8% 3.8% |
3.5% | +0.3 p.p. |
| Credit at Risk Ratio | 5.9% 5.9% |
4.3% | +1.5 p.p. |
| Restructured Loans/Total Loans | 8.7% | ||
| Restructured Loans not included in Credito at Risk/Total Loans | 5.4% | ||
| NPL and Doubtful Loans Coverage Ratio | 104.7% | 97.4% | +7.3 p.p. |
| Credit at Risk Coverage Ratio | 67.7% 67.7% |
79.7% | -12.0 p.p. |
| Loan-to-Deposit Ratio** | 125.3% 125.3% |
126.6% | -1.3 p.p. |
| RATING | Dec-13 Dec-13 |
Dec-12 Dec-12 |
% |
| FitchRatings | |||
| short term | F3 | ||
| long term | BBB- | ||
| Moody´s | |||
| short term | NP | ||
| long term | Ba1 | ||
| Standard & Poor´s | |||
| short term | B | ||
| long term | BB | ||
| DBRS | |||
| short term | R-1L | ||
| long term | BBBH | ||
| Other Data | Dec-13 Dec-13 |
Dec-12 | |
| Employees | 5,572 5,572 |
5,663 | -91 |
| Employees in Portugal | 5,523 5,523 |
5,613 | -90 |
| Branches | 640 640 |
667 | -27 |
| Total Branches and Corporate Centers in Portugal | 625 | 652 | -27 |
* With results net of payout
** According the definition in the "Memorandum of Understanding"
| General Meeting Officers General Meeting |
|
|---|---|
| Chairman Deputy Chairman Secretary |
José Manuel Galvão Teles António Maria Pinto Leite Luís Manuel Baptista Figueiredo |
| Board of Directors Board of Directors |
|
| Chairman Deputy Chairman Members |
António Basagoiti Garcia-Tuñón António José Sacadura Vieira Monteiro Carlos Manuel Amaral de Pinho João Baptista Leite José Carlos Brito Sítima José Urgel Moura Leite Maia José Manuel Alves Elias da Costa Luís Filipe Ferreira Bento dos Santos Manuel António Amaral Franco Preto Pedro Aires Coruche Castro e Almeida |
| Audit Board Audit |
|
| Chairman Members Alternate Member |
Luís Manuel Moreira de Campos e Cunha Mazars & Associados, S.R.O.C. Ricardo Manuel Duarte Vidal Castro Pedro Manuel Alves Ferreira Guerra |
| Auditor | |
| Deloitte & Associados, S.R.O.C., S.A. | |
| Executive Committee e Committee Committee |
|
| Chairman Members |
António José Sacadura Vieira Monteiro João Baptista Leite José Carlos Brito Sítima José Manuel Alves Elias da Costa José Urgel Moura Leite Maia Luís Filipe Ferreira Bento dos Santos Manuel António Amaral Franco Preto Pedro Aires Coruche Castro e Almeida |
| Company Secretary | |
| In active service Alternate |
Luís Manuel Baptista Figueiredo Raquel João Branquinho Nunes Garcia |
Note: Eduardo José Stock da Cunha resigned as a Director on 11/10/13
Bank of the Year in Portugal √ Portugal The Banker Best Bank in Portugal - in Portugal Euromoney Best Bank in Portugal in Portugal -Global Finance
The Large Bank that Showed Greater Growth √Exame
In six service categories: ≈Privacy & Safety∆, ≈Range of Products & Services∆, ≈Family Office Services∆, ≈Best Bank in the Super Affluent segment (\$ 500,000- \$1,000,000 Dollars) ∆, ≈Best Bank in the High Net Worth segment I (\$1,000,000 - \$10,000,000 Dollars) ∆ and ≈Best Bank in the High Net Worth II segment (\$10,000,000 - \$30,000,000 Dollars)∆
BestForeign Exchange Provider oreign Provider in 2013 in Portugal - Global Finance
Best Company to Work within the Banking and in the Banking and Insurance Sector - Accenture e Exame
Equality Is Quality Prize - Prize CITE e CIG
Best Contact ContactCentre in the Banking Sector Centre in the Banking Sector in 2013 in 20132013 - APCC
In the category ≈Quality of Telephone attendance √ Operations with more than 50 positions∆
• João de Deus Ramos is the winner of the Coimbra University Prize
• Santander Totta implements 1st International Real Estate Auction
• Portugal hosts 5th edition of Santander marathon running
Santander is a large international financial group, whose main business is in commercial banking which totally fulfils the financial requirements of its customers and provides relevant returns to its shareholders. In order to achieve this, it relies upon a highly relevant presence in ten main markets, where it operates in branches with autonomous capital and liquidity, to which it provides global business policies and corporate capabilities in organization and technology.
| VALUES | |
|---|---|
| Dynamism | We take the initiative, we have the nimbleness to discover and exploit business opportunities ahead of our competitors, and we are sufficiently flexible to become adapted to market changes |
| Soundness undness | The soundness of our accounts and discreet risk management are the best guarantees of our growth capacity and of the generation of long term value for our shareholders |
| Innovation | We permanently search for products and services that cover the novel needs of our customers and allow us to obtain increases in profitability greater than those of our competitors |
| Leadership | Our calling is the leadership in all markets where we operate, with the aid of the best human teams, guided towards the customer and towards results |
| Quality of Quality ofservice and customer ce and customer satisfaction satisfaction |
The customer is at the centre of Banco Santander»s business model, we are a bank to further his ideas. We want to understand his requirements, respond with innovative solutions and build long term relations of trust |
| Professional ethics and Professional sustainability sustainabilityainability |
In addition to the strict compliance with legislation, codes of conduct and internal standards, all professionals in Santander work with the maximum of transparency and straightness, comprising in the performance of their duties the Bank»s commitment with the economic, social and environmental progress of the communities within which it operates |
Geographic diversification amongst mature and emergent markets guarantees the sustainability of Banco Santander.
Santander is the first Bank in the euro zone in terms of market capitalization. Founded in 1857, it manages funds amounting to €1.24 billion, 103 million customers, 13,927 branches √ more than any other international bank √ and 182,958 employees at end 2013. It is the primary financial Group in Spain and in Latin America, with relevant positions in the United Kingdom, Portugal, Germany, and Poland and in the North Eastern United States of America. Santander obtained a net result of 4,370 million euros in 2013, 90% greater than in the previous year.
Santander Totta develops a social responsibility policy, aligned with the policy of the Santander Group, focusing mainly on the provision of support to learning, promotion of knowledge, merit and entrepreneurialism, especially in Higher Education, through the cooperation agreements it maintains with Portuguese Universities and Polytechnic institutions.
The Bank is also dynamically active: (1) in the area of social solidarity, through supporting several social projects and with the participation of employees that volunteer in initiatives with social features; (2) in the environmental area, through the adoption and promotion of measures to combat climatic change, waste reduction and sustainable development; and (3) in the culture area, through the support to initiatives and patronage of the arts. The promotion of health and well being and of sports is equally important in areas comprised in the social responsibility policy.
In 2013, the total investment in Portugal in activities directly related with corporate social responsibility amounted to approximately 5.5 million euros, a slight increase over the previous year.
Santander Totta has currently 46 cooperation agreements with Higher Education institutions in Portugal. In 2013, the Bank continued to reinforce relationships with Portuguese Universities and Polytechnic institutions, consolidating existing partnerships and setting up new cooperation agreements.
Several initiatives were carried out throughout the years by awarding prizes for scientific and academic merit, scholarships and mobility, which allowed more than 200 students, lecturers and researchers to enjoy an experience in mobility.
Santander Totta backed, since its inception, in 2004, the project for the candidacy of Coimbra University to achieve the status of World Heritage, through providing the project»s financial needs. It equally sponsored the refurbishment of the University Tower, the Institutions prime symbol.
• Distinction of mobility st mobility st ction students in udents in PortoUniversity University
Santander Totta honoured the students that took part, this school year, in the Programme of International Mobility between Porto University (UP) and the Iberian-American Universities. A total of 90 Portuguese and foreign students participated in the Programme. Throughout the programme»s 6 years, it was attended by more than 500 UP students.
Santander Totta and Porto University (UP) renewed the partnership commenced in 2008. The most visible part of this partnership was the launching of the UP Card, which is used to identify the more than 30,000 members of the University, as well as providing the Bank»s support for the improvement of its facilities, in the incentive to entrepreneurialism and young research activities and in the promotion of student mobility.
Madeira University (UMa) and Santander Totta subscribed the renewal of its cooperation agreement. This partnership, which began in 2002, has allowed and will continue to allow the carrying out of scientific, sports and academic projects organized by Madeira University, in the next four years, specifically the teaching and research activities, allowing UMa to channel funds to the Nanotechnology chair and for the setting up of a chair associated to Tourism.
• Renewal of the Protocol with FCSH of the FCSH
The Faculty of Social and Human Sciences and Santander Totta subscribed the renewal of their cooperation protocol, valid for five years. Through this renewal, the Bank will continue its support towards the Faculty»s initiatives, such as the Santander Prize for the Internationalization of FSHS Scientific Production, the prizes for the best students or the prize for entrepreneurialism. Along with this, the functions associated to the university card will be expanded.
• Renewal of the Protocol with the Naval College
Banco Santander Totta renewed its partnership with the Naval College for the next three years. Through this partnership, the Bank strengthens its support for the Navy in general and, in particular, to the Naval College, especially in the technological support associated to the intelligent university card. This protocol also safeguards the Bank»s support for the Sea Campaigns, a biannual Conference of Students for Students, whose objective is to energize the university community on sea related knowledge.
Santander Totta subscribed a partnership agreement with ISMAI (Maia Higher Institute). Following on this agreement the Bank will support ISMAI initiatives especially in aid of research and in organizing conferences, in international student mobility and initiatives in the field of sports events, as well as the issue of TUI for the whole body.
• Santander Totta/ Nova Totta/ Nova ta/ University Scientific Merit Prize (6thEdition)
The ≈Antibody engineering for the treatment of breast cancer∆ project, led by researcher Paula Videira, from the NOVA Faculty of Medical sciences, was the winner of the 6th Edition of the Santander Totta/NOVA University Scientific Merit Prize. With this research the team intends developing an innovative therapy, more effective and with less toxicity than the current therapeutic solutions for breast cancer.
This prize has a pecuniary value of 25,000 euros and aims to distinguish and reward a Portuguese or foreign individuality, who has been working in Portugal for at least five years, whose work, with recognized scientific and/or cultural merit, has contributed notably towards the progress and greatness of science and/or culture and for the country»s international projection. Neurological surgeon João Lobo Antunes was the party distinguished in this edition.
The former ambassador João de Deus Ramos was the winner of the 2013 Coimbra University Prize, one of the more relevant prizes in the areas of science and culture, amounting to 25,000 euros.
After its fourth edition, iUP25k is already one of the most important national awards amongst incentives to entrepreneurialism in the context of Higher Education; its aim is the innovation in scientific and technological projects and the promotion of entrepreneurialism and the setting up of new companies.
The Entrepreneurialism Prize aims to encourage innovative entrepreneurialism and promote the concept of new business ideas in several fields with students and graduates of FCSH and of other organic units of NOVA University.
• The Santander Prizes for the Internationalization of FCSH Scientific Production, distinguish lecturers, researchers and the FCSH/NOVA Research Unit that have most contributed to the international notoriety of the Faculty»s scientific production, through the publication of articles indexed in the 2012 Web of Science. Fifteen researchers were distinguished in this edition.
These prizes were set up with the objective to stimulate the interest and the dedication of lecturers and researchers who, within the field of their educational activities, coordinate teaching and research and distinguish themselves in the latter activity by their scientific merit and by particularly relevant and innovative interventions.
Santander Totta awarded 6 academic merit prizes to the best students of the different Faculties of Interior Beira University (UBI), who distinguished themselves most in the 2011/2012 school year.
This ceremony also included the inaugural act of UbiMedical, a new company incubating structure that intends supporting and aiding the development of companies set up within the scope of the university whose activities are connected to the health field.
The objective of this prize, resulting from a partnership with the Porto Polytechnic Institute, is to contribute towards the development of long range teaching, at the same time as it brings to light projects that provide value for dynamic and innovative methods of teaching and learning, with recourse to new technologies, through differentiating online contents. Also defined within the scope of the prize was the award of 50 scholarships for integration in research.
The Prize for Economic Journalism (PJE) is a Santander Totta initiative, in collaboration with Lisbon Nova University, and which aims to recognize the quality of journalistic creativity in 3 categories: Company and Business Management, Financial Markets and Entrepreneurial Sustainability.
Throughout its 10 years of existence, the Primus, launched by Banco Santander Totta and by Expresso newspaper, is nowadays a prize for excellence, which has allowed distinguishing and rewarding the best economics, management and engineering students, providing them with access to a highly prestigious complementary
academic training, through attending MBA courses in a Business School nationally and internationally renowned.
The objective of the Santander Totta/Casa da América Latina university prize is to reward merit and stimulate the training of Latin-American university students in Portugal, contributing towards a culture of strictness and excellence. The prize consists in the award of a pecuniary amount of 5,000 euros.
The activity of the Universia Network, as framed in its 2011-2013 Master Plan, is guided by the following strategic features: collaboration between the university and the company, the dissemination of knowledge and the future of Higher Education.
Universia supported the Santander Totta Universities Division, in the enrolment campaign for the 2013/2014 school year, in the issue of university cards at national level, in the operational management of this action, which allowed the issue of 14,000 intelligent university cards (TUI).
Three seminars were carried out in 2013, in Miami, organized by the Universia network, directed towards vice-chancellors, directors, managers and other officers in the Universities comprised in the network, and which were supported by several institutions of international prestige, with a total of 237 registrations from more than 13 countries.
Público Newspaper edited in May, in partnership with Universia, a course in Mandarin, composed by 10 modules with an approximate duration of 60 hours.
Under the theme ≈International Visibility of University Research∆, the seminar organized by the Council of Chancellors of Portuguese Universities (CRUP) and by Universia Portugal had as its main objective approaching the role of research in higher education institutions and its impact in institutional reputation.
2013 was the start-up year for the university sites of the ≈Trabalhando∆ Network in Portugal, with the launching of thirteen sites in nine institutions, the launching of the RFM (Broadcasting Station) employment site and the consolidation of the employment section of Público newspaper, both communication partners in this professional network.
The 4th edition of the U>Rock university bands competition took place from September to December and totalled 68 registered bands, representing several higher education institutions.
Universia Portugal developed platform UNI>COM through a partnership with Mooestro √ a North American company with proven experience in mobile technology and responsible for the mobile applications in Universities in the United States of America and in Chile.
With this partnership it was possible to develop mobile applications for Portuguese universities, as in the case of Nova School of Business and Economics (Nova SBE) and Portuguese Catholic University, who developed applications for their students.
• 10thEdition of Bread for All tion All
For the 10th consecutive year, Santander Totta associated with CAIS to carry out the Bread for All event, with the collaboration of approximately 350 Bank employees who volunteered for the cause. Throughout ten years, thousands of Bank employees volunteered in this initiative and helped Bread for All to become a great success.
Bread for All takes place once a year, in December, and aims to promote the feeling of sharing and of mutual help through the free distribution of bread and hot chocolate to all who visit the tent set up for the purpose in the city centres of Lisbon and Porto.
During the ≈Week You Are Santander∆, that in 2013 was themed as ≈Most Nearer∆, and aimed to bring together the Bank and its employees, to strengthen the team spirit and relationship with customers and with all the neighbouring community, a solidarity initiative was carried out to aid needy families.
One of the days of the week was dedicated to solidarity. Food items were collected in all work sites, donated by employees, obtaining more than 1,600 boxes containing food, which were donated to several social solidarity institutions.
• V RaceYou Are You Santander inPortugal Portugal
The 5th edition of the You Are Santander Corporate Race was held in Portugal, bringing together 57 participants from all the Group»s geographic locations, who ran approximately 200 km between Lisbon and Porto. During the event, the participants dedicated one day to refurbish the games area of ≈Casa do Caminho∆, an institution that shelters children victims of abuse and rough usage.
Solidarity is one of the main features of this corporate event and reflects the global dimension and values defended by the Group.
• Support for for≈Casa do Caminho∆ ≈Casa do Caminho∆ ≈Casa Caminho∆
Santander Totta supported the Casa do Caminho Association, through a donation of funds collected from employees who took part in the solidarity initiative promoted during the You Are Santander Race and during the Clean Desk campaign, when more than 40 tonnes of paper were sent for recycling with the respective value reverting to the Association.
Santander Totta was present with more than 50 employees who volunteered for the BIPP Christmas Fair √ Data Bank from Fathers for Fathers, a two day event. BIPP is a Social Solidarity Private Institution, which aims towards the full inclusion of people with special needs.
The ≈Solidarity Corner∆ area was kept up in 2013, dedicated to the promotion and dissemination of social solidarity projects and initiatives of institutions such as ≈Acreditar∆ (To Believe), BIPP and UNICEF.
Approximately 700 Santander Totta employees and their families took part in the 7th edition of the Porto Half and Mini Marathon, an event which the Bank has given support for the fourth consecutive year.
Santander Totta combined with the solidarity feature of the event, which annually supports a social type project, donating 1 euro for each registration in the Mini Marathon, totalling 6,105 euros. This year, the elected Association was GAS Porto, Group of Social Action in Porto, whose calling is the provision of help and human development in Portugal and in developing countries.
In the 10th anniversary of Bread for All and the partnership with the CAIS Association, Santander Totta launched in its page in Facebook, a solidarity campaign in which for each new fan of its page it donated one loaf of bread to CAIS, at the unit value of 0.20€.
Santander Totta has since 1995 been a founder member of the CEBI Foundation, a social solidarity private institution whose objective is to provide support for children, youths, aged people and disadvantaged families, attending its Founder»s Meeting and appointing a representative on its Board of Directors.
Santander Totta sponsored the participation of five third sector institutions in the 5th fundraising seminar organized by ≈Call to Action∆. The main objective of the seminar was to enjoin the participating companies in sustainable management and adequately collect their resources.
Within the scope of its corporate social responsibility policy, the Bank closely aids the third sector by providing support, sponsorships and donations to different social solidarity institutions, associations and NGOs.
Participation in the National Plan for Financial Literacy, developed by CMVM (Securities Market Regulator), BdP (Bank of Portugal) and ISP (Insurance Market Regulator), whose aim is to contribute towards the people»s level of financial knowledge and to promote the adoption of adequate financial deportment.
Use of social networks to disseminate information with the objective to clarify economic and financial contents. Promotion of a heading, through videos produced with university students, in which are amusingly clarified several economic and financial concepts.
Santander Totta sponsored the 2nd Current Meeting in the Future, the topic of which was, European Portugal. And Now What? This two day event brought together more than 1,200 individuals with the presence of more than 100 speakers and discussion leaders. Its aim was to discuss the future of Portugal and of Europe.
Santander Totta sponsored the 48th edition of the Sintra Festival which was held under the sign of youth. The future generations were celebrated by a number of young performers, amongst which several Portuguese and foreign highly talented pianists with successful international careers.
Santander Totta sponsored the initiative named St. Jerónimo»s Order: A history shared between Portugal and Spain, which was held in the scope of the 2013 Spain Exhibition. The event included two concerts at the opening and closure of the campaigns, the first of which with ancient and baroque music by the ≈Segréis de Lisboa∆ and the second with renaissance music by the ≈Camerata Ibéria∆ group, performed in the presence of customers invited by the Bank.
Santander Totta once again joined the Green Fest, the country»s main event covering sustainability and which, in its 6th edition, was held with the topic ≈Shared Economy∆.
During this event the Bank organized the conference ≈Cooperative Networks∆, followed by a discussion panel, in which were present several individualities specialized in the areas covered. The Bank equally sponsored the ≈Networking Lounge∆, an area dedicated to enterprising companies, organizations and citizenship, in order that contacts amongst them may be established and to share knowledge simply and effectively.
Acquisition of carbon credits for the benefit of a project in Honduras, Central America, which consists in the distribution of 200 efficient ovens over 200 rural communities, allowing a reduction in baking time and the lowering of the quantity of required biomass, thus reducing the pressure on the forests.
• Bank employees help reforest Sintra Hills reforest
Approximately 20 employees volunteered to take part in the planting of trees in the Sintra Hills, within the scope of the Pronatura project, in partnership with ANEFA √ Associação Nacional de Empresas Florestais, Agrícolas e do Ambiente (National Association of Forestry, Agricultural and Environmental Companies) and with Cascais County Council.
This action is framed in the awareness campaign that Santander Totta launched at the end of 2011, named ≈Give the Plants a Pause∆. Via this campaign, the Bank intends to bring its employees» awareness towards the importance in the reduction of waste, disseminating amongst them the several ≈pauses∆ that we can all give to the planet, through the adoption of correct habits and practices.
The Department of Technological and Operational Risk, jointly with the Department of Coordination of Human Resources, again developed, in 2013, a Clean Desk Campaign, with the objective to: (1) improve productivity and satisfaction by reducing stress; (2) protect confidential information on customers or the business; (3) reduce the risk of a safety accident; and (4) preserve the environment by reducing the quantity of paper used.
In 2013, Santander Totta continued developing efforts in the improvement of infrastructure efficiency and development of devices for waste reduction, which implied a total investment of 1.7 million euros.
Economic growth in 2013 kept to moderate terms, in line with 2012, but with important differences in dynamics, whether between regions or between periods: growth showed a more favourable trend in the developed economies, relative to the emerging markets, particularly in the second half year.
| World Economic Growth | |||
|---|---|---|---|
| 2011 2011 |
2012 2012 |
2013E | |
| World World |
3,9 3,9 |
3,1 | 3,0 |
| Advanced Economies Economies |
1,7 1,7 |
1,4 | 1,3 |
| USA | 1,8 | 2,8 | 1,9 |
| Euro Area | 1,5 | -0,7 | -0,4 |
| United Kingdom | 1,1 | 0,3 | 1,7 |
| Japan | -0,6 | 1,4 | 1,7 |
| Developing Countries Countries |
6,2 6,2 |
4,9 | 4,7 |
| Africa | 5,5 | 4,8 | 5,1 |
| Asia | 7,8 | 6,4 | 6,5 |
| China | 9,3 | 7,7 | 7,7 |
| Central and Eastern Europe | 5,4 | 1,4 | 2,5 |
| Middle East | 3,9 | 4,1 | 2,4 |
| Latin America | 4,6 | 3,0 | 2,6 |
| Brazil | 2,7 | 1,0 | 2,3 |
Source: IMF (January 2014)
In the first half of the year, business continued to be characterized by a relative weakness, in line with the trends started at end 2012, with the successive shock waves of the sovereign debt crisis in the euro zone.
As a result of this background, perspectives in mid-year, whether for 2013 or for 2014, were less favourable, and due to this the IMF reviewed growth estimates to a lower level for both periods. This review would become generalized, thus not limited to the euro zone, but spreading to the emerging markets.
Weakness in demand in the developed markets affected their main suppliers, such as China, where the authorities debated the new growth objective, below the ≈reference∆ figure of approximately 8%. At year end, emerging markets were affected by the debate and the later start in the moderation of quantitative stimuli by the US Federal Reserve, which resulted in a massive outflow of funds from these markets, causing exchange rate uneasiness and necessitating intervention by the authorities, including increases in the reference interest rates. South Africa, Turkey and even Brazil, already in 2014, adopted several measures, with heavy increases in
reference interest rates, in order to delay exchange rate depreciation that was being felt by their currencies.
The USA performed well, in terms of economic growth. In spite of some volatility, economy has grown, with the recovery in domestic demand compensating the negative effects of the automatic cuts in public expenditure. Private consumption clearly benefited from the lowering in the unemployment rate to the lowest levels since 2008 and the increase in value of the equity markets to historical maximums. At year end, the deadlock in Congress as to the budgetary strategy to be followed and the increase in the debt limit resulted in the temporary closedown of the Federal Government, which penalized year end growth, but which even then remained strong.
In the Summer, as a result of economic improvement, the Federal Reserve announced it was considering the possibility to put a stop to its non conventional expansionist monetary policy. Investors interpreted these declarations as meaning the almost immediate withdrawal of the excess liquidity injected into the economy, reacting in conformity (10 year yields evidenced a very strong increase), leading those responsible for the definition of monetary policy to issue several declarations aiming to assuage fears and indicating that liquidity would remain.
At year end, the Federal reserve started to lower the monthly volume of acquisitions of public debt securities and securitizations (≈tapering∆), to 75 billion dollars per month, as compared with the previous 85 billion, and again lowered those in January 2014 to 65 billion. In compensation, the monetary authority assumed the express commitment to maintain the reference interest rates at the lowest levels for a longer period of time, even should economic conditions show a quicker recovery, and particularly if unemployment were reduced below 6%.
In the United Kingdom, economic estimates were successively reviewed to higher levels, as a result of the recovery in services, but also from construction and real estate activities. In spite of this, the Bank of England kept to its expansionist policy, allowing an eventual change in reference interest rates to depend upon a more pronounced improvement in economic activity.
In Japan, the Central Bank launched an aggressive programme of ≈quantitative easing", in which it proposes to double the monetary base in the following two years, in order to increase inflation to 2%. In December 2013, inflation already stood at 1.6%, as a result of an increase in energy and transport prices. The underlying inflation, which excludes food and energy stood at 0.7%, thus
returning to the maximum rates recorded in a period of approximately 5 years.
The deterioration of economic confidence was further worsened by another two highly relevant factors. In Italy, the general elections held in February resulted in a deadlock, without a clear majority in Parliament, which rendered difficult in the process of setting up a new government (it took more than one month). In spite of the agreement then reached, parliamentary balance still remains very delicate.
In Cyprus, the banking sector required a recovery plan, after the negative impacts, in terms of results and equity, of its exposure to Greek assets and financial system. The country»s largest banks not only had a strong physical presence in Greece, but also had high volumes of Greek public debt in their portfolios, thus suffering massive losses with the restructuring of the Greek debt occurred in the previous year. The amount of support required (approximately 17 billion euros) is equivalent to approximately 100% of the Cypriot GDP, which would lead to an unsustainable situation in the public accounts. In order to minimize the external aid plan, it was decided that Cypriot depositors should incur losses, thus shattering an inviolate taboo since the beginning of the crisis: the defence of the depositors.
In a first version, all depositors, in all the banks, would be taxed, and this amount (up to 7 billion euros) used for the recapitalization of the sector. As compensation, depositors would receive shares in the bank. The shock waves and the risk of infection led to a review of the plan. Bank Laiki, the second largest in the country, was closed down, with deposits up to 100,000 euros transferred to the Bank of Cyprus (the country»s largest), while higher value deposits were transferred to a "bad bank", and will be recovered with the recovery of the more problematic assets, equally transferred to that institution.
The Bank of Cyprus was intervened: shareholders and debt holders viewed their equity virtually eliminated against losses, whilst depositors with balances in excess of 100,000 euros suffered a forced conversion of their deposits in the bank»s shares, to an amount equivalent to 47.5% of the deposit. As such, the bank complies with the requirement of a Tier I capital core ratio at a minimum of 9%.
As a result of this economic evolution, the European Central Bank lowered its reference interest rates, to an historical minimum of 0.5% and, already in July, pronouncedly changed its communication strategy: it abandoned its traditional speech of non pre-commitment, but preferred to adopt a clear indication that interest rates will remain at historical minimums (the current ones or even lower levels) during a long period of time, until
economic recovery achieves sustainability. The assessment of this sustainability will be carried out with recourse to price, activity and financial conditions indicators in the monetary and credit markets.
A further decrease to 0.25% was adopted in November, due to existing estimates that inflation was decelerating, and would remain far below the ECB reference (from ≈close to, but below 2%), in spite of the more favourable economic data, which the ECB considered would only validate its central scenario. At year end the unexpected deceleration of inflation, which fell below 1%, commenced feeding expectations that the ECB could react, with either a new decrease in the reference interest rate or with the adoption of non conventional measures.
| GDP GDP |
Inflation Inflation |
|
|---|---|---|
| Euro Area Area |
-0,4 -0,4 |
1,3 |
| Germany | 0,5 | 1,6 |
| France | 0,2 | 1,0 |
| Spain | -1,2 | 1,5 |
| Italy | -1,8 | 1,3 |
Source: IMF (January 2014)
During the whole of the second half year, European economic data signalled recovery, stronger than initially estimated, with the PMI indicator of industrial activity standing out by showing a progression to its strongest level of the last two years, and which allowed an improvement in economic perspectives for 2014, as reflected in a review to increased growth estimates..
In the so-called ≈peripheral∆ countries, economic conditions also improved in almost general terms during 2013, from the economic and financial points of view.
Spain and Ireland concluded their adjustment programmes, without requiring supplementary aid. In Spain, the restructuring of the banking sector was pursued with a lower use of public funds as compared to the amount initially made available.
In Ireland, the adjustment programme was concluded in December, with pre-financing for 2014 already made available which, jointly with the fact that the sovereign rating has been set, by all the risk notation agencies, at ≈investment grade∆ 1 , allowed it to dispense with a precautionary programme.
In Greece, however, there are continued risks, in spite of the economic perspectives showing a somewhat lower adversity. At the end of the Summer season, the tone of the discussions increased with respect to the need for a
1 Moody»s reviewed Ireland»s rating to Baa3, on 17 January 2014.
third programme, since the current programme ends in 2014. Already in this latter year, market feelings indicate that a review could take place of the conditions applicable to international loans, with extended maturities.
The European Union continues to take measures in the advance, even if at a slower pace, in the setting up of a Banking Union1 . As a first step, the ECB will take on, at the end of 2014, the responsibility for banking supervision, as directly responsible for the following up of more than one hundred of the largest European banks, the remainder becoming subject to the joint supervision of the ECB and the national central banks.
At year end, the Council of Europe arrived at a consensus concerning the Single Resolution Mechanism (SRM) and the common Deposit Guarantee Scheme (DGS). SRM will be fully in force within 10 years, and in the transitional period the banks should contribute towards the setting up of a resolution fund, which will progressively take on the costs of restructuring/resolution of the institutions. In an initial stage, national authorities will be responsible for such costs. The decision as to the future of the institutions will be taken by an inter-governmental committee, within a complex operational structure. The DGS will equally dispose of a national base, but there are clear rules for the recapitalization of the respective funds, which will depend from the risk profile of each institution.
During the year, European banks commenced the process of anticipated repayment of the very long term loans (LTROs) they had obtained from the ECB in 2011 and 2012.
Total liquidity assigned to the economy is maintained at maximum levels, but excess liquidity which was kept in excess reserves or applied in deposit facilities was markedly reduced, which influenced the dynamics of short term interest rates.
The Eonia interest rate, that reflects the average rate of overnight operations carried out in the European interbank market, increased from historical minimums, of approximately 0.07%, to more than 0.3% at year end. After the lowering of the refinancing rate by the ECB, the Euribor 3 month rate, which had touched a minimum of 0.19%, increased sustainedly, nearing 0.3%. Expectations that the ECB had closed the monetary cycle contributed towards this development.
Source: ECB
Interest rates in the USA dropped gradually, to minimums, as a result of the explicit compromise of the Federal Reserve to maintain reference rates at minimum levels for a prolonged length of time. In the United Kingdom, however, the Bank of England did not change the reference interest rates neither the total amount of public debt holdings, and as such 3 month interest rates were kept stable throughout the year.
Source: Bloomberg
Long term interest rates in the euro zone, decreased sustainedly during 2013, thus fully comprising the commitment announced by the President of the ECB that the institution would carry out whatever was required within its mandate to defend the euro. ECB would announce the major features of its Outright Monetary Transactions (OMT), but without entering into details.
Budgetary execution, in line with the expected, in the main countries, and the signals that the European economy was coming out of recession, provided a relevant contribution for the decrease in yields. Ireland, in spite of its high budgetary targets (an estimated deficit of 7.5% of GDP in 2013), continued benefiting from much lower interest rates than Spain or Italy, and, at year end, it
1 The Banking Union presumes the breach of the relationship between banking risk and sovereign risk, through setting up of three simultaneous mechanisms: (i) single supervision mechanism, attributed to ECB; (ii) single mechanism of banking resolution; and (iii) common deposit guarantee fund.
carried out a 10 year debt issue that allowed it to announce that it would quit the adjustment programme without requiring a precautionary programme or any other type of support from European institutions.
Source: Bloomberg
Portugal accompanied the general trend until May, when the resignation of the Minister of Finance and subsequent political crisis resulted in an increase of long term interest rates: the 10 year yields, which had fallen to approximately 5%, would return to levels in excess of 7%, and only returned to the decreasing trend at year end, with the improved economic data, which aided budgetary execution, and with the submission of the State Budget for 2014. Already in 2014, the 10 year yield fell to 4%, thus returning to lower levels than those existing before the period prior to the request for economic and financial aid, in 2011.
Source: Bloomberg
The yields in the main developed markets √ USA and Germany √ increased sustainedly as from the second quarter of 2013. In the USA, the better economic data, particularly the decrease in the unemployment rate, led the Federal Reserve to publicly announce that it was assessing the need to maintain the quantitative stimuli. The too pronounced increase in 10 year yields, above 3% (an increase in excess of 100bp as compared to the year»s minimums) led to a spot step back in the announcement, which would however be retrieved at the end of the Summer season.
German yields increased, following the trend in the USA, and also due to the dispelling of the main extreme risks in the euro zone (in 2013, the perceived risk of a possible break up of the monetary union was significantly reduced).
Volatility continued high in the exchange rate market, with the main currencies reflecting expectations as to the development of the monetary policy, in the case of the euro also associated to the perception of risk in the viability of the EMU. Even so, most currencies (excepting the yen) fluctuated in an interval of +/- 5% relative to the euro, as compared to their value at the beginning of the year.
The euro recovered from the 2012 minimum, when it was quoted at 1.20 dollars, and fluctuated between 1.28 and 1.38 dollars. The minimum values occurred at the beginning of Summer, when the Federal Reserve started the discussion on the reduction of stimuli, but at year end, on the eve of the lowering of rates by the ECB, it reached the maximum values.
The euro, in terms of effective exchange rate (considering the currencies of the twelve main trading partners of the euro zone), appreciated in line with the dynamics of the remaining currencies.
The yen depreciated approximately 28% comparatively with the euro and almost 25% to the dollar, as the result of the quantitative measures adopted by the Central Bank of Japan.
Source: Bloomberg
The global equity markets were characterized by a general trend of price increases, which would be more pronounced in the second half year. The perspectives that the reference interest rates would keep to the minimums, in spite of the progressive signs of recovery in economic activity, together with the better earnings of the main quoted corporations, contributed towards this dynamism, which took the main indices to 5 year maximums (that is, to the maximums seen before the worsening of the financial crisis, with the bankruptcy of Lehman Bros, in September 2008).
Source: Bloomberg
Portugal was no exception, with the PSI-20 index recording a 16% valuation, in a large measure supported by the banking sector. The completion of the recapitalization process of the main banks (with the recapitalization of Banif), as well as the agreements reached between the EU Competition DG and the banks that obtained public funds was a key factor for the recovery of the prices quoted, in spite of the earnings, in 2013, which were also affected by the decrease in net interest income and by the huge impairment provisions.
Commodities were in general characterized by relative price stability, in 2013, after the major volatility observed in previous years. Oil kept in the range of 100-115 dollars to which it had converged already in 2012, in spite of some spot highs nearing 120 dollars. Demand estimates remained relatively weak, since the activity improvement in the developed economies was not sufficient to compensate the deceleration of the emerging economies.
The remaining commodities showed a depreciating trend, which was more pronounced in the case of cereals, particularly in corn and wheat, result of a better harvest season. The prices of basic metals also fell, in a context of deceleration in the emerging markets.
Source: Bloomberg
Gold prices continued a downward trend, falling to 2010 minimums, at approximately 1,200 dollars per oz. The progressive reduction of aversion to risk, which was more pronounced in the second half year, was largely responsible for these moves.
The dynamics of the Portuguese economy were no different from the global trend seen in the euro zone, with a moderation in the rate of contraction, in the first quarter of the year (when GDP fell successively by 0.4%, after a 1.9% contraction in the last quarter of 2012), which would give rise to immediate recovery in the second quarter and which would be kept up until year end. In the last quarter GDP already increased, in homologous terms, recording a 1.7% growth.
Source: INE
As a result, the contraction in economic activity in 2013 was less pronounced than estimated, -1.4% compared to -2.3%, thus being the third consecutive year of decline in economic activity, which led to the lowest level of annual wealth creation since 2000.
The improvement in activity resulted from the coordination of the progressive stability of domestic demand, particularly privte consumption, but equally of investment, with the continuing dynamism shown by exports.
| Macroeconomic Data | |||
|---|---|---|---|
| 2011 2011 |
2012 2012 |
2013 | |
| GDP GDP |
-1,3 -1,3 |
-3,2 | -1,4 |
| Private Consumption | -3,3 | -5,3 | -1,7 |
| Public Consumption | -5,0 | -4,7 | -1,7 |
| Investment | -11,1 | -13,4 | -7,3 |
| Exports | 6,9 | 3,2 | 6,1 |
| Imports | -5,3 | -6,6 | 2,8 |
| Inflation (average) | 3,7 | 2,8 | 0,3 |
| Unemployment | 12,7 | 15,7 | 16,3 |
| Fiscal Balance (% GDP) | -4,3 | -6,4 | -4,9 |
| Public Debt (% GDP) | 108,2 | 124,1 | 129,0 |
| Current Account Balance (% GDP) | -5,8 | 0,3 | 2,6 |
Source: INE, Banco de Portugal, Ministério das Finanças, Santander Totta, FMI
Regarding private consumption, the annual contraction resulted to a large extent from the dynamics shown in the last quarter of 2012 and the first quarter of 2013. The discussion, already in 2012, surrounding the increase of the Single Social Tax for workers, and the later increase in taxation, to compensate the refunding of subsidies to public servants and pensioners, resulted in a deep lowering of expenditure by households (a cumulative of 2.6% in that period).
From the second quarter of the year, when families became adjusted to the new income levels (because by then the real impact of changes in Income Tax became clear), expenditure started to gradually recover, with this effect becoming more visible in the third quarter of the year.
Particularly important for the improvement in household expenditure, however, was the dynamism shown by the labour market. After an historical maximum of 17.4% in the rate of unemployment, in the first quarter, this was followed by a gradual but sustained decrease, until year end. In the fourth quarter of 2013 the unemployment rate stood at 15.3%, which even showed a decrease in homologous terms. Considering the full year, unemployment rate stood at 16.3%, and thus lower than the most adverse projections at the beginning of the year.
In spite of the reduction in working population in 2013, which, in part, can be explained by the increase in emigration, there was an effective creation of employment during the three last quarters of the year, which would become better distributed amongst sectors at services level. Compared to 4Q2012, 30,000 jobs were created, a number that increases to 128,000 when compared to 1Q2013. Unemployment was thus reduced by 100,000 individuals.
The improvement in the conditions of the labour market was also reflected in the assessment of the unemployment/employment perspectives in the surveys covering consumer and employer confidence.
Investment, in spite of the cumulative decline in the year, commenced recovering in the second quarter of 2013, even if in fact aided by the acquisition of aeronautical material. At year end, investment will have continued to expand, supported by the renewal of the heavy transport fleets and by the inception of projects connected with the fiscal incentives to investment.
Source: Banco de Portugal, INE
Net external demand continued to provide a relevant contribution to the increase in GDP. In 2013, exports of goods and services increased by 5.7%, in nominal terms, whilst imports grew 1.1%. As a result, the surplus expanded to 2.5 billion euros (which compares with a total surplus of 300 million in 2012). Recovery of exports was generalized, including sales to the euro zone (exports to Spain, the main trading partner, grew by 7.4% in 2013). Excluding fuel, exports of goods grew by 2.1% in nominal terms, in 2013.
Source: Ministério das Finanças
Budgetary execution, on a cash flow basis, evolved positively, with a recovery of fiscal revenue, particularly with respect to Personal Income Tax (reflecting the significant increase in tax charges implemented in 2013, with a reduction in the number of tax brackets and reintroduction of the 3.5% extraordinary surtax). At year end, the homologous growth in VAT revenues commenced being visible, in line with the improvement in domestic demand. Fiscal revenue benefited, equally, from the regime of extraordinary regularization of debts to the Tax Authority and to Social Security which allowed and additional revenue of 1.2 billion euros.
In the full year, the Public Administration deficit, within the scope of the Programme of Economic and Financial Adjustment (PEFA), amounted to 7.2 billion euros, lower than the established limit (8.9 billion).
In national accounting, according to the Government, the deficit stood at 4.9% of GDP, lower than the initial estimates. However, when corrected by spot factors (debt regularization, in the case of revenue, and the recapitalization of Banif, in the case of expenditure), the deficit will have been set at 5.2% of GDP.
Source: Ministério das Finanças
In July, the replacement of Vitor Gaspar by Maria Luis Albuquerque as Minister of Finance generated a political crisis, with divergence of opinions in the PSD_CDS/PP coalition, which would be set to rights at the end of the month, with changes in the Government, which brought greater responsibilities for the coalition partner CDS in the coordination of economic policies and relations with the Troika. As a result of the three week deadlock, the eighth assessment of the PEFA was postponed to the end of August, and carried out jointly with the 9th assessment.
As a result, the perception of political risk deteriorated, leading the risk notation agencies to review their rating perspectives for the Republic. At year end, upon the completion of the 10th assessment, and after the submission of the State Budget for 2014, the risk perception started to improve, with a pronounced decrease in the credit spreads, which allowed the Republic to resume financing in the global financial markets, which had been in suspense since the beginning of the year.
In January, the Treasury carried out a 5 year debt syndicated issue, amounting to 2.5 billion euros, the October 2017 Treasury Bonds, with the demand, however, still focused on investors with shorter term investment profiles.
In May, a new issue was carried out, this time in 10 year bonds, with a new benchmark (February 2024 Treasury Bonds), with a 5.65% coupon. The Treasury took advantage of yields decreasing to less than 6%, in a context of strong demand from non resident structural investors (including pension funds and insurance companies).
In December, a debt exchange operation was carried out, amounting to 6.6 billion euros, in which part of the Treasury Binds maturing in 2014 and 2015 were replaced by Treasury Bonds maturing in 2017 and 2018, thus
easing a part of the pressure on financing needs after the end of the adjustment programme.
Already in 2014, the Treasury carried out two issues, at 5 and 10 years, amounting to a total of 6.25 billion euros, thus covering the financing needs for the current year (the remainder is covered by funds from the international institutions). Demand for both issues was very significant (11.2 and 9.8 billion euros respectively), with a geographic dispersal of investors, but above all with the entry of ≈real money∆, particularly from long term investors (banks, insurance companies).
Throughout the whole year, the Republic kept its presence in the short term debt market, with the issue of Treasury Bills. Demand has continued heavy and interest rates decreasing systematically. In the July auction, carried out still in a period of great political uncertainty, interest rates increased, but only marginally, to become corrected by year end.
The banking sector, still in the first half of 2013, largely concluded the adjustment process that was imposed on it within the scope of the programme of economic and financial adjustment. The reduction of the credit/deposits ratio occurred at the end of 2012 (when it already stood at 127.5%) led to its being no longer mandatory, although banks should keep in the neighbourhood of such levels. In September, the credit/deposits ratio of the system stood at 120.8%.
This allowed flexibility in the policy of capturing resources which, in context of pressure on net interest income, was reflected in a marginal decrease in the interest rates practiced. Even so, the capturing of deposits continued, with an approximate 2% growth in private deposits.
The most recent survey on the conditions of the credit markets shows a moderation in the conditions for credit granting by the banking sector, whilst companies commence showing cautious signs in the demand for credit.
However, the credit stock continues decreasing, with an approximate 4% fall in credit to private customers in 2013, particularly in credit granted to companies (a decrease of almost 6%). The non financial sector continues deleveraging and the several processes of analysis of credit portfolios carried out by the Bank of Portugal are also contributing for the reduction in credit stock.
The recapitalization of Banif, with recourse to public funds, also completed the process started in 2012. At the end of the first half year, all the banks had Core Tier I capital ratios above the demanded 10%, whilst BCP, BPI and CGD (the larger national banks) concluded the negotiations with the EU DG Competition to establish the necessary corrective measures as a counterpart of the access to the public recapitalization fund.
Source: ECB
Finance obtained by the Portuguese financial system with the ECB amounted to 48 billion euros, at year end, in gross terms. During the year, and similarly to their European counterparts, the national banks started the repayment of the longer term financial arrangements (LTROs). Adjusted with the deposits with the ECB the net finance amounted to 39.8 billion, a reduction as compared to the 44.4 billion at the end of 2012.
The risks and uncertainties that could affect the activity in 2014 are, largely, the same that conditioned the banking and economic activity in the latter years.
Internationally, the risk factors are related with the sustainability of the economic recovery in Europe and, particularly, in the euro zone. In spite of the stronger economic data in the last quarters, the economic recovery is still in its initial stages, supported by external demand, and with differing cycles between ≈core∆ and ≈peripheral∆ countries. Globally there are risks associated to the recent increased instability in the emerging markets, with deceleration visible in the growth of several economies. Should the uncertainty remain for a prolonged period of time, it could affect the rising recovery in the European economy. The authorities also have a more limited number of instruments to respond to the materialization of possible risks, due to the still high budgetary deficits and public debt ratios, and to the low levels in reference interest rates.
The Asset Quality Review (AQR) to be developed by the ECB in 2014 may reveal itself as an additional risk factor, due to the uncertainty it will have on the sector»s dynamics, at European level.
Domestically, a factor of uncertainty is linked to the completion of the Programme of Economic and Financial Adjustment, in May, since a decision does not yet exist as to the way out without explicit aids, such as happened in Ireland, or if with some sort of precautionary programme. The best economic dynamics, and the fact that the Republic has already covered its financing needs for 2014, reduces some of the risks which were still latent a few months ago.
From the point of view of budgetary execution, in 2014, one of the important measures for the reduction of expenditure, which is the deeper reduction in the salaries of public servants, is currently being assessed by the Constitutional Court, which may, should it be considered unconstitutional, demand additional measures of consolidation, which may affect the confidence of the economic agents and/or the risk perception over the Portuguese economy, with effects on the ongoing economic recovery. After the Summer, the proposal for the 2015 State Budget is a relevant factor, with the materialization of the measures necessary to reduce the budget deficit to 2.5% of GDP.
As regards the financial sector, risks are now less linked to the economic cycle and to the quality of the credit portfolio, after the several asset assessment programmes developed by the regulator. However, here as well, the AQR will be a factor of uncertainty, since some of the assessment criteria are not yet known. The great challenges are the sustained return to the global financial markets and the regaining of profitability.
2013 was earmarked by great uncertainty caused by the economic and financial crisis. However, in the second half of the year there were signs of national and international recovery.
The soundness of the Santander Totta accounts allowed continuing the sustained credit granting policies both to private customers and to the Business/SMEs segment.
With reference to resources, the pursued policy comprised the placing of products with controlled margins, with an adequate management between prices and volumes for the capturing of new resources, with preference towards the diversification of customers» assets. Twelve structured deposits with guaranteed capital and minimum yields were launched, amounting to a total of 1,019 million euros, and, in foreign currency (USD) 98 million euros were placed in 8 issues, 327 million euros in capitalization insurance, in a total of 9 issues and 2 Special Investment Funds with 109 million euros.
In 2013, the placing of customer protection insurance, specifically in health, life and salary protection insurance exceeded 107,000 policies.
Throughout the year an important focus was kept on the capture of new domiciled salary accounts and on the control of all risk headings, aiming towards the growth in transactionality.
Regarding personal credit, the internal ≈Crédito Outono∆ campaign was launched, this being pursued throughout 2013, and resulting in a production of 518.5 million euros. The ≈Crédito Pessoal Activação∆, a credit line with a promotional rate during the 1st year, was equally an essential campaign to capture credit.
To retain current customers with personal credit, the bank continued making available the ≈Crédito Mais∆, a line of credit that allows renewal of ongoing loans and enables a reduction of the instalment and/or increase in the current loan without increasing the monthly payments. Two new products were launched at the end of the year: the ≈Crédito Certo∆, a line of credit that allows adjusting the value of the credit instalment to the monthly amount that the customer indicates as available for its payment; and the ≈Crédito Flexível∆, a line of credit that allows the customer to benefit from lower instalments during the first months of the loan, a period during which only the interest is payable.
The policy of the implementation of new solutions for debt regularization or renegotiation was consolidated, adapting them to each customer»s compliance capacity, supporting families in line with their availability. In spite of the difficult environment, it was possible to comply with the targets, as regards the control of non performing loans.
The bank also launched, throughout the year, campaigns and solutions directed specifically towards other customer segments, such as: i) Juniors/Youths √≈Conta a Crescer∆ and ≈Já KáKonta∆ campaigns; ii) University members √ specific packs for the Erasmus programme iii) Residents Abroad √ energizing the areas of transfers and capturing of resources, through the provision of attractive conditions in different currencies.
Credit cards were also largely focused on through the internal campaign, launched in the second quarter, named ≈Crédito Verão∆, with the objective of placing credit cards with new customers. A specific offer was set up with attractive conditions for customers. The number of new credit card customers, in the year, reached 58,610 new customers that from then on preferred the Bank in their main transactions.
With respect to acceptance, Santander Totta»s position as preferred Bank was strengthened with the larger sized businesses, namely the main distribution channels, in food, clothing, transports and fuel distributors, which resulted in a 17.8% market share.
Commercial policy in the Business segment comprised the placing of an important focus on the granting of credit to new customers, in the binding of current customers and in the increase in transactionality.
The internal campaign named ≈Crédito Primavera∆, intended towards the Business/SMEs segment, commenced in the 1st quarter, resulted in an 19% annual growth in credit production. Outstanding is the 33% growth in the amount contracted, in the Business/SMEs segment, in the SME Growth line, when compared with the same period in 2012.
In the Premium segment, 2013 was shown to be an important year for the increase in market share in this customer segment, and the main business objectives were achieved. The campaigns launched to capture customers in high income brackets as well as the work developed in profiting from the agreements reached with corporate
customers with a high income potential, provided a very relevant contribution.
In parallel, the investment carried out in following up the ≈Customer Experience∆ in this segment, has allowed the Bank to submit the most adequate solutions for increasing satisfaction with the requirements detected.
In the Private Banking area, and notwithstanding the continuous demand for assets with controlled risk and high liquidity, we witnessed, mainly in the last quarter of the year, an increase in the customers» propensity for riskier financial assets, which, in turn, provide a greater profitability potential.
As such, the Santander Totta Private made available a new consultancy tool, used globally in Santander, which allows financial counselling for products and services in line with the profile and individual objectives of each customer, guaranteeing under consultancy that the chosen products are in accordance with the customer»s level of experience and financial knowledge. This new methodology, jointly with the continuous training of the Private managers, allowed an increase in the profitability of the portfolios, growth in terms of customer numbers and expanding the portfolio of products and services that Santander Totta makes available.
For the third consecutive year, Santander Totta was attributed the Euromoney prize in the ≈Best Private Banking in Portugal∆ category.
Resulting from its soundness, liquidity and financial capacity, Santander Totta has been performing a crucial role in the support to the Portuguese entrepreneurial fabric, contributing towards the recovery of the economy, specifically through dynamizing the development of credit granting and in increasing international trade by strongly supporting the exporting companies, the internationalized companies and those that are in the process of becoming internationalized.
Strong pressure was felt on the price, in 2013, which was intensified in the last quarter of the year, due to the sector»s contest for the company market, with the Company Network keeping up a strategy based on the balanced management between the volumes of the credit portfolio and resources, guaranteeing the sustained growth of the profitability of the commercial network.
In the lines SME Invest/Growth, Santander Totta maintains a relevant intervention with a 17% market share, having placed until the end of 2013, more than 17,900 operations, amounting to a total of approximately 1.9 billion euros. In the 2013 SME Growth line, which
began being marketed in February, the Bank holds a 16% market share in the amount of financing operations framed within the SME - Investments. Additionally, Banco Santander Totta is the leader in the SME Expansion line, with a 41% rate of adhesion.
It is equally outstanding that Santander Totta maintains the leadership in factoring and confirming, with a 22.5% market share, thus proving the Bank»s commitment and availability in supporting Company treasuries.
Within the commitment that the Bank assumed in supporting the Portuguese economy, particularly the exporting companies and those undergoing internationalization, the following initiatives were developed:
Exporting customers have the support of a multinational specialized team, with experience in internationalization, with emphasis for the superior value of the network of contacts in the countries where the Group operates.
To support the internationalization of Portuguese companies, Santander Totta provides the International Desk, whose objective is to establish an effective trading link with the Santander Totta Companies Network, jointly with its counterparts in the several banks comprised in the Santander Group, located in different markets, with special reference to the business flow with Brazil and remaining Latin American countries (specifically Mexico, Chile, Peru, Uruguay and Colombia), and with Angola and Spain, enabling taking advantage from its
international dimension to improve the potential of the international business of Portuguese companies.
DCPMI √ Department of Coordination of Real Estate Promoters and Brokers, the Bank»s area for dynamizing these external channels for capturing business, continued, in 2013, a strategy of great proximity and permanent follow up of its main partners.
With a management team already highly specialized in the identification, energizing and following up of External Promoters and a policy of very clear communication and dissemination priorities, based on several tools, it has been possible to achieve one of the main objectives of this area that increases still further the binding and the commitment that external partners already enjoy with the Bank.
As such, quarterly meetings» importance has been stressed held with the main External Promoters where the guiding lines of the strategy established for each quarter are presented.
With the objective to maintain a relationship of great proximity with the real estate brokers with whom we have already established protocols, and a relation of trust and partnership lasting several years, the Bank attended, once more, the SIL √ Salão Imobiliário de Portugal (Portuguese Real Estate Exhibition), with its own stand.
An important axis of growth in the actions of DCPMI in these channels has been the permanent increase in the number of Promoter shops which more than ever allow the national coverage of a network that acts as a complement to the Bank»s branch network, as shown by the more than 270 offices for the promotion of products and services.
During 2013, the implementation of plans continued for the energizing of products for companies and businesses, which were jointly designed with the commercial area. These plans involved the specialists that, jointly with the customer and product managers, developed specific programmes offering products and services that aim to satisfy the companies» requirements.
Specific and multidisciplinary working teams were also established to accompany companies for migration to SEPA (Single European Payment Area).
Recognizing the relevance of a correct management of liquidity, Santander Totta continued offering exclusive
products, and consolidated the launching of the ≈Home Deposit∆, a product that distinguishes the Bank in the market and that allows companies to carry out a more efficient management of their resources as well as the whole operational process of cash collection and treatment.
The launching of products, such as those described above, allowed Santander Totta to be recognized as one of the main providers of cash management services in Portugal, more than ever consolidating its presence with companies.
This activity, in 2013, was based on a strategy of transactional optimization of the currently existing ATM´s in the Multibanco network, thus providing a continuing change of location of this equipment to sites with a greater transactional potential and the retirement of equipment with negative profitability. Consequently, the market share stood at 12.1% in ATM numbers and at 12.8% in number of transactions.
Always keeping in sight proximity with the customer, continuity was equally provided to the adjustment and increment of automation deposit solutions, already attaining 565 installed equipments and a 70% cover of the branch network.
The contracting of new types of savings products has already commenced in the Internet and Netbank Private channels with the Programmed Plans. Also outstanding is the launching of a new functionality that allows receiving instructions for investing in the primary market which, in the case in question, supported the CTT (Post Office) IPO and also the availability of new credit card functionalities.
Improvements were obtained in the availability and performance of websites and in a growth in traffic, with the number of individual visitors in NetBank Private increasing by 6%, whilst the number of frequent users recorded a 4.5% growth in 2013. Also recorded was an increase in the number of customers that carried out transactions.
Outstanding in NetBank Companies are the developments regarding the adequacy of Regulation (EC) 2560/2001 SEPA Transfers and Direct Debits. Also launched were functionalities that allow customers, with full autonomy, to issue (in this case exclusively in Netbank Companies) and download meal tickets, enabling a relevant fiscal saving, both for employers and employees with respect to
the payment of the meal subsidy. Simultaneously, in the field of payment for services, emphasis is placed on the automatic issue of simplified invoices through this channel.
≈Mobile Particulares∆ was launched as an application for Android and Apple mobile devices and the Mobile Device was launched, with exclusive operation in this channel, and which was well received by customers. The advantages of access through this new Channel were heavily promoted with customers.
During 2013, the Santander Totta Contact Centre was considered for the fifth consecutive year the ≈Best Contact Centre in Portugal in the Financial Sector∆, a prize awarded by the Portuguese Contact Centres Association.
It was equally the winner of the Trophy CallCentre in Quality of Service in Telephone Contact in ContactCentres with more than 50 attendants, a prize awarded by IFE √ International Faculty for Executives.
The total number of contacts in 2013 with ContactCentre operators was slightly in excess of those in the previous year. Customer attendance through chat was expanded, and there are currently further requests for contact points in the Bank»s site for Private customers.
Investment was intensified in the increase of the autonomy of the ContactCentre to resolve several requests and measures implemented to guarantee a swifter response to customers» requests, this having been aided by the attributing of a request number, thus allowing a better follow up by customers.
Witnessed, throughout 2013, was the launching of new initiatives in Facebook pages, with a significant increase in the number of entertainments. The number of fans of the Bank»s official page grew substantially and exceeded 50,000.
The economic environment in 2013 was characterized by the continuing climate of austerity and the search for a budgetary balance, particularly in the countries within the European Community, and uncertainty persisted, until mid-year, regarding the capabilities of the peripheral economies.
The strategy pursued in the international area continued with the strengthening of the proximity with customers
residing abroad, aiming to equally find out, through the external units, those who commenced their working life away from Portugal, energizing the offer of services and of solutions in close connection with the commercial network in Portugal.
As such, the offer of the ≈Super Conta Residentes no Estrangeiro∆ was updated and several solutions were made available for savings management.
To strengthen the links between customers and Lusodescendant entrepreneurs, representation offices and branches in Portugal, visits took place and events were promoted in Paris, London, Zurich and Caracas. The Bank also attended the 9th Annual Conference of the Anglo-Portuguese Chamber of Commerce which, for the first time, organized an event, in London, for the promotion of real estate offers in Portugal.
The Summer campaign was an important strategic axis in the relationship with and support to Portuguese customers resident abroad. Visible in national airports and the media was a welcoming campaign, providing the offer of savings solutions in order that, apart from interesting profitability, they could share their security and trust with Santander Totta.
The London branch, within the scope of its business activity, was focused in the relationship with the Portuguese residing in the United Kingdom, particularly with respect to some customer groups, specifically supporting cooperation protocols with professional and technical groups that opted to work in that country.
Special regard was also kept on the follow up and recovery of the credit portfolio, control mechanisms of which were strengthened, in addition to holding meetings and in the search for solutions with customers.
With respect to commercial strategy, the volume of business in the area of residents abroad showed a slight decrease with a growth in the average profitability of the portfolio and greater binding. Significant growth was recorded in new customers in the segment.
With reference to the credit portfolio held by residents abroad, a slight reduction occurred essentially due to normal repayments.
Finally, and with reference to transfers from residents abroad, channelled through Santander Totta, promotional and dynamizing actions were pursued in the more important countries for the sector, the outstanding feature being the easy and flexible means through which customers transferred funds to Portugal, which resulted in 16% market share.
Also carried out were two competitions that aimed to reward customers that opted for the Bank»s transfer services, this resulting in a favourable evolution in the volumes transferred.
The Corporate Finance area consolidated its position as one of the main players in the national market for financial consultancy. The following operations stood out: (1) financial consultancy to Beijing Enterprises Water Group in the acquisition of the water concession business to Veolia in Portugal; (2) consultancy to British Columbia Investment Management Corporation in the acquisition from Galp Energia of their 5% holding in the share capital of Compañía Logística de Hidrocarburos (CLH); (3) consultancy to Riverside in the issue of a Fairness Opinion for the purpose of the disposal of ONI to Altice; (4) consultancy to Optimus over the merger with ZON; (5) consultancy to Sodim on the economic and financial assessment of Cimigest and issue of a Fairness Opinion; and (6) co-leadership of the syndicate for the placing of the CTT √ Correios de Portugal, S.A., (Post Office) IPO, carried out within the scope of the 1st stage of the company»s privatization.
During 2013, the portfolio of Corporate Finance operations was also strengthened and there are several other ongoing consultancy processes for transactions to be concluded in the next few months.
In the Credit Markets area, 2013 reinforced the climate of optimism commenced at the end of 2012, with international investors once again viewing Portugal with great interest searching for good investment opportunities. Companies took advantage of the trend towards lower credit spreads to take decisions over the lengthening of their indebtedness and in anticipating their refinancing requirements, both in the market for syndicated loans and in the bond market, in this latter also with an increase in the number of issues for private investors and issues for private placing.
However, the continuing restrictive economic environment kept up a negative pressure over new decisions on private and public investment. Even so, in spite of this context, Santander Totta continued as one of the institutions with a constant presence in the analysis of the existing opportunities and in the support to promoters in the materialization of their projects.
In the area of acquisition financing, Santander Totta continued a strengthened activity in the support and structuring of financing for the acquisition of Portuguese companies and assets for Portuguese and international corporate customers and in supporting the privatization plans.
In Asset & Capital Structuring, Santander Totta continued analysing and exploring market opportunities that kept arising as a result of the economic environment.
Through the Fixed Income & FX area, the Bank continued as a natural partner of Portuguese companies, helping to manage the risks associated to interest rate markets and to international trade and investments in countries with different currencies. Standing out within this activity is the support provided to Portuguese companies involved in exports and imports, exploiting the capability to offer products that allow the efficient management of exchange rate risks. This activity is developed jointly with other areas of the Bank providing relevant services to international activity. Emphasis must be given to the fact that Banco Santander Totta was considered by Global Finance magazine as being, once again, the best finance institution in the FX (foreign exchange) area in Portugal, having been appointed as the Best Foreign Exchange Provider.
The year was featured by a recovery in the equity markets not only as regards the valuation of securities but also in the increase of the transacted volumes. The growing optimism, particularly since the second half of the year, over the economic recovery in the euro zone and in the United States, led the EuroStoxx50 to consolidate above the 3,000 points during the year»s last quarter, while the renewal of the successive maximums in the American markets were being closely watched. In the Cash Equities activities, a significant recovery was viewed in the customers» propensity for the equity market, reflected in the 150% increase in the commissions generated by the customers with direct access to the broker. The bond market suffered a reduction in the transacted volumes as compared to 2012, particularly in the last quarter of the year.
The activity in Santander Totta»s area of Institutional Custody continued with stable volumes and obtained the 2nd place in the national ranking of Custodians, with a market share of approximately 21% in the volume of assets under custody, in line with the last data made available by CMVM (Securities Market Regulator).
Resident and non resident institutional customers had the opportunity to assess the quality of the custody services rendered by the Bank through the specialty magazine Global Custodian, the outstanding fact being the award of the Commended prize in the 3 categories √ Leading Clients, Cross-Border & Domestic.
Keeping to the conservative view that has ruled the actions of the management company in the latter years, Santander Asset Management (SAM), endeavoured, once again to manage its products with a level of controlled risk, focusing on the maintenance of high and adequate levels of liquidity, not failing to benefit from the opportunities that the market has provided. The year was also featured by the dynamization of the range of funds (amongst which the Multitesouraria fund stood out with a total of net subscriptions amounting to 84.6 million euros) and by the strong commercial activity.
Also outstanding due to its merit was the launching of two new FEI's: FEI Ibérico Maio 2013, in the first half year (amounting to a total of 38.9 million euros) and FEI Ibérico Premium Julho 2013, in the 2nd half year, (amounting to a total of 70.3 million euros). Three FEI's became due: FEI Estratégias Europeias (a total amount of 18 million euros), FEI Valor Invest I (a total amount of 98.8 million euros) and FEI Valor Invest II (a total amount of 36.4 million euros).
At end year, all the mutual investment funds actively managed by Santander Asset Management exhibited positive return, namely, Santander Multitesouraria (1.5% net return), Santander Multicrédito (3.5% net return), Santander Global (2.4% net return) and the share funds: Acções Portugal (31.9% net return), Acções Europa (21.3% net return) and Acções América (18.3% net return). It should also be noted that the Santander Acções Portugal fund has been, consecutively throughout the year, the best national fund considering 12 month return.
At the end of 2013, the mutual investment funds managed by SAM held an 11.5% market share.
Regarding real estate investment funds managed by Santander Asset Management, these amounted, at end 2013, to a total of 526.2 million euros, a market share of approximately 4.4%.
In 2013, the gradual development of the Portuguese economy continued very conditioned by the adjustment process commenced in 2011, in an unfavourable external environment, and a slowing down of activity.
In 2014, estimates indicate an improvement in the economic cycle, which will be favourable for the Portuguese financial system but, on the other hand, a relevant factor of uncertainty still exists, which is related to how the Programme of Economic and Financial Adjustment for Portugal will be concluded.
In 2014, one of the greatest challenges for Santander Totta is the increase in profitability levels. The evolving of the net interest income will be a critical factor for the increase in the Bank»s revenues, through a balanced management between the normalization of the liability cost and the growth in business volumes.
Focus on the customer will be kept going as a strategic priority through the implementation of plans for capturing new customers, strengthening the position in primary Bank customers, increasing their binding and transactionality.
The comfortable postion of the Bank in terms of capital and liquidity, allows pursuing a policy of support to the Portuguese entrepreneurial sector, with particular emphasis on international business by supporting exporting companies, the internationalized companies and those that are in the process of becoming internationalized, taking into consideration a better balancing in the structure of the credit portfolio in terms of the increase of the relative weight of the Companies segment and respective market share, as well as the increment in the levels of transactionality.
On another hand, the optimization of expenses, associated to a new competitive environment will also be kept up as a strategic priority in 2014.
Maintaining relevant caution in risk management, a fundamental axis in the Group»s operation, 2014 will witness the implementation of better adjusted models to each customer segment, providing agility to all the decision process concerning risks.
One of the major objectives of Human Resources area in 2013 was to be closer to employees and business, and established as bases of development: Talent, Innovation, Knowledge and Culture, guided by three vectors: the Future, the Business and Energy.
The support and direct follow up provided for the optimization of the branch network required a close proximity to the business areas, reflected by the more than 450 visits carried out by the Human Resources managers.
With the objective to improve the quality of attendance in the branches identified in the ≈waiting times∆ indicator, continuity was given to the ≈BeUp∆ programme, commenced in the previous year, with 224 visits carried out and 108 branches followed up, through behavioural type interventions based on coaching techniques, aiming towards excellence in customer relationship.
The award of 361 new salary levels, the fact that 96% of employees received variable remuneration and the 0.5% salary increase show the importance given to merit recognition and employee individual contribution towards the achievement of the Bank»s objectives.
Singled out in the Knowledge and Development area are the programmes in the ≈Customer Engagement∆ feature, with the carrying out of the ≈Experience 100%∆, ≈To be excellent∆ and ≈Commercial Energy∆ programmes, always with the objective to develop skills that increase the trust relationship of customer with Bank.
In the Development area, programmes were carried out on ≈Executive Coaching∆ and ≈Mentoring∆ which were included in the following programmes ≈Mentoring for University Graduates∆ and ≈Santander Future for Young Executives∆.
Of a total in excess of three hundred thousand hours of training, 46% were carried out with E-Learning. The Bank has a platform that comprises 125 E-Learning courses, thus allowing a larger offer to respond to individual needs and geographic dispersion.
Training carried out in the Juridical and Standardization categories was outstanding, particularly with respect to actions in the prevention of and cash laundering and in the Pari and Persi regimes.
In the field of collaboration with Universities, Santander Totta took part in Employment Fairs and Jobpartys, and carried out 4 actions of Junior Consulting in the Bank»s internal projects. Within the scope of probationary periods, the Bank received 196 students from several schools and universities.
No of training hours √ 300.194 No of training hours per employee √ 57 %age training with e-learning √ 46% Investment in training √ 1,800,000 € Investment in training /total remunerations √ 1.07%
Whilst a ≈Family Responsible Company∆, several training initiatives were carried out for employee offspring: ≈Learn to Set Up Your Business,YA?∆ under the topic of entrepreneurialism, in partnership with an university, and the course ≈Searching for Magic (TEEN)∆ that approached means on how to design the path of success, using basic concepts of Neurological Linguistic Programming (NLP).
In 2013, the certification of Santander Totta as a ≈Family Responsible Company∆ (FRC) was confirmed by the Más Familia Foundation. Within the scope of the renewal audit, the Bank improved its notation in the schedule of FRC companies, from ≈C∆ to ≈B+∆, a reflex of continuous improvement and regard given to this issue. There are more than 40 measures of conciliation and balance at the disposal of employees that deserved the attention and recognition of the external auditors and that sustained this distinction.
The unfavourable economic and social environment existing in 2013 continued requiring special attention and the strengthening and development of extraordinary measures that aimed to lessen the effects of the crisis, and which resulted in the following initiatives: (1) implementation of the ≈Children Ticket∆ and ≈Meal Card∆ with direct fiscal benefits for employees; (2) renewal of the 310€ contribution to all employees with offspring attending higher education and with monthly salaries equal to or lower than 2.090€; (3) contribution of 50% of the value of the social season tickets for
employees framed up to level 7 of the Collective Workers Agreement for the banking sector; and (4) the 60€ award to employees who have their offspring attending school classes between the 5th and the 12th years, with a monthly salary equal to or less than 1,500€, to aid in the purchase of school books.
Internal recognition was once again expressed in the results obtained in the assessment of internal satisfaction, ≈How»s the Climate∆, which was carried out in 2013 and according to which 92% of employees consider that the programme ≈You Are Santander∆ should be kept going forward. Also evidencing the value of the measures that the Bank has been introducing for its employees is the external recognition shown by the prizes awarded in 2013 √ ≈Best Company to Work In The Banking and Insurance Sector∆ attributed by Accenture and Exame magazine; Equality is Quality∆ attributed by CITE and CIG∆; and the nomination for the ≈Top Ten of the Best Companies For Leadership∆ by the Hay Group.
The 6th edition of the ≈Semana Santander és tu∆ was subject to the topic ≈Proximity+∆: comprising Employees, Teams, Customers, and ≈Solidarity+∆. Customers were included for the first time in the week»s events, one of the days being dedicated to them, an innovation which pleased the commercial area and was welcomed by the customers who were invited to visit their branch on that occasion. In addition to the traditional ≈Employee Day∆ and the ≈Direct Contact Day∆, what deserves notice is the solidarity initiative during which food items were collected and later donated to institutions indicated by the local teams (more than 1,600 ≈solidarity boxes∆) and which developed the proximity with the communities where Santander Totta operates. The closure of the week»s events was signalled by a ≈foot paper∆ for health promotion, which included attendance by more than 100 employees from several of the Bank»s professional areas and from the country»s regional operators.
The ≈Challenge +∆ was an initiative which took place between April and June. To keep healthy habits, healthy nourishment, stimulate physical exercise and combat sedentary habits were the key topics of this initiative which was developed with weekly launched consecutive challenges.
Also within the scope of ≈You Are Santander∆, the V Edition of the ≈You Are Santander Run∆, was held in Portugal, having previously been held in Spain, Chile, United Kingdom and Mexico. The event brought together 57 runners representative of the 17 countries where Santander operates. Solidarity was one of the values present in this initiative with the runners taking part in the recovery and improvement of several outdoor areas (cleaning of gardens, organization of a pedagogic vegetable garden and wall painting) of the ≈Home Route∆, an institution in the Porto region that shelters
children from birth to six years old that were abandoned or victims of abuse.
Employee offspring that were awarded prizes in the initiative ≈Bank Rewards Employee Offspring∆ numbered 34. This initiative is intended to value the merit and effort of these youths who become distinguished by their academic achievement at the completion of their secondary schooling. Children rewarded in the seven editions of this event already number 137.
As previously referred, solidarity activities continued being part of the agenda of the initiatives promoted and supported by the Human Resources area. The dynamizing of the ≈Solidarity Singing∆ in the Totta Centre, set up in 2012, as an area for social institutions to promote their activities, included the presence of ≈ACREDITAR∆ (To Believe), UNICEF and BIPP representatives. Volunteers also had an active role in the energizing and participation in several events such as the BIPP Christmas Fair, the actions developed by the ≈Casa de St. António∆ (St. Anthony»s Home), the tree planting initiative in Malveira da Serra and in the already traditional Bread for All. Launched internally, still in the ≈You Are Santander∆ week, at Christmas time, were two actions of food collection, such as the ≈Solidarity Box∆, intended to support social institutions and/or families indicated by local teams, and resulting in the Bank having donated 4,057euros to the ≈Home Route∆, an institution that shelters abandoned children.
With reference to internal levels of satisfaction and in line with the commitment to carry out such a measurement every two years, the 5th edition of the ≈How»s the Climate∆ questionnaire was implemented.
Globally, the results demonstrate that Santander Totta consistently maintains a sound internal climate and that there is great pride in working for Santander Totta (96% of employees), a revealing indicator of a high degree of commitment.
| DIMENSIONS | 2006 | 2007 | 2009 | 2011 | 2013 |
|---|---|---|---|---|---|
| CONCILIATION | n.a. | n.a. | n.a. | 66% | 73% |
| CREDIBILITY | 74% | 78% | 83% | 85% | 85% |
| DYNAMICS | 52% | 56% | 59% | 64% | 63% |
| TEAM SPIRIT | 59% | 69% | 76% | 81% | 81% |
| IMPARTIALITY | 49% | 57% | 63% | 65% | 66% |
| INNOVATION | 70% | 75% | 80% | 81% | 81% |
| LEADERSHIP | 71% | 73% | 77% | 80% | 81% |
| PROUDE | 64% | 71% | 77% | 92% | 90% |
| QUALITY | 68% | 75% | 82% | 85% | 85% |
| RESPECT | 64% | 64% | 73% | 76% | 81% |
| SANTANDER ES TU | n.a. | n.a. | 87% | 89% | 89% |
The Technology & Processes area is responsible for the availability and management of the technological infrastructure, for the development of procedures and for the management of the network means of Santander Totta, permanently guaranteeing the adequacy of the applications and technology platforms (hardware, software, communications, amongst others), of the business processes and operational control to efficiently support the Bank»s activity, with controlled levels of operational and technological risks.
During 2013, the quality of the technology services continued under focus, standing out, due to their relevance, the reduction of technological risk, the development of actions to improve the application support for the business, as well as the compliance with the control activities, as established in the Bank»s Model of Internal Control, in the technology feature. On another hand, several regulatory projects were developed, concerning the reduction of incidences, stabilization and optimization of the exploit of technological resources, as well as the increase in availability of services offered by the Bank, with particular incidence in the channels available in the Internet and in Mobile Banking.
Developed within this activity, to come into production in 2014, was the new site of the public component of ≈Netbanco Particulares∆, aiming to provide the Bank with an updated platform with better dynamics and inhibit the technological risk inherent to obsolete components. Equally completed was the project to update the management system of the customers» data base, including the management components of addresses and functionalities of the citizen»s card, enabling the branches, at the same time, with the new commercial agenda intended for the respective managers, this being a tool of modern management integrated with the remaining components of the information system.
The migration process to the Windows 7 operating system was completed and is in the launching stages; this comprised several technical projects with the aim to reduce incidences and to keep the technological risk of the involved applications at adequate levels..
Also deserving special reference is the investment carried out in projects to comply with the new legislation and regulation, amongst which stands out the adaptation of the systems for SEPA1 and FACTA2 payments.
In the Business Processes area, a number of projects were carried out that aimed to improve processes and the continuous increase in efficiency, as well as the compliance with the standards issued both by the regulators and by the Group. Standing out:(1) the operational and functional optimization of the Companies Network;(2) the adaptation of all the hardware and software of the equipment of the commercial network to comply with the implementation of the new 5 Euro bill, maintaining the equipment approved by the ECB;(3) the implementation of the regulator»s (Bank of Portugal) standards as to the treatment of the Unfit bills;(4) the implementation of a new process that guarantees the strict compliance with the MiFID standard by the commercial network; and (5) the implementation of a new process that guarantees the compliance with the Group standard as to the concentration of assets and the operational and functional optimization of the Private Network. The implementation continued at a fair rate, of the North American FATCA regulation.
The Network Means Department has been operating systematically, through periodical visits and actions with the business units, guaranteeing compliance with the set proceedings and with the standards in force, identifying weaknesses in control and internal functions and promoting several mitigating, training, supporting and improving actions.
Within the scope of the follow up of the centralized operation, a review is being carried out on the monthly recurrence in the main features of operational control that must be ensured by the network»s business units, aiming to mitigate / minimize impacts in terms of operational risk.
Service quality is one of the bases of the Santander Totta management model.
In a world in constant change and in such a competitive market as the banking market where all the players search for improvement and quality of service, the Bank has assumed as an objective in the latter years the improvement of the ≈Customer experience with Santander Totta∆.
In a market where products and services are easily resembled, the differentiation and the quality of service perceived by the customers in each contact with the Bank depends fundamentally on the details that stand out with attendance. In 2013, Santander Totta continued developing the priorities defining the improvement in
1 SEPA √ Guarantee the timely, progressive and efficient migration of the transfers of direct credits and debits to the SEPA standards and its transition to the Portuguese standards.
2 FATCA √ Implementation of the requisites of the FATCA standards, whose objective consists in identifying and reporting to the US Treasury all the US Persons and their assets as a component to dissuade tax evasion.
customer attendance, both in terms of attitude and in terms of waiting time in the branches and in telephone attendance.
The bid placed on the ≈value of attendance∆ led to the involvement of the whole Bank in the objective to become the preferred Bank of our customers.
An individual and personalized compilation at the level of all the commercial figures was developed to become part of the daily routine of each employee, to be used as a reminder of the four essential attitudes to provide good attendance, viz.: how to attend, know how to listen and smile, pay full attention to the customer and how to make a farewell.
After the introduction of the innovative classification of the Bank»s branches with stars, through quality indicators of branches and Bank, work was pursued in 2013 to reduce the asymmetries in this ranking. For this purpose, the programme for behavioural improvement known as ≈BeUp∆, which attends to a cluster of 100 branches classified with 2 and 3 stars, with an ≈in loco∆ follow up plan and clear improvement objectives, was continued, given the good results of the previous actions with approximately 50% of the intervened branches rising by at least one level in the scale.
A visiting plan known as ≈how to become a 5 star∆ was also developed in approximately 158 branches, excluded from the ≈BeUp∆ cluster, which consisted of a joint working plan heedful of the weaknesses found in the perceived quality indicators obtained from customer surveys or operational quality, in response to problems and telephone attendance, in which were selected the best practices and actions applied to the reality of each of the branches included in this plan with improvement commitments, which were later assessed on their evolution in the ranking of the stars.
The implementation of the Quality Management System has already achieved its cruising speed and it is thus current practice in the most diverse areas of the Bank.
The Bank»s objective is to pursue a policy of continuous strengthening of the tools included in the ISO 9001-2008 standard and in the improvement of management practices always guided towards customer satisfaction.
Thus the Bank has approached even further the requisites of excellence, specifically with the implementation in 2013 of a model of Quality Governance, which gave greater focus to guidance towards the customer through the whole of the Bank»s structure and strengthened the
commitment of this same structure with this prop of the Santander Group.
A reduction of 22% was recorded in total customers» complaints in 2013 as compared with the previous year, a very positive development taking into consideration the adjustment programme implemented in Portugal with direct effects in the banking activity and in the economy of the Country, since greater difficulties represent increased customer discontent.
Several important steps were taken in 2013 to promote a drive in the commercial network in order to anticipate and resolve customer complaints with greater swiftness, such as, for instance, the ≈BeUp∆ project, with direct impact in reduction of complaints.
With the strengthening of the investment in the support for the commercial network, in a perspective of a decentralized treatment of customer incidences, an area was developed, in the Quality Site, in which are recorded the main types of answers to customers» complaints should they require a formal response, and a more relevant dynamic action in the central services following clarifications requested by the commercial network.
The bringing of uniformity to the records and metrics of incidences and complaints was completed in the main support areas and channels, enabling adequate monitoring of the more critical themes with a negative impact on customers.
As referred above the Bank set up, in 2013, the Star indicator. In line with hotel logic, the number of stars of each branch is established through quality indicators. The 5 Star objective became transversal to all levels of the Private and Business Networks. The stars are established through the cross referencing of the two implemented models. On the one hand the ≈Target 100∆ that measures the service rendered by the branches and on the other the CEM indicator that measures indicators related to the Bank as an institution.
At the end of 2013, 36% of the Bank»s branches had achieved the 5 Star rating. The objective that had been set at the beginning of the year was to end the year with a 5 Star rating in 35% of the branches.
In the Premium/Select segment, indicators had a very significant increase due to the contribution of a quality model implemented up to manager level and that enables an analysis of multiple satisfaction indicators.
At the level of the Companies Network, the TARGET 100 is kept in full operation; this indicator comprises differing assessments (operational metrics and indicators of customer satisfaction), continuing to show a very positive development in the majority of satisfaction indicators, which is reflected in the final result of the TARGET 100 model, in which 52% of the Commercial Managements of the Companies Network comply with or override the objectives.
The control of internal services levels is also carried out within the central services. The TARGET SSCC 100, which combines a set of indicators common to all the areas and specific indicators for each one, has already determined, in 2013, a notation for each of the areas. The intent of this indicator is to create a unique dynamism of continuous improvement in the services rendered to customers and through ≈end-to-end∆ measures the involvement of the whole Bank in customer service.
A very positive trend was evident in a large majority of quality indicators. In the several channels and segments the indicators showed a development in terms of very satisfied customers (average values in excess of 50%), satisfied (average values in excess of 90%) and even dissatisfied customers registered a decrease, with recorded values varying between 4% and 6% according to the channels/segments.
During 2013, Santander Totta recorded a positive development in the several market surveys and some times even reached the first position in comparison with the main competitors, both in the Corporate Assessment and in the BASEF Study. The several indicators included in these assessments showed improvements and even in the indicators where the Bank does not show up so strongly, already have a specific action plan with material measures to achieve improvement thereon.
The activity of Banco Santander Totta, mainly based on domestic banking business, was impacted by the economic environment that has penalized the volume of business, the quality of assets and the results of the financial sector.
However, the Bank showed a strong capacity of internal fund generation, without any need to increase its capital nor to recur to any public aid, always maintaining the soundness of the structure of its accounts, as shown by a robust situation of solvency, with the Tier I ratio reaching 14.2% (+2.8 p.p. relative to 2012) and the Core Capital ratio standing at 12.4% (an homologous variation of +2.5 p.p.).
The transformation ratio, measured by the weight of net credit on deposits reached 125.3% at end 2013, below the 126.6% reached in 2012.
Credit granted to companies amounted to 9.8 billion euros, a homologous growth of +0.3%, relevant in a context of economic abatement, and an outstanding position in financing granted within the scope of the Credit Activation campaign and in the SME Invest/Growth lines.
The ratio of credit at risk stood at 5.9% (+1.5 p.p. than that shown in the homologous period).
The portfolio of credits eligible as guarantees in the financing operations with the Eurosystem amounted to 12.9 billion euros at end 2013, with a 10.0% increase in the last year. Net financing obtained with the European Central Bank reached 4.5 billion euros, 8.5% less than the value recorded in 2012.
At the end of 2013, Banco Santander Totta recorded net income amounting to 89.2 million euros, which compares with 88.1 million euros in the homologous period (+1.2%).
| Dec-13 Dec-13 |
Dec-12 | % | |
|---|---|---|---|
| Net Interest Income (without Dividends) | 507.3 507.3 |
541.5 541.5 |
-6.3% |
| Dividends | 1.3 | 1.7 | -22.7% |
| Net Interest Income | 508.6 508.6 |
543.2 543.2 |
-6.4% |
| Fees and Other Income | 281.1 | 318.0 | -11.6% |
| Commercial Revenue | 789.7 789.7 |
861.3 861.3 |
-8.3% |
| Gain/Losses on Financial Transactions | 31.4 | 125.8 | -75.1% |
| Operating Income | 821.0 821.0 |
987.1 987.1 |
-16.8% |
| Operating Costs | (466.5) | (459.0) | +1.6% |
| Net Operating Income | 354.5 354.5 |
528.1 528.1 |
-32.9% |
| Impairment and Other Provisions | (244.0) | (466.6) | -47.7% |
| Results from Associated Companies | 14.1 | 11.9 | +18.6% |
| Income Before Taxes and MI | 124.6 124.6 |
73.4 73.4 |
+69.9% |
| Taxes | (44.4) | 14.7 | <-200% |
| Minority Interests | 8.9 | 0.0 | >200% |
| Net Income | 89.2 89.2 |
88.1 88.1 |
+1.2% |
Strict net interest income amounted to 507.3 million euros, equivalent to a 6.3% homologous decrease, stabilizing in the last quarters, evidencing that the lower volumes of credit granted were compensated by the lower Bank»s financing costs, particularly in the case of customer»s deposits.
Net commissions and other banking income reached 281.1 million euros, reflecting a -11.6% homologous variation, as compared to the amount shown at end 2012, as a result of lower commissions in accounts, means of payment and depreciation in real estate values, by consolidation of the Novimovest investment fund in 2013, partially compensated by higher commissions obtained in commercial paper.
Commercial revenue amounted to 789.7 million euros, an 8.3% decrease in homologous terms.
Gains on financial transactions reached 31.4 million euros (-75.1% than in the same period in the previous year), mainly as a consequence of the recording, in 2012, of the non recurring gain with the repurchasing of securities issued within the scope of credit securitization transactions.
The evolution in revenues resulted in an operating income amounting to 821.0 million euros, a 16.8% decrease relative to 2012.
Net Interest Income
Operating expenses in 2013 amounted to 466.5 million euros, + 1.6% above the amount recorded in the previous year. By aggregate, personnel expenses increased by 4.6%, amounting to 269.6 million euros, affected by the legislative change, occurred in 2012, in the setting of the values for death subsidies. Excluding this effect, personnel expenses would have had a -0.5% variation and operating costs would have diminished by 1.2%. General expenses amounted to137.2 million euros, with an almost nil variation, and depreciation amounted to 59.8 million euros, -6.4% relative to the amount recorded one year ago.
| Dec-13 Dec-13 |
Dec-12 | % | |
|---|---|---|---|
| Personnel Expenses | (269.6) | (257.6) | +4.6% |
| Other Administrative Expenses | (137.2) | (137.5) | -0.2% |
| Operating Costs | (406.7) (406.7) |
(395.1)(395.1) (395.1) |
+2.9% |
| Depreciation | (59.8) | (63.9) | -6.4% |
| Total Operating Costs | (466.5) (466.5) |
(459.0) (459.0)(459.0) |
+1.6% |
| Efficiency Ratio (excludes depreciation) Efficiency Ratio |
49.5% 49.5% |
40.0% | +9.5 p.p. |
| Efficiency Ratio (includes depreciation) Efficiency Ratio |
56.8% 56.8% |
46.5% | +10.3 p.p. |
At the end of 2013, the efficiency ratio, that shows operating expenses as a percentage of operating income, stood at 56.8%, +10,3 p.p. than that recorded in 2012, as a consequence of the 16.8% decrease in revenue and the 1.6% increase in operating expenses. Should the effect of the death subsidy in the operating expenses be excluded, the efficiency ratio would have increased by +9.0 p.p..
Net operating income amounted to a total of 354.5 million euros, that compares with 528.1 million euros recorded in 2012 (-32.9%).
Standing out in the case of productivity indicators is the favourable evolution of credit per attendance point, a relevant factor in a macroeconomic context of homologous recession.
(1) Includes guarantees
(2) Includes branches, corporate centers and representative offices
Allocations for imparity and net provisions amounted to 244.0 million euros as compared with 466.6 million euros recorded in the homologous period, a -47.7% variation. This evolution resulted from a lower need for provisions required by the impairment model in 2013, deriving from the implementation of a conservative policy in credit granting and in the following up of non performing loans.
The results of associated companies recognized by the equity method, amounting to 14.1 million euros, 18.6% above the value reached in 2012, encompassed the inclusion of the results in Banco Caixa Geral Totta de Angola, in Unicre-Instituição Financeira de Crédito, in Partang and in Benim-Sociedade Imobiliária (a company held indirectly by the Bank via TottaUrbe-Empresa de Administração e Construções).
At the end of 2013, income after taxes and minority interests amounted to 124.6 million, an increase of 69.9% relative to December 2012.
The net income of Banco Santander Totta amounted to 89.2 million in 2013, compared to 88.1 million euros recorded in 2012, showing an homologous variation of +1.2%.
At end 2013, the volume of business amounted to 54.8 billion euros, a variation of -4.3% as compared with 2012.
Credit (including guarantees and sureties) decreased by 2.7%, reaching 28.4 billion euros, although comprising a 0.3% increase relative to the previous year, in credit granted to companies. Customers» resources stood at 26.4 billion euros, a 5.9% decrease with balance sheet recourses decreasing by 3.9% and off the balance sheet recourses by 13.1%.
| Business Volume (million euros) | |||
|---|---|---|---|
| Dec-13 Dec-13 |
Dec-12 | % | |
| Business Volume | 54,806 54,806 |
57,269 57,269 |
-4.3% |
| Total Gross Loans (includes guarantees) | 28,371 | 29,165 | -2.7% |
| Customers' Resources | 26,436 | 28,105 | -5.9% |
The credit/deposits ratio stood at 125.3% in 2013 (a ratio established in line with the Memorandum of
Understanding), lower than the 126.6% recorded in the previous year.
| Dec-13 Dec-13 |
Dec-12 Dec-12 |
% | |
|---|---|---|---|
| Total Gross Loans (includes guarantees) | 28,371 28,371 |
29,165 29,165 |
-2.7% |
| Gross Loans | 27,185 27,185 |
27,945 27,945 |
-2.7% |
| of which | |||
| Commercial Banking | 24,051 24,051 |
25,415 25,415 |
-5.4% |
| Loans to Corporates | 6,887 | 7,633 | -9.8% |
| SME/Small Business | 2,677 | 3,046 | -12.1% |
| Corporates | 4,210 | 4,587 | -8.2% |
| Loans to Individuals | 17,164 | 17,782 | -3.5% |
| of which | |||
| Mortgage | 15,276 | 15,783 | -3.2% |
| Consumer | 1,382 | 1,414 | -2.3% |
| Large Corporates and Institutionals and Institutionals |
2,873 2,873 |
2,097 | +37.0% |
The decrease in credit granted derived from a lower demand for loans from customers. The soundness of the accounts and the Bank»s liquidity allowed an increase in credit granted to the economically viable industrial sector. At end 2013, credit granted to companies amounted to 9.8 billion euros, halting the decreasing trend which had been the scenario in the latter years, through a 0.3% increase relative to the end of 2012, and achieving a prominent position in the SME Invest/Growth Lines and within the Credit Activation campaign.
Credit granted to private customers amounted to 17.2 billion euros, reflecting a 3.5% homologous decrease, with a -3.2% variation in home loans and a 2.3% decrease in consumer credit.
At the end of 2013, the credit at risk ratio stood at 5.9%, greater than the 4.3% shown in the previous year, with a 67.7% coverage ratio. Restructured credit represented
8.7% of total credit. The quality indicators of the credit portfolio deteriorated in the last year, however at a lower rate.
| Dec-13 Dec-13 |
Dec-12 | % | |
|---|---|---|---|
| Non Performing Loans Ratio | 4.0% | 3.7% | +0.3 p.p. |
| Non Performing Loans Ratio (+90 days) | 3.7% | 3.5% | +0.2 p.p. |
| Non Performing Loans and Doubtful Loans Ratio | 3.8% | 3.5% | +0.3 p.p. |
| Credit at Risk Ratio | 5.9% | 4.3% | +1.5 p.p. |
| Restructured Loans / Total Loans | 8.7% | ||
| Restructured Loans not included in Credit ar Risk / Total Loans | 5.4% | ||
| Non Performing Loans Coverage Ratio | 100.4% | 93.9% | +6.5 p.p. |
| Non Performing Loans Coverage Ratio (+90 days) | 106.4% | 98.4% | +8.1 p.p. |
| NPL and Doubtful Loans Coverage Ratio | 104.7% | 97.4% | +7.3 p.p. |
| Credit at Risk Coverage Ratio | 67.7% | 79.7% | -12.0 p.p. |
Total customers» resources, at end 2013, amounted to 26.4 billion euros, a -5.9% decrease relative to the value recorded in 2012.
| Dec-13 Dec-13 |
Dec-12 | % |
|---|---|---|
| 26,436 26,436 |
28,105 28,105 |
-5.9% |
| 21,001 | 21,853 | -3.9% |
| 20,707 | 21,497 | -3.7% |
| 294 | 356 | -17.5% |
| 5,435 | 6,252 | -13.1% |
| 1,570 | 1,930 | -18.6% |
| 3,865 | 4,322 | -10.6% |
Balance sheet resources amounted to 21.0 billion euros, or 79.4% of the total resources captured from customers and decreasing by 3.9% in homologous terms, with deposits decreasing by 3.7%. Off balance sheet resources amounted to 5.4 billion euros, a 13.1% decrease relative to the amount shown in 2012. Investment funds amounting to 1.6 billion euros decreased by 18.6%, as a consequence of the inclusion in the perimeter of consolidation the Novimovest investment fund, occurred in 2013. On a comparable basis, investment funds would have increased by 2.9%. Capitalization insurance and other resources decreased by -10.6%, relative to the amount shown one year previously.
At the end of 2013, Banco Santander Totta continued presenting a sound balance sheet, with capitalization ratios solely reached with recourse to the generation of internal results, in parallel with the decrease in risk weighted assets. The Tier I ratio reached 14.2% and the Core Capital ratio stood at 12.4% (11.4% and 9.9%, respectively, in 2012).
| Dec-13 Dec-13 |
Dec-12 | % | |
|---|---|---|---|
| Total capital | 2,284 2,284 |
2,062 | +10.8% |
| Tier I Capital | 2,292 2,292 |
2,069 | +10.8% |
| Tier II capital | -8 | -7 | +8.3% |
| Risk weighted assets | 16,090 16,090 |
18,127 | -11.2% |
| Core Capital Ratio | 12.4% 12.4% |
9.9% | +2.5 p.p. |
| Tier I Ratio | 14.2% 14.2% |
11.4% | +2.8 p.p. |
Banco Santander Totta recorded, in terms of individual accounts, net income amounting to 2.4 million euros in 2013, recovering from a 9.2 million euro loss recorded in 2012.
The Bank achieved operating income amounting to 790.5 million euros in 2013, -10.1% compared to the 879.5 million euros recorded in the previous year, particularly due to the lower value in net interest income and to results in financial transactions.
Operating expenses amounted to 461.4 million euros, increasing by 1.3% in relation to the homologous period. Excluding the effect of the legislative change in the calculation of the death subsidy, operating expenses would have deceased by 1.6%. The efficiency ratio grew by 6.6 p.p. increasing from 51.8% in 2012 to 58.4% in 2013.
The joint evolution of revenues and expenses led to a net operating income amounting to 329.1 million euros, 22.4% lower than the amount achieved in the previous year.
Imparity and net provisions showed a 29.9% decrease, with a net appropriation of 311.0 million euros in 2013.
Taxes on profits amounted to 15.6 million euros.
At the end of 2013, business volume amounted to 54.9 billion euros, a +2.2% variation relative to the homologous period, with credit (including guarantees and sureties) increasing by 9.4%, and reaching 28.3 billion euros, and customers» resources showing a 4.6% decrease, standing at 26.6 billion euros, with balance sheet resources decreasing by 3.5% and off balance sheet resources decreasing by 8.2%.
| Dec-13 Dec-13 |
Dec-12 | % | |
|---|---|---|---|
| Business Volume | 54,908 54,908 |
53,751 53,751 |
+2.2% |
| Total Gross Loans (includes guarantees) | 28,294 28,294 |
25,865 25,865 |
+9.4% |
| Total Gross Loans | 27,105 27,105 |
24,645 24,645 |
+10.0% |
| Customers' Resources | 26,614 26,614 |
27,886 27,886 |
-4.6% |
| Balance Sheet Resources | 20,985 | 21,751 | -3.5% |
| Deposits | 20,691 | 21,395 | -3.3% |
| Securities issued | 294 | 356 | -17.5% |
| Off-Balance Sheet Resources | 5,630 | 6,135 | -8.2% |
| Investment Funds | 1,907 | 1,903 | +0.2% |
| Insurance and Other Resources | 3,723 | 4,231 | -12.0% |
At the end of 2013, the Tier I and Core Capital ratios stood at 12.4% and 9.3%, respectively.
| CAPITAL | |||
|---|---|---|---|
| Dec-13 Dec-13 |
Dec-12 | % | |
| Total capital | 2,365 2,365 |
2,305 | +2.6% |
| Tier I Capital | 1,933 1,933 |
1,865 | +3.6% |
| Tier II capital | 432 | 440 | -1.8% |
| Risk weighted assets | 15,653 15,653 |
18,240 | -14.2% |
| Core Capital Ratio | 9.3% 9.3% |
8.6% | +0.7 p.p. |
| Tier I Ratio | 12.4% 12.4% |
10.2% | +2.2 p.p. |
For Santander Totta, the quality of risk management is a fundamental basis of operation, within the corporate policy of the Group in which it is comprised. Prudence in risk management allied to the use of advanced management technologies has been a decisive factor, particularly in an environment of great uncertainty in the financial markets.
In 2013, the activity of the area of Credit Risks had the following main vectors:
rendered to customers whenever they present new credit opportunities;
management information, in order to allow that measures are taken to avoid operations to become non performing and to resolve non performing loans;
• Focus was equally maintained on the Bank»s internal models, most of which already recognized (by the regulators) as advanced models (IRB), for the purpose of calculation of equity fund requirements, as well as in their more than ever inclusion in management
Credit risk arises from the possibility of losses derived from total or partial non performance of the financial liabilities contracted with the Bank by its customers.
The organization of the credit risk function in Santander Totta is specialized in line with customer types and is differentiated, throughout all the risk management process, between customers in portfolio and standardized customers (not in portfolio):
Santander Totta uses its own models for attributing solvency classification or internal ratings for the different customer segments, to measure the credit capacity of a customer or a transaction, each rating corresponding to a non performing probability.
Global classification tools are applied to country risk segments, financial institutions and Wholesale Banking Groups, both in determining their rating as in following up the risks assumed. These tools attribute a rating to each customer as a result of a quantitative, or automatic, module, based upon balance sheet data and/or ratios, or macroeconomic variables complemented by the analysis carried out by the risk analyst that follows up the customer.
In the case of companies and institutions comprised in retail banking groups, the ascribing of a rating is based on the same modules as those referred above, in this case quantitative or automatic (analysing the credit behaviour of a sample of customers and its correlation with a set of accounting data and ratios), and qualitative, in line with the analysis of the risk analyst, whose duty is to carry out a final revision of the rating attributed.
Attributed ratings are periodically revised, incorporating any new financial information that has meanwhile become available as well as, qualitatively, the experience deriving from the existing credit relationship. This periodicity increases in case of customers for which the internal alert systems and risk classification so demand.
For the portfolios of standardized risks, both in the case of private customers and in businesses without portfolios, scoring tools are implemented to automatically assign an evaluation/decision of the transactions submitted. These decision tools are complemented with a behavioural scoring model, a device that allows a greater predictability of the assumed risks and which is used both in the pre-sale and in the sale period.
The evaluation of a customer and/or operation, through rating or scoring, is an assessment of credit capacity, which is quantified through the probability of default (PD). In addition to the evaluation of the customer, the quantitative risk analysis carries other features such as the period of the operation, the type of product and the existing guarantees. As such what is taken into account is not just the probability that the customer may not comply with his contractual obligations (PD) but the exposure at default (EAD) as well as the percentage EAD that may not be recovered (loss given default or LGD).
These factors (PD, LGD and EAD) are the main credit risk parameters and, when taken jointly, allow an estimate of the expected loss or that of the unexpected loss. The expected (or probable) loss, is considered as a further activity cost (reflecting the risk premium), and this cost duly included in the price of the operations.
The estimate of the unexpected risk, which is the basis for establishing the regulatory capital in line with standards comprised in the Basle (BIS II) capital agreement, is related to a very high and thus improbable loss level which, considering its nature, is not accepted as recurrent and must thus be covered by the equity.
In small and medium sized enterprises, the information obtained from their accounts is used not just to record a rating, but also to obtain explanatory factors for the probability of default. In retail portfolios, PD is estimated by observing entries into delay, and correlating these with the scoring attributed to the transactions. Excepted are the portfolios in which, due to lesser internal default experience, such as financial institutions, country risk or wholesale banking groups, estimating these parameters is based upon alternative sources of information or assessments made by agencies with recognized experience and skill, with a portfolio containing a sufficient number of bodies (these portfolios are known as low default portfolio).
LGD estimates are based on the observation of the recovery process of operations in default, taking into consideration not just revenues and expenses associated to this process, but also the moment when the same are produced and the indirect expenses that derive from the recovery activity.
EAD estimates are based on the comparison of the use of the committed lines at the time of default and in a normal situation, in order to identify the real consumption of the lines at the time of default.
The estimated parameters are immediately ascribed to operations that are normally under way and will be differentiated between low default portfolios and the remainder.
The risk management process consists in identifying, measuring, analysing, controlling, negotiating and deciding the risks incurred in the Banks» operations.
This process is initiated in the business areas, which propose a given tendency to risk: These risks are analysed and decided in special committees, which act through remits delegated by the Executive Committee of the Higher Credit Council (CSC). The CSC establishes risk policies and procedures and the limits and delegation of powers.
Establishing risk limits is conceived as a dynamic process that identifies the risk profiles that the Bank is willing to assume through the assessment of the business proposals and the opinion of the Risks area.
With respect to the large corporate groups a preclassification model is used based upon a measurement system and the sequence of economic capital.
With respect to portfolio risks, the more basic level is that of the customer and when certain features concur generally at a level of relative importance √ the portfolio is the object on an individual limitation, usually named as pre-classification, through a simpler system and usually for those customers that comply with determined requisites (well known, rating, etc.).
With respect to standardized risks, the process of planning and establishing limits is carried out through a joint preparation, by the Risks and Business areas, of programmes for credit management (PGC) where the results of the business in terms of risk and profitability are considered, as well as the limits to which the activity and associated risk management must be subject.
Risk assessment is pre-requisite to permission being given for any credit transaction in Santander Totta. This assessment consists in analysing the customer»s capability to comply with the contractual commitments assumed with the Bank, which implies analysing the customer»s credit quality, its solvency and its profitability. Additionally, an assessment and revision of the rating is also carried out whenever an alert or event appears that may affect the customer and/or the operation.
The decision process on operations is intended to analyse these and to take the respective decision, considering the risk profile and the relevant components of the operation in determining a balance between risk and profitability.
In order to keep adequate control of the portfolio»s credit quality, apart from the actions developed by the Internal Audit, the specific follow up function, made up by teams and responsible officers, is established within the Risks area. This function is also specialized in line with customer segmentation and is fundamentally based upon a continuous observation process that allows the prior detection of incidences that may occur in the evolution of the risk, of the operations and of the customer, with the objective to previously carry out the actions intended to mitigate such incidences.
Recoveries management in Santander Totta is a strategic, comprehensive and business activity. The specific objectives of the recoveries process are the following:
• Ensure the collection or regularize the amounts in irregular situations, preferring the negotiated solution, in order that the customer»s credit situation returns to normal. Should the negotiated position not be
possible, the Recoveries area will then endeavour to process recovery through the law courts;
• Maintain and strengthen the relations with the customer, safeguarding his deportment within the commitments contractually assumed with the Bank.
Recoveries activity is structured in line with customers» commercial segmentation: Private, Business and Companies, with specific management models. The thus segmented recoveries management also respects the distinct management levels: preventive management, management of irregular situations and management of delays and bankruptcies. This whole activity is shared with the business areas.
Counterparty risk, dormant in contracts carried out in financial markets √ organized markets or over the counter (OTC) √ corresponds to the possibility of default by the counterparties over the contractual terms and subsequent occurrence of financial losses for the institution.
Types of transactions comprised include the purchase and sale of securities, operations in the interbank monetary market, contracting of ≈repos∆, loans of securities and derivative instruments.
Control of such risks is carried out through an integrated system that allows recording the approved limits and provides information on their availability for different products and maturities. The same system also allows the transversal control of risk concentration for certain groups of customers and/or counterparties
Risks in derivative positions, known as Credit Risk Equivalent (REC), is the sum total of the Present Value of each contract (or Current Replacement Cost) and the respective Risk Potential, a component that reflects an estimate of the maximum expected value until maturity, according to the underlying volatilities of the market factors and the contracted flow structure.
In 2013, the present value of transactions on the indexing factors of interest rates (Euribor) generally recorded a moderate reduction, reflecting the movements of the medium and long terms market rates. With respect to the exposure to Financial Groups, new transactions were carried out to cover the structural risk of interest rates although the exposure continues relatively low, and equally keeping up the application of collateral providing agreements (ISDA Master Agreements/Credit Support Annex).
The management of structural risk is ensured by a body in the first level of the Bank»s organization and the decisions are taken by the Assets and Liabilities Committee (ALCO), with powers delegated by the Executive Committee. This body is presided by the Chairman of the Executive Committee and comprises the directors responsible for the Financial, Risks, Commercial and Marketing areas. This Committee meets on a monthly basis.
The interest rate risk in the consolidated balance sheet is measured through a model of dynamic risk analysis of the balance sheet»s market risk, modelling the timing variations of risk factors and the Bank»s positions over assets and liabilities sensitive to interest rate variations. The model in use allows the measuring and control of the risks originating directly from the movement of the income curve, given the structure of the indexing factors and existing re-appreciation, which determine the exposure to interest rate risk of the balance sheet components.
Considering the uncertainty in the variation of interest rate levels in 2013, the policy followed was to keep sensitivity at the levels considered as adequate.
The exchange rate risk of commercial activity is measured and controlled by the global exchange position, the Group»s strategy being its total coverage
Liquidity policy followed by the Group is based upon a low liquidity risk and the continuous diversification of the sources of finance, placing into perspective the volume and nature of the financing instruments used to allow the achievement and the development under good conditions of the established business plan.
By keeping to a conservative profile, the Bank is better protected with respect to potential crises that affect its environment.
The policy of a financing mix is always based on an adequate level of liquidity risk, in line with the established limits and will be assessed monthly by ALCO. The limits of liquidity risks are established by an independent
management body which, apart from other indicators, demands a reasonable amount of available liquid assets to be employed as a liquidity cushion.
Liquidity management is carried out at the consolidated level. The Group»s financial policy takes into consideration the variations of the balance sheet components, the structural situations of the maturities of assets and liabilities, the level of interbank indebtedness relative to the available lines, the spread of maturities and the minimization of expenditure related to the funding activity.
The structural liquidity situation is fully balanced. In December 2013 the Bank presented an asset situation in the short term monetary market of approximately 700 million euros.
The capital market operated very irregularly throughout the year. In this context the ECB, by leading monetary policy assumed itself as the counterparty of the system through lending operations and absorbing liquidity. To take part in these operations it is necessary to hold assets considered eligible by the ECB to be given as collateral. In December 2013, the Bank held 12.9 billion euros in eligible assets that constitute a very comfortable liquidity reserve.
The perimeter of measurement, control and follow up of financial risks comprises operations where asset risks are assumed. This risk derives from the variation in risk factors √ interest rate, exchange rate, variable income and their respective volatility √ as well as the solvency risk and the liquidity risk of the several products and markets in which Santander Totta operates (banking activity).
As a function of the risk objectives, activities are segmented as follows:
Balance Sheet Management: Interest rate and liquidity risk arise as a result from the timing differentials existing in maturities and re-pricing of assets and liabilities. Additionally, the active management of the credit risk inherent to Santander Totta»s accounts.
Structural Risks:
The methodology applied, within the scope of Banco Santander Totta, for the negotiation activity, is the Value at Risk (VaR). Used as a basis is the methodology of Historic Simulation with a 99% level of confidence and a one day time horizon, with statistical adjustments applied that allow a swift and effective inclusion of the more recent events that condition the assumed risk levels.
Stress Testing is used as a complement, consisting in the definition of behavioural scenarios of different financial variables and obtaining the respective impact on results when applying these to the portfolios. These scenarios may replicate the behaviour of financial variables in the face of past factual events (such as crises) or, on the contrary, may determine plausible scenarios that do not correspond to past events. In short, the analysis of scenarios endeavours to identify the potential risk over extreme market conditions and in the fringes of occurrence probabilities not covered by VaR.
Also estimated are several sensibility measures (BPV and Greeks) and equivalent volumes.
In parallel, a daily accompaniment of positions takes place, by carrying out an exhaustive control of the changes that occur in the portfolios, aiming to detect changes in profile or possible incidences for their correction. The daily preparation of the profit and loss account is a risk indicator, in the measure that it allows us to identify the impact of the movements in the financial variables or the changes in the make up of the portfolios.
The reliability of the VaR model is periodically checked through a backtesting analysis. Backtesting consists of a comparative analysis between the Value at Risk estimates and the daily ≈clean∆ trial balances (clean P&L - result related to the reassessment of the closing portfolios of the previous day at the closing prices of the following day), where the spot/sporadic variances of the recorded results compared to the estimated measures are analysed.
The backtesting analyses carried out in Santander Totta comply with the BIS recommendations, as regards the comparison of the internal systems used in the measurement and management of financial risks. Additionally, back-testing includes hypothetical tests: excess tests, normality tests, measures of average excess, etc.
Quantitative limits for negotiation portfolios, which are classified in two groups, are established in line with the following objectives:
The evolution of the risk relative to negotiation activity during 2013, quantified through VaR was that described in the following chart:
VaR was kept at reduced levels, varying between 5,000 and 37,000 euros.
Santander Totta defines Operational Risk as ≈the risk of loss arising from deficiencies or failures in internal procedures, human resources or systems, or derived from external circumstances∆. This is generally a risk differing from other types of risks, that is not associated to products or business, and that arises in processes and/or assets, and is internally generated (people, systems, etc.) or as a consequence of external risks such as natural catastrophes.
The management and control of operational risk is directed towards the identification, measurement, assessment, control and mitigation and information concerning this risk.
The priority is thus to identify and eliminate risk focuses, independently from losses having occurred or not. Measurement has also contributed towards the establishment of priorities in the management of operational risk.
To estimate the equity value required to cover operational risk the Group opted on a first stage for the method foreseen in the BIS II standards
The organizational management and control model results from the adaptation of the Group»s approach to Basle II.
Supervision and control of operational risk is practised through its governing bodies. As such, the Board of Directors and the Executive Committee periodically include in their agendas the treatment of relevant features in the management and mitigation of operational risk.
The management and control of operational risk is the responsibility of all the Bank»s areas, since these have the better knowledge of the processes, as well as of those items that are susceptible to cause relevant exposures to operational risk, and are accompanied by a central area, responsible for the implementation and follow up of the project through control and supervision
The different stages of the management model allow:
The control model of the operational risk that was implemented has the following advantages:
Currently, limits to operational risk are currently formally established. An apetite for risk is equally established, which must always be set in the low/medium-low bracket profile.
Reputation risk is understood to be the probability of occurrence of negative financial impacts for the institution affecting the results or even its share capital, resulting from an unfavourable perception of its public image, whether proven or not, from customers, suppliers, analysts, employees, investors, media and any other bodies with which the institution may be related, or even by public opinion in general.
The reputation risk policy targets its management, such as defined in the above paragraph, determining the devices and procedures that allow: i) to minimize the probability that it becomes factual; ii) to identify, report to the Board and overcome the situations that may have arisen; iii) to ensure follow up and control; and iv) to provide evidence, if necessary, that the Bank has reputation risk amongst its main concerns and has available the organization and means required for its prevention and, should it be the case, to overcome it.
Without prejudice to all the remaining features that derive from the above, the global policy with respect to reputation risk covers, specifically, the tools identified below that are referred due to their particular impact in the prevention and management of the risk:
Net Income for the Year, in individual terms and referring to 2013, amounted to € 2,448,854.26 (two million, four hundred and forty eight thousand, eight hundred and fifty four euros and twenty six cents) and the Consolidated Net Income for 2013 was € 89,163,757 (eighty nine million, one hundred and sixty three thousand, seven hundred and fifty seven euros)
As such, the Board of Directors proposes to the General Meeting that the following distribution be approved:
Lisbon, 24 April 2014
THS BOARD OF DIRECTORS
Santander Totta develops its business activity following policies and applying criteria for the prevention of money laundering and of financing terrorism, in line with the legislation in force.
The Bank applies procedures in accordance with legislative provisions, complies with duties determined by Law, has available an organic structure exclusively directed towards prevention and control of money laundering and financing terrorism which is comprised in the Department for Coordination of Compliance and Institutional Issues.
Staff is trained and regularly updated in this issue in order to detect eventual risk situations and immediately communicate with the competent body when such is justified, has available computer applications to monitor atypical movements, to assess transactions that fit into risk typologies and to bring into prominence high risk customers, with a view for eventual communication to the Authorities. The system is audited annually.
Units headquartered abroad are followed up by the head office central structure through visits or centralized control. Compliance testing is carried out by systems for prevention and control of money laundering and of financing terrorism. These units apply the procedures determined by the Bank or by the legal regulations of the countries in which they operate, should the latter be more demanding.
Complying with the determinations of the Bank of Portugal»s Memorandum No. 9/2012, Santander Totta prepared the corresponding Report on Prevention of Money Laundering and of Financing Terrorism relative to the period from 1 June 2012 to 31 May 2013 which,
once approved by the Board of Directors was submitted to the Bank of Portugal.
On another hand, the Bank, complying with the Bank of Portugal»s Instruction No. n≥ 46/2012, prepared the Self Assessment Questionnaire on the issue of prevention of money laundering and financing terrorism relative to the period between 1 November 2012 and 30 November 2013, forwarding it to the Bank of Portugal following its prior approval by the Executive Committee.
| Shareholder Shareholder |
N≥ shares N≥ shares |
% |
|---|---|---|
| Santander Totta, SGPS, S.A. | 641,269,620 | 97.65% |
| Taxagest - SGPS, S.A. | 14,593,315 | 2.22% |
In line with the decision of the Annual General Meeting, held on 15 March 2013, Banco Santander Totta, S.A., directly on its own behalf or through a dependent company, may acquire own shares as well as dispose of those acquired up to the limit and remaining conditions foreseen in law.
On 31 December 2013 the Bank held 125,169 own shares corresponding to 0.019% of its share capital. During 2013, the Bank carried out a purchase of 124,258 own shares, corresponding to 0.019% of its share capital, thus holding a total of 249,427 own shares at year end. This acquisition is comprised in the Bank»s general policy, as to the purchase of shares from shareholders that are outside the Santander Group that wish to sell them.
| TRANSACTION WITH OWN SHARES - 2013 | ||||
|---|---|---|---|---|
| N≥ of shares N≥ shares |
Average unit price ( price €) ) |
Book value ( (€) ) |
% % of Share Capital Share |
|
| 31/12/2012 31/12/2012 |
125,169 125,169 125,169 |
5.41 | 676,705 676,705 676,705 | 0.019% |
| Purchases | 124,258 | 6.05 | 752,112 | 0.019% |
| Disposals | - | - | - | - |
| 31/12/2013 31/12/2013 |
249,427 249,427 249,427 |
5.73 | 1,428,817 1,428,817 | 0.038% |
In order to comply with the recommendation of the Bank of Portugal through circular letter No. 97/08/DSBDR dated 3 December 2009, the replies requested by the questionnaire were as follows:
| I. | Business Model Model | |
|---|---|---|
| 1. | Description of the business model (i.e., reasons for the development of the activities/business and respective contribution towards the process of creation of value and, if applicable, the alterations carried out (e.g. as a result of the period of turbulence); |
See Report and Accounts √ Chapter: - Business Areas. |
| 2. | Description of the strategies and objectives (including the strategies and objectives specifically related to carrying out securitization operations and with structured products); |
See Report and Accounts √ Chapters: - Business Areas - Risk Management. See Attachment to Consolidated FS -Notes 11, 22 & 45. |
| 3. | Description of the importance of the activities carried out and respective contribution towards the Business (including approach in quantitative terms); |
See Report and Accounts √ Chapters: - Business Areas - Business Support Areas; - Economic and Financial Information. See Attachment to Consolidated FS -Notes 3 & 27. |
| 4. | Description of the type of activities developed, including the description of the instruments used, and the operation and qualification criteria that products/investments must comply with; |
See Report and Accounts √ Chapter: - Business Areas. See Attachment to Consolidated FS -Notes 1.3 e) and f). |
| 5. | Description of the objective and range of the institution»s involvement (i.e. commitments and liabilities assumed), relative to each activity developed. |
See Report and Accounts √ Chapters: - Business Areas |
| II. | Risks and Risk management ks Risk management |
|
| 6. | Description of the nature and range of the risks incurred relating to activities developed and instruments used |
See Report and Accounts √ Chapter: - Risk Management: See Attachment to Consolidated FS √Note 48 √ dissemination of financial risk management policies inherent to the Group»s activity and their monitoring. |
| 7 | Description of the practices in risk management (particularly including the liquidity risk in the current environment) relevant to the activities and the corrective measures adopted, description of any weaknesses identified and the corrective measures adopted; |
See item 6 above. |
| III. | Impacton the Results of the Period of Financial Turbulenc n the Period |
Turbulence |
| 8. | Qualitative and quantitative description of the results with emphasis on losses (where applicable) and impact of the |
N.A |
| 9. | Breakdown of write-downs/losses per type of products and instruments affected by the turbulence period such as the following: commercial mortgage backed securities (CMBS), residential mortgage backed securities (RMBS), collateralised debt obligations (CDO), asset-backed securities (ABS); |
N.A. |
|---|---|---|
| 10. | Description of the motives and factors responsible for the impacts suffered; |
N.A. |
| 11. | Comparison of: i) impacts between (relevant) periods and ii) financial statements before and after the impact of the turbulence period; |
N.A. |
| 12. | Breakdown of write-downs between amounts realised and not realised; |
N.A. |
| 13. | Description of the influence of the financial turbulence in the prices quoted for the unit»s shares; |
N.A. |
| 14. | Disclosure of the risk of maximum loss and disclosure of how the institution»s situation may be affected by the extension or the worsening of the turbulence period or by the market»s recovery; |
See Report and Accounts √ Chapters: : - Economic and Financial Information; - Risk Management. See Attachment to Consolidated FS -Note 48. |
| 15. | Disclosure of the impact that the variations to the spreads, related to the institutions main liabilities, had on the results, as well as the methods used to determine this impact; |
See Report and Accounts √ Chapter: - Economic and Financial Information. Liabilities issued by the Santander Totta Group are recorded at the depreciated cost. |
| IV. | Levels and Types of Exposures Affected by the Turbulence Period | lence |
|---|---|---|
| 16. | Nominal value (or amortized cost) and fair value of the ≈live∆ exposures"; |
See Report and Accounts √ Chapter: - Risk Management. See Attachment to Consolidated FS -Notes 1.3 e) and f) and 48. |
| 17. | Information on credit risk mitigating factors (e.g. via credit default swaps) and the respective effect on existing exposures |
See Attachment to Consolidated FS -Notes 1.3 f), 7, 12 and 48. |
| 18. | Detailed disclosure, broken down by: - Seniority level of exposures/tranches held; - Level of credit quality (e.g. ratings, vintages) - Original geographic area; - Sector of activity; - Origin of exposures (issued, held or acquired); - Product features: e.g. ratings, weight/part of sub-prime associated assets, discount rates, spreads, financing; - Features of underlying assets: e.g. vintages, "loan-to-value" ratio, credit privileges, weighted average life of underlying assets, variation assumptions of pre-payment situations, expected losses. |
See Attachment to Consolidated FS -Notes 3, 11 and 48. |
| 19. | Movements occurred in exposures between relevant reporting periods and underlying reasons for such variations (sales, write-downs, acquisitions, etc.) |
N.A. |
| 20. | Explanations concerning exposures (including "vehicles" and, in this case, the respective activities) that have not been consolidated (or that have been recognized during the crisis) and the related reasons; |
N.A. |
| 21. | Exposure to "monoline" insurers and quality of the insured assets: - Nominal value (or amortized cost) of the insured exposures as well as the amount of protection of the acquired credit; - Fair value of the ≈live∆ exposures, as well as the respective protection of the acquired credit; - Value of ≈write-downs" and losses, broken down between realised and non realised amounts; - Breakdown of exposures per rating or counterparty; |
The Santander Totta Group has no exposure to ≈monoline∆ type insurers. |
| V. | Acconting Policies and Valuation methods Valuation methods |
|
|---|---|---|
| 22. | Classification of transactions and of structured products for accounting purposes and respective accounting treatment |
See Attachment to Consolidated FS √Note 1 |
| 23. | Consolidation of Special Purpose Entities (SPE) and other vehicles and reconciling these with the structured products affected by the turbulence period; |
N.A. |
| 24. | Detailed disclosure of the fair value of the financial instruments: - Financial instruments to which fair value is applied; - Fair value hierarchy (breakdown of all exposures measured at fair value in the fair value hierarchy and breakdown between availabilities and derivative instruments as well as disclosure of migration between hierarchical levels); - Treatment of "day 1 profits" (including quantitative information); - Use of fair value option (including conditions for its use) and respective amounts (with the adequate breakdown); |
See Attachment to Consolidated FS -Notes 1.3 e) and f), 7, 8, 12 and 48. |
| 25. | Description of modelling techniques used for the valuation of financial instruments, including information on: - Modelling techniques and instruments to which these are applied; - Evaluation processes (particularly including the assumptions and the inputs on which the models are based); - Types of adjustment applied to reflect the modelling risk and other evaluation uncertainties; - Fair value sensitivity (namely the variations in key assumptions and inputs); - Stress scenarios. |
See Attachment to Consolidated FS -Notes 1.3 e), f) and 48. |
| VI. | Other Relevant Disclosure Features Features | |
| 26. | Description of the disclosure policies and of the principles followed in disclosure and financial reporting. |
See Attachment to Consolidated FS -Note 1. |
Chairman»s Office √ Sebastião Beltrão Risk Control/Management √ Manuel Aragão
Wholesale Banking and Companies √ Amílcar Lourenço Solvency, Markets and Credit Control √ Jesus Garcia Standardized Risks √ Inês Furtado Planning and Risk Projects - José Leão Superior Credit Board Internal Audit √ Miguel Ruiz
Accounting √ Graça Vale Management Control √ Cristina Marques Internal Control √ Américo Domingues
Human Resources √ Isabel Viegas Buildings, General Services & Security √ Luís Morais Organization & Expenses √ Mário Paulino
Business Juridical Consultancy √ Pedro Carvalho Institutional Issues & Compliance √ João Labareda Supervision √ João Mendes
Recoveries √ José Sousa Divestment √ Jacinto Galante
Quality √ Abel Bernardes Image & Internal Communication √ Rui Santos External Communication √ Cristina Neves Public Relations & Events √ Cristina Carvalho Shareholders √ José Pacheco Economic Research √ Rui Constantino Universities √ Marcos Ribeiro Public Policy √ António Terra da Motta
Private & Business North √ Manuel Cerejeira Castro Private & Business South √ Sofia Frère Control & Dynamics of P&N Network √ Paulo Lourenço Support to Private & Business Network√ Pedro Louceiro Private Banking North √ Miguel Coimbra Private Banking South √ Luís Santos Support to Private Business √ Miguel Cordovil Management of Private Assets √ Catarina Roseira Real Estate Promoters & Brokers √ José Alberto Moura Control of Irregularities √ Jorge Mogo International √ Foreign Residents √ António Carneiro
(1) Manager Attached to the Executive Committee (2)Assistant to the Board
Companies North √ Paulo Costa Companies South √ António Velez do Peso Control & Dynamics of Companies Network √ Mota Veiga Management & Coordination with Risks √ Marcos Heitor International Business √ Pedro Correia Building Credit/Construction Promotion √ António Fontes Institutional Customers √ Pedro Fialho
Corporate and Investment Banking √ João Veiga Anjos Credit Markets √ Cristina Melo Antunes Global Transaction Banking √ Hélder Gomes Treasury √ Alexandra Gomes Middle Office and Control √ António Rebocho Business Control √ José Viegas Financial Institutions Group √ Carlos Ramalho
Finance √ Miguel Carvalho
Strategy and Multichannel Management √ Isabel Guerreiro Mid & Mass Market Segment√ Luis Coito Premium/Select Segment √ Jorge Alcobia Companies Segment √ Inês Oom de Sousa Supplementary Channels √ Rute Medo Studies & CRM √ Sara Fonseca
Private Products & Services √ Cláudia Barrocas Companies Products & Services √ Jorge Gaspar Means of Payment √ Paula Resende Marketing √ José Saks
Technology & Business Systems √ Elsa Graça Operations √ Luís Alves Technological & Operational Risk √ Esther Casillas Data Integration & Information √ Otília Casquilho
(*) Assists the Chairman of the Executive Committee in the area of Commercial Intelligence (**) Also assumes relations with the Insurance and Asset Management areas
(1) Assistant to the Board
The main activities that the members of the Board of Directors of BANCO SANTANDER TOTTA, SA, fulfil outside the company, significant in themselves, are the exercise of the following offices in the Following companies:
| Name | Company Company |
Office |
|---|---|---|
| Member of the Delegate Risk Committee of the | ||
| Banco Santander, S.A (Spain). | Board of Directors, of the International | |
| Committee and of the Technology, Productivity and Quality Committee |
||
| Santander Totta, SGPS, S.A. | Chairman of the Board of Directors | |
| Fundación Santander | Member of the Patronage Committee | |
| Fundación Banesto Sociedad y Tecnologia | Chairman | |
| Fundación Cultural Banesto | Chairman | |
| FundaciónEugenio Rodriguez Pascual | Chairman | |
| António Basagoiti Garcia-Tuñón | Fundación Príncipe de Asturias | Patron and Member of the Jury of the Concordia Prize |
| A.T. Kearney | Member of the External Advisory Board | |
| Círculo de Empresários | Member of the Board of Directors | |
| Real Asociación Amigos del Museo Nacional Centro de Arte Reina Sofia |
Member | |
| Fundación Amigos del Museo del Prado | Member | |
| Real Club Náutico de Calpe | Economic Vice-President | |
| Fundación Silos | Patron | |
| Santander Totta, SGPS, S.A. | Deputy Chairman of the Board of Directors and | |
| Chairman of the Executive Committee Deputy Chairman of the Board of Directors and |
||
| Portal Universia Portugal, S.A. | Chairman of the Executive Committee | |
| António José Sacadura Vieira Monteiro |
Faculdade de Ciências Sociais e Humanas da Universidade Nova |
Member of the General Council |
| Câmara de Comércio e Indústria Luso Espanhola |
Deputy Chairman of the Board of Directors | |
| Vieira Monteiro, Lda. | Manager | |
| Santander Totta, SGPS, S.A. | Member of the Board of Directors and Member of the Executive Committee |
|
| José Carlos Brito Sítima | Portal Universia Portugal, S.A. | Chairman of the General Meeting |
| Partang, SGPS, S.A. | Member of the Board of Directors | |
| Santander Totta, SGPS, S.A. | Member of the Board of Directors and of the Executive Committee |
|
| Luís Filipe Ferreira Bento dos Santos |
Portal Universia Portugal, S.A. | Member of the Board of Directors and of the |
| Executive Committee | ||
| Carlos Manuel Amaral de Pinho | Banco Caixa Geral Totta de Angola, S.A. | Member of the Board of Directors and of the Executive Committee |
| José Manuel Alves Elias da Costa | Santander Totta, SGPS, S.A. | Member of the Board of Directors and of the Executive Committee |
| Banco Santander Consumer Portugal, S.A. | Member of the Audit Board | |
|---|---|---|
| SerfinInternationalBank& Trust | Director | |
| Taxagest √ Sociedade Gestora de Participações Sociais, S.A. |
Member of the Board of Directors | |
| Manuel António Amaral Franco Preto |
Santotta √ International, SGPS, Sociedade Unipessoal, Lda |
Manager |
| Totta& Açores Financing, Ltd. | Director | |
| TottaIreland, Plc | Director r | |
| Partang, SGPS, S.A. | Member of the Board of Directors | |
| João Baptista Leite | UNICRE √ Instituição Financeira de Crédito, S.A. |
Member of the Board of Directors |
| José Urgel Moura Leite Maia | Associação dos Amigos de Recife | Chairman of the Audit Board |
| Santander Totta Seguros √ Companhia de Seguros de Vida, S.A. |
Chairman of the Board of Directors | |
| Trem √ Aluguer de Material Circulante, ACE | Member of the Board of Directors | |
| Trem II √ Aluguer de Material Circulante, ACE | Member of the Board of Directors | |
| Pedro Aires Coruche Castro e Almeida |
Nortrem √ Aluguer de Material Ferroviário, ACE |
Chairman of the Board of Directors |
| SIBS √ Forward Payment Solutions, S.A. | Member of the Board of Directors | |
| SIBS √ SGPS, S.A. | Member of the Board of Directors | |
| UNICRE √ Instituição Financeira de Crédito, S.A. |
Member of the Board of Directors (1) | |
| Santander Totta, SGPS, S.A. | Chairman of the Audit Board | |
| Fundação de Serralves | Deputy Chairman | |
| Luís Manuel Moreira de Campos | SEDES √ Associação para o Desenvolvimento | President |
| e Cunha | Económico e Social | |
| Galp Energia, SGPS, S.A. | Member of the Board of Directors | |
| Fundação Centro Cultural de Belém | Deputy Chairman of the Board of Directors | |
| Universidade Nova de Lisboa | Professor | |
| Ricardo Manuel Duarte Vidal de | Santander Totta, SGPS, S.A. | Member of the Audit Board |
| Castro | Clube do Autor, S.A. | Director |
| Pedro Manuel Alves Ferreira Guerra |
Santander Totta, SGPS, S.A. | Alternate Member of the Audit Board |
(1) Office terminates on 11-01-13
In the terms and for the purposes of the provisions of Article No 447 of Company Law and of CMVM Regulation 5/2008, the movements in shares and bonds carried out by members of the Corporate Bodies with reference to 2013, were the following:
| Opening | Movements in 2013 | Closing | |||||
|---|---|---|---|---|---|---|---|
| Name | Securities | Position 31/12/12 |
Date | Acquisitions | Disposals | Unit Price (€) |
Position 31/12/13 |
| Bonds BST √ Caixa EUA - Cx |
820 | 820 | |||||
| João Baptista Leite |
Bonds. BST √ Caixa Rendimento América Latina TOP 3 |
400 | 400 |
This report is prepared in line with the provisions of art, No. 70, §2, item b) of Company Law
In its turn the Santusa Company is fully owned by Banco Santander SA which thus indirectly holds the dominant control in Banco Santander Totta, SA.
There is a remaining 2.222% holding in the Bank»s share capital that is owned by a Company under full, direct or indirect control of Companies Santander Totta, SGPS, Santusa and Banco Santander.
The remaining 0.131% of the total share capital is dispersed among several shareholders, with 0.038% corresponding to BST»s own shares.
Consequently there are no privileged shares of any type. Equally there are no restrictions whatsoever to the possibility of share transfers, which are entirely free.
There is no statutory system covering employee participation in the Company»s share capital.
In order that shareholders have the right to take part in the General Meetings they must prove the registration or deposit of their shares in financial intermediaries from the fifteenth day prior to the date the General Meeting has been called for.
The Company is not aware of any agreement that may have been concluded among shareholders.
The Company is organically structured in line with the provisions of article No. 278, §1, item a) of Company Law.
.
The corporate bodies are: the General Meeting, the Board of Directors and the Audit Board. Additionally, an official auditor, autonomous from the Audit Board, has been appointed in line with the provisions of article No. 413, §1, item b) and §2c of Company Law.
The mandates of the corporate officers are valid for a normal period of three years.
The Board of Directors comprises an Executive Committee on which are constituted all the powers permitted by article No. 407, §4 of Company Law.
The Board of Directors meets at least once every quarter and whenever it is called by the Chairman or by two Directors.
The Board of Directors is not empowered to decide upon increases in the Company»s share capital.
Equally no special rules exist with respect to the appointment or replacement of Directors, or as to alterations to the articles of association, such situations being governed by General Law.
The permanent objective is the rationalization and uniformity of operations and technical support services to the Commercial Network.
Within the scope of the normal operation of banking activity, in its several components there are, however, contracts that confer on the counterparty
.
the right to terminate them in the event of changes in the Bank»s shareholder structure and control, in line with what is current and common in banking practice.
Otherwise there are no agreements that confer upon corporate officers or employees the right to compensation when the termination of their binding to the Institution derives from their own initiative, from destitution or dismissal with just cause and reason or that occurs following a public offering.
Itemized below are the several interdisciplinary Committees that follow up and control all the institutions activities.
The main Committees follow, together with a résumé their functions.
Presided by the Chairman of the Executive Committee and comprising some of its members and officers responsible for the business areas, it meets on a fortnightly basis. It exercises the powers delegated by the Executive Committee. The main objectives of the Management Committee are the analysis, decision and follow up of:
Highest decision body in the Risk structure that exercises the powers delegated by the Executive Committee.
Analysis of the governance information of the Risks area; analysis and control of the several risks; approval of procedures and controls to prevent or mitigate existing risks.
Manages the market and liquidity structural risk, establishes contingency plans, promotes hedging strategies, and decides strategic positioning in order to optimize net interest income and the profitability of the equity funds
Analysis and decisions concerning changes and exceptions to the current HR management policies.
Prevents Money Laundering and Financing Terrorism and carries out the communications established by Law.
Approval of product and services and their respective follow up, singling out incidences that may occur and the reputation risk they may generate.
.
Carries out the corporate policy over pensions and fully controls the respective risks.
Follow up and supervise compliance policies and promote an environment of internal control, specifically through the effective application of the risk management system.
Establish and follow up the implementation of measures for the control and mitigation of technological and operational risk.
Analysis and decision concerning the disposal of items of real estate valued at amounts equal to or in excess of 200,000 euros.
Guarantees the alignment of the local areas involved in the development and follow up of risk models, as well as their inclusion in management procedures. Involvement must occur at the Higher Management level.
Ensure the correct operational management of the provisions set up and decide upon credit provisions that should be binding.
Follows up known legislative or regulatory projects as well as standards of conduct.
Establishes the Social Responsibility Strategic Plan, jointly with the Santander Group corporate plan.
Assesses the legal changes and fiscal rulings with impact on the Group»s institutions to determine the appropriate measures to comply with rules and requirements comprised in tax legislation.
Establish the plan for implementation of innovative solutions in Means of Payment for customers, to be based on the corporate strategy established in the Santander Group.
Promote an organizational culture that ensures business continuity, provide the availability of the necessary resources for implementation of the Banco Standard Totta PCN and of other bodies and ensure that the approved and implemented plans and procedures are in line with the corporate PCN.
Establish the access profiles to the central systems, departmental systems, local networks and to the various applications that support the business.
Analysis and decision concerning proposals for new branches, refurbishment, displacement, merger or shut down and the assess the respective impacts.
Decide upon action proposals to be implemented in the social networks.
Two new areas were set up in 2013:
Within this framework, the Bank practices a system of risk identification and management in line with articles Nos. 11 and 12 of the above referred instruction and has the required organization to bring about a proper an appropriate controlling environment and a sound risk management system.
Policies and procedures are specifically established with respect to all the risks referred to in article No. 11 of the above mentioned Instruction No. 5/2008.
Such policies and procedures are available and easily accessed by all the institution»s employees through their disclosure in the appropriate area of the Bank»s intranet system.
The Bank, similarly to the Group in which it belongs, complies, since 2006, with the demands of the Sarbanes Oxley (SOX) American Law, a standard that the Securities Exchange Commission (SEC) made obligatory for all corporations quoted on the New York Stock Exchange and which is one of the
more demanding in terms of requisites for an adequate and warrantable Model of Internal Control.
Following are the general lines that rule the organization and operation of the referred three missions.
The Risk Management Function (RMF) is transversal to the Santander Totta Group. This function is comprised in the Control Office / Risk Management Function (CORMF), established in BST»s organic structure.
Due to the major interconnection between Group companies, with a significant portion of risk measuring and control operations ensured by transversal central services, it was decided the RMF should adopt a transversal and common service feature to all the Credit Institutions and Finance Companies dominated by Santander Totta, SGPS, SA.
This function» general mission is to ensure an efficient and adequate operation of the risk management system as defined in Article No. 16 of the already mentioned BdP Instruction 5/2008, aiming to assess the relevance of the incurred risks and the degree of effectiveness of the measures adopted for its control, mitigation and overcoming.
RMF was set up with the highest level of independence, that is, without any direct responsibility over any executive duty or first or second line of control over the activities to be assessed and thus with the capability of carrying out its own tests with the objective to ensure the effective application of the risk management system.
The Executive Committee (EC) conferred on this body the widest possible powers to apply its mission, basing its activity on the applicable legislation and on the following principles and duties:
considering the different risks involved, namely, Credit, Market, Liquidity, Exchange Rate, Interest Rate, Settlement, Operational, Technological, Compliance, Reputation and Strategic Risks, without prejudice to any others that, in the view of the institution, may become material;
In total agreement with these competences, the CORMF was set up under the control of the EC, which also ensures the greatest autonomy and freedom in the exercise of its duties.
The CORMF is applying a specific methodology developed to assess the reach and effectiveness of the controls and mitigation processes of the Risk profiles, which has materialized in a number of tests or checks of the requisites specifically recommended for each type of risk. Such tests and requisites were based on the recommendations issued by the Basle Committee and by the European Banking Authority (EBA, ex-CEBS), by the Committee of Sponsoring Organizations of theTreadway Commission (COSO), by the Federal Reserve System (FED), Sarbanes-Oxley Law (SOX), Financial Services Authority (FSA) and other standard and regulatory bodies. Also considered was the Portuguese case, especially the regulations covering Internal Control contained in the General Regime of Credit Institutions and Finance Companies (GRCIFC) and connected documentation such as BdP Instruction 5/2008, CMVM Regulatory Instruction 3/2008 and particularly in the Risk Assessment Model (RAM).
The activity developed by the Risk Management Function is usually documented in a specific annual report, the ≈CMF Report∆, the last of which is dated May 2013. This document is intended to be used as a support to the Santander Totta Internal Control System, with the main actions focused on the following up of controls and promotion of internal control, namely through several actions included in the referred Report.
As a complement, this activity, since the end of 2012, is also directed towards the accompaniment of the Special On-Site Inspection Programme (SIP) promoted by the Bank of Portugal, with the support of international auditors and consultants, under the joint supervision of the International Monetary Fund, European Central Bank and European Commission (IMF/ECB/EU), the of
which have confirmed, in all regards, the certainty of the correct adequacy of the policies, procedures and controls instituted by Santander Totta.
The Bank has given precedence, for some time, to the autonomy, follow up and control of risks that could be contingent to incurring in legal or regulatory sanctions, as well as in financial or reputation losses, as a result of non compliance with any legal or regulatory provisions that could be considered as applicable, whether legal or regulatory, and also deriving from an infringement to the Codes of Conduct or procedures that do not conform to ethical standards or the required best practices.
The compliance function is comprised in the Department for Coordination of Institutional and Compliance Issues (DCICI), which includes, in its midst, a unit specifically attributed to the Prevention of Money Laundering and Financing Terrorism with staff reserved for its exclusive use.. The officer responsible is the Compliance Manager, Dr. João António Cunha Labareda, with the following specific duties and attributions:
the Code of Conduct for the Securities Market is especially controlled by DCICI that equally supports and follows compliance with the General Code which, however, is under the control of the Department of Coordination of Human Resources;
On another level, and in order to ensure the most efficient and effective means to perform its mission, the Management promoted the institutionalization of specific compliance committees especially designed for the more sensitive areas, such as those closer related to the financial markets, that operate periodically monthly as a rule √ and that allow considering the established practices, assess their conformity with applicable legal and regulatory standards, keep the areas informed as to innovations occurred and guarantee that these are carried out, control compliance with information and other applicable requirements, identify possible incidences and, should it be the case, analyse and implement the appropriate mitigation and preventive measures. These committees are directed and coordinated by DCICI, with the officers responsible for
the involved areas taking part in the respective meetings.
On another hand, within the scope of these Committees, or not, DCICI maintains a regular relationship with the remaining control areas (Audit and General Risk Function), in order to enhance the placing into perspective, the follow up and the global control of the risks.
Also singled out, in this framework, is the institutionalized connection with the Quality area √ responsible for following up and processing customer»s complaints √ in order to follow up the development of the situation in this field and, mainly, to examine, from the typology of the complaints, possible omissions or inadequate practices that these may point out, so as to provide the appropriate adjustments or corrections.
The Compliance Management equally comprises the Internal Control and Compliance Committee that has general control and risk management duties.
Without prejudice to the permanent and systematic contacts with the Bank»s Executive Committee, and mainly with the Director responsible, the activity developed within the scope of the compliance mission is the object of an annual report.
As such, the Compliance Manager submitted to the Board the report on the compliance activity carried out during the period elapsed since the last report (May 2012) and the end of May 2013.
In line with the above, the opinion of the Compliance Manager is that the Bank should proceed in accordance with the regulatory framework of the compliance mission, contained in Instruction No. 5/2008.
The basic duties of Internal Audit are:
• Supervise the compliance, effectiveness and efficiency of the Group»s systems of internal control, as well as the reliability and quality of the accounting information. For this purpose it checks that the risks inherent to the Group»s activity are adequately covered, particularly the accounting risks, market risks (that include interest and exchange rates), of the balance sheet structure (that includes liquidity risks), credit, operational, (including the adequate launching of products), money laundering, regulatory and reputation;
The officer responsible for the internal audit mission is appointed by the Board of Directors, who confer on him all the necessary powers for the independent performance of his duties, with free access to all relevant information.
The staff of the Internal Audit Department comprises 28 employees, distributed over the areas of Financial Risks, Credit Risks, Operational Risks and Technological Risks, all of whom are University graduates.
The Risk Matrix gives precedence to the units covered by the Internal Audit, in line with their inherent degree of risk. The matrix assesses the business risks implicit to the units during the previous accounting year and other factors (size of Unit, last rating obtained, and degree of implementation of the recommendations).
Based upon the assessment of all these factors the Overall Units covered are classified as Priority, Concerning, To Be Watched, Normal and Not Concerning. Amongst the Regulatory requisites are the carrying out of revisions of the Basle II project and DMIF. Additionally, the units» reviews include the analysis and checking of the SOX processes
Following a proposal of the Remuneration Committee, the General Meeting held on 15 March 2013 approved the following statement on remunerations policy.
The remuneration Policy of Bank Santander Totta is framed within the directives established by the Bank»s majority shareholder for all the Santander Group, which is laid out, with the involvement of external consultants, in line with the best practices existing in the sector. Santander Group owns a greater than 99% shareholding in the Bank.
The Remuneration Policy of Corporate Officers is reviewed and approved on an annual basis. In the respective definition, proposals were laid down and recommendations prepared to ensure that the remunerations are adequate and reflect the Bank»s risk profile and long term objectives.
The current Remuneration Committee was elected for a three year mandate, at the meeting of the General Meeting held on 28 May 2010, and comprises the following individualities:
Since the remuneration policy to be followed is necessarily and fully integrated in the Santander Group policy it is relevant to refer the very competitive environment in which this activity is developed and that the achievement of its objectives depends, in a large measure, on the quality, working capacity, dedication, responsibility, knowledge of the business and on the commitment to the institution, of those who perform key functions and that lead the organization.
These are the premises that generally determine the Group»s remuneration policy, with special reference to the executive directors, and that allow attracting and retaining talents in the organization, considering the wide scope of the market in which it operates.
Consequently, the remuneration policy of the members of the Board of Directors has, as it already had in the past concerning the executive directors, the following objectives:
In the case of the remuneration of non-executive duties, the remuneration policy equally aims to compensate the dedication, qualification and responsibility demanded for the respective performance.
Already in 2010, at Group level, a Committee for the Assessment of Risks in Remunerations was set up, whose members are individualities with recognized competence and impartiality, which aims to assess the quality of the results, risks incurred and achievement of objectives.
Thus the Group, following on what has been its custom, will continue to align its remuneration policy with the best market practices, anticipating, in general terms and within adequate measures, the concerns shown in the new Portuguese regulations.
In line with the above, the general guiding principles in setting remunerations are the following:
In line with the above principles, the following is assumed:
Shares attributed to the members of the Executive Committee do not benefit from any risk coverage contract and will remain, until the termination of their respective mandates, subject to the condition that the shares continue held, until their value reaches twice the value of the amount of the Total Remuneration (without prejudice to the possibility of shares being disposed of should this be required in order to settle taxes resulting from the benefits of those same shares).
On this date, with respect to two directors, two thirds of the Variable Deferred Remuneration relative to 2010 has been deferred, and one third of this Remuneration will be paid during this month.
With respect to 2011 the total Deferred Variable Remuneration remains to be paid, and one third will be paid during this month.
With respect to 2012, 30% of the Variable Remuneration has already been paid and a further 30% will be settled in shares in the current month. The remaining portion is deferred
It is not estimated that, in 2013, any amounts will be paid to the executive directors, by other companies owned by or related to the Group.
Attribution of benefits is carried out in order to ensure compatibility with company strategy, with the objectives, the values and the Bank»s long term interests.
The attribution of option plans for 2013 is not envisaged.
Considering the provisions of §5 of article No. 403 of Company Law, statutory limitations to compensation for early termination of services by Corporate Officers have not been established nor is it envisaged that these should be introduced.
It is not foreseeable that, in 2012, any compensation will be paid for early termination of services by Corporate Officers.
This remuneration Policy of the Bank»s Corporate Officers is fully in line with the principles comprised in the Bank of Portugal»s Instruction No. 10/2011, dated 26 December (Official Gazette, 2nd series, dated 9 January 2012), guided by simplicity, transparency and adequacy to the Bank»s medium and long term objectives.
As such, the determination of the total remuneration of those Officers, comprising fixed and variable components, as well as the connection between these components, such as outlined in this Declaration, allow arriving at the adoption, in general, of the rules contained in Chapter II of the referred Instruction, which is manifestly its basic nucleus.
The circumstance of the Bank being comprised in the Santander Group, which owns more than 99% of its share capital, implies the necessary coherence of the respective corporate policies which, in turn, considering the global nature of the Group, respect the applicable international regulations.
This information is provided in order to comply with the provisions of article No. 3 of Law 28/2009, dated 19 June, and in article No. 17 of the Bank of Portugal»s Instruction No. 10/2011, dated 29 December (Official Gazette, 2nd Series, dated 9 January 2012), in that part that refers to the disclosure of the annual amount paid in remunerations to Corporate Officers.
In aggregate terms, the fixed and variable remunerations paid to Corporate Officers in 2013 were, respectively, 2,749,000 euros in fixed remunerations and 3,561,000 euros in variable remuneration.
Paid and deferred individual remuneration relative to 2013 is shown in the table below.
On 31 December 2013 the cumulative amount of credits granted and in force to the members of the Board of Directors in accordance with article 85 of the general regime of credit institutions and finance companies amounted to 1,009,000 euros.
Board of Directors
| Name Name |
Position | Remuneration fixed |
|---|---|---|
| António Basagoiti Garcia -Tuñón ** | Chairman | 460 |
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 500 |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 178 |
| Eduardo José Stock da Cunha *** | Non-Executive Member | - |
| João Baptista Leite | Member | 200 |
| José Carlos Brito Sítima | Member | 273 |
| José Urgel Moura Leite Maia | Member | 200 |
| José Manuel Alves Elias da Costa | Member | 257 |
| Luís Filipe Ferreira Bento dos Santos | Member | 231 |
| Pedro Aires Coruche Castro e Almeida | Member | 210 |
| Manuel António Amaral Franco Preto * | Member | 141 |
| 2,650 |
* Appointed on 01/04/2013
** Appointed on 01/05/2013
*** Rennounced office on 16/10/2013
| Name Name |
Position Position |
Remuneration fixed |
|---|---|---|
| Luís Campos e Cunha | Chairman | 60 |
| Mazars & Associados, SROC | Member | 15 |
| Ricardo Castro | Member | 24 |
| 99 |
Payment in cash:
| Name Name |
Position | Bonuses in 2013 (cash) |
|---|---|---|
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 150 |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 75 |
| João Baptista Leite | Member | 72 |
| José Carlos Brito Sítima | Member | 150 |
| José Urgel Moura Leite Maia | Member | 105 |
| José Manuel Alves Elias da Costa | Member | 130 |
| Luís Filipe Ferreira Bento dos Santos | Member | 129 |
| Pedro Aires Coruche Castro e Almeida | Member | 161 |
| Manuel António Amaral Franco Preto | Member | 90 |
| 1,062 |
Payment in shares:
Board of Directors
| Name | Position Position |
Bonuses in 2013 retained by one year |
|---|---|---|
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 144 |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 72 |
| João Baptista Leite | Member | 68 |
| José Carlos Brito Sítima | Member | 144 |
| José Urgel Moura Leite Maia | Member | 101 |
| José Manuel Alves Elias da Costa | Member | 125 |
| Luís Filipe Ferreira Bento dos Santos | Member | 123 |
| Pedro Aires Coruche Castro e Almeida | Member | 154 |
| Manuel António Amaral Franco Preto | Member | 86 |
| 1,017 |
This amount corresponds to 158,901 shares of Banco Santander, S.A., at the value of 6.40 Euros per share, this being the market value (stock exchange quotation) on the date of the respective attribution.
The Santander Group, in which the Bank is comprised, also has a long term worldwide incentive plan, naturally including Bank Banco Santander Totta, S.A., which is divided into cycles.
In July 2013, the fifth cycle of the share plan bound to objectives was finalized, with no shares attributed since the objectives were not met.
The deferred portion of the remuneration paid in cash with respect to 2013 consists of:
Board of Directors
| Bonuses in 2013 | ||||
|---|---|---|---|---|
| Name Name |
Position Position Position |
2015 | 2016 | 2017 |
| Cash | Cash | Cash | ||
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 50 | 50 | 50 |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 17 | 17 | 17 |
| João Baptista Leite | Member | 16 | 16 | 16 |
| José Carlos Brito Sítima | Member | 33 | 33 | 33 |
| José Urgel Moura Leite Maia | Member | 23 | 23 | 23 |
| José Manuel Alves Elias da Costa | Member | 29 | 29 | 29 |
| Luís Filipe Ferreira Bento dos Santos | Member | 29 | 29 | 29 |
| Pedro Aires Coruche Castro e Almeida | Member | 36 | 36 | 36 |
| Manuel António Amaral Franco Preto | Member | 20 | 20 | 20 |
| 252 | 252 | 252 |
The deferred portion of the remuneration paid in shares with respect to 2013 consists of:
| Bonuses in 2013 | |||||
|---|---|---|---|---|---|
| Name Name |
Position Position |
2014 | 2015 | 2016 | |
| shares | shares | shares | |||
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 7,485 | 7,485 | 7,485 | |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 2,495 | 2,495 | 2,495 | |
| João Baptista Leite | Member | 2,380 | 2,380 | 2,381 | |
| José Carlos Brito Sítima | Member | 4,990 | 4,990 | 4,990 | |
| José Urgel Moura Leite Maia | Member | 3,502 | 3,502 | 3,502 | |
| José Manuel Alves Elias da Costa | Member | 4,339 | 4,339 | 4,340 | |
| Luís Filipe Ferreira Bento dos Santos | Member | 4,281 | 4,281 | 4,282 | |
| Pedro Aires Coruche Castro e Almeida | Member | 5,339 | 5,339 | 5,340 | |
| Manuel António Amaral Franco Preto | Member | 2,994 | 2,994 | 2,994 | |
| 37,805 | 37,805 | 37,809 |
At the current date, two thirds of the deferred variable remuneration with respect to 2012 have been deferred, and one third has already been paid.
| Bonuses of 2012 paid in February 2014 | |||||
|---|---|---|---|---|---|
| Name Name |
Position Position |
Interest Interest Dividend Dividend Dividend Cash |
Shares | ||
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 0.3 | 5 | 53 | 54 |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 0.2 | 2 | 19 | 19 |
| João Baptista Leite | Member | 0.1 | 2 | 18 | 18 |
| José Carlos Brito Sítima | Member | 0.1 | 3 | 27 | 28 |
| José Urgel Moura Leite Maia | Member | 0.1 | 3 | 27 | 28 |
| José Manuel Alves Elias da Costa | Member | 0.2 | 3 | 32 | 33 |
| Luís Filipe Ferreira Bento dos Santos | Member | 0.2 | 3 | 29 | 30 |
| Pedro Aires Coruche Castro e Almeida | Member | 0.2 | 4 | 38 | 39 |
| Manuel António Amaral Franco Preto | Member | 0.1 | 2 | 21 | 22 |
| 1.5 | 24 | 262 | 270 |
The value of the shares corresponds to 40,704 shares of Banco Santander, S.A., at a price per share of 6.64 Euros, since this is the market value (stock exchange quotation) on the date of the respective attribution.
| Bonuses in 2012 | |||||
|---|---|---|---|---|---|
| Name Name |
Position Position |
2015 2015 |
2016 2016 |
||
| Shares Shares |
Cash Cash |
Shares | Cash | ||
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 8,169 | 53 | 8,168 | 53 |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 2,885 | 19 | 2,884 | 19 |
| João Baptista Leite | Member | 2,723 | 18 | 2,723 | 18 |
| José Carlos Brito Sítima | Member | 4,220 | 27 | 4,221 | 27 |
| José Urgel Moura Leite Maia | Member | 4,149 | 27 | 4,149 | 27 |
| José Manuel Alves Elias da Costa | Member | 4,963 | 32 | 4,964 | 32 |
| Luís Filipe Ferreira Bento dos Santos | Member | 4,452 | 29 | 4,452 | 29 |
| Pedro Aires Coruche Castro e Almeida | Member | 5,876 | 38 | 5,876 | 38 |
| Manuel António Amaral Franco Preto | Member | 3,267 | 21 | 3,268 | 21 |
| 40,704 | 261 | 40,705 | 261 |
At the current date, one third of the deferred variable remuneration with respect to 2011 is deferred, and one third of this remuneration has been paid.
| Bonuses of 2011 paid in February 2014 | ||||||
|---|---|---|---|---|---|---|
| Name Name |
Position Position |
Interest Interest |
DividendDividend Dividend |
Cash | Shares | |
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 0.2 | 2 | 10 | 11 | |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | - | 2 | - | 12 | |
| João Baptista Leite | Member | 0.1 | 1 | 6 | 7 | |
| José Carlos Brito Sítima | Member | 0.2 | 2 | 10 | 11 | |
| José Urgel Moura Leite Maia | Member | 0.2 | 2 | 10 | 11 | |
| José Manuel Alves Elias da Costa | Member | 0.3 | 3 | 14 | 16 | |
| Luís Filipe Ferreira Bento dos Santos | Member | 0.3 | 3 | 12 | 14 | |
| Pedro Aires Coruche Castro e Almeida | Member | 0.6 | 6 | 26 | 29 | |
| 1.9 | 21 | 87 | 111 |
The value of the shares corresponds to 17,011 shares of Banco Santander, S.A., at a price per share of 6.56 Euros, since this is the market value (stock exchange quotation) on the date of the respective attribution
| Bonuses of 2011 | ||||
|---|---|---|---|---|
| Name Name |
Position Position |
2015 | ||
| Shares Shares |
Cash Cash |
|||
| António José Sacadura Vieira Monteiro | Deputy-Chairman | 1,704 | 10 | |
| Carlos Manuel Amaral de Pinho | Non-Executive Member | 1,772 | - | |
| João Baptista Leite | Member | 1,086 | 6 | |
| José Carlos Brito Sítima | Member | 1,704 | 10 | |
| José Urgel Moura Leite Maia | Member | 1,704 | 10 | |
| José Manuel Alves Elias da Costa | Member | 2,409 | 14 | |
| Luís Filipe Ferreira Bento dos Santos | Member | 2,138 | 12 | |
| Pedro Aires Coruche Castro e Almeida | Member | 4,496 | 26 | |
| 17,013 | 87 |
The variable remuneration paid with respect to 2010 was as follows:
| Name | Position | Bonuses of 2010 paid in February 2014 |
||
|---|---|---|---|---|
| Dividend | Shares | |||
| José Manuel Alves Elias da Costa | Member | 1 | 4 | |
| Pedro Aires Coruche Castro e Almeida | Member | 6 | 21 | |
| 7 | 24 |
The value of the shares corresponds to 3,725 shares of Banco Santander, S.A., at a price per share of 6.56 Euros, since this is the market value (stock exchange quotation) on the date of the respective attribution.
With respect to post employment benefits, the members of the Board of Directors who are contractually bound to BST and that are not inserted in the plan referred to below are comprised in the pension plan of the Collective Labour Agreement for the banking sector subscribed by the Bank.
In 2010, the group set up a plan with an established contribution for its entire managerial staff. This plan also includes the members of the Board of Directors that are not comprised in the plan referred to below.
The executive directors who, at the date of the merger, were directors of Banco Totta & Açores, benefit from a complementary pension fund covering retirement due to age or incapability, the terms and conditions of which were set in line with the regulation that was approved by the General Meeting held on 30 May 2007, as provided for under §7 of article No. 11 of the Banks Articles of Association and that globally adopts the provisions of the regulation that had been originally approved at the General Meeting of Banco Totta & Açores held on 30 October 1989. The requisites of this pension plan are, specifically, the exercise of the office for a minimum period, the complementary portion varying as a function of the director»s accrued years of service
On 31 December 2013, liabilities with this plan amounted to 15,598,000 euros and are duly covered by a provision recorded in the Bank»s accounts.
There were no payments, in 2013, of any compensation for early termination of employment of corporate officers.
At its meeting held on 27 June 2013 the Board of Directors approved the following remunerations policy.
In the terms and for the purposes of the provisions of article No. 3 of Law No. 28/2009, dated 19 June, and in article No. 16 of Instruction No.10/2011 of the Bank of Portugal, dated 29 December (Official Gazette 2nd Series, dated 9 January 2012), the remuneration policy is disclosed of the employees who, not being Corporate Officers of Bank Santander Totta, S.A. (the ≈Bank∆), (i) exercise their professional activity with responsibility for assuming risks on behalf of the Bank or of its customers with material impact on the Banks risk profile or (ii) exercise their professional activity within the scope of the control functions, comprised in Instruction No. 5/2008 of the Bank of Portugal, dated 1 July, as is the case with the officers responsible for the Audit, General Control of Bank Risks, Compliance and Credit & Market Risks Departments, as well as those officers responsible for the Financial, accounting and Management Control areas
The Remuneration Policy of Managerial Staff follows the principles in force for the Bank»s remaining employees, as comprised in the directives established by the Bank»s majority shareholder for all the Santander Group and laid out, with the involvement of external consultants, in line with the best practices existing in the sector. Santander Group owns a greater than 99% shareholding in the Bank.
The Remuneration Policy of Managerial Staff is annually reviewed and approved by the Board of Directors, in the exercise of the competence that may be delegated on the respective Executive Committee, The officer responsible for Bank»s Human Resources Department also took part in its definition, putting forward recommendations intended to ensure that remunerations are adequate and reflect the Bank»s risk profile and long term objectives, and also conform to legal and regulatory standards, as well as with the national and international pertinent principles and recommendations.
Since the following remuneration policy is necessarily and fully comprised in the Santander Group policy, reference should be made to the extremely competitive context within which the Group»s activity is developed and the circumstance that the achievement of its objectives largely depends upon the quality, the capacity for work, the dedication, responsibility, knowledge of the business and commitment towards the institution, from those that perform key duties in the organization.
These are the premises that generally determine the Santander Group»s remuneration policy and that allow attracting and retaining talents in the organization, considering the global cover of the market within which it operates.
Consequently, the remuneration policy of these groups of employees has, as it did in the past, the following objectives:
The Group set up, in 2010, a Committee for the Assessment of Remuneration Risks, whose members are individualities of known competence and impartiality, in order to assess the quality of the results, incurred risks and achievement of objectives, all features that have an impact on remunerations.
Thus the Group, following on what has been its practice, will continue to align its remuneration policy with the best market practices, anticipating in general terms and within the adequate measures, the concerns evident in the Portuguese regulations.
In line with the above, the general guiding principles of the remunerations policy have been and must remain the following:
In line with the above principles, the following is assumed:
• Since the conditions for the establishment and payment of the variable remuneration render its final value indeterminate and its payment eventual, it is not possible to set an absolute maximum limit for the relationship between the fixed and variable components of the Managerial remunerations. For this reason, with respect to 2013, the only possible indication will be the estimated proportion that each of the components will represent in the total remuneration, having as a reference the practice followed in prior years.
The 30% in cash and the 30% in shares of the 2012 Variable Remuneration of the Officers covered by the provisions of Instruction 5/2008 of the Bank of Portugal has already been settled. The settlement of the remainder, should the assumptions contained in 2.1 b) have materialized, will be deferred throughout 2014 and 2016.
With reference to the remaining Officers, the 2012 Variable Remuneration has been fully settled.
Attribution of benefits is carried out in order to ensure compatibility with company strategy, and with the Bank»s objectives, values and long term objectives.
Without prejudice to causal or residual attributions, resulting from measures taken in the past by previous employers (Crédito Predial Português, Banco Totta & Açores, Banco Santander Portugal and Banco Santander de Negócios Portugal), all Managers enjoy the following benefits:
Several employees benefit from life insurance, resulting from the contractual connection to the extinct Banco Santander Portugal or to Banco Santander, S.A.
Several employees benefit from a complementary pension plan, in the terms of the decision taken by the Bank»s Board of Directors on 25 February 2010.
There are no pension benefits attributed on a discrete basis.
The remuneration policy of Bank Managers is globally in line with the principles comprised in Instruction No. 10/2011 of the Bank of Portugal, dated 26 December (Official Gazette, 2nd Series, dated 9 January 2012), guided by simplicity, transparency and adequacy to the Bank»s medium and long term objectives.
As such, the establishment of the Total Remuneration of these employee groups, comprising Fixed and Variable Remuneration, as well as the relationship between these two components, such as outlined in this Declaration, allow arriving at the adoption, in general, of the rules contained in Chapter II of the referred Instruction, which is manifestly its basic nucleus.
The circumstance of the Bank being comprised in the Santander Group, which owns more than 99% of its share capital, implies the necessary coherence of the respective corporate policies which, in turn, considering the global nature of the Group, respect the applicable international regulations. In this context, the adoption of the remaining rules contained in Instruction No. 10/2011 would imply a procedural redundancy and an artificial execution without any practical effects. Thus Bank Santander Totta»s policy in the matter of its Managers remunerations is contained within the current limits without prejudice to the compliance, in global terms, and at the time of the setting of the directives of the Group it comprises, with rules issued in identical sense by the competent national authorities.
This information is provided in compliance with the provisions of article No. 17 of Instruction No.10/2011 of the Bank of Portugal, dated 29 December (Official Gazette 2nd Series, dated 9 January 2012), in that part that refers the disclosure, in aggregate terms, of the amount of annual remuneration paid to employees who, not being Corporate Officers of Banco Santander Totta, S.A. (the ≈Bank∆), exercise their professional activity within the scope of the control functions comprised in Instruction No. 5/2008 of the Bank of Portugal, dated 1 July, or exercise duties with responsibility for assuming risks on behalf of the Bank or of its customers that may have material impact on the Bank»s risk profile (hereinafter referred to as ≈Managers∆ or ≈Officers∆).
| Amount of fixed remuneration: | €1,078,000 |
|---|---|
| Amount of variable remuneration: | € 495,000 |
| Number of beneficiaries: | 7 |
2013 performance premium retained for one year amounting to € 242,000 corresponds to 37,743 shares in Banco Santander, S.A., at a value of 6.40 Euros per share, since this is the market price (stock exchange quotation) on the date of the respective attribution.
| Deferred Remuneration Remuneration |
Assigned | 2015 | 2016 | 2017 |
|---|---|---|---|---|
| 2012 | ||||
| Cash payment (Euros «000) | 45 | 44 | 44 | - |
| Shares | 38 | 6,821 | 6,821 | - |
Shares assigned correspond to 5,720 shares in Banco Santander, S.A., at a value of 6.64 Euros per share, since this is the market price (stock exchange quotation) on the date of the respective attribution.
| 2013 | ||||
|---|---|---|---|---|
| Cash payment (Euros «000) | - | 58 | 58 | 58 |
| Shares | - | 8,752 | 8,752 | 8,751 |
These Officers are also comprised in the worldwide long term incentive plan, which is divided in cycles. The fifth cycle of the share plan bound to objectives was finalized in July 2013, with no shares being attributed since the objectives had not been met.
Managers enjoy the benefits of health insurance complementary to Medical & Social Assistance Services (SAMS) comprised in the collective labour regulations for the banking sector and of personal accident insurance, in line with the provisions of the collective labour regulations for the banking sector.
Several Managers benefit from life insurance, as a result of a contractual link with the extinct Banco Santander Portugal or with Banco Santander, S.A.
Several Managers benefit from a complementary pension plan, in the terms of the decision of the Bank»s Board of Directors dated 25 February 2010.
No new personnel contracts occurred. However, in July 2013, the Officer responsible for the Area of Human Resources, Organization and Expenses was included in this circle.
In 2013, the Officer Reswponsible for the Financial Area was appointed as a Director, and another Officer appointed for these duties.
The Remunerations policy for the Corporate Officers of Bank Santander Totta for 2014, will be considered at the Annual General Meeting, in compliance with article No. 2, §1 of Law No. 28/2009, dated 19 June and of article No. 16 of Instruction No. 10/2011, of the Bank of Portugal, dated 29 December (Official Gazette, 2nd Series, dated 9 January 2012).
The Remunerations policy for the Managerial Staff of Bank Santander Totta was approved at the meeting of the Board of Directors held on 27June 2013, applicable in 2013 and 2014. Until a new decision is taken, that policy is the above described. This issue will be reconsidered in June 2014.
Item c) of §1 of article No. 245 of the Securities Legislation determines that each of the responsible officers in a company issues a declaration as defined therein.
The members of the Board of Directors of Banco Santander Totta, S.A, hereunder identified by name individually subscribed the following declaration:
≈I hereby declare, in the terms and for the purposes foreseen in item c) of §1 of article No. 245 of the Securities Legislation that, to the best of my knowledge, the management report, the annual accounts, the statutory auditor»s report and remaining notes to the accounts of Banco Santander Totta, S.A., all relative to the year ended on 31 December 2013, were prepared in line with the applicable accounting standards, provide a true and accurate view of the assets and liabilities, of the financial situation and of the results of the above named company and of those companies comprised in the consolidation perimeter, and include a description of the main risks and uncertainties with which all the above companies are faced∆.
Board of Board ofDirectors Directors Directors
| António Basagoiti Garcia-Tuñon | |
|---|---|
| Chairman | |
| António José Sacadura Vieira Monteiro | Carlos Manuel Amaral de Pinho |
| Deputy Chairman | Member |
| João Batista Leite | José Carlos Brito Sítima |
| Member | Member |
| José Urgel Moura Leite Maia | José Manuel Alves Elias da Costa |
| Member | Member |
| Luís Filipe Ferreira Bento dos Santos | Manuel António Amaral Franco Preto |
| Member | Member |
| Pedro Aires Coruche Castro e Almeida | |
| Member | |
Item c) of §1 of article No. 245 of the Securities Legislation determines that each of the responsible officers in a company issues a declaration as defined therein.
The members of the Audit Board of Banco Santander Totta, S.A, hereunder identified by name individually subscribed the following declaration:
≈I hereby declare, in the terms and for the purposes foreseen in item c) of §1 of article No. 245 of the Securities Legislation that, to the best of my knowledge, the management report, the annual accounts, the statutory auditor»s report and remaining notes to the accounts of Banco Santander Totta, S.A., all relative to the year ended on 31 December 2013, were prepared in line with the applicable accounting standards, provide a true and accurate view of the assets and liabilities, of the financial situation and of the results of the above named company and of those companies comprised in the consolidation perimeter, and include a description of the main risks and uncertainties with which all the above companies are faced∆.
Chairman: Luís Manuel Moreira de Campos e Cunha
Members: Members:Mazars & Associados, SROC, represented by Fernando Vieira
Ricardo Manuel Duarte Vidal Castro
Consolidated Financial Statements
| 20 13 |
20 12 |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| AS SE TS |
No tes |
Am ts b efo oun re imp air nt a nd me dep iati rec on |
De cia tion pre and im irm ent pa |
Ne t ets ass |
Ne t ets ass |
LIA BIL ITI ES AN D S HA RE HO LD ER S' EQ UIT Y |
No tes |
20 13 |
20 12 |
| Ca sh and de its ral ban ks at c ent pos |
5 | 337 .84 1 |
- | 337 .84 1 |
352 .36 5 |
Lia bil itie s |
|||
| e f Ba lan du ot her ba nks ces rom |
6 | 552 .92 1 |
- | 552 .92 1 |
385 .32 3 |
f ce Re ntr al b ank sou rce s o s |
19 | 6.2 41 .41 0 |
5.8 37 .24 2 |
| Fin ial he ld f din ets tra anc ass or g |
7 | 1.9 49 .11 5 |
- | 1.9 49 .11 5 |
2.2 65 .49 5 |
Fin ial liab iliti hel d fo adi r tr anc es ng |
7 | 1.6 19. 768 |
2.0 48 .74 3 |
| fair rof Fin ial ets at lue th h p it o r lo anc ass va rou g ss |
8 | - | - | - | 93 .73 5 |
f ot Re her edi t in stit utio sou rce s o cr ns |
20 | 4.1 75 .05 8 |
1.9 49 .57 4 |
| Av aila ble -fo ale fin ial ets r-s anc ass |
9 | 4.4 43 .99 1 |
61 .73 8 |
4.3 82 .25 3 |
3.4 89 .86 4 |
Re f cu nd oth deb sto ts sou rce s o me rs a er |
21 | 20 .70 7.0 01 |
21 .49 7.1 74 |
| Loa and ad dit ins titu tion to ns van ces cre s |
10 | 3.2 70 .97 0 |
- | 3.2 70 .97 0 |
3.0 97 .42 2 |
De bt s ritie ecu s |
22 | 2.5 34 .16 1 |
3.9 53 .51 9 |
| Loa and ad to tom ns van ces cus ers |
11 | 27 .18 5.3 97 |
1.0 77 .87 6 |
26 .10 7.5 21 |
26 .97 9.6 49 |
He dg ing de riva tive s |
12 | 370 .68 4 |
455 .91 1 |
| He dg ing de riva tive s |
12 | 199 .42 7 |
- | 199 .42 7 |
284 .85 0 |
Pro vis ion s |
23 | 62 .03 9 |
72 .27 1 |
| No s h eld fo le ent set n-c urr as r sa |
13 | 319 .52 5 |
112 .58 2 |
206 .94 3 |
206 .84 0 |
Cu liab iliti nt t rre ax es |
17 | 14. 313 |
4.6 87 |
| Inv ies est nt p ert me rop |
14 | 467 .94 9 |
- | 467 .94 9 |
- | De fer red lia bili ties tax |
17 | 58 .52 4 |
75 .30 3 |
| Oth ible tan set er g as s |
15 | 83 1.5 93 |
512 .93 1 |
318 .66 2 |
336 .08 4 |
Su bor din d li abi litie ate s |
24 | 4.3 07 |
4.3 11 |
| Inta ible set ng as s |
15 | 364 .49 8 |
312 .03 0 |
52 .46 8 |
65 .84 2 |
Oth liab iliti er es |
25 | 292 .90 0 |
303 .41 7 |
| Inv in oci d c ies est nts ate me ass om pan |
16 | 148 .79 0 |
1.0 60 |
147 .73 0 |
142 .99 4 |
To tal liab iliti es |
36 .08 0.1 65 |
36 .20 2.1 52 |
|
| Cu nt t ets rre ax ass |
17 | 17. 458 |
- | 17. 458 |
4.2 46 |
||||
| De fer red tax set as s |
17 | 540 .67 5 |
- | 540 .67 5 |
63 1.5 78 |
Sh ho lde rs' uit are eq y |
|||
| Oth ets er ass |
18 | 28 1.6 93 |
23 .09 8 |
258 .59 5 |
190 .95 6 |
Sh ital are ca p |
26 | 656 .72 3 |
656 .72 3 |
| Sh ium nt are pr em ac cou |
26 | 193 .39 0 |
193 .39 0 |
||||||
| Oth ity ins tru nts er equ me |
26 | 135 .00 0 |
135 .00 0 |
||||||
| Re val ion uat re ser ves |
26 | ( 573 .18 9) |
( 699 .20 2) |
||||||
| Oth and tain ed rnin er res erv es re ea gs |
26 | 1.4 77 .21 7 |
1.4 21 .51 2 |
||||||
| ( Tre har es) asu ry s |
( 43 .31 2) |
( 42 .56 0) |
|||||||
| Co lida ted t in ttri but abl th har eho lde rs' of BS T e to nso ne com e a e s |
27 | 89 .16 4 |
88 .06 8 |
||||||
| Sh BS hol de rs' ity ribu tab le t o th har eho lde rs' of T att are equ e s |
1.9 34 .99 3 |
1.7 52 .93 1 |
|||||||
| Min orit inte ts y res |
28 | 795 .37 0 |
572 .16 0 |
||||||
| T ota l sh hol de rs' ity are equ |
2.7 30 .36 3 |
2.3 25 .09 1 |
|||||||
| T ota l as set et s, n |
40 .91 1.8 43 |
2.1 01 .31 5 |
38 .81 0.5 28 |
38 .52 7.2 43 |
T ota l lia bili ties d s har eho lde rs' ity an equ |
38 .81 0.5 28 |
38 .52 7.2 43 |
||
The accompanying notes form an integral part of the consolidated balance sheet as of December 31, 2013.
(Amounts expressed in thousands of Euros - tEuros)
(Translation of statements of income originally issued in Portuguese - Note 52)
| Notes | 2013 | 2012 | |
|---|---|---|---|
| Interest and similar income | 30 | 1.271.127 | 1.648.148 |
| Interest and similar charges | 31 | (763.859) | (1.106.614) |
| Net interest income | 507.268 | 541.534 | |
| Income from equity instruments | 32 | 1.313 | 1.698 |
| Income from services and commissions | 33 | 370.626 | 384.701 |
| Charges with services and commissions | 34 | (55.116) | (53.893) |
| Result of assets and liabilities at fair value through profit or loss | 35 | 20.326 | 37.183 |
| Result of available-for-sale financial assets | 36 | 4.534 | (2.696) |
| Result of foreign exchange revaluation | 37 | 4.039 | 5.652 |
| Result from the sale of other assets | 38 | 2.476 | 85.689 |
| Other operating results | 39 | (34.431) | (12.760) |
| Net income from banking activities | 821.035 | 987.108 | |
| Staff costs | 40 | (269.577) | (257.636) |
| General administrative costs | 41 | (137.159) | (137.496) |
| Depreciation in the year | 15 | (59.777) | (63.873) |
| Provisions, net of reversals | 23 | (6.930) | (22.821) |
| Loan impairment net of reversals and recoveries | 23 | (197.039) | (378.147) |
| Impairment of other financial assets net of reversals and recoveries | 23 | (3.155) | (16.504) |
| Impairment of other assets net of reversals and recoveries | 23 | (36.827) | (49.137) |
| Result from associates | 42 | 14.069 | 11.864 |
| Income before taxes and minority interests | 124.640 | 73.358 | |
| Taxes | |||
| Current | 17 | (35.321) | (29.593) |
| Deferred | 17 | (9.037) | 44.303 |
| Income after taxes and before minority interests | 80.282 | 88.068 | |
| Minority interests | 28 | 8.882 | - |
| Consolidated net income attributable to the shareholders of BST | 27 | 89.164 | 88.068 |
| Average number of ordinary shares outstanding | 641.959.603 | 642.021.170 | |
| Earnings per share (in Euros) | 0,14 | 0,14 | |
The accompanying notes form an integral part of the consolidated statement of income for the year ended December 31, 2013.
(Amounts expressed in thousands of Euros - tEuros)
| De mb ce |
31 20 13 er , |
De mb ce er |
31 20 12 , |
|
|---|---|---|---|---|
| Att rib ble th uta to e |
Att rib ble uta to |
Att rib ble th uta to e |
Att rib ble uta to |
|
| sh ho lde rs' f B ST are o |
mi rity in ter est no s |
sh ho lde rs' f B ST are o |
mi rity in ter est no s |
|
| Co lida ted t in fo r th nso ne co me e y ea r |
89 .16 4 |
( 8.8 82 ) |
88 .06 8 |
- |
| fie Ite th at wil l no t b las si d s ub tly to the in st ate nt: ms e r ec se qu en co me me |
||||
| Ac ria l a nd fin cia l de via tio tua an ns |
||||
| Fa ir v alu e |
( 37 .78 5 ) |
- | ( 35 .09 3 ) |
- |
| Ta ffe ct x e |
7.4 47 |
- | 10 .17 8 |
- |
| Ite th be las si fie d s ub tly the in at to st ate nt: ms ma rec se qu en co me me y |
||||
| Ex ch e d iffe ctio f fo rei ub sid iar ies n t an g ren ce s o ran sa n o g n s |
( ) 4.4 87 |
( 1) 11 .81 |
1.5 27 |
( ) 5.3 77 |
| Re lua tio f a cia ted ies lue d a ity tho d t e va n r es erv es o sso co mp an va qu me |
||||
| Fa ir v alu e |
76 7 |
- | 1.4 46 |
- |
| ffe Ta ct x e |
( ) 157 |
- | ( ) 42 0 |
- |
| Ch in f air lue f fi ial ilab le for le set an g es va o na nc as s a va sa |
||||
| Fa ir v alu e |
27 8.5 91 |
- | 42 7.5 90 |
- |
| Ta ffe ct x e |
( 79 .60 4) |
- | ( 124 .00 0 ) |
- |
| Ch in f air lue f c h f low s h ed ing de riva tive an g es va o as g s |
||||
| Fa ir v alu e |
( .10 8 ) 55 |
- | 40 .94 4 |
- |
| Ta ffe ct x e |
15 .76 0 |
- | ( 11 .87 4) |
- |
| Co lida ted reh siv e i fo r th nso co mp en nco me e y ea r |
21 4.5 88 |
( 20 .69 3 ) |
39 8.3 66 |
( 5.3 77 ) |
The accompanying notes form an integral part of the consolidated statement of income and other comprehensive income for the year ended December 31, 2013.
(Amounts expressed in thousands of Euros - tEuros)
(Translation of statements of changes in shareholders' equity originally issued in Portuguese - Note 52)
| Rev alu atio n re |
ser ves |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sha re |
For eig n |
|||||||||||||
| Sha re |
Pre miu m |
Oth ity er e qu |
Leg al |
Fai r |
han exc ge |
Def d erre |
Leg al |
Oth er |
Ret ain ed |
Tre asu ry |
Net inc om e |
Min orit y |
Sha reh old er |
|
| Ca ital p |
Acc t oun |
inst ent rum s |
alu atio rev n |
val ue |
fluc tua tion |
tax es |
res erv e |
res erv es |
rnin ea gs |
sha res |
in t he yea r |
inte ts res |
ity equ |
|
| Ba lan at Dec ber 31 , 20 11 ces as em |
656 .72 3 |
193 .39 0 |
135 .00 0 |
23. 245 |
( ) 1.4 35. 951 |
( 16) 6.1 |
410 .36 1 |
243 .63 3 |
934 .46 5 |
226 .48 4 |
( ) 42. 400 |
47. 121 |
577 .52 0 |
1.9 63. 475 |
| Ap iati of n et i pro pr on nco me |
||||||||||||||
| . Tr fer to r ans ese rve s |
- | - | - | - | - | - | 229 | 2.2 29 |
30. 069 |
14. 594 |
- | ( 47. 121 ) |
- | - |
| . Pr efe sha ren ce res |
- | - | - | - | - | ( 68) 1.2 |
- | - | ( ) 29. 346 |
- | - | - | 16 | ( ) 30. 598 |
| Lon inc ive term ent g- s |
- | - | - | - | - | - | - | - | ( 616 ) |
- | - | - | - | ( 616 ) |
| Pur cha of t har se rea sur y s es |
- | - | - | - | - | - | - | - | - | - | ( 160 ) |
- | - | ( 160 ) |
| Oth er |
- | - | - | - | - | - | - | - | - | - | - | - | 1 | 1 |
| Co reh ive inc mp ens om e |
||||||||||||||
| for the ar 2 012 ye |
- | - | - | - | 434 .88 7 |
1.5 27 |
( 126 .11 6) |
- | - | - | - | 88. 068 |
( 5.3 77) |
392 .98 9 |
| Ba lan at Dec ber 31 , 20 12 ces as em |
656 .72 3 |
193 .39 0 |
135 .00 0 |
23. 245 |
( 1.0 01. 064 ) |
( 5.8 57) |
284 .47 4 |
245 .86 2 |
934 .57 2 |
241 .07 8 |
( 42. 560 ) |
88. 068 |
572 .16 0 |
2.3 25. 091 |
| Ap iati of n et i on nco me |
||||||||||||||
| pro pr . Tr fer to r ans ese rve s |
453 | ( 08) 3.9 |
91. | ( ) 88. 068 |
||||||||||
| . Pr efe sha ren ce res |
- | - | - | - | - | - 136 |
- | ( 30. 750 ) |
523 | - | - | - ( 30. 578 ) |
||
| Lon term inc ent ive g- s |
- - |
- | - | - | - | - | - | ( 799 ) |
- | - | - | 36 | ( 799 ) |
|
| Pur cha of t har se rea sur y s es |
- | - | - | - | - | - | - | - | - ( ) 752 |
- | - | ( ) 752 |
||
| Ent ries in the lida tion rim ete co nso pe r: |
- | - | - | - | - | - | - | - | - | - | - | - | ||
| . No vim st F und ove |
- | - | - | - | - | - | - | - | ( 358 ) |
- | - | - | 111 .24 1 |
110 .88 3 |
| . Sa nde r M ultio brig ões Fu nd nta aç |
- | - | - | - | - | - | - | - | - | - | - | - | 132 .70 1 |
132 .70 1 |
| Oth er |
- | - | - | - | - | - | - | - | ( 3) |
- | - | - | ( 75) |
( 78) |
| Co reh ive inc mp ens om e |
||||||||||||||
| for the ar 2 013 ye |
- | - | - | - | 186 .46 5 |
( 87) 4.4 |
( ) 56. 554 |
- | - | - | - | 89. 164 |
( ) 20. 693 |
193 .89 5 |
| Ba lan at Dec ber 31 , 20 13 ces as em |
656 .72 3 |
193 .39 0 |
135 .00 0 |
23. 245 |
( 9) 814 .59 |
( ) 10. 208 |
228 .37 3 |
245 .86 2 |
898 .75 4 |
332 .60 1 |
( ) 43. 312 |
89. 164 |
795 .37 0 |
2.7 30. 363 |
The accompanying notes form an integral part of the consolidated statement of changes in shareholders' equity for the year ended December 31, 2013.
| 2013 | 2012 | |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES: | ||
| Interest and commissions received | 1.490.692 | 1.862.203 |
| Payment of interest and commissions | (738.522) | (1.065.914) |
| Payments to staff and suppliers | (414.641) | (430.528) |
| Contributions to the Pension Fund | (56.000) | (12.023) |
| Foreign exchange and other operating results | (41.654) | (14.081) |
| Recovery of uncollectable loans | 7.457 | 8.638 |
| Operating results before changes in operating assets and liabilities | 247.332 | 348.295 |
| (Increase) / decrease in operating assets: | ||
| Loans and advances to banks | (171.659) | (403.229) |
| Financial assets held for trading | 433.845 | (257.082) |
| Loans and advances to customers | 556.972 | 981.684 |
| Assets and liabilities at fair value through profit and loss | (14.399) | (32.618) |
| Non-current assets held for sale | (55.204) | (108.330) |
| Other assets | (55.098) | (28.209) |
| 694.457 | 152.216 | |
| Increase / (decrease) in operating liabilities: | ||
| Resources of financial institutions | 2.588.358 | (723.734) |
| Resources of customers and other loans | (734.970) | 1.585.956 |
| Financial liabilities held for trading | (428.975) | 385.444 |
| Other liabilities | (1.457) | 20.553 |
| 1.422.956 | 1.268.219 | |
| Net cash flow from operating activities before income tax | 2.364.745 | 1.768.730 |
| Income tax paid | (31.459) | (19.588) |
| Net cash flow from operating activities | 2.333.286 | 1.749.142 |
| CASH FLOW FROM INVESTING ACTIVITIES: | ||
| Dividends received | 1.313 | 1.698 |
| Purchase of available-for-sale financial assets | (1.205.590) | (435.853) |
| Sale of available-for-sale financial assets | 379.880 | 1.873.570 |
| Income from available-for-sale financial assets | 148.823 | 229.159 |
| Purchase of tangible and intangible assets | (36.798) | (33.341) |
| Sale of tangible assets | 5.535 | 7.945 |
| Net cash flow from investment activities | (706.837) | 1.643.178 |
| CASH FLOW FROM FINANCING ACTIVITIES: | ||
| Issuance/(redemption) of debt securities | (1.378.946) | (3.283.192) |
| Interest paid on bonds issued and other | (94.338) | (116.114) |
| Interest paid on subordinated liabilities | (91) | (125) |
| Net cash flow from financing activities | (1.473.375) | (3.399.431) |
| Net Increase / (Decrease) in cash and cash equivalents | 153.074 | (7.111) |
| Cash and cash equivalents at the beginning of the period | 737.688 | 744.799 |
| Cash and cash equivalents at the end of the period | 890.762 | 737.688 |
The accompanying notes form an integral part of the consolidated statement of cash flows for the year ended December 31, 2013.
Notes to the Consolidated Financial Statements
Banco Santander Totta, S.A. (hereinafter referred to as the "Bank", "BST" or "Group") previously known as Companhia Geral de Crédito Predial Português, S.A. ("CPP"), was founded in 1864 and has its registered office in Portugal, in Rua do Ouro, no. 88, Lisboa. The Bank was nationalized in 1975 and transformed into a government owned corporation in 1990. On December 2, 1992 the Bank's capital was re-privatized through an Initial Public Offering carried out in a special session of the Lisbon Stock Exchange.
Since December 2000, following the acquisition of Banco Totta & Açores, S.A. ("Totta") by the Santander Group, the Bank has been part of the Santander Group. The main balances and transactions with companies of the Santander Group during 2013 and 2012 are detailed in Note 46.
On December 16, 2004, a demerger/merger operation of Totta was carried out, under which its investments in Foggia, SGPS, S.A. and Totta Seguros – Companhia de Seguros de Vida, S.A. were demerged and the remainder of its operations, together with Banco Santander Portugal, S.A. ("BSP"), were merged into CPP, which then changed its name to the current one.
On May 3, 2010, the Bank carried out the merger by incorporation of Banco Santander de Negócios Portugal, S.A. ("BSN"). For accounting purposes the operation was recorded as from January 1, 2010.
On April 1, 2011, the Bank carried out the merger by incorporation of Totta Crédito Especializado – Instituição Financeiro de Crédito, S.A. ("Totta IFIC"). For accounting and tax purposes the operation was reported as from April 1, 2011, which was the date of registration.
The Bank's operations consist in obtaining funds from third parties, in the form of deposits and other, to apply along with its own funds, in all sectors of the economy, mostly in the form of loans granted or securities and providing other banking services in Portugal and abroad.
The Bank has a domestic network of 604 branches (633 branches as at December 31, 2012) and also has a branch in London, as well as an international financial branch in the Autonomous Region of Madeira. The Bank has also subsidiaries and representation offices abroad as well as investments in subsidiaries and associated companies.
BST's consolidated financial statements were prepared on a going concern basis, from its books and accounting records maintained in accordance with the accounting principles set forth in the International Financial Reporting Standards (IAS/IFRS) as adopted by the European Union, Regulation (CE) 1606/2002 of July 19 of the European Parliament and Council, transposed to Portuguese legislation by Decree-Law 35/2005 of February 17, and Notice 1/2005 of February 21 of the Bank of Portugal. Where Group companies used different accounting principles, appropriate adjustments are made for conversion to the IAS/IFRS.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In 2013, the Bank adopted the following standards (new and revised) and interpretations endorsed by the European Union of mandatory application for the first time in the end of that year:
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The adoption of the above referred standards and interpretations had impact particularly in terms of disclosures.
On December 31, 2013, the following standards (new and revised) and interpretations already endorsed by the European Union, were available for early adoption:
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
These standards, although endorsed by the European Union have not been adopted by the Bank on December 31, 2013, as their application was not yet mandatory. However, the Board of Directors believes that their adoption will not have a material impact on the accompanying financial statements.
Furthermore, up to the date of approval of the accompanying financial statements, the following standards and improvements, which are still not endorsed by the European Union, were also issued:
These standards have not been endorsed by the European Union and so they were not adopted by the Bank in the year ended December 31, 2013.
The Bank's financial statements for the year ended December 31, 2013 are pending approval from the General Shareholders' Meeting. Nevertheless, the Bank's Board of Directors believes that they will be approved without significant amendments.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The consolidated financial statements include the accounts of the Bank and those of the entities controlled directly and indirectly by the Bank (Note 4), including special purpose entities.
Subsidiary companies are those in which the Bank exercises effective control over the current management in order to obtain economic benefits from their activities. Control usually exists when more than 50% of the share capital or the voting rights are held. Furthermore, as a result of the application of the IAS 27 – "Consolidated and Separate Financial Statements", the Group includes special purpose entities in its consolidation perimeter, namely vehicles and funds created under securitization operations when it exercises effective financial and operating control over them and when it is exposed to the majority of the risks and benefits associated to their activity.
The financial statements of subsidiaries are consolidated by the full integration method from the date that the Bank has control over their activities to the date control cease. The transactions and the significant balances between the companies subject to consolidation were eliminated. In addition, when applicable, consolidation adjustments are made in order to ensure consistency in application of accounting principles. Third party shareholders in subsidiary companies consolidated by the full integration method are accounted for under the caption "Minority interests" (Note 28).
As part of its fund management activity, the Bank manages assets held by investment funds whose units are held by third parties. The financial statements of investment funds are not included in the consolidation of the Bank, except when the Bank has control over those investment funds, namely when it holds more than 50% of its participating units, in which case they are consolidated by the full integration method.
Associated companies are those in which the Bank has significant influence, but over which it does not have control. Significant influence is presumed to exist when a participation (direct or indirect) exceeds 20% or where the Bank has the power to participate in decisions relating to their financial and operating policies, but does not have control or joint control over them. Participations in associated companies are recorded in accordance with the equity method of accounting, from the date the Bank has significant influence until the date it ceases.
In accordance with the equity method of accounting, the consolidated financial statements include the part of shareholders' equity and profit or loss of the associated companies attributable to the Bank.
Goodwill is measured as the excess of the acquisition cost over the effective percentage held in the fair value of the assets, liabilities and contingent liabilities of subsidiary and associated companies. At least once a year, the Bank performs impairment tests to the goodwill recognized in the balance sheet, in accordance with the requirements of IAS 36 - "Impairment of Assets". For this purpose, goodwill is allocated to cash generating units, and the recoverable amount is assessed based on the present value of estimates of future cash flows using discount rates considered appropriate by the Bank. Impairment losses associated with goodwill are recorded in the income statement and cannot be reversed.
Goodwill on associated companies is included in the carrying amount of the investment, which is subject to impairment tests.
The Bank decided not to apply IFRS 3 – "Business combinations", retrospectively. Therefore, goodwill on acquisitions up to January 1, 2004 is reflected as a deduction to shareholders' equity in compliance with the former accounting policy. Previously recognised negative goodwill was recorded as an increase in shareholders' equity, as permitted by IFRS 1.
Acquisitions of subsidiaries and associated companies after January 1, 2004 were recorded in accordance with the acquisition method. Cost of the acquisition corresponds to the fair value of the assets and liabilities of the subsidiaries and associated companies as of the acquisition date. Goodwill is recorded as an asset and is subject to impairment tests in accordance with IAS 36, but is not depreciated. Furthermore, whenever the fair value of the assets acquired and of the liabilities incurred or assumed is higher than the acquisition cost (negative goodwill), the difference is recognised in the income statement.
With the application of the amendments to the standards IFRS 3 and IAS 27, the Bank defined as accounting policy the fair value valuation through profit or loss when there is a change of control for subsidiaries acquired in stages. In such cases, the share participation acquired prior to the date of the change of control is revalued at fair value through profit or loss. Goodwill is calculated on a given date as the difference between total acquisition cost and the proportion in the fair value of the subsidiaries' assets and liabilities. Similarly, by the application of the amendments above, the Bank revalue through profit or loss the undertakings in which it loses control (Note 4).
On the other hand, the Bank decided to reverse, as of the transition date (January 1, 2004) to the IAS/IFRS, the reserve resulting from foreign exchange differences arising out from the translation of financial statements of subsidiaries and associated companies expressed in functional currencies other than the Euro. As from that date, in compliance with IAS 21, the foreign currency financial statements of subsidiary and associated companies have been converted to Euros as follows:
Exchange differences arising upon conversion to Euros are accounted in shareholders' equity in the caption of "Revaluation reserves – Foreign Exchange fluctuation".
The main accounting policies used in the preparation of the accompanying financial statements were the following:
a) Accruals basis
The Bank uses the accrual-based accounting principle for most of its financial statement captions. Therefore, expenses and income are recorded in the period to which they relate, independently of when they are paid or received.
b) Foreign currency transactions
The Bank's accounts are prepared in the currency of the economic environment in which the Bank operates (functional currency), being expressed in Euros.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Transactions in a currency other than the functional currency, and the corresponding income and expenses, are recorded at the exchange rate of the date when they occur. Foreign currency assets and liabilities are translated to Euros at the fixing exchange rates as of the balance sheet date (Bank of Portugal fixing).
This category of financial assets includes loans and advances to customers and applications in credit institutions.
Loans and advances to customers include loans to costumers, as well as other securitized loans (commercial paper), not intended to be sold in the short term, being initially recorded at fair value, less any commissions, plus all the external costs directly attributable to the operations.
Subsequently, loans and other accounts receivable are recorded at amortised cost, being submitted to periodic impairment analysis.
Commissions and the external costs attributable to the underlying operations included in this category, as well as interests associated to the loans and advances granted, are recognised on an accruals basis, using the effective interest rate method, regardless of when they are received or paid. The Bank chose to defer commissions received and paid relating to credit granted as from January 1, 2004.
The Bank classifies as overdue credit, instalments of principal and interests overdue for more than 30 days. Credits with overdue instalments are denounced in accordance with the credit procedures approved by the Bank, being the whole debt considered overdue from that moment on.
On the other hand, the Bank periodically analyses the loans and advances that should have already been paid in full but where the effort to collect them has not been effective. When the prospects of recovering those loans are negligible, loans are considered to be uncollectible and impairment losses are recognised for the full amount. In these cases, the Bank writes them off. Credits recovered subsequently are recognised in the income statement in the caption "Loan impairment net of reversals and recoveries".
The Bank periodically analyses the loans and advances granted to customers and other receivable accounts in order to identify objective evidence of impairment. A financial asset is considered to be impaired if, and only if, there is evidence that one or more loss events have occurred that have a measurable impact on the estimated future cash flows of that asset or group of assets.
For the purpose of determining loan impairment, the Bank´s loan portfolio is segmented as follows:
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On the other hand, concerning the segment of credit provided to companies the Bank makes an individual assessment of the customers that have:
In this regard, these segments may include customers without overdue credit. Occasionally the Bank also includes some customers without the mentioned features in individual assessment, by professional judgement.
Customers assessed individually with impairment losses less than 0.5% are subsequently assessed on an collective impairment basis, being segmented between customers with responsibilities greater or less than tEuros 300.
The Bank carries out a collective impairment assessment on the remaining segments of the loan portfolio.
Evidence of impairment of an asset or group of assets, as defined by the Bank , corresponds to the observation of several loss events, such as:
Impairment losses for customers without overdue credit correspond to the probability of having overdue credit (PI) times the difference between the book value of the respective credits and the present value of estimated future cash flows of those operations. PI corresponds to the probability of one transaction, operation or client becoming overdue during an emergence period. The emergence period corresponds to the period between the occurrence of a loss event and the identification of that event by the Bank (incurred but not reported). For all loan portfolio segments, the Bank considers an emergence period of 6 months.
If there is evidence that the Bank has incurred in an impairment loss on credits or other receivables, the impairment loss corresponds to the difference between the book value of those assets and the present value of the estimated future cash flows, discounted at the original interest rate of the asset or financial assets. The book value of the asset or assets is reduced by the impairment loss account balance. In the case of credits with variable interest rates, the discount rate used to determine an impairment loss is the current interest rate, as determined by the respective contract. Impairment losses are recorded by a corresponding charge in the income statement.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In accordance with the Bank's current impairment model for the loan portfolio, impairment losses are assessed individually, on a sample basis, and on a collective basis. When a group of financial assets is assessed collectively, the future cash flows of that Group are estimated based on the contractual cash flows of the assets of that group and on historical data regarding losses arising out from assets with similar credit risk characteristics. Whenever the Bank considers it necessary, the historic information is updated based on current observable data, in order to reflect the effect of current conditions.
When, in a subsequent period, there is a decrease in the amount of impairment losses due to a specific event occurring after the impairment determination, the previously recognised amount is reversed and the impairment loss balance is adjusted. The amount of the reversal is recognised directly by a corresponding charge in the income statement.
In accordance with the policies in place in the Bank, interests arising out from overdue credits without a real guarantee are reversed three months after the due date of the operation or after the first due instalment. Unrecorded interest on the above-mentioned credits is only recognised in the period of its actual collection.
Interests on mortgage loans or on loans granted with other real guarantees are suspended from the date of termination of the contract.
Gains and losses on the definitive sale of loans are recorded in the income statement caption "Result from the sale of other assets" (Note 38). These gains or losses correspond to the difference between the sale value agreed and the book value of these assets, net of impairment losses.
Assets resulting from factoring operations with recourse are recorded in the balance sheet as loans granted by the value of the advance funds on behalf of those contracts.
Assets resulting from factoring operations without recourse are recorded in the balance sheet as loans granted by the value of the credits taken against the recognition of a liability under the caption "Creditors and other resources - Other creditors - Creditors under factoring contracts." The delivery of funds to the counterparts in factoring operations originate´ s a corresponding debit in the caption "Creditors and other resources - Other creditors - Creditors under factoring contracts."
Commitments resulting from credit lines negotiated with customers and not yet used are recorded on off-balance sheet items.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The Bank does not derecognise from the balance sheet credits sold in securitization transactions when:
Credits sold and not derecognised are recorded under the caption "Loans and advances to customers" and are subject to the same accounting principles as other credit operations. The interests and commissions associated to the securitized loan portfolio are accrued over the term of the loan.
The maintenance of risk and/or benefit is represented by the bonds with higher risk level issued by the securitization vehicle. The amount recorded in current assets and liabilities represents the proportion of the risk / benefit held by the Bank (continuing involvement).
The bonds issued by securitization vehicles and held by Group entities are eliminated from consolidation.
On December 31, 2013 and 2012, there are no derecognized securitized loans.
Lease operations are classified as finance leases when substantially all the risks and benefits relating to ownership of the leased asset are transferred to the lessee under the lease contract. Finance leasing's are recorded in accordance with the following criteria:
i) As lessee
Assets purchased under finance leases are recorded at their fair value in tangible assets and in liabilities and the corresponding depreciation is recognised. Lease instalments are divided in accordance with the respective financial plan, the liabilities being decreased by the amount corresponding to payment of the principal. Interest included in the instalments is recorded in the caption "Interest and similar charges".
ii) As lessor
Leased assets are recorded in the balance sheet as loans granted, which are repaid by amortising the principal in accordance with the financial plan of the contracts. Interest included in the instalments is recorded in the caption "Interest and similar income".
Responsibilities for guarantees given and irrevocable commitments are recorded in off- -balance sheet accounts for the amount at risk, while interest, commissions and other income are recorded in the income statement over the period of the operations.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
d) Recognition of income and costs relating to services and commissions
Income from services and commissions obtained in the execution of a significant act, for example a commission from syndicating loans operations, is recognised in the income statement when the significant service act has been completed.
Income from services and commissions obtained as the services are rendered is recognised in the income statement in the period to which it refers.
Income from services and commissions that are part of the remuneration from financial instruments is recorded in the income statement using the effective interest rate method.
Costs relating to services and commissions are recognised using the same criteria as adopted for income.
e) Financial instruments
Financial assets and liabilities are recognised on the balance sheet at the date of payment or receipt, unless there is an explicit contractual provision arising from the legal regime applicable that establishes that the rights and obligations related to the traded values are transferred at a different date, in which cases the latter will be the relevant date.
Financial assets and liabilities are subsequently classified into one of four specific categories set down in IAS 39:
Financial assets held for trading include fixed or variable yield securities traded on active markets purchased with the intention of being sold or repurchased in the short term. Trading derivatives with a receivable net value (positive fair value) and options bought are included in the caption Financial assets held for trading. Trading derivatives with a payable net value (negative fair value) and options sold are included in the caption Financial liabilities held for trading.
At 31 December 2012 other financial assets at fair value through profit or loss included fixed income securities.
Financial assets and liabilities held for trading and financial assets and liabilities at fair value through profit or loss are recognised initially at fair value. Gains and losses arising from subsequent fair value measurement are recognised in the income statement.
The interest inherent to the financial assets and the difference between the acquisition cost and nominal value (premium or discount) is calculated in accordance with the effective interest rate method and recognised in the income statement in the caption "Interest and similar income". The effective interest rate is that which, when used to discount the estimated future cash flows associated to the financial instrument, makes its present value equal to the net carrying amount of the financial instrument on initial recognition.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Interest relating to trading derivatives is classified in the caption "Result of assets and liabilities at fair value through profit or loss" in the income statement.
The fair value of financial assets held for trading and traded on active markets is their bid-price or their closing price on the balance sheet date. If the market price is not available, fair value of the instrument is estimated based on valuation techniques that include price valuation models or discounted cash flow techniques.
When discounted cash flow techniques are used, the future cash flows are estimated in accordance with management's expectations and the discount rate used corresponds to the market rate for financial instruments with similar characteristics. Data used in price valuation models correspond to market prices information.
The fair value of the derivatives financial instruments that are not traded on a stock exchange including the credit risk component attributed to the parties involved in the transaction ("Credit Value Adjustments" and "Debit Value Adjustments") is estimated based on the amount that would be received or paid to settle the contract on that date, considering the current market conditions as well as the credit quality of the counterparties.
Available-for-sale financial assets include equity and debt instruments that are not classified as financial assets held for trading, at fair value through profit or loss, as investments to be held to maturity or as loans and accounts receivable.
Available-for-sale financial assets are stated at fair value, with the exception of equity instruments not listed on an active market and which fair value cannot be reliably measured, which are recorded at their acquisition cost, net of impairment. Subsequent gains or losses resulting from changes in fair value are reflected in a specific equity caption "Revaluation Reserve - Fair value" until they are disposed of or until impairment losses are recognised, time when they are reclassified to the income statement. Foreign exchange gains or losses on monetary assets are directly recognised in the income statement.
Interest on available-for-sale financial assets is calculated in accordance with the effective interest rate method and recorded in the income statement caption "Interest and similar income".
Income from variable return securities is recognized in the income statement caption "Income from equity instruments" in the date that it is declared. In accordance with this criterion, the interim dividends are recognized as income in the year the distribution is declared.
In accordance with the amendment introduced on October 13, 2008 in Standard IAS 39 - "Financial instruments: Recognition and measurement", the Bank can reclassify a financial asset that is no longer held for sale or repurchase in the short term (although it may have been acquired or incurred mainly for the purpose of sale or repurchase in the short term), removing it from the category of fair value through profit or loss, if some certain requirements are met. However, reclassifications of other categories are not permitted for the category Financial assets at fair value through profit or loss.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Disclosure on the reclassifications made under this amendment is provided in Note 9.
Interest relating to financial assets and the recognition of the difference between their acquisition cost and nominal value (premium or discount) is calculated in accordance with the effective interest rate method and recorded in the "Interest and similar income" caption in the income statement.
Income from variable return securities is recognised in the income statement on the date that it is declared. In accordance with this criterion, interim dividends are recognised as income in the year the distribution is declared.
Securities sold with repurchase agreements are maintained in their original securities portfolio. Funds received are recorded on the settlement date in a specific liability account, while interest payable are accrued.
When there is objective evidence of impairment of a financial asset or group of assets, an impairment loss is recognised in the income statement.
For quoted securities, objective evidence of impairment exists when there is a significant or prolonged decline in fair value. Objective evidence of impairment for unquoted securities exists when there is a negative impact on the estimated future cash flows of the financial asset, provided that it can be reliably estimated.
The Bank considers the specific nature and features of the assets being valued in its periodic impairment tests. In terms of objective impairment criteria, the Bank considers a 24 month period to be adequate for the prolonged devaluation of financial instruments in relation to their acquisition cost. The Bank also considers the existence of unrealised capital losses exceeding 50% of the acquisition cost to be a significant devaluation.
Except as explained in the following paragraph, if in a subsequent period there is a decrease in the amount of impairment loss attributable to an event occurring after the impairment determination, the previously recognised impairment loss is directly reverted through an adjustment to the impairment loss account. The amount of the reversal is recognised directly in the income statement.
When there is objective evidence of impairment of available for sale financial assets as a result of a significant or prolonged decline in the fair value of the security or of financial difficulties of the issuer, the accumulated loss of the fair value reserve is reclassified from equity to the income statement. Impairment losses on fixed income securities can be reverted through profit or loss if there is an increase in the fair value of the security resulting from an event that occurs after the determination of the impairment. Impairment losses on equity instruments cannot be reverted and so any unrealised capital gain arising after recognition of an impairment loss are recorded in the fair value reserve. In the case of equity instruments for which impairment losses have been recognised, subsequent reductions in its fair value are always recognised in the income statement.
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
For financial assets recorded at cost namely unquoted equity instruments which fair value cannot be measured reliably, the Bank also carries out periodic impairment tests. In this context, the recoverable amount of those assets corresponds to the present value of the estimated future cash flows, using a discount rate that reflects the underlying risk of a similar asset.
Other financial liabilities correspond essentially to resources of central banks, of other credit institutions, of customers' deposits and bond issues. These liabilities are initially recognized at fair value, which normally corresponds to the amount received, net of transaction costs, and are subsequently measured at amortised cost in accordance with the effective interest rate method.
Bond issues are recorded in the captions "Debt securities" and "Subordinated liabilities".
Embedded derivatives in bonds issued are recorded separately in the captions "Financial assets and liabilities held for trading", being revalued at fair value through the income statement.
The Bank carries out repurchases of bonds issued in the secondary market. Purchases and sales of own obligations are included in proportion to the respective accounts of debt issued (capital, interest and commissions) and the differences between the amount settled and the write off, are recognised immediately in profit or loss or deferred during the period of the bonds.
As mentioned above, the financial assets and liabilities recorded in the categories of "Financial assets held for trading", "Financial liabilities held for trading", "Financial assets at fair value through profit or loss" and "Financial assets available for sale" are measured at fair value.
The fair value of a financial instrument corresponds to the amount for which an asset or financial liability can be sold or settled (in other words, an exit price) between independent, knowledgeable and interested parties in the transaction under normal market conditions.
The fair value of financial assets and liabilities is determined by an independent area of the Bank's trading function, based on:
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
iii) Valuation models, which take into account market inputs when determining the price for the financial instrument, reflecting the market interest rates and volatility, as well as the liquidity and credit risk associated to the instrument.
Financial instruments measured at amortized cost are initially recorded at its fair value added to or deducted from the income or costs directly attributable to the transaction. The interest is recognised by the effective interest rate method.
Whenever the estimate of payments or charges associated with financial instruments measured at amortized cost is revised, the carrying amount is adjusted to reflect the new expected cash flows. The new amortized cost results from the present value of the revised future cash flows discounted at the original effective interest rate of the financial instrument. The adjustment in the amortized cost is recognised by a corresponding charge in the income statement.
Financial derivative instruments traded by the Bank are always recognised in the balance sheet at their fair value.
Embedded derivatives in other financial instruments (namely in bonds and structured deposits) are separated from their host contract whenever their risks and characteristics are not closely related to those of the host contract and the whole instrument is not recorded at fair value with changes in fair value recognised in profit or loss.
The Bank uses derivative financial instruments namely to hedge the interest rate risk resulting from financing and investing activities. Derivatives that do not qualify for hedge accounting are recorded as financial instruments held for trading, under the financial assets or financial liabilities held for trading captions, being all changes in their fair value recorded by a corresponding entry in the income statement.
Derivatives that qualify for hedge accounting are recorded at fair value and the corresponding capital gains and losses are recognised in accordance with the hedge accounting model adopted by the Bank.
In accordance with IAS 39, hedge accounting is applicable only when the following requirements are cumulatively met:
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Hedge accounting is only applied as from the time all these requirements are met. In the same way, if at any time the hedging effectiveness ceases to be between 80% and 125%, hedge accounting is discontinued.
Gains or losses on the revaluation of a hedging derivative financial instrument are recognised in the income statement. If the hedge is effective, the gains or losses resulting from variations in the fair value of the hedged item relating to the risk being hedged are also recognised in the income statement.
If a hedging instrument matures or is early terminated, the gains or losses in the valuation of the hedged item relating to the risk being hedge, recognised as value adjustments of the hedged items, are amortized over the effective remaining period. If the asset or liability being hedged is sold or settled, the amounts recognised as result of the valuation of the hedged risk are reclassified to the income statement and the derivative is transferred to the trading portfolio. If the hedge becomes ineffective, the gains or losses recognised as value adjustments to the hedged items are amortized through the income statement over the remaining period.
Hedge accounting is not applied in the case of foreign exchange rate hedging of monetary items, being the gain or loss arising from the derivative and from the foreign exchange variation of the monetary items both recognised in the income statement.
Cash flow hedges refer to hedging the exposure to variability in future cash flows that can be attributed to a particular risk associated with a recognized asset or liability, or to a highly probable forecast transaction that may affect profit or loss.
In this sense, the Bank has entered into derivatives to hedge future cash flows of interest on its variable rate mortgage loan portfolio.
The application of cash flow hedge accounting is also subject to the previously mentioned hedge accounting requirements and implies the following records:
In addition, the gain or loss in the hedging instrument recognised in equity corresponds to the lower of the following amounts:
In this regard, and if applicable, the remaining of the gain or loss on the hedging instrument not recognised in equity is included in profit or loss.
Cash flow hedge accounting shall be discontinued if the hedging instrument matures or is early terminated, if the hedge relationship becomes ineffective or if it is decided to terminate the hedging relationship. In these cases, the accumulated gain or loss on the hedging instrument that was recognised in equity continues to be separately classified in equity, being recorded in the income statement in the same period that the gains or losses of the hedged item are recognised.
Tangible assets used by the Bank in its operations are stated at cost (including directly attributable costs), less accumulated depreciation, and impairment losses, when applicable.
Depreciation of tangible assets is recorded on a systematic basis, on a monthly basis over the estimated useful life of the asset, which corresponds to the period in which the asset is expected to be available for use:
| Years of useful life |
|
|---|---|
| Property for own use | 50 |
| Equipment | 4 to 10 |
Non recoverable expenditure capitalized on leasehold buildings is amortised over a period compatible with that of their expected useful life or of the lease contract, if shorter, which on average corresponds to a period of ten years.
As permitted by IFRS 1, tangible assets acquired up to January 1, 2004 have been recorded at their book value at the transition date to the IAS/IFRS, which corresponded to the cost adjusted by legal revaluations based on evolution of the general price index. 40% of the increase in depreciation charge resulting from such revaluations is not tax deductible, being the resulting deferred tax liability recognised accordingly.
On the other hand, impairment tests are made periodically by the Bank to its tangible assets. The branches are considered as cash flows generating units for this purpose with impairment losses being recognised whenever the recoverable amount of the property (through the use in the operations or sale) is lower than its carrying amount.
The criteria followed in the valuations of the buildings normally use a market comparison method, and the amount of the valuation corresponds to the market value of the property in its current condition.
In this caption the Bank recognises the expenses incurred in the development phase of IT systems implemented and in their implementation phase, as well as expenses of acquiring software, in both cases where the impact extends beyond the financial year in which the cost is incurred. Impairment losses assessments are made on an annual basis.
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Intangible assets are amortised on a monthly basis over the estimated lifetime period of the assets, which corresponds to three years on average. For the new computer platform (Partenon), the expected useful lifetime corresponds to a maximum of five years.
Investment properties comprise, essentially, buildings and land held by Novimovest – Real Estate Investment Fund (Novimovest) to earn rentals or for capital appreciation or both, rather than for use in the provision of goods, services, or for administrative purposes.
Investment properties are stated at their fair value based on periodic valuations performed by independent experts. Changes in the fair value of investment properties are recognized directly in the income statement for the year.
Costs incurred with investment properties in use, such as maintenance, repairs, insurance and property taxes (municipal property tax) are recognized in the income statement for the year to which they relate. Improvements which are expected to generate additional future economic benefits are capitalized.
The Bank accounts for property and other assets received in settlement of non-performing loans under this caption, when these are available for immediate sale in their present condition and their sale is highly probable within one year. Should these criteria not be met, these assets are accounted for under the caption "Other assets" (Note 18). These assets are recorded at the amount agreed under negotiation or court decision, deducted from the estimated sale costs or their forced sale value, if lower. In the other hand, property recovered following the termination of finance lease contracts is recorded in assets at the amount of the outstanding principal on the date the contract is terminate.
This caption also includes participating units of a real estate investment fund acquired following a debt settlement agreement with a customer.
In addition, the Bank's property for own use which is in the process of being sold is accounted for under this caption. These assets are transferred at their net book value in accordance with IAS 16 (acquisition cost, net of accumulated depreciation and accumulated impairment losses), thereafter being subject to periodic impairment tests.
Property is subject to periodic appraisals made by independent real estate appraisers. Impairment losses are recognised whenever the appraised value (net of costs to sell) is lower than the book value.
According to IFRS 5 – "Non-current assets held for sale and discontinued operations", the Bank does not recognize unrealized gains on these assets.
At last, the Bank's Board of Directors considers that the valuation methods adopted for these assets are appropriate and reflect the market situation.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
A provision is set up whenever there is a present obligation (legal or constructive) arising from past obligation event relating to which there will be a probable future outflow of resources, and this can be determined reliably. The amount of the provision corresponds to the best estimate of the amount to be disbursed to settle a liability at the balance sheet date. Whenever the outflow of resources is not probable, a contingent liability exists. Contingent liabilities need only to be disclosed unless the probability of their payment is remote.
Thus, in accordance with IAS 37, this caption includes the provisions to cover specific postemployment benefits of members of the Board of Directors, restructuring plans, tax contingencies, legal processes and other losses arising from the Bank's activity (Note 23).
The Bank signed the Collective Labour Agreement (Acordo Colectivo de Trabalho - ACT) for the Portuguese Banking Sector, under which its employees or their families are entitled to retirement, disability and survival pensions.
For employees hired by the Bank up to December 31, 2008, BST's pension plan corresponds to a defined benefit plan, as it establishes the criteria for determining the amount of the pension that each employee would receive during retirement, based on his/her time of service and remuneration at the time of retirement, where the pensions are updated annually based on the remuneration established in the ACT for the serving employees. For these employees, the Bank has been responsible for the payment of the full amount of the pensions established under the ACT. The liabilities arising out from the defined benefit plan are covered by a Pension Fund.
As from January 1, 2009, employees hired by the Bank started to be registered in the Social Security and are covered by a supplementary defined contribution pension plan with acquired rights under Article 137 – C of the ACT. The plan is supported by contributions from the employees (1.5%) and from the Bank (1.5%) over the amount of the effective monthly salary. For this purpose, each employee can choose his/her own pension fund.
The employees of the former totta were already covered by Social Security, thus the Bank's liability for those employees consists only in the payment of supplements.
In October 2010 an agreement was reached between the Ministry of Labour and Social Solidarity, the Portuguese Association of Banks and the Financial Sector Federation (FEBASE) to include workers of the banking sector in the General Regime of the Social Security. Following this agreement, it was published in 2011 the Decree-Law no. 1- A/2011, dated January 3, which defined that serving workers in the banking sector at the date of its entry into force (January 4, 2011) are to be included in the General Regime of the Social Security, with regard to retirement pensions and in the event of maternity, paternity and adoption. Given the complementary nature allowed for under the rules of the Collective Labour Agreement for the Banking Sector, the Bank will continue to cover the difference between the amount of the benefits paid under the General Regime of the Social Security and those resulting from the Collective Labour Agreement.
Past service liabilities as at December 31, 2010 have not changed as result of the abovementioned Decree-Law since the reduction of the pensionable amount attributable to the Bank will affect the services to be provided by the employees in the future as from January 1, 2011. Thus, the current service cost has been reduced as from this date only, though at the same time the Bank has started to pay the employer's contribution to the Social Security of 23.6% (the so called "Taxa Social Única"). On the other hand, the Bank maintains the responsibility of paying out the disability pensions and the survival pensions along with any healthcare assistance. This understanding was also confirmed by the National Council of Financial Supervisors (Conselho Nacional de Supervisores Financeiros).
In December 2011 a three party agreement was established between the Ministry of Finance, the Portuguese Association of Banks and the Federation for the Financial Sector (FEBASE), concerning the transfer to the Social Security of part of the liabilities for pensioners which, as at December 31, 2011 were covered by the substitutive regime of the Social Security as per the Collective Labour Agreement (ACT) in force for the banking sector.
Following the above-mentioned three party agreement, still in 2011, Decree-Law no. 127/2011, dated December 31, was issued determining that as from January 1, 2012 the Social Security started to be responsible for the above-mentioned pensions for an amount corresponding to the pension computed in accordance to the terms and conditions in force under the Collective Labour Agreement for the banking sector as at December 31, 2011, including both vacation (14th month) and Christmas subsidies.
In accordance with this Decree-Law, the Bank, through its Pension Fund, only maintains the responsibility for paying:
Under the transfer of responsibilities to the Social Security, the Bank's pension fund assets backing such responsibilities were also transferred. The value of the Pension Fund assets transferred corresponds to the value of the responsibilities assumed under the above mentioned Decree Law, which were determined considering the following assumptions:
| Mortality table male population | TV 73/77 less 1 year |
|---|---|
| Mortality table female population | TV 88/90 |
| Actuarial technical rate (discount rate) | 4% |
The assets to be transferred should be in cash and up to 50% in Portuguese government debt securities valued at the respective market value.
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Under the terms of the aforementioned Diploma, the ownership of the assets was transferred by the Bank as follows:
In this regard, and prior to the transfer to the Social Security, the Bank obtained actuarial studies used to calculate the amount of the transfer.
Following the transfer agreement responsibilities of the pensioners to the Social Security, and for purposes of determining the value of the liabilities to be transferred in accordance with the provisions in Decree Law no. 127/2011, of December 31, the Bank calculated the liabilities separately for serving and retired employees, having defined specific assumptions for each case (Note 44).
The difference between the amount of the liabilities to be transferred to the Social Security determined as per the above assumptions and the liabilities determined based on updated actuarial assumptions as adopted by the Bank, was recorded under the caption "Staff Costs" in the income statement.
Furthermore, the London branch employees are covered by a defined benefit pension plan, for which there is a separate pension fund (Note 44).
On the other hand, in February 2010, a supplementary defined contribution pension plan was approved for a defined set of the Bank's executives, for which an insurance policy was taken out.
BST's retirement pension liability is calculated annually by external experts (Towers Watson (Portugal) Unipessoal Limitada) based on the "Projected Unit Credit" method. The discount rate used in the actuarial calculations is determined based on market rates for high quality corporate bonds in terms of credit risk, in the currency in which the benefits will be paid (Euros), with similar maturity of the plan's liability. Employees' post-employment benefits also include healthcare assistance (SAMS) and death subsidy during retirement.
Banco Santander de Negócios Portugal, S.A. (BSN) did not sign the Collective Labour Agreement (ACT) in force for the banking sector. So in 2006 the BSN established a defined contribution pension fund under which employees are allowed to make voluntary contributions. BSN's contribution to that fund depended of the results and corresponded to a percentage of the employees' wages, with an annual floor of 1,000 Euros per participant. Following the merger of BSN into BST, the employees of the former BSN have been incorporated in the ACT and in BST's defined benefit pension plan as from May 2010, with recognition of the seniority of employees hired before July 1, 1997.
Totta IFIC had no Pension Fund. As a result of the merger by incorporation of Totta IFIC into BST, the employees of the former Totta IFIC were integrated in the ACT and in the BST's defined benefit pension plan as from April 2011. Additionally, the seniority of the employees hired before July 1, 1997 has been recognised.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 (Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On January 1, 2004 the Bank opted not to apply IAS 19 retrospectively, and therefore has not recalculated the actuarial gains and losses that would be deferred on the balance sheet if that standard had been adopted as from the beginning of the pension's plans. Accordingly, the actuarial gains and losses existing as at January 1, 2004, as well as those resulting from adopting IAS 19 were reversed/recorded against retained earnings as at the transition date.
In 2011 the Bank decided to change the accounting policy for recognizing actuarial gains and losses using the corridor method, having started to recognize actuarial gains and losses in equity, as provided in the revised version of IAS 19.
From January 1, 2013 following the revision of IAS 19 - "Employee Benefits", the Bank records under "Staff costs" in the income statement the following components:
Net interest profit / cost with the pension plan is calculated by multiplying the Bank net asset / liability with pensions (liability less the fair value of plan assets) by the discount rate used in determining pension liabilities with retirement pensions. Thus, the net interest profit / cost represents the interest cost associated with pension liabilities net of the theoretical return of the Fund's assets, both measured based on the discount rate used to calculate pension liabilities.
Gains and losses from remeasurement, namely: (i) gains and losses resulting from differences between actuarial assumptions and actuarial values (experience gains and losses) as well as changes in actuarial assumptions; and (ii) gains and losses arising from the difference between the theoretical return of the Fund's assets and the values obtained are recognized against the statement of other comprehensive income.
The liability for retirement pensions, less the fair value of the assets of the Pension Fund is recorded in the captions "Other assets" or "Other liabilities", depending on whether there is financial surplus or deficit.
Notice no. 4/2005 of the Bank of Portugal states that the liability arising from pensions being paid shall be fully funded and a 95% minimum funded level should exist for the past service liability of serving employees. Notwithstanding this, it also established a transition period ranging from 5 to 7 years in respect of the increase in the liability as result of the adoption of IAS 19.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
At December 31, 2013 and 2012, the rate of coverage of the full amount of the liability of BST for employee benefits, including SAMS, was 99.30% and 98.80%, respectively (Note 44).
In compliance with the ACT, the Bank assumed the commitment to pay bonuses to serving employees with fifteen, twenty-five and thirty years of good and effective service, corresponding to one, two or three months of their effective monthly wage (in the year the bonus is attributed), respectively.
The Bank determines the present value of its liability for long service bonuses by actuarial calculations using the "Projected Unit Credit" method. The actuarial assumptions used (financial and demographic) are based on expectations, as of the balance sheet date, regarding salary increases and are based on mortality tables adapted to Bank's population. The discount rate used is determined based on market rates for high quality corporate bonds with similar maturity of the liability.
Long service bonus liabilities are recorded in the caption "Accrued costs - Relating to personnel – Long service bonus" (Note 25).
BST and the Group's companies are subject to the tax regime established in the Corporate Income Tax Code ("CIRC"). The branches' accounts are consolidated with those of the Bank for tax purposes. In addition to being subject to Corporate Income Tax, the results of the branches are also subject to local taxes in the countries/territories in which they are established. Local taxes are deductible for Corporate Income Tax in Portugal under the terms of article 91 of CIRC and the Double Taxation Agreements signed by Portugal.
With the wording used in the State Budget Law for 2011 (Law no. 55–A/2010, of December 3), in accordance with article 92 of the Corporate Income Tax Code, tax paid under the terms of item 1, article 90, net of international double taxation and any tax benefits, cannot be less than 90% of the amount that would have been determined if the taxpayer did not have the tax benefits established in item 13, article 43 and article 75 of the Corporate Income Tax Code.
Since January 1, 2007, local authorities have been able to establish a maximum local surcharge of up to 1.5% over taxable income subject to and not exempt from corporate income tax. With the publication of Law no. 12 - A/2010, of 30 June, a state surcharge was also introduced, which must be paid by all taxpayers subject to and not exempt from corporate income tax with taxable income in excess of tEuros 2,000. The state surcharge corresponds to 2.5% of the taxable income exceeding that limit.
With the publication of the State Budget Law for 2012 (Law no. 64-B/2011, of December 30), the companies that present higher taxable income in the year and on the two following years were subject to higher state surcharge rates. Companies with taxable income between tEuros 1,500 and tEuros 10,000 are now subject to a state surcharge rate of 3% and the companies with taxable income exceeding tEuros 10,000 are subject to a rate of 5%. Consequently, the tax rate used in the years 2012 and 2013 was 26.5% up to tEuros 1,500 of taxable income, 29.5% up to tEuros 8,500 of taxable income and 31.5% for the remainder. The Bank determined a tax loss for the years 2012 and 2013.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Additionally, following the publication of Law no. 2/2014, of 16 January, the taxation of corporate profits for the year 2014 became the following:
Thus, the above referred change implied that the rate used by the Bank in the calculation and recognition of deferred taxes for the year 2013 was 23% for tax losses and 29.5% for temporary differences (25% and 29% in fiscal year 2012).
On the other hand, the tax losses for the years 2012 and 2013 may be used in the five subsequent tax periods (or the twelve subsequent tax periods for the tax losses generated from 2014, inclusive). However, within the terms allowed in the State Budget Law for 2012, the deduction of the losses in each year cannot exceed 75% of the respective taxable profit (70% from the year 2014), although the remaining 25% continue to be deductible up to the end of the reporting period.
With the publication of Law no. 55-A/2010, of 31 December, the Bank is subjected to the banking sector contribution regime. The basis of such contribution is as follows:
The rates applicable to the bases of incidence defined in a) and b) above are 0.05% and 0.00015%, respectively, as allowed for in no's. 1 and 2 of article 5 of Dispatch no. 121/2011, of 30 March.
Deferred tax assets and liabilities correspond to the amount of the tax recoverable and payable in future periods resulting from temporary differences between the carrying value of assets and liabilities in the balance sheet and their respective tax bases. Tax credits are also recognised as deferred tax assets.
Deferred tax assets are recognised when it is estimated that they will be recovered and only up to the amount that will probably be recovered through the existence of sufficient expected future taxable income to absorb the deductible temporary differences.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Deferred tax assets and liabilities were calculated based on the tax rates decreed for the period in which the respective assets are expected to be realised or the liabilities incurred.
Current and deferred taxes are reflected in the income statement, except for taxes on transactions recorded directly in shareholders' equity, namely potential gains and losses on financial assets available for sale and on cash flow hedging derivatives, as well as actuarial gains and losses related to pension liabilities following the change in accounting policy (Note 1.3. I)).
The Bank has long-term incentive plans for stocks and stock options of Banco Santander, S.A., holding company of the Santander Group. Given their characteristics, these plans consist of equity settled share-based payment transactions, as defined in IFRS 2 and IFRIC 11. The management, hedging and implementation of these long-term incentive plans is provided directly by Banco Santander, S.A.. The Bank pays out annually these plans to Banco Santander, S.A..
The recording of such plans corresponds to the recognition of the Bank's employee's right to these instruments in the caption "Other reserves" and in the caption "Staff costs" of the income statement, as these are granted in exchange for services rendered.
A description of the long-term incentives plans for stocks and stock options of Banco Santander S.A. in force in reporting periods of 2013 and 2012 is included in Note 47.
Treasury shares are recorded in the equity accounts at their acquisition cost and are not subject to revaluation. Gains or losses arising from the sale of treasury shares, as well as the related taxes, are recorded directly in equity not affecting the net income for the year.
Preference shares are classified as equity instruments when:
On December 31, 2013 and 2012, the Bank classified as equity instruments the issues of preference shares by Totta & Açores Financing and BST International Bank, Inc. - Puerto Rico.
The preference shares classified as equity instruments and held by third parties are presented in the consolidated financial statements under the caption "Minority Interests".
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Income from commissions associated with insurance brokerage services rendered is recorded on an accrual basis. Income is recorded as it is generated, irrespective of when it is received. Amounts receivable are subject to impairment analysis.
The Bank does not engage in the collection of insurance premiums on behalf of insurers, or perform the movement of funds related to insurance contracts. Thus, there is no other asset, liability, revenue or expense to report on the activity of insurance mediation performed by the Bank, other than those already disclosed.
In preparing the cash flow statement, the Bank considers "Cash and cash equivalents" to be the total of the captions "Cash and deposits at central banks" and "Balances due from other banks".
The preparation of the financial statements requires estimates and assumptions to be made by the Bank's Board of Directors. These estimates are subjective by nature and can affect the amount of the assets and liabilities, income and costs, and also of the contingent liabilities disclosed.
Retirement and survival pensions have been estimated using actuarial valuations performed by external experts certified by the Portugal Insurance Institute (ISP). These estimates incorporate a set of financial and actuarial assumptions, including discount rate, mortality, disability, pension growth and wages, amongst others.
The assumptions adopted correspond to the best estimate of the Bank's Board of Directors regarding the future behaviour of the above referred variables.
Models and valuation techniques, such as those described in Notes 1.3 e) and f) above, are used to value financial instruments not traded on active markets. Consequently, the valuations correspond to the best estimate of the fair value of these instruments as at the balance sheet date. As mentioned in Note 1.3. e) to ensure an adequate segregation of duties, the valuation of those financial instruments is determined by an independent area of the trading function.
Loans impairment losses have been determined as explained in Note 1.3 c) above. Consequently, impairment assessment performed on an individual basis corresponds to the Bank's judgement as to the financial situation of their customers and its estimate of the value of collateral received, and the consequent impact on the expected future cash flows. Impairment losses determined on a collective basis are estimated based on historical parameters for comparable types of operations, considering estimates of default and recoverability.
As described in Note 1.3. e), the unrealised capital losses resulting from the valuation of these assets are recognised under the revaluation reserve. Nevertheless, whenever there is objective evidence of impairment, the accumulated capital losses of that reserve are transferred to the income statement.
In the case of equity instruments, the determination of impairment losses may involve a degree of subjectivity. The Bank determines whether or not impairment on these assets exists through specific analysis at each balance sheet date taking into account the existence of any of the events foreseen in IAS 39.
In the case of debt instruments recorded in this caption, unrealised capital losses are transferred from the caption revaluation reserve to the income statement whenever there are indications that default might occur, namely, due to financial difficulties of the issuer, failure to comply with other financial liabilities, or a significant deterioration in the rating of the issuer.
Deferred tax assets are recognised based on the assumption of the existence of future taxable income. Furthermore, deferred tax assets and liabilities have been determined based on the interpretation of the tax legislation currently in force. Therefore, changes in tax legislation or in its interpretation by the competent authorities may have an impact on the amount of deferred taxes.
The Bank, as an entity subject to Bank of Portugal supervision, must present separate (nonconsolidated) financial statements in accordance with the Adjusted Accounting Standards as issued under Bank of Portugal Notice 1/2005, dated February 21, and which form the basis for determining the taxable profit.
In order to adapt the Corporate Income Tax Code to the International Accounting Standards as adopted by the European Union and to the new accounting system "Sistema de Normalização Contabilistica" (SNC), approved by Decree Law no. 158/2009, dated July 13, the Decree Law no. 159/2009, dated July 13, was also approved.
The above referred Decree Law amended some articles of the Corporate Income Tax Code and also revoked paragraph 2 of Article 57 of the State Budget Law of 2007. These changes came into force on 1 January 2010.
In this regard, these new rules were observed to compute the taxable profit for 2013 and 2012, in accordance with their interpretation by the Bank.
The outcome of the legal proceedings, including those mentioned in Note 50, as well as the need for provisioning are estimated based on the opinion of the lawyers / legal advisors of the Bank, which, however may not come to materialize.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In accordance with the requirements of IFRS 8, the disclosures of the Bank's operating segments are presented below in accordance with the information reviewed by the management of the Bank:
This area essentially includes the Bank's activity with financial markets and large companies, providing financial advisory services, namely Corporate and Project Finance, as well as intermediary, custody and settlement services.
This essentially corresponds to credit granting operations and attracting of funds from private customers and businesses with a turnover of lower than 5 million Euros through the branches network, telephone and internet banking services.
This is geared towards companies with a turnover ranging between 5 and 125 million Euros. This activity is backed by the branches network as well as by specialised services, and includes a variety of products, such as loans, project funding, export financing and real estate.
This area results from the investment fund management activity, which includes the launching of funds, the objective of which is to create added value products for the Bank's customers.
At the end of the year 2013, the Bank sold the companies responsible for this business segment to a Santander Group company.
This area covers all the activities that provide support to the Bank's main activities but which are not directly related to its core business, and also includes liquidity management, balance sheet hedging and Bank funding.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The income statement by segment as at December 31, 2013 is made up as follows:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Global Banking & Markets |
Retail banking |
Commercial banking |
Asset management |
Corporate activities |
Consolidated Total |
|
| Financial margin (narrow sense) | 95,721 | 281,023 | 157,883 | (1,784) | (25,575) | 507,268 |
| Income from equity instruments | - | - | - | - | 1,313 | 1,313 |
| Financial margin | 95,721 | 281,023 | 157,883 | (1,784) | (24,262) | 508,581 |
| Net commissions | 63,663 | 231,843 | 22,722 | 5,122 | (7,840) | 315,510 |
| Other results from banking activity | - | 1,421 | - | (15,375) | (20,477) | (34,431) |
| Commercial margin | 159,384 | 514,287 | 180,605 | (12,037) | (52,579) | 789,660 |
| Results from financial operations | 2,065 | 839 | 429 | 9,187 | 18,855 | 31,375 |
| Net income from banking activities | 161,449 | 515,126 | 181,034 | (2,850) | (33,724) | 821,035 |
| Operating costs | (17,063) | (337,141) | (45,758) | (6,774) | - | (406,736) |
| Depreciation and amortization | (2,230) | (54,202) | (3,189) | (156) | - | (59,777) |
| Net operating income | 142,156 | 123,783 | 132,087 | (9,780) | (33,724) | 354,522 |
| Impairment and provisions, net of reversals | (10,755) | (182,189) | (75,398) | 1,433 | 22,958 | (243,951) |
| Result from associates | - | - | 12,669 | - | 1,400 | 14,069 |
| Income before taxes | 131,401 | (58,406) | 69,358 | (8,347) | (9,366) | 124,640 |
| Taxes | (38,106) | 17,428 | (16,441) | (3,062) | (4,177) | (44,358) |
| Minority interests | - | - | - | 8,903 | (21) | 8,882 |
| Net income for the year | 93,295 | (40,978) | 52,917 | (2,506) | (13,564) | 89,164 |
At December 31, 2013 the assets and liabilities under management of each business segment in accordance with the information used by the Bank's management for decision making, are as follows:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Global Banking & Markets |
Retail banking |
Commercial banking |
Asset Management |
Corporate activities |
Consolidated Total |
|
| Assets | ||||||
| Loans and advances to customers | ||||||
| Mortgage Loans | - | 15,277,265 | - | - | - | 15,277,265 |
| Consumer credit | - | 1,399,152 | - | - | - | 1,399,152 |
| Other loans | 2,758,628 | 2,632,642 | 4,039,834 | - | - | 9,431,104 |
| Total allocated assets | 2,758,628 | 19,309,059 | 4,039,834 | - | - | 26,107,521 |
| Total non-allocated assets | 12,703,007 | |||||
| Total assets | 38,810,528 | |||||
| Liabilities | ||||||
| Resources in the balance sheet | ||||||
| Customers' accounts and other resources | 763,842 | 16,448,582 | 2,084,356 | - | 1,410,221 | 20,707,001 |
| Debt securities issued | - | 289,272 | 101,557 | - | 2,143,332 | 2,534,161 |
| 763,842 | 16,737,854 | 2,185,913 | - | 3,553,553 | 23,241,162 | |
| Guarantees and other sureties given | 171,674 | 167,383 | 846,410 | - | - | 1,185,467 |
| Investment funds | - | 1,151,870 | 394,550 | 871,953 | - | 2,418,373 |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The income statement by segment as at December 31, 2012 is made up as follows:
| 2012 | ||||||
|---|---|---|---|---|---|---|
| Global Banking & Markets |
Retail banking |
Commercial banking |
Asset management |
Corporate activities |
Consolidated Total |
|
| Financial margin (narrow sense) Income from equity instruments |
77,148 - |
307,299 - |
166,108 - |
- - |
(9,021) 1,698 |
541,534 1,698 |
| Financial margin | 77,148 | 307,299 | 166,108 | - | (7,323) | 543,232 |
| Net commissions Other results from banking activity |
55,052 - |
252,197 2,785 |
23,186 - |
5,847 12 |
(5,474) (15,557) |
330,808 (12,760) |
| Commercial margin | 132,200 | 562,281 | 189,294 | 5,859 | (28,354) | 861,280 |
| Results from financial operations | 12,786 | (355) | (372) | - | 113,769 | 125,828 |
| Net income from banking activities | 144,986 | 561,926 | 188,922 | 5,859 | 85,415 | 987,108 |
| Operating costs Depreciation and amortization |
(18,649) (2,943) |
(329,346) (56,947) |
(42,190) (3,735) |
(4,947) (248) |
- - |
(395,132) (63,873) |
| Net operating income | 123,394 | 175,633 | 142,997 | 664 | 85,415 | 528,103 |
| Impairment and provisions, net of reversals Result from associates Income before taxes |
(23,632) - 99,762 |
(265,638) - (90,005) |
(91,083) 10,808 62,722 |
(1,353) - (689) |
(84,903) 1,056 1,568 |
(466,609) 11,864 73,358 |
| Taxes | (28,931) | 26,401 | (15,054) | 200 | 32,094 | 14,710 |
| Net income for the year | 70,831 | (63,604) | 47,668 | (489) | 33,662 | 88,068 |
At December 31, 2012 the assets and liabilities under management for each business segment as in accordance with the information used by the Bank's management for decision making, are as follows:
| 2012 | ||||||
|---|---|---|---|---|---|---|
| Global Banking & Markets |
Retail banking |
Commercial banking |
Asset Management |
Corporate activities |
Consolidated Total |
|
| Assets | ||||||
| Loans and advances to customers | ||||||
| Mortgage Loans | - | 15,788,523 | - | - | - | 15,788,523 |
| Consumer credit | - | 1,433,532 | - | - | - | 1,433,532 |
| Other loans | 2,024,753 | 3,309,047 | 4,423,794 | - | - | 9,757,594 |
| Total allocated assets | 2,024,753 | 20,531,102 | 4,423,794 | - | - | 26,979,649 |
| Total non-allocated assets | 11,547,594 | |||||
| Total assets | 38,527,243 | |||||
| Liabilities | ||||||
| Resources in the balance sheet | ||||||
| Customers' accounts and other resources | 415,014 | 18,193,057 | 2,889,103 | - | - | 21,497,174 |
| Debt securities issued | - | 353,878 | 328,165 | - | 3,271,476 | 3,953,519 |
| 415,014 | 18,546,935 | 3,217,268 | - | 3,271,476 | 25,450,693 | |
| Guarantees and other sureties given | 206,332 | 189,279 | 824,119 | - | - | 1,219,730 |
| Investment funds | - | 1,261,600 | 641,874 | 813,723 | - | 2,717,197 |
The information by geographic area of the consolidated activity, namely the balance sheet and the income statement, is presented below. The Bank's balance sheet as at December 31, 2013 and 2012, by geographic segments was as follows:
| 201 3 |
||||||||
|---|---|---|---|---|---|---|---|---|
| Inte | tion al o rna per |
atio ns |
Inte ent r se gm |
|||||
| Por al tug |
Irel and |
Ang ola |
Pue Ric rto o |
Oth er |
Tot al |
bal anc es |
Co lida ted nso |
|
| Ass ets |
||||||||
| Ca sh and de its ral ban ks at c ent pos |
337 ,84 1 |
337 ,84 1 |
||||||
| Bal due fro the r ba nks anc es m o |
552 ,43 2 |
- 1,5 66 |
- - |
- 5,4 79 |
- 438 |
- 7,4 83 |
- (6,9 94) |
552 ,92 1 |
| Fin ial he ld f rad ing ets or t anc ass |
1,9 49, 115 |
- | - | - | - | - | - | 1,9 49, 115 |
| Fin ial ets at fair lue thr h p rofi t or los anc ass va oug s |
4,3 82, 253 |
1,1 86, 994 |
- | - | - | 1,1 86, 994 |
(1,1 86, 994 ) |
4,3 82, 253 |
| Ava ilab le-f ale fin ial ets or-s anc ass |
3,2 70, 749 |
50, 000 |
- | 424 ,65 9 |
327 ,23 8 |
801 ,89 7 |
(80 1,6 76) |
3,2 70, 970 |
| Loa and ad dit ins titu tion to ns van ces cre s |
26, 107 ,52 1 |
- | - | - | - | - | - | 26, 107 ,52 1 |
| Loa and ad to tom ns van ces cus ers |
199 ,42 7 |
- | - | - | - | - | - | 199 ,42 7 |
| Hed ing de riva tive g s |
206 ,94 3 |
- | - | - | - | - | - | 206 ,94 3 |
| No ts h eld for le nt a n-c urre sse sa |
467 ,94 9 |
- | - | - | - | - | - | 467 ,94 9 |
| Oth ible er t set ang as s |
318 ,63 6 |
2 | - | - | 24 | 26 | - | 318 ,66 2 |
| Inta ible set ng as s |
52, 468 |
- | - | - | - | - | - | 52, 468 |
| Inve stm ent s in iate d c ies as soc om pan |
32, 334 |
- | 115 ,39 6 |
- | - | 115 ,39 6 |
- | 147 ,73 0 |
| Cu t ta set rren x as s |
17, 458 |
- | - | - | - | - | - | 17, 458 |
| Def d ta set erre x as s |
540 ,67 5 |
- | - | - | - | - | - | 540 ,67 5 |
| Oth ts er a sse |
257 ,89 0 |
5,5 00 |
- | 1,1 75 |
694 | 7,3 69 |
(6,6 64) |
258 ,59 5 |
| Tot al N et A ts sse |
38, 693 ,69 1 |
1,2 44, 062 |
115 ,39 6 |
431 ,31 3 |
328 ,39 4 |
2,1 19, 165 |
(2,0 02, 328 ) |
38, 810 ,52 8 |
| Lia bilit ies |
||||||||
| of Res tral ba nks |
410 | 410 | ||||||
| our ces cen Fin ial liab ilitie s h eld for din tra |
6,2 41, 1,6 19, 768 |
- | - | - | - | - - |
- | 6,2 41, 1,6 19, 768 |
| anc g Res of oth red it in stit utio our ces er c ns |
4,1 75, 058 |
- 704 ,92 1 |
- | - 6,6 76 |
- | 711 ,59 7 |
- (71 97) 1,5 |
4,1 75, 058 |
| of Res tom d o the r de bts our ces cus ers an |
20, 568 ,82 4 |
- | 138 ,17 7 |
- | 138 ,17 7 |
20, 707 ,00 1 |
||
| De bt s ritie ecu s |
2,5 34, 161 |
- | - | - | - | 2,5 34, 161 |
||
| Hed ing de riva tive s |
370 ,68 4 |
- | - | - | - | - | - | 370 ,68 4 |
| g Pro vis ion s |
62, 039 |
- | - | - | - | - | - | 62, 039 |
| Cu x lia bilit ies t ta rren |
13, 475 |
- | - | - | - | - | - 838 |
14, 313 |
| Def d ta x lia bilit ies erre |
41, 990 |
- | - | - | - | - | 16, 534 |
58, 524 |
| Sub ord ina ted lia bilit ies |
4,3 07 |
- | - | - | - | - | 4,3 07 |
|
| Oth er l iab ilitie s |
290 ,70 2 |
- 140 ,76 7 |
- | - 1,9 35 |
- 178 |
- 142 ,88 0 |
- (14 82) 0,6 |
292 ,90 0 |
| Tot al L iab ilitie s |
35, 922 ,41 8 |
845 ,68 8 |
- | 146 ,78 8 |
178 | 992 ,65 4 |
(83 4,9 07) |
36, 080 ,16 |
| - | 5 | |||||||
| Sha reh old ' eq uity ers |
||||||||
| Sha reh old ' eq uity ribu tab le t har eho lde att ers o s rs Min |
2,5 35, 536 |
398 ,37 4 |
115 ,39 6 |
23, 485 |
29, 623 |
566 ,87 8 |
(1,1 ) 67, 421 |
1,9 34, 993 |
| orit inte ts y res |
235 ,73 7 |
- 4 |
- | 261 ,04 0 |
298 ,59 3 |
559 ,63 3 |
- 421 |
795 ,37 0 |
| Tot al s har eho lde rs' ity equ |
2,7 71, 273 |
398 ,37 |
115 ,39 6 |
284 ,52 5 |
328 ,21 6 |
1,1 26, 511 |
(1,1 67, ) |
2,7 30, 363 |
| Tot al l iab ilitie nd sha reh old ' eq uity s a ers |
38, 693 ,69 1 |
1,2 44, 062 |
115 ,39 6 |
431 ,31 3 |
328 ,39 4 |
2,1 19, 165 |
(2,0 ) 02, 328 |
38, 810 ,52 8 |
| 201 2 |
||||||||
|---|---|---|---|---|---|---|---|---|
| Inte | tion al o rna per |
atio ns |
Inte ent r se gm |
|||||
| Por tug al |
Irel and |
Ang ola |
Pue rto Ric o |
Oth er |
Tot al |
bal anc es |
Co lida ted nso |
|
| Ass ets |
||||||||
| Ca sh and de its at c ent ral ban ks pos |
352 ,36 5 |
- | - | - | - | - | - | 352 ,36 5 |
| Bal due fro the r ba nks anc es m o |
384 ,85 0 |
11, 366 |
- | 6,0 39 |
396 | 17, 801 |
( 17, 328 ) |
385 ,32 3 |
| Fin ial he ld f rad ing ets or t anc ass |
2,2 65, 493 |
- | - | - | - | - | 2 | 2,2 65, 495 |
| Fin ial fair lue thr h p rofi los ets at t or anc ass va oug s |
93, 735 |
- | - | - | - | - | - | 93, 735 |
| Ava ilab le-f ale fin ial ets or-s anc ass |
3,4 89, 864 |
1,3 11, 876 |
- | - | - | 1,3 11, 876 |
( 1,3 11, 876 ) |
3,4 89, 864 |
| Loa and ad to dit ins titu tion ns van ces cre s |
3,0 97, 194 |
50, 001 |
- | 465 ,20 2 |
311 ,79 0 |
826 ,99 3 |
( 826 ,76 5) |
3,0 97, 422 |
| Loa and ad to tom ns van ces cus ers |
26, 979 ,64 9 |
- | - | - | - | - | 26, 979 ,64 9 |
|
| He dg ing de riva tive s |
284 ,85 0 |
- | - | - | - | - | - | 284 ,85 0 |
| for No nt a ts h eld le n-c urre sse sa |
206 ,84 0 |
- | - | - | - | - | - | 206 ,84 0 |
| Oth er t ible set ang as s |
336 ,04 7 |
- | - | - | 34 | 34 | 3 | 336 ,08 4 |
| Inta ible set ng as s |
65, 842 |
- | - | - | - | - | - | 65, 842 |
| Inve s in iate d c ies stm ent as soc om pan |
31, 710 |
- | 111 ,28 4 |
- | - | 111 ,28 4 |
- | 142 ,99 4 |
| Cu t ta set rren x as s |
4,0 01 |
- | - | - | - | - | 245 | 4,2 46 |
| De ferr ed tax ets ass |
631 8 ,57 |
- | - | - | - | - | - | 631 8 ,57 |
| Oth ts er a sse |
190 ,01 0 |
3 | - | 1,9 96 |
942 | 2,9 41 |
( 1,9 95) |
190 ,95 6 |
| Tot al N et A ts sse |
38, 414 ,02 8 |
1,3 73, 246 |
111 ,28 4 |
473 ,23 7 |
313 ,16 2 |
2,2 70, 929 |
( 2,1 57, 714 ) |
38, 527 ,24 3 |
| Lia bili ties |
||||||||
| Re f ce l ba nks ntra sou rce s o |
5,8 37, 242 |
5,8 37, 242 |
||||||
| Fin ial liab ilitie s h eld for din tra anc |
2,0 48, 741 |
- | - | - | - | - - |
- 2 |
2,0 48, 743 |
| g f ot Re her dit ins titu tion sou rce s o cre s |
1,9 49, 574 |
- 1,0 13, 953 |
- | - 4,2 27 |
- | 1,0 18, 180 |
( ) 1,0 18, 180 |
1,9 49, 574 |
| Re f cu nd oth er d ebt sto sou rce s o me rs a s |
21, 323 ,19 0 |
- | 171 ,02 2 |
- | 171 ,02 2 |
2,9 62 |
21, 497 ,17 4 |
|
| De bt s ritie ecu s |
3,9 53, 519 |
- | - | - | 3,9 53, 519 |
|||
| He dg ing de riva tive s |
455 ,90 6 |
- | - | - | - | - | - 5 |
455 ,91 1 |
| Pro vis ion s |
72, 271 |
- | - | - | - | - | 72, 271 |
|
| Cu x lia bili ties t ta rren |
3,7 02 |
- | - | - | - | - | - 985 |
4,6 87 |
| De ferr ed liab ilitie tax s |
57, 911 |
- | - | - | - | - | 17, 392 |
75, 303 |
| Sub ord ina ted lia bili ties |
4,3 11 |
- | - | - | - | - | 4,3 11 |
|
| Oth er l iab ilitie s |
302 ,83 8 |
- | - | - 3,3 13 |
- 191 |
- 3,5 04 |
- ( 2,9 25) |
303 ,41 7 |
| iab iliti Tot al L es |
36, 009 ,20 5 |
- 1,0 13, 953 |
- - |
178 ,56 2 |
191 | 1,1 92, 706 |
( 9) 999 ,75 |
36, 202 ,15 2 |
| Sha reh old ' eq uity ers Sha reh old ribu tab le t har eho lde |
111 4 |
414 | ||||||
| ' eq uity att ers o s rs Min orit inte |
2,4 04, 071 752 |
359 ,29 3 |
,28 | 21, 824 272 1 |
14, 298 7 |
506 ,81 5 571 8 |
( ) 1,1 57, 955 |
1,7 52, 931 572 0 |
| ts y res Tot al s har eho lde rs' |
- | - 111 4 |
,85 | ,55 1 |
,40 | - | ,16 | |
| ity equ |
2,4 04, 823 |
359 ,29 3 |
,28 | 294 ,67 5 |
312 ,97 |
1,0 78, 223 |
( 1,1 57, 955 ) |
2,3 25, 091 |
| Tot al l iab iliti and sh hol der s' e ity es are qu |
38, 414 ,02 8 |
1,3 73, 246 |
111 ,28 4 |
473 ,23 7 |
313 ,16 2 |
2,2 70, 929 |
( 2,1 57, 714 ) |
38, 527 ,24 3 |
In the reporting periods ending on December 31, 2013 and 2012, the income statement by geographic segments was as follows:
| 201 3 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Inte | tion al o atio rna per |
ns | Inte ent r se gm |
||||||
| Por al tug |
Irel and |
An la go |
Pue Ric rto o |
Oth er |
Tot al |
bal anc es |
Co lida ted nso |
||
| Inte d s imil inc t an res ar om e |
1, 271 030 , |
47, 944 |
- | 25, 697 |
- | 73, 641 |
( ) 73, 544 |
1, 271 127 , |
|
| Inte d s imil cha t an res ar rge s |
( 758 938 ) , |
( 9, 878 ) |
- | ( 4, 982 ) |
- | ( 14, 860 ) |
9, 939 |
( 763 859 ) , |
|
| Fin cia l m in an arg |
512 092 , |
38, 066 |
- | 20, 715 |
- | 58, 781 |
( 63, 605 ) |
507 268 , |
|
| Inc e f uity ins tru nts om rom eq me |
1, 313 |
- | - | - | - | - | - | 1, 313 |
|
| Inc e f rvic and iss ion om rom se es co mm s |
370 626 , |
498 5, |
- | - | - | 498 5, |
( 498 ) 5, |
370 626 , |
|
| Cha ith vic and iss ion rge s w ser es co mm s |
( 54, 873 ) |
- | - | ( 1) |
( 242 ) |
( 243 ) |
- | ( 55, 116 ) |
|
| Res ult of a nd liab ilitie t fa ir v alu e th h p rof it o r lo ts a sse s a rou g ss |
20, 327 |
- | - | ( 1) |
- | ( 1) |
- | 20, 326 |
|
| Res ult of a vai lab le-f sal e f ina nci al a ts or- sse |
4,5 34 |
- | - | - | - | - | - | 4,5 34 |
|
| Res ult of f ign cha val ion uat ore ex nge re |
3, 984 |
- | - | 55 | - | 55 | - | 4, 039 |
|
| fro of Res ult ale oth ts m s er a sse |
2, 475 |
- | - | - | 1 | 1 | - | 2, 476 |
|
| Oth atin sul ts er o per g re |
( 34, 340 ) |
- | - | ( 4) |
( 87) |
( 91) |
- | ( 34, 431 ) |
|
| t in fro ing tiv itie Ne ba nk co me m ac s |
826 138 , |
43, 564 |
- | 20, 764 |
( 328 ) |
64, 000 |
( 69, 103 ) |
821 035 , |
|
| Sta ff c ost s |
( ) 268 637 , |
( ) 177 |
- | ( ) 193 |
( ) 570 |
( ) 940 |
- | ( 7) 269 ,57 |
|
| Ge al a dm inis tive tra sts ner co |
( 136 461 ) , |
( 329 ) |
- | ( 115 ) |
( 254 ) |
( 698 ) |
- | ( 137 159 ) , |
|
| Dep iatio n in the rec ye ar |
( ) 59, 767 |
( 1) |
- | - | ( 9) |
( 10) |
- | ( ) 59, 777 |
|
| Pro vis ion f re sal et o s n ver s |
( ) 6, 930 |
- | - | - | - | - | - | ( ) 6, 930 |
|
| Loa n im irm t of sal nd ries ent pa ne re ver s a rec ove |
( 197 039 ) , |
- | - | - | - | - | - | ( 197 039 ) , |
|
| Imp airm of oth er f ina nci al a f re sal nd ries ent ts n et o sse ver s a rec ove |
( 3, 155 ) |
- | - | - | - | - | - | ( 3, 155 ) |
|
| Imp airm ent of oth ets t of sal nd ries er ass ne re ver s a rec ove |
( ) 36, 827 |
- | - | - | - | - | - | ( ) 36, 827 |
|
| Res ult fro cia tes m a sso |
1, 400 |
- | 12, 669 |
- | - | 12, 669 |
- | 14, 069 |
|
| Inc e b efo tax d m ino rity in ter ts om re es an es |
118 22 ,7 |
43, 057 |
12, 669 |
20, 456 |
( 1, 161 ) |
021 75, |
( 69, 103 ) |
124 640 , |
|
| Cu nt t rre axe s |
( ) 29, 042 |
( ) 6, 266 |
- | - | ( 13) |
( ) 6, 279 |
- | ( ) 35, 321 |
|
| Def ed tax err es |
( 9, 895 ) |
858 | - | - | - | 858 | - | ( 9, 037 ) |
|
| Inc fte nd be for ino rity in r ta ter ts om e a xe s a e m es |
79, 785 |
37, 649 |
12, 669 |
20, 456 |
( 1, 174 ) |
69, 600 |
( 69, 103 ) |
80, 282 |
|
| Min orit inte ts res y |
( ) 8, 882 |
- | - | - | - | - | - | ( ) 8, 882 |
|
| Co olid ate d n et inc ttr ibu tab le t o t he sh ho lde of the Ba nk ns om e a are rs |
88, 667 |
37, 649 |
12, 669 |
20, 456 |
( ) 1, 174 |
69, 600 |
( ) 69, 103 |
89, 164 |
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 201 2 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Inte | tion al o atio rna per |
ns | Inte ent r se gm |
|||||||
| Por al tug |
Irel and |
An la go |
Pue Ric rto o |
Oth er |
Tot al |
bal anc es |
Co lida ted nso |
|||
| Inte t an d s imil inc res ar om e |
1, 648 133 , |
74, 042 |
- | 24, 542 |
- | 98, 584 |
( ) 98, 569 |
1, 648 148 , |
||
| Inte d s imil cha t an res ar rge s |
( ) 1, 100 401 , |
( 67) 3,7 |
- | ( ) 5, 941 |
- | ( 08) 9,7 |
3, 495 |
( ) 1, 106 614 , |
||
| Fin cia l m in an arg |
547 32 ,7 |
70, 275 |
- | 18, 601 |
- | 88, 876 |
( 95, 074 ) |
541 34 ,5 |
||
| Inc e f uity ins tru nts om rom eq me |
1, 698 |
- | - | - | - | - | - | 1, 698 |
||
| Inc e f rvic and iss ion om rom se es co mm s |
384 ,7 01 |
- | - | - | - | - | - | 384 ,7 01 |
||
| Cha ith vic and iss ion rge s w ser es co mm s |
( 53, 651 ) |
- | - | ( 1) |
( 241 ) |
( 242 ) |
- | ( 53, 893 ) |
||
| of a t fa rof Res ult ts a nd liab ilitie ir v alu e th h p it o r lo sse s a rou g ss |
37, 172 |
- | - | - | - | - | 11 | 37, 183 |
||
| Res ult of a vai lab le-f sal e f ina nci al a ts or- sse |
( ) 2, 696 |
- | - | - | - | - | - | ( ) 2, 696 |
||
| Res ult of f ign cha val ion uat ore ex nge re |
639 5, |
- | - | 13 | - | 13 | - | 652 5, |
||
| Res ult fro ale of oth ts m s er a sse |
85, 691 |
- | - | - | ( 2) |
( 2) |
- | 85, 689 |
||
| Oth atin sul ts er o per g re |
( ) 12, 679 |
- | - | ( 5) |
( 78) |
( 83) |
2 | ( ) 12, 760 |
||
| Ne t in fro ba nk ing tiv itie co me m ac s |
993 607 , |
70, 275 |
- | 18, 608 |
( ) 321 |
88, 562 |
( ) 95, 061 |
987 108 , |
||
| Sta ff c ost s |
( ) 256 632 , |
( ) 176 |
- | ( ) 200 |
( ) 628 |
( ) 1, 004 |
- | ( ) 257 636 , |
||
| Ge al a dm inis tive tra sts ner co |
( 47) 136 ,7 |
( ) 421 |
- | ( ) 129 |
( ) 307 |
( ) 857 |
108 | ( ) 137 496 , |
||
| Dep iatio n in the rec ye ar |
( 63, 846 ) |
- | - | - | ( 27) |
( 27) |
- | ( 63, 873 ) |
||
| Pro vis ion f re sal et o s n ver s |
( 22, 821 ) |
- | - | - | - | - | - | ( 22, 821 ) |
||
| t of Loa n im irm ent sal nd ries pa ne re ver s a rec ove |
( ) 378 147 , |
- | - | - | - | - | - | ( ) 378 147 , |
||
| Imp airm of oth er f ina nci al a f re sal nd ries ent ts n et o sse ver s a rec ove |
( ) 16, 504 |
- | - | - | - | - | - | ( ) 16, 504 |
||
| Imp airm of oth t of sal nd ries ent ets er ass ne re ver s a rec ove |
( 49, 137 ) |
- | - | - | - | - | - | ( 49, 137 ) |
||
| fro Res ult cia tes m a sso |
2, 296 |
- | 9,5 68 |
- | - | 9,5 68 |
- | 11, 864 |
||
| Inc e b efo tax d m ino rity in ter ts om re es an es |
72, 069 |
69, 678 |
9,5 68 |
18, 279 |
( 1, 283 ) |
96, 242 |
( 94, 953 ) |
73, 358 |
||
| Cu nt t rre axe s |
( ) 20, 614 |
( ) 8, 958 |
- | ( 4) |
( 22) |
( ) 8, 984 |
5 | ( ) 29, 593 |
||
| Def ed tax err es |
44, 303 |
- | - | - | - | - | - | 44, 303 |
||
| Inc fte r ta nd be for ino rity in ter ts om e a xe s a e m es |
95, 758 |
60, 720 |
9,5 68 |
18, 275 |
( 1, 305 ) |
87, 258 |
( 94, 948 ) |
88, 068 |
||
| Min orit inte ts y res |
- | - | - | - | - | - | - | - | ||
| Co olid d n inc ibu tab le t he sh ho lde of the Ba nk ate et ttr o t ns om e a are rs |
95, 758 |
60, 720 |
9,5 68 |
18, 275 |
( ) 1, 305 |
87, 258 |
( ) 94, 948 |
88, 068 |
The accounting policies used in the preparation of financial information by segment were consistent with those described in Note 1.3. from these accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 (Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
As at December 31, 2013 and 2012, the subsidiaries and associated companies and their most significant financial data, taken from their respective individual financial statements, excluding conversion adjustments to the IAS/IFRS, may be summarised as follows:
| Dire | ct | Eff ect |
ive | Tot al a |
ts sse |
Sha reh |
old ' ers |
Net inc om e |
||
|---|---|---|---|---|---|---|---|---|---|---|
| tici par pa |
( %) tion |
rtic ipa pa |
( %) tion |
(ne | t) | eq | uity | f th o e y |
ear | |
| Co mp any |
201 3 |
201 2 |
201 3 |
201 2 |
201 3 |
201 2 |
201 3 |
201 2 |
201 3 |
201 2 |
| NC O S TO S.A BA AN TA ND ER TTA , |
- | - | 100 .00 |
100 .00 |
40, 260 305 , |
38, 501 91 ,7 |
1, 471 117 , |
1, 212 474 , |
2, 449 |
( 9, 180 ) |
| BA NC O C AIX A G ERA L T OT TA DE AN GO LA S.A . ( 3) , |
- | - | 24. 99 |
24. 99 |
1, 371 384 , |
1, 199 433 , |
247 304 , |
183 ,5 37 |
52, 120 |
44, 023 |
| TO TTA & A Ç OR ES FIN AN CIN G ( 1) ( 5) |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
311 ,7 87 |
311 ,7 89 |
311 ,7 87 |
311 ,7 89 |
12, 360 |
12, 360 |
| SE TIO US RFI N IN TER NA NA L B AN K & TR T |
- | - | 100 .00 |
100 .00 |
32, 592 |
33, 736 |
32, 578 |
33, 717 |
320 | 401 |
| TO TTA & A Ç OR ES, INC . - N EW AR K |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
1, 180 |
1, 187 |
1, 014 |
1, 013 |
47 | ( 88) |
| TO PLC ( 4) TTA IRE LA ND , |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
1, 011 636 , |
1, 373 246 , |
298 037 , |
359 293 , |
2,7 32 |
4, 040 |
| SA NTO TTA -INT ERN AC ION AL SG PS, S.A , |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
110 807 , |
101 468 , |
74, 397 |
74, 865 |
4, 933 |
4, 293 |
| TO TTA UR BE - E .Ad min Co ões S.A . ( 2) nst mp . e ruç , |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
114 033 , |
112 634 , |
110 246 , |
109 225 , |
1, 997 |
2, 474 |
| BEN IM - So cie dad e Im obi liár ia, S.A . ( 3) |
- | - | 25. 81 |
25. 81 |
/a n |
11, 427 |
/a n |
8, 249 |
/a n |
( 283 ) |
| ÃO SA NTA ND ER - G EST DE AC TIV OS SG PS, S.A , |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
49, 795 |
41, 656 |
49, 417 |
41, 633 |
84 7,7 |
1, 331 |
| SA AS SET GE SG S.A . ( 9) NTA ND ER MA NA ME NT, FIM , |
- | 100 .00 |
- | 100 .00 |
- | 26, 426 |
- | 22, 270 |
- | 11 |
| BS T IN TER NA TIO NA L B AN K, INC PO RTO RIC O ( 1) ( 6) . - |
100 .00 |
100 .00 |
100 .00 |
100 .00 |
431 322 , |
473 237 , |
284 486 , |
294 675 , |
20, 457 |
18, 276 |
| TA XA GE ST SG PS, S.A , |
99. 00 |
99. 00 |
99. 00 |
99. 00 |
731 55, |
043 55, |
724 55, |
54, 963 |
761 | ( 37) |
| NG SG PS, S.A PA RTA . ( 3) , |
0.4 9 |
0.4 9 |
49. 00 |
49. 00 |
152 642 , |
139 611 , |
140 ,7 14 |
130 108 , |
25, 616 |
21, 433 |
| ÕE SA NTA ND ER PEN S S, S.A . ( 9) |
- | 100 .00 |
- | 100 .00 |
- | 3, 685 |
- | 3, 607 |
- | 769 |
| ÃO ÉDI UN ICR E - INS TIT UIÇ FIN AN CE IRA DE CR TO S.A . ( 3) , |
21. 50 |
21. 50 |
21. 50 |
21. 50 |
315 889 , |
305 005 , |
89, 696 |
84, 595 |
9,7 85 |
11, 256 |
| HIP OT OT TA nº 1 P LC |
- | - | - | - | 194 678 , |
215 ,7 28 |
( 1, 654 ) |
( 3, 423 ) |
( 152 ) |
( 2, 061 ) |
| HIP OT OT TA nº 4 P LC |
- | - | - | - | 1, 147 ,7 48 |
1, 220 666 , |
( ) 13, 619 |
( ) 20, 466 |
( ) 2, 036 |
( ) 8, 699 |
| HIP OT OT TA nº 5 P LC |
- | - | - | - | 972 ,7 64 |
1, 021 215 , |
( ) 8, 404 |
( ) 12, 215 |
( ) 1, 155 |
( ) 5, 081 |
| OT OT nº td ( 7) HIP TA 7 L |
- | - | - | - | - | 1, 258 61 ,5 |
- | ( ) 17, 739 |
- | ( ) 5, 684 |
| LEA SET OT TA nº 1 L td |
- | - | - | - | 428 640 , |
569 976 , |
( 13, 187 ) |
( 23, 142 ) |
3, 434 |
( 15, 292 ) |
| OT OT nº TC HIP TA 1 F |
- | - | - | - | 179 215 , |
202 335 , |
178 077 , |
201 123 , |
( 24) |
( 2, 282 ) |
| HIP OT OT TA nº 4 F TC |
- | - | - | - | 1, 107 ,5 00 |
1, 182 405 , |
1, 104 994 , |
1, 178 445 , |
( 1, 035 ) |
( 9, 982 ) |
| HIP OT OT TA nº 5 F TC |
- | - | - | - | 953 003 , |
1, 004 670 , |
947 977 , |
1, 001 819 , |
( 1, 932 ) |
( 7, 814 ) |
| HIP OT OT TA nº 7 F TC ( 7) |
- | - | - | - | - | 1, 226 920 , |
- | 1, 228 066 , |
- | ( ) 13, 001 |
| SET OT nº TC LEA TA 1 F |
- | - | - | - | 347 423 , |
485 651 , |
350 252 , |
506 336 , |
( 99) 1,5 |
( ) 15, 108 |
| NO VIM OV EST - F und o d e In tim o Im obi liár io A ber to ( 8) ent ves |
71. 60 |
- | 71. 60 |
- | 477 098 , |
- | 360 442 , |
- | ( 28, 670 ) |
- |
| ÕE SA OB RIG AÇ S - biliá NTA ND ER MU LTI Fu ndo de Inv est ime nto Mo rio Ab erto |
||||||||||
| Ob de riga ões de Ta Va riáv el ( 8) ç xa |
64. 32 |
- | 64. 32 |
- | 374 ,5 90 |
- | 371 951 , |
- | 8, 824 |
- |
n/a – not available
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
As at December 31, 2013 and 2012, the business, the location of the headquarters and the consolidation method for the companies included in the consolidation are as follows:
| Consolidation | |||
|---|---|---|---|
| Company | Business | Head office | method |
| BANCO SANTANDER TOTTA, S.A. | Banking | Portugal | Parent company |
| BANCO CAIXA GERAL TOTTA DE ANGOLA, S.A. (3) | Banking | Angola | Equity Method |
| TOTTA & AÇORES FINANCING (1) (5) | Banking | Cayman Islands | Full |
| SERFIN INTERNATIONAL BANK & TRUST | Banking | Cayman Islands | Full |
| TOTTA & AÇORES, INC. - NEWARK | Obtaining funds | USA | Full |
| TOTTA IRELAND, PLC (4) | Investment management | Ireland | Full |
| SANTOTTA-INTERNACIONAL, SGPS, S.A. | Holding company | Madeira | Full |
| TOTTA URBE - Emp.Admin. e Construções, S.A. (2) | Real estate management | Portugal | Full |
| BENIM - Sociedade Imobiliária, S.A. (3) | Real estate | Portugal | Equity Method |
| SANTANDER - GESTÃO DE ACTIVOS, SGPS, S.A. | Holding company | Portugal | Full |
| SANTANDER ASSET MANAGEMENT, SGFIM, S.A. (9) | Investment management | Portugal | Full |
| BST INTERNATIONAL BANK, INC. - PORTO RICO (1) (6) | Banking | Puerto Rico | Full |
| TAXAGEST, SGPS, S.A. | Holding company | Portugal | Full |
| PARTANG, SGPS, S.A. (3) | Holding company | Portugal | Equity Method |
| SANTANDER PENSÕES, S.A. (9) | Pension fund management | Portugal | Full |
| UNICRE - INSTITUIÇÃO FINANCEIRA DE CRÉDITO, S.A. (3) | Credit Card Management | Portugal | Equity Method |
| HIPOTOTTA nº 1 PLC | Investment management | Ireland | Full |
| HIPOTOTTA nº 4 PLC | Investment management | Ireland | Full |
| HIPOTOTTA nº 5 PLC | Investment management | Ireland | Full |
| HIPOTOTTA nº 7 Ltd (7) | Investment management | Ireland | Full |
| LEASETOTTA nº 1 Ltd | Investment management | Ireland | Full |
| HIPOTOTTA nº 1 FTC | Securitized loans fund | Portugal | Full |
| HIPOTOTTA nº 4 FTC | Securitized loans fund | Portugal | Full |
| HIPOTOTTA nº 5 FTC | Securitized loans fund | Portugal | Full |
| HIPOTOTTA nº 7 FTC (7) | Securitized loans fund | Portugal | Full |
| LEASETOTTA nº 1 FTC | Securitized loans fund | Portugal | Full |
| NOVIMOVEST - Fundo de Investimento Imobiliário Aberto (8) | Investment fund | Portugal | Full |
| SANTANDER MULTIOBRIGAÇÕES - Fundo de Investimento Mobiliário Aberto de | |||
| Obrigações de Taxa Variável (8) | Investment fund | Portugal | Full |
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In compliance with IAS 27 and SIC 12, the Bank's consolidated financial statements include special purpose entities (SPE) created for securitization operations, given that the Bank retains most of the risks and benefits of their activity, namely the bonds issued by these entities with a higher degree of subordination (Note 45). These entities are referred to above as Leasetotta Ltd or Hipototta FTC (securitised loans funds) and Hipototta PLC or Ltd. (entities which acquired the participating units issued by the securitised loan funds).
During the year 2013, the Bank increased its participation in the Fundo de Investimento Imobiliário - Novimovest managed by Santander Asset Management, SGFIM, S.A. ("SAM"), to hold a share of more than 50%. According to the accounting policy adopted by the Bank, the investment funds are consolidated (by the full consolidation method) when control exists, i.e., when more than 50% of their participating units are held.
From July 1, 2013, the Bank started to consolidate that Fund.
For the above referred reasons, as at December 31, 2013, the Bank also consolidated Fundo de Investimento Mobiliário Aberto de Obrigações de Taxa Variável – Santander Multiobrigações, also managed by SAM.
On December 31, 2013, the Funds consolidated for the first time during the year, their activity, the percentage of ownership held by the Bank and the amount incurred in their acquisition were as follows:
| Entity | Developed Activity |
% Participation | Amount Paid |
|---|---|---|---|
| Fundo de Investimento Imobiliário Aberto - Novimovest | Real estate Investment fund |
71.60% | 275,910 |
| Fundo de Investimento Mobiliário Aberto de Obrigações de Taxa Variável - Santander Multiobrigações |
Securities Investment fund |
64.32% | 239,249 |
Since the participating units in the investment funds referred to above were recorded at their fair value, determined based on the value of the participating units disclosed periodically by SAM in the Portuguese Securities Market Commission (CMVM) site, and given that all the subscriptions of participating units were based on that source of valuation, no goodwill was generated on these acquisitions. Moreover, all subscriptions of participating units in those funds had cash in return.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013, the balance sheet of those funds was as follows:
| Novimovest | Multiobrigações | Total | |
|---|---|---|---|
| Securities portfolio | 3,151 | 344,421 | 347,572 |
| Real estate portfolio | 449,758 | - | 449,758 |
| Accounts receivables | 23,257 | - | 23,257 |
| Cash and banks | 513 | 28,150 | 28,663 |
| Accruals and deferrals | 419 | 2,019 | 2,438 |
| 477,098 | 374,590 | 851,688 | |
| Fund Capital | 360,442 | 371,951 | 732,393 |
| Adjustments and provisions | 5,285 | 580 | 5,865 |
| Accounts payable | 104,260 | 1,718 | 105,978 |
| Accruals and Deferrals | 7,111 | 341 | 7,452 |
| 477,098 | 374,590 | 851,688 |
On December 31, 2013, the consolidated net income includes a loss of tEuros 18,428 attributable to Novimovest Fund.
In December 2013, the Bank, through Santander - Asset Management, SGPS, S.A., sold 100% of its shares in Santander Asset Management, SGFIM, S.A. and in Santander Pensões, S.A., to an entity of the Santander Group, recording a gain of tEuros 12,588, calculated as follows:
| Santander Asset Management, SGFIM, S.A. |
Santander Pensões, S.A. |
Total | ||
|---|---|---|---|---|
| Net assets sold | 25,440 | 3,472 | 28,912 | |
| Cash received | 37,400 | 4,100 | 41,500 | |
| Gain on the operation | 12,588 |
This caption is made up as follows:
| 337,841 ====== |
352,365 ====== |
|
|---|---|---|
| European Central Bank | 116,135 ----------- |
141,602 ------------ |
| Cash Demand deposits at Central Banks: |
221,706 | 210,763 |
| 2013 | 2012 |
In accordance with European Central Bank Regulation 2,818/98, dated December 1, as from January 1, 1999 credit institutions established in Member States shall maintain minimum cash reserves at the participating National Central Banks. The basis for determining the amount of the reserves consists in all deposits at central banks and financial and monetary entities outside the Euro Zone and all deposits of clients repayable in less than two years' time, to which 1% is applied and 100,000 Euros is deducted from the amount calculated. The minimum cash reserve requirements earn interest at the average of the rates for the principal refinancing operations of the European Central Bank System.
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| ====== | ====== | |
|---|---|---|
| 552,921 | 385,323 | |
| ----------- | ---------- | |
| Cheques for collection | 1,532 | 1,621 |
| Demand deposits | 496,556 | 321,138 |
| Balances due from foreign banks | ||
| Demand deposits | 756 | 490 |
| Cheques for collection | 54,077 | 62,074 |
| Balances due from domestic banks | ||
| 2013 | 2012 | |
| This caption is made up as follows: |
On December 31, 2013 and 2012, sub captions "Cheques for collection" correspond to cheques drawn by third parties over other credit institutions which, in general, are compensated in the following days.
On December 31, 2013 and 2012, the caption "Balances due from foreign banks – Demand deposits" included deposits in the amount of tEuros 165,375 and of tEuros 188,916, respectively, which are mobilized as the fulfilment of certain obligations towards third parties, occurs.
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Financial assets held for trading | ||
| Derivatives with positive fair value | 1,599,893 | 2,031,856 |
| Securities – Debt instruments | 346,070 | - |
| Securities - Participating units | 3,152 | 233,639 |
| ------------- 1,949,115 |
------------- 2,265,495 |
|
| ======= | ======= | |
| Financial liabilities held for trading | ||
| Derivatives with negative fair value | ( 1,619,768 ) | ( 2,048,743 ) |
| Net balance of the fair value | -------------- | -------------- |
| of derivative financial instruments | ( 19,875 ) | ( 16,887 ) |
| ====== | ======= |
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012 the caption of derivative financial instruments is made up as follows:
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities | Net | Assets | Liabilities | Net | ||
| (Note 12) | (Note 12) | ||||||
| FRA's | - | - | - | 227 | - | 227 | |
| Forwards | 1,250 | 1,311 | (61) | 576 | 746 | (170) | |
| Swaps | |||||||
| Currency swaps | 1,119 | 7,400 | (6,281) | 3,179 | 18,900 | (15,721) | |
| Interest rate swaps | 1,203,389 | 1,217,597 | (14,208) | 1,687,138 | 1,689,107 | (1,969) | |
| Equity swaps | 76,883 | 76,233 | 650 | 113,516 | 112,843 | 673 | |
| Options | 137,907 | 137,912 | (5) | 22,343 | 22,343 | - | |
| Caps & Floors | 179,345 | 179,315 | 30 | 204,877 | 204,804 | 73 | |
| 1,599,893 | 1,619,768 | (19,875) | 2,031,856 | 2,048,743 | (16,887) |
On December 31, 2013, the captions of derivative financial instruments include amounts of approximately tEuros 187,800 and tEuros 168,000, respectively, of "Credit Value Adjustments" and "Debit Value Adjustments".
On December 31, 2013 and 2012, almost all derivative financial instruments for trading were covered "back-to-back" with Banco Santander, S.A..
On December 31, 2013, the caption "Securities - Debt instruments" is made up as follows:
| Book |
|---|
| Value |
| 76,613 |
| 23,583 |
| 7,667 |
| 238,207 |
| 346,070 |
As at December 31, 2013 and 2012, the caption "Securities - Participating units" corresponds to the following real estate funds:
| 2013 | 2012 | |
|---|---|---|
| Fundo Maxirent Fundo Santander Multiobrigações Others |
3,152 - - |
- 233,613 26 |
| --------- | ----------- | |
| 3,152 | 233,639 | |
| ===== | ====== |
On December 31, 2013, the Bank started to consolidate by the full integration method Fundo Santander Multiobrigações.
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2012 this caption corresponded exclusively to Portuguese Treasury Bonds that fell due in September 2013.
Interest and valuation results of those bonds at fair value until the date of reimbursement were reflected in the income statement caption "Result of assets and liabilities at fair value through profit or loss" (Note 35).
This caption is made up as follows:
| 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Value | ||||||||
| adjustments | ||||||||
| Acquisition | Interest | resulting from | Fair Value Reserve | Book | ||||
| cost | receivable hedging operations | Positive | Negative | Total | Impairment | Value | ||
| (Note 26) | (Note 23) | |||||||
| Debt instruments | ||||||||
| Issued by residents | ||||||||
| Treasury Bonds | 2,130,470 | 29,161 | 105,608 | 106 | (136,469) | (136,363) | (231) | 2,128,645 |
| Other Portuguese Government entities | 479,002 | 1,119 | - | 13,155 | (1,456) | 11,699 | - | 491,820 |
| Other residents | ||||||||
| Acquired in securitization operations | 86,505 | 87 | - | - | (23,349) | (23,349) | - | 63,243 |
| Unsubordinated debt | 416,584 | 8,013 | - | 7,662 | (11,220) | (3,558) | (231) | 420,808 |
| Subordinated debt | 128,233 | 36 | - | - | (7,256) | (7,256) | (11,193) | 109,820 |
| Issued by non-residents | ||||||||
| Foreign government entities | 1,007,249 | 23,108 | 120,005 | 109 | (75,105) | (74,996) | - | 1,075,366 |
| Equity instruments | ||||||||
| Issued by residents | ||||||||
| Valued at fair value | 121,633 | - | - | 374 | (326) | 48 | (42,655) | 79,026 |
| Valued at cost | 19,732 | - | - | - | - | - | (6,683) | 13,049 |
| Issued by non-residents | ||||||||
| Valued at fair value | 16 | - | - | - | - | - | - | 16 |
| Valued at cost | 1,205 - |
- | - | - | - | - | (745) | 460 |
| 4,390,629 | 61,524 | 225,613 | 21,406 | (255,181) | (233,775) | (61,738) | 4,382,253 |
| 2012 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Value | ||||||||
| adjustments | ||||||||
| Acquisition | Interest | resulting from | Fair Value Reserve | Book | ||||
| cost | receivable hedging operations | Positive | Negative | Total | Impairment | Value | ||
| (Note 26) | (Note 23) | |||||||
| Debt instruments | ||||||||
| Issued by residents | ||||||||
| Treasury Bonds | 1,612,565 | 25,395 | 155,226 | 461 | (229,662) | (229,201) | (252) | 1,563,733 |
| Other Portuguese Government entities | 420,456 | 3,385 | - | - | (9,442) | (9,442) | - | 414,399 |
| Other residents | ||||||||
| Acquired in securitization operations | 93,047 | 88 | - | - | (27,688) | (27,688) | - | 65,447 |
| Unsubordinated debt | 170,285 | 579 | - | - | (25,481) | (25,481) | (230) | 145,153 |
| Subordinated debt | 127,294 | 28 | - | - | (10,808) | (10,808) | (15,674) | 100,840 |
| Issued by non-residents | ||||||||
| Foreign government entities | 1,007,573 | 23,111 | 166,351 | 294 | (207,771) | (207,477) | - | 989,558 |
| Other non-resident | ||||||||
| Other | ||||||||
| Equity instruments | ||||||||
| Issued by residents | ||||||||
| Valued at fair value | 234,432 | - | - | 670 | (2,939) | (2,269) | (36,114) | 196,049 |
| Valued at cost | 20,192 | - | - | - | - | - | (5,967) | 14,225 |
| Issued by non-residents | ||||||||
| Valued at fair value | ||||||||
| Valued at cost | 1,206 - |
- | - | - | - | - | (746) | 460 |
| 3,687,050 | 52,586 | 321,577 | 1,425 | (513,791) | (512,366) | (58,983) | 3,489,864 |
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
As at December 31, 2013 and 2012, the captions Treasury Bonds and Foreign government entities include capital gains of tEuros 225,613 and tEuros 321,577, respectively, relating to value adjustments resulting from hedging interest rate risk operations. These securities have the following characteristics:
| Gains | Gains | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Acquisition | Interest | in hedging | Fair value | Book | Acquisition | Interest | in hedging | Fair value | Book | ||
| cost | receivable | operations | reserve | Impairment | value | cost | receivable | operations | reserve | Impairment | value |
| 649,159 | 4,981 | 12,388 | (7,573) | - | 658,955 | 50,676 | 747 | - | 460 | - | 51,883 |
| - | - | - | - | - | - | 771,722 | 5,906 | 28,518 | (28,560) | - | 777,586 |
| 517,531 | 6,447 | - | (4,195) | - | 519,783 | 114,678 | 1,009 | - | (7,666) | - | 108,021 |
| 675,000 | 17,728 | 93,220 | (124,701) | - | 661,247 | 675,000 | 17,728 | 126,708 | (193,435) | - | 626,001 |
| 288,293 | - | - | 106 | - | 288,399 | - | - | - | - | - | - |
| 487 | 5 | - | - | (231) | 261 | 489 | 5 | - | - | (252) | 242 |
| 2,130,470 | 29,161 | 105,608 | (136,363) | (231) | 2,128,645 | 1,612,565 | 25,395 | 155,226 | (229,201) | (252) | 1,563,733 |
| 1,000,000 | 23,028 | 120,005 | (75,105) | - | 1,067,928 | 1,000,000 | 23,028 | 166,351 | (207,771) | - | 981,608 |
| - | |||||||||||
| 7,950 989,558 |
|||||||||||
| 2,553,291 | |||||||||||
| 7,249 1,007,249 3,137,719 |
80 23,108 52,269 |
- 120,005 225,613 |
2013 109 (74,996) (211,359) |
- - (231) |
7,438 1,075,366 3,204,011 |
7,573 1,007,573 2,620,138 |
83 23,111 48,506 |
- 166,351 321,577 |
2012 294 (207,477) (436,678) |
- - (252) |
At December 31, 2013 and 2012, the Bank held in its portfolio Treasury Bonds of Portugal and Spain amounting to tEuros 2,666,582 and tEuros 1,115,614 respectively, used as collateral in financing operations (Note 20).
On December 31, 2013 and 2012, the caption "Debt instruments – Issued by residents - Other residents" includes, amongst others, the following securities:
| 2013 | 2012 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Description | Acquisition cost |
Interest receivable |
Fair value reserve |
Impairment | Book value |
Acquisition cost |
Interest receivable |
Fair value reserve |
Impairment | Book value |
| Acquired in securitization operations | ||||||||||
| ENERGYON NO.2 CLASS A NOTES 2025 Other |
86,455 50 |
87 - |
(23,329) (20) |
- - |
63,213 30 |
92,998 49 |
88 - |
(27,673) (15) |
- - |
65,413 34 |
| 86,505 | 87 | (23,349) | - | 63,243 | 93,047 | 88 | (27,688) | - | 65,447 | |
| Unsubordinated debt | ||||||||||
| CAIXA GERAL DEPOSITOS 3.75% JAN/2018 GALP ENERGIA 2013/2017 SONAE DISTRIBUICAO SET 2007/2015 IBERWIND II P- CONSULTORIA SENIO A OBRIGAÇÕES ZON MULTIMÉDIA 2014 EDIA 2010/2030 AUTO SUECO 2009/2014 Other |
199,820 99,226 35,000 29,956 24,300 19,250 - 9,032 |
7,144 446 98 32 50 227 - 16 |
6,521 1,141 (2,295) (5,845) (294) (1,413) - (1,373) |
- - - - - - - (231) |
213,485 100,813 32,803 24,143 24,056 18,064 - 7,444 |
- - 70,000 32,078 24,300 19,250 15,000 9,657 |
- - 235 30 47 248 3 16 |
- - (10,290) (1,482) (1,011) (11,144) (1,202) (352) |
- - - - - - - (230) |
- - 59,945 30,626 23,336 8,354 13,801 9,091 |
| 416,584 | 8,013 | (3,558) | (231) | 420,808 | 170,285 | 579 | (25,481) | (230) | 145,153 | |
| Subordinated debt | ||||||||||
| CAIXA GERAL DEPOSITOS 3.875% 2017 TOTTA SEGUROS - OBRIG. SUB. 2002 Other |
111,360 14,000 2,873 |
32 2 2 |
- (5,150) (2,106) |
(11,193) - - |
100,199 8,852 769 |
110,492 14,000 2,802 |
24 1 3 |
- (8,428) (2,380) |
(15,674) - - |
94,842 5,573 425 |
| 128,233 | 36 | (7,256) | (11,193) | 109,820 | 127,294 | 28 | (10,808) | (15,674) | 100,840 |
The operations of commercial paper held in 2011 fell due in the first semester of 2012. On the other hand, the issues subscribed in 2012 and 2013 were recorded under the caption of "Loans and advances to customers".
In the last quarter of 2012, the Bank acquired to Santander Totta Seguros – Companhia de Seguros de Vida, S.A., subordinated bonds issued by the Caixa Geral de Depósitos, S.A. by an amount that was tEuros 15,674 above its fair value. Following this operation, impairment losses of the same amount were recorded. During the year 2013, the Bank reversed tEuros 4,481 of impairment losses at that securities due to its valuation.
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
As at December 31, 2013 and 2012, the caption "Equity instruments" includes the following securities:
| 2013 | 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| Description | Acquisition cost |
Fair value reserve |
Impairment | Book value |
Acquisition cost |
Fair value reserve |
Impairment | Book value |
| Valued at fair value | ||||||||
| FUNDO RECUPERAÇÃO FCR | 28.491 | - | (3.850) | 24.641 | 25.014 | (2.478) | - | 22.536 |
| FUNDO SOLUCAO ARRENDAMENTO | 24.915 | (319) | - | 24.596 | 15.000 | - | - | 15.000 |
| LUSIMOVEST - F.I. IMOBILIÁRIO | 26.379 | - | (1.998) | 24.381 | 26.379 | (461) | - | 25.918 |
| GARVAL - SOC.DE GARANTIA MUTUA S.A. | 1.759 | 51 | - | 1.810 | 2.086 | - | - | 2.086 |
| Other | 6.690 | 316 | (3.392) | 3.614 | 6.628 | 21 | (2.699) | 3.950 |
| NOVIMOVEST - F.I. IMOBILIÁRIO | - | - | - | - | 125.910 | 649 | - | 126.559 |
| Securities w ith 100% impairment losses | 33.415 | - | (33.415) | - | 33.415 | - | (33.415) | - |
| 121.649 | 48 | (42.655) | 79.042 | 234.432 | (2.269) | (36.114) | 196.049 | |
| Valued at cost | ||||||||
| SIBS - SOC.INTERBANCÁRIA DE SERVIÇOS SARL | 3.461 | - | - | 3.461 | 3.461 | - | - | 3.461 |
| ASCENDI NORTE - AUTO ESTRADAS DO NORTE S.A. (ex-AENOR) ASCENDI NORTE - AUTO ESTRADAS DO NORTE S.A. |
3.749 | - | (531) | 3.218 | 3.749 | - | (404) | 3.345 |
| (Supplementary capital contributions) (ex-AENOR) | 3.749 | - | (531) | 3.218 | 3.749 | - | - | 3.749 |
| Other | 4.951 | - | (1.339) | 3.612 | 6.158 | - | (2.028) | 4.130 |
| Securities w ith 100% impairment losses | 5.027 | - | (5.027) | - | 4.281 | - | (4.281) | - |
| 20.937 | - | (7.428) | 13.509 | 21.398 | - | (6.713) | 14.685 |
During the year 2013, following the subscription of several participating units, the Bank started to consolidate by the full integration method the real estate Fund Novimovest.
During the years 2013 and 2012, the Bank subscribed capital calls of the Fundo Recuperação, FCR in the amounts of tEuros 3,477 and tEuros 6,658, respectively. On December 31, 2013, the Bank held in its portfolio 28,427 participating units corresponding up to 4.12% of the capital of that Fund.
During 2012, the Bank subscribed 3,002,028 participating units of Solução Arrendamento – Fundo de Investimento Imobiliário Fechado para Arrendamento Habitacional amounting to tEuros 15,000. The capital was paid up in cash for the amount of tEuros 2 and the remainder was settled through the delivery of buildings. During the year 2013, the Bank has reinforced its position at that Fund in tEuros 9,915 through the delivery of buildings.
In the first semester of 2012 the Bank reclassified the participating units held in the real estate investment funds "Novimovest" and "Lusimovest" from the caption "Financial assets held for trading" to the caption "Available-for-sale financial assets". The impact of the reclassification of these participating units on the results and in the fair value reserve was the following:
Book value on the date of reclassification:
| . Participating units | 50,289 |
|---|---|
| . Credit rights of the Fund Lusimovest | 15,890 ---------- |
| 66,179 | |
| ---------- | |
| Fair value of the participating units reclassified on December 31, 2012 |
50,015 |
| ---------- | |
| Fair value reserve of the participating units reclassified in 2012 (excluding tax effect) |
( 274 ) |
| ==== |
On the other hand, in October 2012 the Bank reclassified the credit rights held over Lusimovest Fund, which at that date amounted to tEuros 24,500 (Note 18), from "Available-for-sale financial assets" to "Debtors and other applications – Other debtors".
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
At last, in the first semester of 2012, the Bank reclassified to the caption "Non-current assets held for sale" (Note 13), the 2,748,238 participating units valued at tEuros 18,663 of Fundo Fechado de Investimento Imobiliário Imorent, received in 2011, following a settlement agreement of a debt receivable on a loan granted. This Fund is in a liquidation process.
At December 31, 2013 and 2012, the negative fair value reserve resulting from the fair value valuation of the available for sale assets had the following percentages in relation to cost:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Acquisition cost |
Interest receivable |
Gains on hedging operations |
Negative reserve |
Book Value | ||
| Debt Instruments | ||||||
| . Between 0% and 25% | 2,968,000 | 52,608 | 225,613 | (224,250) | 3,021,971 | |
| . Between 25% and 50% | 100,505 | 88 | - | (28,500) | 72,093 | |
| . Over 50% | 2,873 | 3 | - | (2,105) | 771 | |
| 3,071,378 | 52,699 | 225,613 | (254,855) | 3,094,835 | ||
| Equity Instruments | ||||||
| . Between 0% and 25% | 24,988 | - | - | (326) | 24,662 | |
| 3,096,366 | 52,699 | 225,613 | (255,181) | 3,119,497 |
| 2012 | |||||
|---|---|---|---|---|---|
| Acquisition cost |
Interest receivable |
Gains on hedging operations |
Negative reserve |
Book Value | |
| Debt Instruments | |||||
| . Between 0% and 25% | 2,297,157 | 33,638 | 194,869 | (265,195) | 2,260,469 |
| . Between 25% and 50% | 778,551 | 17,817 | 126,708 | (223,703) | 699,373 |
| . Over 50% | 36,052 | 252 | - | (21,954) | 14,350 |
| 3,111,760 | 51,707 | 321,577 | (510,852) | 2,974,192 | |
| Equity Instruments | |||||
| . Between 0% and 25% | 51,393 | - | - | (2,939) | 48,454 |
| 3,163,153 | 51,707 | 321,577 | (513,791) | 3,022,646 | |
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Loans and advances to the European Central Bank | 1,600,000 | 900,000 |
| Loans and advances to other Portuguese banks | ------------- | ----------- |
| Deposits | 200,407 | - |
| Loans | 36,522 | 46,581 |
| Interest receivable | 3,523 | 261 |
| ---------- 240,452 |
--------- 46,842 |
|
| ----------- | --------- | |
| Loans and advances to other foreign banks | ||
| Deposits | 1,158,953 | 1,192,627 |
| Other applications | 172,463 | 709,874 |
| Very short term loans and advances | 68,797 | 216,402 |
| Interest receivable | 30,305 | 31,677 |
| ------------- 1,430,518 |
------------- 2,150,580 |
|
| ------------- | ------------- | |
| 3,270,970 | 3,097,422 | |
| ======== | ======== |
On December 31, 2013 and 2012, the caption "Loans and advances to other foreign banks - Other applications" includes margin accounts of tEuros 172,446 and tEuros 209,856, respectively.
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Unsecuritised credit | ||
| Domestic loans | ||
| To corporate clients | ||
| Loans | 3,898,652 | 4,148,746 |
| Current account loans | 1,011,146 | 1,195,764 |
| Factoring | 995,271 | 905,312 |
| Finance leasing | 460,387 | 455,646 |
| Overdrafts | 105,260 | 337,700 |
| Discount and credit securities | 144,180 | 137,300 |
| Other credits | 20,309 | 26,898 |
| To individuals | ||
| Mortgage loans | 12,554,234 | 11,745,561 |
| Consumer credit and other loans | 1,722,630 | 1,798,911 |
| Foreign loans | ||
| To corporate clients | ||
| Loans | 132,935 | 124,141 |
| Factoring | 57,974 | 42,147 |
| Current account loans | 11,615 | 9,558 |
| Finance leasing | 2,282 | 3,276 |
| Overdrafts | 440 | 2,559 |
| Other credits | 3,231 | 1,541 |
| Discount and credit securities | 128 | 85 |
| To individuals | ||
| Mortgage loans | 361,067 | 377,167 |
| Consumer credit and other loans | 32,147 | 39,894 |
| --------------- 21,513,888 |
--------------- 21,352,206 |
|
| Loans represented by securities | --------------- | --------------- |
| Non-subordinated debt securities | ||
| Commercial paper | 2,003,612 | 1,451,055 |
| ------------- | ------------- | |
| Non-derecognised securitised assets (Note 45) | ||
| Companies | ||
| Finance leasing | ||
| . Leasetotta no. 1 | 335,458 | 462,375 |
| To individuals | ||
| Loans | ||
| Mortgage loans | ||
| . Hipototta no. 1 | 177,830 | 200,164 |
| . Hipototta no. 4 | 1,103,384 | 1,177,349 |
| . Hipototta no. 5 | 945,687 | 997,032 |
| . Hipototta no. 7 | - | 1,217,069 |
| Finance leasing . Leasetotta no. 1 |
206 | 685 |
| ------------- 2,562,565 |
-------------- 4,054,674 |
|
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2013 | 2012 | |
|---|---|---|
| Overdue loans and interest | ||
| Up to 90 days | 61,292 | 45,689 |
| More than 90 days | 948,738 | 891,127 |
| Non-derecognised securitised assets | 63,934 ------------- |
89,771 ------------ |
| 1,073,964 | 1,026,587 | |
| --------------- 27,154,029 |
--------------- 27,884,522 |
|
| Interest receivable | --------------- | --------------- |
| Unsecuritised credit | 47,101 | 52,626 |
| Loans represented by securities | 4,791 | 4,161 |
| Non-derecognised securitised assets | 3,165 | 6,852 |
| Deferred expenses | 77,414 | 89,526 |
| Commissions associated with amortised cost (net) | ( 105,303 ) | ( 98,476 ) |
| Value adjustment of hedged assets | 4,200 ---------- |
6,100 ---------- |
| 31,368 | 60,789 | |
| --------------- 27,185,397 |
--------------- 27,945,311 |
|
| Impairment of loans and advances to customers (Note 23) | ( 1,077,876 ) | ( 965,662 ) |
| --------------- 26,107,521 |
--------------- 26,979,649 |
|
| ========= | ========= |
In the years 2013 and 2012, the Bank has sold mortgage loans and company loans portfolios, most of which had already been written off. As a result of these operations, net gains were recorded in 2013 and 2012 amounting to tEuros 2,321 and tEuros 4,117 respectively (Note 38).
On December 31, 2013 and 2012, the caption "Domestic loans - To individuals – Mortgage loans" includes loans allocated to the autonomous pool of the covered bonds issued by the Bank totalling tEuros 8,245,739 and tEuros 7,675,686, respectively (Note 22).
During 2012 the securitization operations Hipototta no. 11, Hipototta no. 12, BST SME no. 1 and Totta Consumer no. 1 were settled in advanced. During the year 2013 the securitization operation Hipototta no. 7 was settled in advance, which justified the increase in the caption of "Domestic loans – To individuals – Mortgage loans".
Changes in impairment of loans and advances to customers during 2013 and 2012 are presented in Note 23.
On December 31, 2013 and 2012, overdue loans and interest are made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Up to three months | 61,292 | 46,934 |
| Between three and six months | 32,115 | 97,166 |
| Between six months and one year | 163,839 | 247,703 |
| Between one year and three years | 627,701 | 515,542 |
| More than three years | 189,017 | 119,242 |
| ------------- | ------------ | |
| 1,073,964 | 1,026,587 | |
| ======= | ======= |
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The portfolio of loans to customers as at December 31, 2013 and 2012, by business sector is as follows:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Performing | Overdue | Total | % | |||
| Agriculture and forestry | 151,426 | 8,971 | 160,397 | 0.59% | ||
| Fishing | 3,122 | 35 | 3,157 | 0.01% | ||
| Mining | 23,673 | 1,739 | 25,412 | 0.09% | ||
| Manufacturing: | ||||||
| Food, beverage and tobacco | 402,914 | 10,408 | 413,322 | 1.52% | ||
| Textiles, leather and clothing | 172,748 | 7,202 | 179,950 | 0.66% | ||
| Wood and cork | 95,945 | 4,358 | 100,303 | 0.37% | ||
| Paper and publishing | 186,370 | 2,394 | 188,764 | 0.70% | ||
| Chemical industry | 176,807 | 3,483 | 180,290 | 0.66% | ||
| Ceramics, glass and cement | 247,283 | 2,088 | 249,371 | 0.92% | ||
| Metal-working | 114,182 | 7,608 | 121,790 | 0.45% | ||
| Machines and vehicles | 180,979 | 10,768 | 191,747 | 0.71% | ||
| Electricity, water and gas | 277,654 | 1,355 | 279,009 | 1.03% | ||
| Construction and public works | 1,354,987 | 220,361 | 1,575,348 | 5.80% | ||
| Commerce and hotels | ||||||
| Wholesale trading | 642,398 | 50,003 | 692,401 | 2.55% | ||
| Retail sale | 842,497 | 57,899 | 900,396 | 3.32% | ||
| Restaurants and hotels | 398,633 | 27,176 | 425,809 | 1.57% | ||
| Transport and communications | 540,288 | 13,912 | 554,200 | 2.04% | ||
| Non-monetary financial institutions | 702,904 | 31 | 702,935 | 2.59% | ||
| Government administration | 551,843 | 2,760 | 554,603 | 2.04% | ||
| Other service companies | 1,307,674 | 128,433 | 1,436,107 | 5.29% | ||
| Loans to individuals | 16,217,460 | 489,350 | 16,706,810 | 61.53% | ||
| Foreign loans | 339,914 | 5,851 | 345,765 | 1.27% | ||
| Holding companies | 811,988 | 9,967 | 821,955 | 3.03% | ||
| Other loans | 336,376 | 7,812 | 344,188 | 1.27% | ||
| 26,080,065 | 1,073,964 | 27,154,029 | 100.00% |
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| Performing | Overdue | Total | % | ||||
| Agriculture and forestry | 196.186 | 10.979 | 207.165 | 0,74% | |||
| Fishing | 22.465 | 885 | 23.350 | 0,08% | |||
| Mining | 76.740 | 3.341 | 80.081 | 0,29% | |||
| Manufacturing: | |||||||
| Food, beverage and tobacco | 377.099 | 12.505 | 389.604 | 1,40% | |||
| Textiles, leather and clothing | 367.730 | 17.189 | 384.919 | 1,38% | |||
| Wood and cork | 87.374 | 5.657 | 93.031 | 0,33% | |||
| Paper and publishing | 253.911 | 4.114 | 258.025 | 0,93% | |||
| Chemical industry | 139.790 | 1.108 | 140.898 | 0,51% | |||
| Ceramics, glass and cement | 227.827 | 3.158 | 230.985 | 0,83% | |||
| Metal-working | 140.131 | 7.236 | 147.367 | 0,53% | |||
| Machines and vehicles | 234.778 | 11.074 | 245.852 | 0,88% | |||
| Electricity, water and gas | 269.065 | 4.332 | 273.397 | 0,98% | |||
| Construction and public works | 1.535.568 | 204.745 | 1.740.313 | 6,24% | |||
| Commerce and hotels | |||||||
| Wholesale trading | 622.867 | 39.232 | 662.099 | 2,37% | |||
| Retail sale | 668.126 | 44.678 | 712.804 | 2,56% | |||
| Restaurants and hotels | 397.555 | 43.092 | 440.647 | 1,58% | |||
| Transport and communications | 614.601 | 15.413 | 630.014 | 2,26% | |||
| Non-monetary financial institutions | 449.620 | 4.232 | 453.852 | 1,63% | |||
| Government administration | 653.341 | 7.028 | 660.369 | 2,37% | |||
| Other service companies | 1.495.854 | 86.876 | 1.582.730 | 5,68% | |||
| Loans to individuals | 16.782.550 | 459.107 | 17.241.657 | 61,83% | |||
| Foreign loans | 369.628 | 4.588 | 374.216 | 1,34% | |||
| Holding companies | 738.732 | 31.100 | 769.832 | 2,76% | |||
| Other loans | 136.397 | 4.918 | 141.315 | 0,51% | |||
| 26.857.935 | 1.026.587 | 27.884.522 | 100,00% |
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the overdue and performing loans, with and without objective evidence of impairment, considering the segmentation for the purpose of calculating impairment losses, are made up as follows:
| 2013 | |||
|---|---|---|---|
| Overdue loans |
Performing loans |
Total loans |
|
| Loans granted to companies | |||
| Without objective evidence of impairment | - | 9,015,937 | 9,015,937 |
| With objective evidence of impairment | 562,922 | 324,947 | 887,869 |
| ----------- 562,922 |
--------------- 9,340,884 |
-------------- 9,903,806 |
|
| Mortgage loans | ----------- | --------------- | -------------- |
| Without objective evidence of impairment | - | 14,314,279 | 14,314,279 |
| With objective evidence of impairment | 339,470 ----------- |
664,763 --------------- |
1,004,233 --------------- |
| 339,470 | 14,979,042 | 15,318,512 | |
| Consumer credit | ----------- | --------------- | --------------- |
| Without objective evidence of impairment | - | 1,047,541 | 1,047,541 |
| With objective evidence of impairment | 35,496 --------- |
48,351 -------------- |
83,847 -------------- |
| 35,496 | 1,095,892 | 1,131,388 | |
| Loans granted through credit cards | --------- | -------------- | -------------- |
| Without objective evidence of impairment | - | 233,736 | 233,736 |
| With objective evidence of impairment | 35,152 | 3,508 | 38,660 |
| --------- 35,152 |
----------- 237,244 |
----------- 272,396 |
|
| --------- | ----------- | ----------- | |
| Other loans to individuals Without objective evidence of impairment |
- | 353,916 | 353,916 |
| With objective evidence of impairment | 100,924 | 73,087 | 174,011 |
| ---------- 100,924 |
----------- 427,003 |
----------- 527,927 |
|
| ----------- 1,073,964 |
--------------- 26,080,065 |
---------------- 27,154,029 |
|
| ======== | ========= | ========= |
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||
|---|---|---|---|
| Overdue | Performing | Total | |
| loans | loans | loans | |
| Loans granted to companies | |||
| Without objective evidence of impairment | - | 9,254,210 | 9,254,210 |
| With objective evidence of impairment | 547,969 ----------- |
217,601 -------------- |
765,570 --------------- |
| 547,969 | 9,471,811 | 10,019,780 | |
| Mortgage loans | ----------- | -------------- | --------------- |
| Without objective evidence of impairment | - | 14,823,138 | 14,823,138 |
| With objective evidence of impairment | 303,252 | 701,747 | 1,004,999 |
| ----------- 303,252 |
--------------- 15,524,885 |
--------------- 15,828,137 |
|
| Consumer credit | ----------- | --------------- | --------------- |
| Without objective evidence of impairment | - | 1,048,143 | 1,048,143 |
| With objective evidence of impairment | 37,458 | 62,869 | 100,327 |
| --------- 37,458 |
-------------- 1,111,012 |
-------------- 1,148,470 |
|
| Loans granted through credit cards | --------- | -------------- | -------------- |
| Without objective evidence of impairment | - | 248,211 | 248,211 |
| With objective evidence of impairment | 31,912 | 12,159 | 44,071 |
| --------- 31,912 |
----------- 260,370 |
----------- 292,282 |
|
| --------- | ----------- | ----------- | |
| Other loans to individuals | |||
| Without objective evidence of impairment | - | 412,022 | 412,022 |
| With objective evidence of impairment | 105,996 ---------- |
77,835 ----------- |
183,831 ----------- |
| 105,996 | 489,857 | 595,853 | |
| ------------- 1,026,587 |
--------------- 26,857,935 |
---------------- 27,884,522 |
|
| ======= | ========= | ========= |
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities Net |
Assets | Liabilities | ||||
| Fair value hedges | |||||||
| Interest rate swaps | 46,101 | 272,356 | (226,255) | 90,407 | 370,277 | (279,870) | |
| Equity swaps | 51,381 | 37,484 | 13,897 | 50,522 | 14,273 | 36,249 | |
| AutoCallable options | - | 49,951 | (49,951) | 2,656 | 71,361 | (68,705) | |
| Cash flow hedges | |||||||
| Interest rate swaps | 101,945 | 10,893 | 91,052 | 141,265 | - | 141,265 | |
| 199,427 | 370,684 | (171,257) | 284,850 | 455,911 | (171,061) |
On December 31, 2013 and 2012, derivatives were broken down as follows:
| 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Notional amounts | |||||||||
| Book | Up to 3 | Between 3 and Between 6 and | Between 1 | Over | Notional amounts | ||||
| Type of financial Instruments | Value | months | 6 months | 12 months | and 3 years | 3 years | Total | EUR | Other |
| 1. Derivatives held for trading (Note 7) | |||||||||
| Forwards | |||||||||
| . Purchased | 30,337 | 58,904 | 7,202 | 81 | - | 96,524 | 45,471 | 51,053 | |
| . Sold | (61) | 30,306 | 58,916 | 7,214 | 81 | - | 96,517 | 42,220 | 54,297 |
| Currency swaps | |||||||||
| . Purchased | (6,281) | 1,212,071 | - | - | - | - | 1,212,071 | - | 1,212,071 |
| . Sold | 1,218,426 | - | - | - | - | 1,218,426 | 1,218,426 | - | |
| Interest rate swaps | |||||||||
| Cross urrency swaps | |||||||||
| . Purchased | - | - | - | - | 19,848 | 85,295 | 105,143 | 105,143 | - |
| . Sold | - | - | - | (19,848) | (85,295) | (105,143) | - | (105,143) | |
| Other | (14,208) | 196,193 | 373,775 | 443,024 | 1,910,362 | 3,420,108 | 6,343,462 | 6,305,502 | 37,960 |
| Equity swaps | 650 | 60,402 | 39,107 | 58,837 | 818,959 | 1,137,609 | 2,114,914 | 2,114,914 | - |
| FRA's | - | 20,000 | - | - | - | - | 20,000 | 20,000 | - |
| Currency options | |||||||||
| . Purchased | (5) | 13,489 | 11,956 | 10,333 | - | - | 35,778 | - | 35,778 |
| . Sold | 13,489 | 11,956 | 10,333 | - | - | 35,778 | - | 35,778 | |
| Equity options | |||||||||
| . Purchased | - | - | 23,079 | - | 346,590 | - | 369,669 | 369,669 | - |
| . Sold | - | 23,079 | - | 346,590 | - | 369,669 | 369,669 | - | |
| Caps | 30 | 33,214 | 41,834 | 2,804 | 78,768 | 1,251,253 | 1,407,873 | 1,407,873 | - |
| Floors | - | - | 53,171 | - | 6,611 | 491,948 | 551,730 | 523,559 | 28,171 |
| (19,875) | 2,827,927 | 695,777 | 539,747 | 3,508,042 | 6,300,918 | 13,872,411 | 12,522,446 | 1,349,965 | |
| 2. Hedging derivatives | |||||||||
| Fair value hedges | |||||||||
| Interest rate swaps | |||||||||
| . Liabilities and loans | 41,625 | 48,320 | 46,510 | 891,120 | 191,241 | 212,566 | 1,389,757 | 1,389,757 | - |
| . Financial assets available for sale | (267,880) | - | - | 400,000 | - | 1,675,000 | 2,075,000 | 2,075,000 | - |
| AutoCallable options | (49,951) | 62,160 | 153,520 | 1,140 | 21,253 | - | 238,073 | 238,073 | - |
| Equity swaps | 13,897 | 185,571 | 207,162 | 586,121 | 2,426,063 | 34,303 | 3,439,220 | 3,270,182 | 169,038 |
| Cash flow hedges | |||||||||
| Interest rate swaps | |||||||||
| . Cash flow | 91,052 | 1,000,000 | - | - | 1,375,000 | 1,525,000 | 3,900,000 | 3,900,000 | - |
| FRA's | - | 2,200,000 | - | - | - | - | 2,200,000 | 2,200,000 | - |
| (171,257) | 3,496,051 | 407,192 | 1,878,381 | 4,013,557 | 3,446,869 | 13,242,050 | 13,073,012 | 169,038 |
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Notional amounts | |||||||||
| Book | Up to 3 | Between 3 and Between 6 and | Between 1 | Over | Notional amounts | ||||
| Type of financial Instruments | Value | months | 6 months | 12 months | and 3 years | 3 years | Total | EUR | Other |
| 1. Derivatives held for trading (Note 7) | |||||||||
| Forwards | |||||||||
| . Purchased | 27,327 | 15,579 | 3,176 | - | - | 46,082 | 14,566 | 31,516 | |
| . Sold | (170) | 27,428 | 15,603 | 3,168 | - | - | 46,199 | 24,243 | 21,956 |
| Currency swaps | |||||||||
| . Purchased | 1,258,038 | 38,379 | - | - | - | 1,296,417 | 19,393 | 1,277,024 | |
| . Sold | (15,721) | 1,273,385 | 38,371 | - | - | - | 1,311,756 | 1,292,770 | 18,986 |
| Interest rate swaps | |||||||||
| Other | (1,969) | 572,113 | 961,321 | 1,761,715 | 3,356,906 | 4,874,011 | 11,526,066 | 11,420,878 | 105,188 |
| Equity swaps | 673 | 6,223 | 1,646 | 6,415 | 479,683 | 170,714 | 664,681 | 652,815 | 11,866 |
| FRA's | 227 | 44,800 | 20,000 | 80,000 | 20,000 | - | 164,800 | 164,800 | - |
| Currency options | |||||||||
| . Purchased | 16,955 | 2,445 | - | - | - | 19,400 | - | 19,400 | |
| . Sold | - | 16,955 | 2,445 | - | - | - | 19,400 | - | 19,400 |
| Interest rate options | |||||||||
| . Purchased | 812 | 619 | 993 | 191 | 800,558 | 803,173 | 800,791 | 2,382 | |
| . Sold | - | 762 | 619 | 810 | 191 | - | 2,382 | - | 2,382 |
| Caps | 142 | 6,456 | 9,343 | 73,214 | 231,706 | 1,387,886 | 1,708,605 | 1,708,605 | - |
| Floors | (69) | - | - | 30,000 | 64,903 | 535,041 | 629,944 | 597,457 | 32,487 |
| (16,887) | 3,251,254 | 1,106,370 | 1,959,491 | 4,153,580 | 7,768,210 | 18,238,905 | 16,696,318 | 1,542,587 | |
| 2. Hedging derivatives | |||||||||
| Fair value hedges | |||||||||
| Interest rate swaps | |||||||||
| . Liabilities and loans | 83,928 | 32,081 | 1,008,950 | 197,190 | 1,110,756 | 270,106 | 2,619,083 | 2,585,397 | 33,686 |
| . Financial assets available for sale | (363,798) | - | - | - | 400,000 | 1,675,000 | 2,075,000 | 2,075,000 | - |
| AutoCallable options | (68,705) | 70,745 | 12,662 | 152,725 | 241,453 | - | 477,585 | 477,585 | - |
| Equity swaps | 36,249 | 159,592 | 52,006 | 158,633 | 2,389,435 | 57,458 | 2,817,124 | 2,678,041 | 139,083 |
| Cash flow hedges | |||||||||
| Interest rate swaps . Cash flow |
2,950,000 | ||||||||
| 141,265 (171,061) |
300,000 562,418 |
250,000 1,323,618 |
- 508,548 |
1,200,000 5,341,644 |
1,200,000 3,202,564 |
10,938,792 | 2,950,000 10,766,023 |
- 172,769 |
The Bank carries out derivative transactions in the scope of its activity, managing its own positions based on expectations for the market's evolution, satisfying customer's needs, or covering positions of a structural nature (hedging).
The Bank trades derivatives, namely exchange rates contracts, interest rate contracts or a combination of both. These transactions are carried out over-the-counter (OTC).
The negotiation of derivatives on over the counter (OTC) markets is based, usually, on a standard bilateral contract, which encompasses all the derivative transactions between the parties. In the case of professional relationships, an ISDA Master Agreement - International Swaps and Derivatives Association. In the case of customer relationships, a specific agreement of the Bank.
This type of contracts, anticipates compensation of liabilities in the event of default (the scope of such compensation is provided in the contract and is regulated by Portuguese law and, for contracts executed with foreign counterparties or under foreign law by the law applicable in their relevant jurisdictions).
The derivative contract may also include an agreement of collateralization of credit risk that is generated by the transactions covered by it. Note that the derivative contract between two parties normally includes all OTC derivative transactions made between those two parties, whether they are for hedging or not.
According to IAS 39, embedded derivatives are also separated and recorded as derivatives, in order to recognize, in profit or loss the fair value of those operations.
All derivatives (embedded or autonomous) are accounted at fair value.
Derivatives are also recorded in off balance sheet accounts by their theoretical value (notional amount). Notional amount is the reference amount for the calculation of payments and receipts resulting from the operations.
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The fair value corresponds to the price of the derivatives if they were traded on the market at the reference date. The evolution of the fair value of the derivatives is recognized in the appropriate balance sheet accounts and has an immediate impact in the income statement.
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Property received as settlement of defaulting loans | 268,035 | 245,155 |
| Own property for sale | 28,706 | 31,428 |
| Participating units (Note 9) | 18,663 | 18,663 |
| Equipment | 4,021 | 5,558 |
| Other properties | 100 | 100 |
| ----------- | ---------- | |
| 319,525 | 300,905 | |
| Impairment (Note 23) | ---------- ( 112,582 ) |
---------- ( 94,065 ) |
| ----------- 206,943 |
---------- 206,840 |
|
| ====== | ====== |
The changes occurred under "Non-current assets held for sale" in the years ended December 31, 2013 and 2012 were as follows:
| 2013 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31 2012 | December 31 2013 | ||||||||||
| Gross | Accumulated | Impairment (Note 23) | Gross | Accumulated | Net | ||||||
| amount | impairment | Increases | Sales | Transfers | Increases | Reversals | Utilization | amount | impairment | amount | |
| (Notes 9 and 15) | |||||||||||
| Property: | |||||||||||
| . Received as settlement of defaulting loans | 245,155 | (71,078) | 158,002 | (135,122) | - | (55,840) | 18,718 | 20,523 | 268,035 | (87,677) | 180,358 |
| . Ow n property for sale | 31,528 | (15,413) | 114 | (9,820) | 6,984 | (6,765) | 50 | 4,150 | 28,806 | (17,978) | 10,828 |
| Equipment | 5,559 | (3,574) | 5,477 | (7,015) | - | (3,914) | 3,376 | 1,185 | 4,021 | (2,927) | 1,094 |
| Participating units | 18,663 | (4,000) | - | - | - | - | - | - | 18,663 | (4,000) | 14,663 |
| 300,905 | (94,065) | 163,593 | (151,957) | 6,984 | (66,519) | 22,144 | 25,858 | 319,525 | (112,582) | 206,943 |
| 2012 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31 2011 | December 31 2012 | |||||||||||
| Gross | Accumulated | Impairment (Note 23) | Gross | Accumulated | Net | |||||||
| amount | impairment | Increases | Sales | Transfers | Increases | Reversals | Utilization | amount | impairment | amount | ||
| (Notes 9 and 15) | ||||||||||||
| Property: | ||||||||||||
| . Received as settlement of defaulting loans | 177,737 | (53,639) | 178,631 | (111,213) | - | (38,106) | 4,328 | 16,339 | 245,155 | (71,078) | 174,077 | |
| . Ow n property for sale | 26,625 | (10,757) | 55 | (507) | 5,355 | (5,024) | 292 | 76 | 31,528 | (15,413) | 16,115 | |
| Equipment | 3,982 | (2,785) | 2,808 | (1,231) | - | (1,485) | 610 | 86 | 5,559 | (3,574) | 1,985 | |
| Participating units | - | - | - | - | 18,663 | (4,000) | - | - | 18,663 | (4,000) | 14,663 | |
| 208,344 | (67,181) | 181,494 | (112,951) | 24,018 | (48,615) | 5,230 | 16,501 | 300,905 | (94,065) | 206,840 |
The Bank's intention is to immediately sell all properties received as settlement of defaulting loans. These properties are classified as non-current assets held for sale and are recorded upon their initial recognition at the lowest of their fair value less expected selling costs and the accounting value of the loans recovered. Subsequently, these assets are measured at the lowest of the initial recognition value and the fair value less costs to sell, and they are not depreciated. The unrealized losses on these assets, thus determined, are recognized in the income statement.
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The valuation of these properties is made in accordance with one of the following methodologies, applied according to the specific situation of each asset:
The market method has by reference the transaction values of similar and comparable properties to the asset being studied, obtained through market research, and carried out in the place where that asset is located.
The purpose of this method is to estimate the value of the property from the capitalization of its net rent discounted to the present moment, through the discounted cash flows methodology.
The cost method consists in determining the replacement value of the property taking into consideration the cost of building another one with identical functionality, less the amount of functional, physical and economical depreciation/obsolescence verified.
The valuations of the properties mentioned above are performed by specialized independent entities, which are accredited in the Portuguese Securities Market Commission (CMVM).
In 2011, following a debt settlement agreement referring to a loan granted, the Bank received 2,748,238 participating units of Fundo de Investimento Imobiliário Fechado - Imorent for an amount of tEuros 18,663. These participating units were initially recorded in the caption "Available for sale financial assets". Nevertheless, in the first semester of 2012, the Bank reclassified these participating units to this caption as it considers that they are available for immediate sale in their present condition and that the sale is probable in the short term (Note 9).
This caption is made up as follows:
| ====== | == | |
|---|---|---|
| 467,949 | - | |
| ----------- | --- | |
| Hotel | 18,191 | - |
| Properties held by Fundo Imobiliário Novimovest | 449,758 | - |
| 2013 | 2012 |
During the year 2013, following the subscription of several participating units, the Bank started to consolidate by the full integration method the Fundo Imobiliário Novimovest, which main assets are properties for rental.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31 2013, the properties held by Fundo Imobiliário Novimovest have the following characteristics:
| Land | |
|---|---|
| Urbanized | 47,809 |
| Non - Urbanized | 9,457 |
| Finished constructions | |
| Rented | 307,213 |
| Not rented | 85,279 |
| ---------- | |
| 449,758 | |
| ====== |
On the other hand, during the year 2013, the properties held by Fundo Imobiliário Novimovest generated, amongst others, the following revenues and annual charges:
| Rents | 22,744 |
|---|---|
| Taxes | ( 4,762 ) |
| Condominium expenses | ( 1,369 ) |
| Maintenance and repair expenses | ( 945 ) |
| Insurances | ( 316 ) |
| --------- | |
| 15,352 | |
| ===== |
Finally, during the first half of 2013, the Bank received in settlement of a non performing loan a hotel valuated at that date in tEuros18,660. Simultaneously, the Bank celebrated a lease contract for that property for a period of 1 year automatically renewable. On December 31, 2013, the Bank updated the fair value of that property.
The changes occurred under "Investment properties" for the year ended December 31, 2013 were as follows:
| Balances on | Changes in the | Balances on | |||||
|---|---|---|---|---|---|---|---|
| January 1, | consolidation | Fair value | December 31, | ||||
| 2013 | Increases | perimeter | valuation | Sales | 2013 | ||
| Properties held by Fundo Imobiliário Novimovest | - | - | 523,886 | (25,978) | (48,150) | 449,758 | |
| Hotel | - | 18,660 | - | (469) | - | 18,191 | |
| - | 18,660 | 523,886 | (26,447) | (48,150) | 467,949 |
The impact of the fair value valuation of investment properties is recorded in the income statement caption "Other operating income - Unrealized gains on investment properties" (Note 39).
Investment properties held by the Bank are valued mostly on an annual basis, using specialized independent entities, in accordance with the valuation methodologies described in Note 13.
(Translation of notes originally issued in Portuguese – Note 49) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013, the determination of the fair value of the investment properties in accordance with the levels defined in IFRS 13 was as follows:
| 31-12-2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Valuation techniques | |||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||
| Investment properties | - | - | 467,949 | 467,949 |
In compliance with the requirements of IFRS 13, for the investment properties with higher value in the Bank's portfolio at December 31, 2013, a summary of their main characteristics, the valuation techniques adopted and relevant inputs used in the estimation of their fair value are presented below:
| Property description | Status | Amount | Valuation method | Relevant inputs |
|---|---|---|---|---|
| Hotel Delfim - Alvor Hotel in Portimão |
Rented | 33,284 Income method / Cost method | Rent value by square meter Yield |
|
| Stª Cruz do Bispo - plots of land 1,2 and 3 Land in Matosinhos |
Rented | 31,796 Comparative market method / Residual value method | Yield Land price and construction and sale costs by square meter |
|
| Galerias Saldanha Residence Shoping center in Lisbon |
Rented | 31,006 Income method / Comparative market method | Rent value by square meter Yield |
|
| Hotel in Cascais | Rented | 18,191 Income method / Depreciated replacement cost method | Yield Ocupation rate |
|
| Warehouse in Perafita Warehouse in Matosinhos |
Rented | 17,315 Income method / Comparative market method | Yield Rent value by square meter |
|
| Antero de Quental Avenue, 9 Offices and shops in Ponta Delgada |
Rented | 12,441 Income method / Comparative market method | Yield Rent value by square meter |
|
| Estrada da Outurela, 119, Carnaxide Offices in Oeiras |
Rented | 12,399 Income method / Cost method | Yield Rent value by square meter |
|
| Golf courses "Vila Sol" - G1 and G2 Golf courses in Loulé |
Rented | 11,799 Income method / Cost method | Yield Rent value by square meter |
|
| Logistics parks SPC - warehouses 1 and 4 Warehouses in Vila Franca de Xira |
Rented | 10,823 Income method / Cost method | Yield Rent value by square meter |
|
| Alfena - Land in Valongo Land in Valongo |
Non - urban area |
8,224 Comparative market method / Cost method/ Residual value method | Land price and construction and sale costs by square meter |
|
| 187,278 |
If an increase in the rent value per square meter occurs or an increase in the occupancy rate or a decrease in the yield occurs, the fair value of the investment properties will increase. On the other hand, if an increase in the construction or sale costs occurs, the fair value of these investment properties will decrease.
Changes in these captions for the years ended on December 31, 2013 and 2012 are as follows:
| 2013 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31/12 /2012 |
nd/o Entra nce a the c lidati |
r exit of e ntitie s in erim eter |
Write | -offs | From | Tran sfers /to a sset s he ld Note |
rtizat | Fore xcha |
iffere | 31/12 | /2013 | |||||||
| Gros s |
Acc lated umu |
onso Gro ss |
on p Acc lated umu |
Gro ss |
Acc lated umu |
for s Gro ss |
ale ( 13) Acc lated umu |
Amo ion of th e |
Reve rsal o f |
ign e Gros s |
nge d nces Acc lated umu |
Gro ss |
Acc lated umu |
Net | ||||
| unt amo |
dep recia tion |
Impa irme nt |
unt amo |
dep recia tion |
Acq uisiti ons |
unt amo |
dep recia tion |
unt amo |
dep recia tion |
year | Impa irme nt |
unt amo |
dep recia tion |
unt amo |
dep recia tion |
Impa irme nt |
unt amo |
|
| Tang ible a sset s Prop erty |
(Not e 23) |
(Not e 23) |
(Not e 23) |
|||||||||||||||
| . Pro for o perty wn u se |
408 ,502 |
126,7 31 |
3,87 5 |
- | - | 5,92 2 |
1,010 | 412 | (8,56 9) |
(1,60 1) |
7,29 4 |
(32) | - | - | 404 ,845 |
132,0 12 |
3,84 3 |
268 ,990 |
| . Lea seho ld ex pend iture |
134,2 56 |
110,1 70 |
- | (258 ) |
(258 ) |
790 | 5,527 | 5,50 4 |
- | - | 6,57 8 |
- | (7) | (7) | 129,2 54 |
110,9 79 |
- | 18,27 5 |
| . Oth ty er pr oper |
306 | 4 | 20 | - | - | 6 | - | - | - | - | 2 | - | - | - | 312 | 6 | 20 | 286 |
| Tang ible a s in p sset rogre ss |
||||||||||||||||||
| . Pro perty for o wn u se |
131 | - | - | - | - | 406 | - | - | - | - | - | - | - | - | 537 | - | - | 537 |
| . Lea seho ld ex pend iture |
1 | - | - | - | - | 4 | - | - | - | - | - | - | - | - | 5 | - | - | 5 |
| 543, 196 |
236 ,905 |
3,89 5 |
(258 ) |
(258 ) |
7,128 | 6,53 7 |
5,916 | (8,56 9) |
(1,60 1) |
13,87 4 |
(32) | (7) | (7) | 534 ,953 |
242 ,997 |
3,86 3 |
288 ,093 |
|
| Equi nt pme |
||||||||||||||||||
| . Fur nitur e and fixtu res |
23,2 19 |
19,28 7 |
- | (669 ) |
(669 ) |
65 | 356 | 356 | - | - | 1,268 | - | (2) | (2) | 22,2 57 |
19,52 8 |
- | 2,72 9 |
| . M a chine d too ls ry an |
3,966 | 3,85 4 |
- | (187 ) |
(187 ) |
22 | 54 | 54 | - | - | 41 | - | (2) | (2) | 3,74 5 |
3,65 2 |
- | 93 |
| . Com pute r har dwar e |
124,7 25 |
113,0 64 |
- | (1,28 0) |
(1,24 5) |
2,72 0 |
1,066 | 1,032 | - | - | 4,75 6 |
- | (1) | (1) | 125,0 98 |
115,5 42 |
- | 9,55 6 |
| . Inte rior i llatio nsta ns |
92,3 46 |
84,12 0 |
- | (254 ) |
(254 ) |
3,170 | 3,35 6 |
3,34 4 |
(66) | (50) | 2,54 5 |
- | - | - | 91,84 0 |
83,0 17 |
- | 8,82 3 |
| . Veh icles |
17,70 8 |
11,97 0 |
- | (160 ) |
(133 ) |
2,59 7 |
1,007 | 928 | - | - | 2,22 4 |
- | (3) | (2) | 19,13 5 |
13,13 1 |
- | 6,00 4 |
| . Sec urity equip t men |
27,5 93 |
26,9 04 |
- | - | - | 154 | 731 | 731 | - | - | 333 | - | - | - | 27,0 16 |
26,5 06 |
- | 510 |
| . Oth uipm ent er eq |
5,80 1 |
4,00 8 |
- | - | - | 139 | 210 | 210 | - | - | 616 | - | - | - | 5,73 0 |
4,414 | - | 1,316 |
| . Tan gible ets in ass prog ress |
- | - | - | - | - | 2 | - | - | - | - | - | - | - | - | 2 | - | - | 2 |
| 295,3 58 |
263 ,207 |
- | (2,55 0) |
(2,48 8) |
8,86 9 |
6,78 0 |
6,65 5 |
(66) | (50) | 11,78 3 |
- | (8) | (7) | 294 ,823 |
265 ,790 |
- | 29,0 33 |
|
| Othe r tan gible ets ass |
||||||||||||||||||
| . Lea sed e quipm ent |
281 | 281 | - | - | - | - | - | - | - | - | - | - | - | - | 281 | 281 | - | - |
| . Wo rk of Art |
1,537 | - | - | (1) | - | - | - | - | - | - | - | - | - | - | 1,536 | - | - | 1,536 |
| 1,818 | 281 | - | (1) | - | - | - | - | - | - | - | - | - | - | 1,817 | 281 | - | 1,536 | |
| 840,3 72 |
500 ,393 |
3,89 5 |
(2,80 9) |
(2,74 6) |
15,99 7 |
13,3 17 |
12,57 1 |
(8,63 5) |
(1,65 1) |
25,6 57 |
(32) | (15) | (14) | 831,5 93 |
509 ,068 |
3,86 3 |
318,6 62 |
|
| Intan gible ets ass |
||||||||||||||||||
| Soft hase d ware purc |
342 ,991 |
277 ,149 |
- | (1,99 9) |
(1,94 5) |
20,8 00 |
758 | 758 | - | - | 34,12 0 |
- | - | - | 361,0 34 |
308 ,566 |
- | 52,4 68 |
| Goo dwill Othe r |
3,58 5 29 |
3,58 5 |
- | - | - | - | 121 | 121 | - | - | - | - | - | - | 3,46 4 |
3,46 4 |
- | - |
| 346,6 05 |
29 280 ,763 |
- - |
(29) (2,02 8) |
(29) (1,97 4) |
- 20,8 00 |
- 879 |
- 879 |
- - |
- - |
- 34,12 0 |
- - |
- - |
- - |
- 364 ,498 |
- 312,0 30 |
- - |
- 52,4 68 |
In the year ended December 31, 2013, the column "Entrance and / or exit of entities in the consolidation perimeter" refers to Santander Asset Management, SGFIM, S.A. and Santander Pensões, S.A..
(Translation of notes originally issued in Portuguese – Note 49)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| Tran sfers From /to a sset s hel d 31/12 /2011 Write -offs for s ale (N ote 1 3) Betw een f ixed a ssets Amo rtizat ion Fore ign e xcha nge d iffere 31/12 /2012 nces Gros Acc umul ated Gros Acc umul ated Gro Acc lated Gro Acc lated of th Reve rsal o f Gros Acc lated Gro Acc umul ated Net s s ss umu ss umu e s umu ss unt depr eciat ion Impa irmen t Acq uisiti unt depr eciat ion unt depr eciat ion unt depr eciat ion Impa irme nt Impa irmen t unt depr eciat ion unt depr eciat ion Impa irmen t unt amo ons amo amo amo year amo amo amo (Not e 23) (Not e 23) (No te 23 ) (Not e 23) Tang ible a sset s Prop erty . Pro for o 415,4 72 120,7 14 2,48 6 351 1,548 3 (6,91 4) (1,60 2) 1,144 (164) 7,78 6 1,389 (3) 408, 502 126,7 31 3,87 5 277, 896 perty wn u se - - . Lea seho ld exp endit 134,2 30 105,2 17 912 1,470 (166 ) (166 ) (713 ) 163 6,42 9 (7) (3) 134,2 56 110,17 0 24,0 86 ure - - - - - . Oth 347 1 43 41 1 (23) 2 306 4 20 282 ty er pr oper - - - - - - - - Tang ible a in pr ssets ogre ss . Pro for o 240 336 (445 ) 131 131 perty wn u se - - - - - - - - - - - - - - . Lea seho ld exp endit 1 1 1 ure - - - - - - - - - - - - - - - - (7,08 0) (1,76 8) (14) (1) (23) (10) (1) 550,2 90 225, 932 2,52 9 1,599 1,589 1,473 14,21 6 1,389 543, 196 236, 905 3,89 5 302, 396 Equip ment . Furn iture and f ixture (1) 23,16 0 17,68 9 192 133 133 1,732 23,2 19 19,28 7 3,93 2 s - - - - - - - - - (2) . M ac hiner y and tool 3,922 3,817 57 13 13 52 3,966 3,85 4 112 s - - - - - - - - - . Com pute r hard 124,0 15 107,1 15 1,524 814 678 6,62 7 124,7 25 113,0 64 11,66 1 ware - - - - - - - - - - (59) (16) (2) . Inte rior i nstal latio 91,26 8 82,5 45 2,153 1,031 1,029 14 1 2,62 1 1 92,3 46 84,12 0 8,22 6 ns - - - - (3) . Veh icles 18,48 2 11,00 2 2,07 0 2,84 1 2,62 9 3,59 7 17,70 8 11,97 0 5,73 8 - - - - - - - - - . Sec urity equip ment 27,8 05 26,7 37 59 272 272 439 1 27,5 93 26,9 04 689 - - - - - - - - - . Oth uipm ent 5,66 3 3,35 9 178 41 41 692 1 (2) 5,80 1 4,00 8 1,793 er eq - - - - - - - - 294,3 15 252, 264 6,23 3 5,145 4,79 5 (59) (16) 14 1 15,76 0 (7) 295, 358 263, 207 32,15 1 - - - - - Othe r tang ible a ssets . Lea sed e quipm ent 281 281 281 281 - - - - - - - - - - - - - - - . Wor k of A rt 1,535 2 1,537 1,537 - - - - - - - - - - - - - - - 1,816 281 2 1,818 281 1,537 - - - - - - - - - - - - - 846,4 21 478, 477 2,52 9 7,83 2 6,73 4 6,26 8 (7,13 9) (1,78 4) 29,9 76 1,389 (23) (8) (8) 840, 372 500, 393 3,89 5 336, 084 - - Intan gible ts asse Softw urcha sed 317,4 82 243, 252 13,93 3 11,57 6 33,8 97 342, 991 277, 149 65,8 42 are p - - - - - - - - - - - Intan gible ts in 11,57 6 (11,5 76) asse prog ress - - - - - - - - - - - - - - - - - Goo dwill 3,58 5 3,58 5 3,58 5 3,58 5 - - - - - - - - - - - - - - - Othe 29 29 29 29 r - - - - - - - - - - - - - - - 321,0 96 246, 866 25,5 09 33,8 97 346, 605 280, 763 65,8 42 - - - - - - - - - - - - |
2012 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
The caption "Software purchased" at December 31, 2013 and 2012 includes software acquired from Santander Tecnologia y Operaciones A.E.I.E., a european economic interest group owned by Santander Group, amounting to, net of depreciation, tEuros 50,783 and tEuros 64,273, respectively.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Effective participation (%) |
Book value |
Effective participation (%) value |
Book | |
| Investments in associates | ||||
| Domestic | ||||
| Partang, SGPS, S.A. | 49.00 | 115,396 | 49.00 | 111,284 |
| Unicre - Instituição Financeira | ||||
| de Crédito, S.A. (Unicre) | 21.50 | 31,265 | 21.50 | 30,168 |
| Benim - Sociedade Imobiliária, S.A | 25.81 | 2,129 | 25.81 | 2,202 |
| ----------- 148,790 |
---------- 143,654 |
|||
| ---------- | ---------- | |||
| Impairment of investments in associates (Note 23) | ||||
| Benim – Sociedade Imobiliária, S.A. (Benim) | ( 1,060 ) | ( 660 ) | ||
| ---------- 147,730 |
----------- 142,994 |
|||
| ====== | ====== |
Under the terms of the agreement signed in August 2008 between Caixa Geral de Depósitos, S.A. (CGD) and BST, on June 4, 2009, Santotta – Internacional, SGPS, S.A. (Santotta) and BST founded Partang, SGPS, S.A. (Partang) through the delivery of shares of Banco Caixa Geral Totta de Angola, S.A. ("BCGTA"), previously denominated by Banco Totta de Angola, S.A., corresponding to 50.5% and 0.5% of its share capital, respectively. Under the terms of the above referred agreement, on July 2, 2009 CGD subscribed the total amount of Parting's capital increase. After this operation Partang was 50% owned by CGD and 50% by the Santander Group (of which 49.51% was held by the subsidiary Santotta – Internacional SGPS, S.A. (Santotta) and 0.49% was held directly by BST).
On December 31, 2013 and 2012, Partang, SGPS, S.A. owned 51% of Banco Caixa Geral Totta de Angola.S.A..
Under the terms of the agreement entered into between BST and CGD, on July 5, 2010 CGD exercised its purchase option over 1% of Parting's share capital. Following this operation, the Bank owned 49% of the share capital of Partang, having lost its joint control over BCGTA. In accordance with IAS 27, the Bank measured the remaining participating interest at the date when joint control was lost at fair value. Thus, the participation started to be recognised in accordance with the equity method of accounting.
On the other hand, the Bank has a put option to sell its participation in Partang to CGD, exercisable during the period of 4 years starting July 2, 2011. Additionally, CGD has a second call option on the Bank's participation in Partang, with a limit of 80% of Parting's share capital and voting rights, to be exercise in the first month of the fifth anniversary of the date of the capital increase of Partang (July 2, 2009).
The participation in Benim – Sociedade Imobiliária, S.A. is held indirectly by the Bank through Totta Urbe – Empresa de Administração e Construções, S.A. (Totta Urbe).
The summary of the financial data from the main associated companies of the Bank in December 31, 2013 was made up as follows:
| Partang | |
|---|---|
| Balance sheet | |
| Current assets | 10,558 |
| Non current assets | 142,084 |
| 152,642 | |
| Current liabilities | 10,555 |
| Non current liabilities | 1,373 |
| 11,928 | |
| Shareholders equity excluding net income | 115,098 |
| Net income for the year | 25,616 |
| Statement of income | |
| Operating income | 25,643 |
| Income before tax | 25,643 |
| Net income for the year | 25,616 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, these captions were made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Current tax assets: | ||
| . Corporate income tax receivable . Other |
16,973 485 --------- |
3,889 357 --------- |
| 17,458 | 4,246 | |
| ===== | ===== | |
| Current tax liabilities: | ||
| . Corporate income tax payable | 3,361 | 1,898 |
| . Tax on rental income (Fundo Novimovest) | 4,762 | - |
| . Corporate income tax payable from previous years | 6,190 | 2,789 |
| ------- 14,313 |
-------- 4,687 |
|
| ===== | ==== | |
| Deferred tax assets | ||
| . Relating to temporary differences | 500,144 | 604,209 |
| . Tax losses carried forward | 40,531 | 27,369 |
| ----------- | ----------- | |
| 540,675 | 631,578 | |
| Deferred tax liabilities | ====== | ====== |
| . Relating to temporary differences | 54,759 | 71,442 |
| . Relating to tax credits | 3,765 | 3,861 |
| --------- | ---------- | |
| 58,524 | 75,303 | |
| ===== | ===== |
On December 31, 2013, the caption "Current tax assets – Corporate income tax receivable" includes tEuros 9,807 paid by the Bank concerning corrections made by the Tax Authorities to its tax declarations in previous years. Since the Bank does not agree with the fundamentals the Bank appealed from those corrections.
On December 31, 2013 and 2012, income tax for the year was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Current tax Of the year Special contribution of the banking sector Consortiums ("ACE's") Other |
( 20,214 ) ( 10,802 ) ( 1,597 ) ( 2,708 ) --------- |
( 23,715 ) ( 11,842 ) ( 1,482 ) 7,446 --------- |
| ( 35,321 ) | ( 29,593 ) | |
| Deferred tax | --------- | --------- |
| Increases and reversals of temporary differences | ( 8,941 ) | 44,803 |
| (Expense)/Income for tax credits | ( 500 ) | ( 500 ) |
| ---------- | --------- | |
| ( 9,037 ) ---------- |
44,303 --------- |
|
| ( 44,358 ) | 14,710 | |
| ===== | ===== |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2013 | |||||
|---|---|---|---|---|---|
| Balances on Comprehensive | Income | Balances on | |||
| 31/12/2012 | Income | statement | Other | 31/12/2013 | |
| Provisions/Impairment temporarily not accepted for tax purposes | |||||
| Assets | 235,044 | - | 6,238 | - | 241,282 |
| Liabilities relating to potential capital losses | (5,755) | - | 3,756 | - | (1,999) |
| Revaluation of tangible assets | (3,861) | - | 96 | - | (3,765) |
| Pensions: | |||||
| Early retirement pensions | 27,317 | - | (3,073) | - | 24,244 |
| Retirement pensions | 162,482 | - | (22,711) | - | 139,771 |
| Transfers of pension liabilities to the Social Security | 5,442 | - | (521) | - | 4,921 |
| Long service bonuses | 7,871 | - | 552 | - | 8,423 |
| Securitization operations: | |||||
| . Premium/discount on debt issued | (283) | - | 32 | - | (251) |
| . Recognition of accrual of interest from notes w ith greater subordination | (8,850) | - | 277 | - | (8,573) |
| . Results on intra-Group securities purchases | (18,034) | - | (383) | - | (18,417) |
| Tax losses carried forw ard | 27,369 | - | 14,062 | (900) | 40,531 |
| Valuations temporarily not accepted for tax purposes: | |||||
| Tangible and intangible assets | 22 | - | (1,540) | - | (1,518) |
| Cash flow hedges | (28,852) | 15,760 | - | - | (13,092) |
| Financial assets available for sale | 148,587 | (79,604) | - | - | 68,983 |
| Deferred commissions | 3,263 | - | (3,263) | - | - |
| Capital gains | (1,815) | - | 48 | - | (1,767) |
| Application of the equity method in the | |||||
| valuation of investments in associated companies | (461) | (157) | 4 | (184) | (798) |
| Long-term incentives | 3,568 | - | (1,073) | - | 2,495 |
| Investments in subsidiaries, associates and joint ventures | 3,226 | - | (1,541) | - | 1,685 |
| Other | (5) | - | 3 | (2) | (4) |
| 556,275 | (64,001) | (9,037) | (1,086) | 482,151 |
| 2012 | |||||
|---|---|---|---|---|---|
| Balances on Comprehensive | Income | Transfers and | Balances on | ||
| 31/12/2011 | income | statement | settlements | 31/12/2012 | |
| Provisions/Impairment temporarily not accepted for tax purposes | |||||
| Assets | 180.675 | - | 54.369 | - | 235.044 |
| Liabilities relating to potential capital losses | (8.324) | - | 2.569 | - | (5.755) |
| Revaluation of tangible assets | (4.109) | - | 248 | - | (3.861) |
| Pensions: | |||||
| Early retirement pensions | 19.543 | - | 7.774 | - | 27.317 |
| Retirement pensions | 193.852 | - | (31.370) | - | 162.482 |
| Transfers of pension liabilities to the Social Security | 6.047 | - | (605) | - | 5.442 |
| Long service bonuses | 7.471 | - | 400 | - | 7.871 |
| Pension Fund - London Branch | 193 | - | (193) | - | - |
| Securitization operations: | |||||
| . Premium/discount on debt issued | (439) | - | 156 | - | (283) |
| . Recognition of accrual of interest from notes w ith greater subordination | (8.622) | - | (228) | - | (8.850) |
| . Results on intra-Group securities purchases | (17.130) | - | (904) | - | (18.034) |
| Tax losses carried forw ard | 13.690 | - | 13.679 | - | 27.369 |
| Valuations temporarily not accepted for tax purposes: | |||||
| Tangible and intangible assets | 77 | - | (55) | - | 22 |
| Cash flow hedges | (16.978) | (11.874) | - | - | (28.852) |
| Financial assets available for sale | 272.587 | (124.000) | - | - | 148.587 |
| Deferred commissions | 2.663 | - | 600 | - | 3.263 |
| Capital gains | (1.854) | - | 39 | - | (1.815) |
| Application of the equity method in the | |||||
| valuation of investments in associated companies | (402) | (420) | (59) | 420 | (461) |
| Long-term incentives | 3.098 | - | 470 | - | 3.568 |
| Investments in subsidiaries, associates and joint ventures | 5.809 | - | (2.583) | - | 3.226 |
| Other | (2) | - | (4) | 1 | (5) |
| 647.845 | (136.294) | 44.303 | 421 | 556.275 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In 2013 and 2012, the reconciliation between the nominal and effective income tax rate is as follows:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Income | Income | |||
| Tax Rate | Amount | Tax Rate | Amount | |
| Income before income tax | 124,640 | 73,358 | ||
| Income tax based on the current tax rate | ||||
| in force in Portugal and countries where the subsidiaries are established | 22.67% | 28,252 | -28.84% | (21,154) |
| Insufficiency/(excess) of tax estimate of the previous year | 1.67% | 2,084 | 3.30% | 2,421 |
| Impact on the effective tax rate of income from associated companies | -3.35% | (4,172) | -4.69% | (3,438) |
| Constitution/(reversal) of taxed provisions | 4.74% | 5,903 | 5.13% | 3,761 |
| Impact of the income tax rate change in deferred tax calculation | -3.93% | (4,902) | 0.00% | - |
| Deductible tax losses (consortiums) | 0.01% | 8 | -0.44% | (323) |
| Tax exempt dividends | -0.20% | (246) | -0.42% | (307) |
| Tax benefits | -0.31% | (386) | -0.46% | (341) |
| Non tax deductible costs | -0.90% | (1,122) | 0.00% | - |
| Special contribution of the banking sector | 8.67% | 10,802 | 16.14% | 11,842 |
| Autonomous taxation | 2.17% | 2,699 | 5.07% | 3,720 |
| Tax losses of previous years that became recoverable | 1.43% | 1,777 | 0.00% | - |
| Non taxable results from the sale of investments | -2.98% | (3,713) | 0.00% | - |
| Other | 5.92% | 7,375 | -14.85% | (10,891) |
| Income tax for the year | 35.61% | 44,358 | -20.06% | (14,710) |
Following the changes of the tax legislation for the year 2014, the Bank started to measure and recognize the deferred tax assets related to tax losses carried forward at a rate of 23% (25% at December 31, 2012) and the deferred taxes associated with temporary differences at a rate of 29.5% (29% on December 31, 2012).
The dividends distributed to the Bank by its subsidiaries and associated companies in Portugal are not taxed in result of the arrangements laid down in Article 46 of the Corporate Income Tax Code providing for the elimination of double taxation on distributed profits.
Tax authorities may review the Bank's tax situation during a period of four years, except in the case of tax losses carried forward, as well as of any other tax deduction or credit, in which cases the right to the corrections expires in the year of this right.
The Bank was subject to tax inspections for the years up to 2011, inclusive. As a result of the inspection for 2011, the Bank was subject to an additional assessment of Corporate Income Tax relating to autonomous taxation and several corrections to the tax losses reported in that year. In terms of stamp duty the Bank was also subject to an additional assessment. The corrections made to the tax base related to several matters, including, amongst others, adjustments for early retirement and use of provisions for overdue loans. Some of these corrections are only temporary.
As regards the additional assessments received (this years or in past years), the Bank has paid the assessment amounts. However, the Bank has challenged the majority of the additional tax assessments.
The Bank records in the liability caption "Provisions" the amount considered to be necessary to cover the risks of the additional tax assessments received as well as contingencies relating to prior years not yet reviewed by the Tax Authorities (Note 23).
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Other available funds | 315 | 333 |
| Debtors and other applications | ||
| Debtors resulting from operations with futures | 12,548 | 3,895 |
| VAT recoverable | 1,905 | 548 |
| Debtors for loan interest subsidy | 4,617 | 5,939 |
| Other debtors | 56,481 | 47,850 |
| Debtors and other applications - overdue capital | 6,441 | 528 |
| Debtors - unrealised capital | 38 | 38 |
| Shareholders' loans: | ||
| Fafer - Empreendimentos Urbanísticos e de Construção, S.A. Gestínsua - Aquisições e Alienações de Património Imobiliário |
364 | 364 |
| e Mobiliário, S.A. | 126 | 126 |
| Propaço - Sociedade Imobiliária de Paço de Arcos, Lda. | 2,443 | 2,443 |
| Gold, other precious metals, coins and medals | 2,503 | 2,465 |
| Promises and other assets received as settlement of defaulting loans | 72,477 | 104,672 |
| Income receivable | 66,441 | 25,314 |
| Other income receivable - securitization | 4,991 | 10,767 |
| Deferred costs on participations in consortiums | ||
| NORTREM - Aluguer Material Ferroviário ACE | 2,093 | 2,762 |
| TREM - Aluguer Material Circulante ACE | - | 137 |
| TREM II - Aluguer Material Circulante ACE | 216 | 443 |
| Deferred costs | 6,891 | 7,893 |
| Over-the-counter transactions pending settlement | - | 28 |
| Asset transactions pending settlement | 40,803 | 253 |
| ----------- 281,693 ----------- |
----------- 216,798 ----------- |
|
| Impairment losses (Note 23): | ||
| Shareholders' loans | ( 2,222 ) | ( 2,042 ) |
| Assets received as settlement of defaulting loans | ( 14,933 ) | ( 22,921 ) |
| Debtors and other applications | ( 5,943 ) | ( 879 ) |
| --------- ( 23,098 ) |
---------- ( 25,842 ) |
|
| ----------- 258,595 |
----------- 190,956 |
|
| ====== | ====== |
The caption "Debtors and other applications - Debtors resulting from operations with futures" corresponds to the current accounts maintained by the Bank in international financial institutions relating to the trading of futures. Futures margin accounts are recorded under the caption " Creditors and other resources - Creditors resulting from operations with futures" (Note 25).
The balance of the caption "Debtors and other applications - Other debtors" at December 31, 2013 and 2012, includes the amount of the credit rights held over Lusimovest Fund totalling tEuros 24,500, relating to redemptions settled on account of that Fund. Additionally, in December 31, 2013, that caption included tEuros 16,488 relating to amounts receivable by Novimovest Fund from sales of property made during the year.
On December 31, 2013, the caption "Debtors and other applications - Debtors and other applications - Overdue capital" includes tEuros 5,017 relating to overdue rents from properties leased by Novimovest Fund. For those rents, the Fund recognized impairment losses in the same amount.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012 the caption "Income receivable" includes mainly commissions receivable from Santander Totta Seguros – Companhia de Seguros de Vida, S.A. for the sale of its insurance products (tEuros 61,647 and tEuros 13,712, respectively, on December 31, 2013 and 2012).
On December 31, 2013 and 2012, the caption "Other income receivable - securitization" corresponds to the amount receivable on swap agreements entered into between the Bank and the Santander Group and between the Santander Group and the securitization vehicles. The amount payable relating to these transactions is recorded in the caption "Other liabilities – Accrued costs – relating to swap agreements" (Note 25).
On December 31, 2013, the caption "Asset transactions pending settlement " includes, amongst others, the following debtors and (creditors) balances:
tEuros 45,022 associated with interest receivable from swaps established with some Portuguese public sector entities (Note 50);
tEuros 30,128 relating to cheques, values in transit and other transactions to be settled;
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Resources of the European Central Bank | ||
| Demand Deposits | 6,200,000 | 5,837,226 |
| Interest payable | 41,394 | - |
| Resources of other Central Banks | ||
| Demand deposits | 16 | 16 |
| ------------- | ------------ | |
| 6,241,410 | 5,837,242 | |
| ======== | ======== |
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Resources of domestic credit institutions | ||
| Deposits | 136,765 | 31,778 |
| Interest payable | 39 | 47 |
| Other resources | - | 2 |
| ----------- | ---------- | |
| 136,804 ---------- |
31,837 ---------- |
|
| Resources of foreign credit institutions Sale operations with repurchase agreement |
3,082,444 | 1,115,715 |
| Deposits | 711,980 | 745,391 |
| Very short term resources | 41,261 | 48,976 |
| Other resources | 202,242 | 7,236 |
| Interest payable | 327 | 419 |
| ------------- 4,038,254 |
------------- 1,917,737 |
|
| ------------- 4,175,058 |
------------- 1,949,574 |
|
| ======== | ======== |
On December 31, 2013 and 2012, the caption "Resources of foreign credit institutions – Sale operations with repurchase agreement", is made up as follows, by type of underlying asset:
| 2013 | ||||
|---|---|---|---|---|
| Assets | Principal | Interest | Deferred costs | Total |
| Treasury Bonds - Portugal | 1,595,639 | 891 | (270) | 1,596,260 |
| Treasury Bonds - Spain | 1,070,943 | 426 | (191) | 1,071,178 |
| Bonds issued by BST Group in securitization operations | 362,758 | 287 | (84) | 362,961 |
| Covered bonds issued by BST | 52,029 | 395 | (379) | 52,045 |
| 3,081,369 | 1,999 | (924) | 3,082,444 | |
| 2012 | ||||
| Assets | Principal | Interest | Deferred costs | Total |
| Treasury Bonds - Portugal | 146,305 | 46 | (9) | 146,342 |
| Treasury Bonds - Spain | 969,309 | 123 | (59) | 969,373 |
| 1,115,614 | 169 | (68) | 1,115,715 |
On December 31, 2013, the caption "Resources of foreign credit institutions – Other resources" includes tEuros 200,000 related to loans obtained from the European Investment Bank (EIB).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 (Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Term deposits Demand deposits Structured deposits Savings deposits Advance notice deposits |
13,062,376 4,595,022 2,766,498 36,599 18,267 --------------- |
14,431,667 4,890,448 1,764,839 55,081 21,365 --------------- |
| 20,478,762 | 21,163,400 | |
| Interest payable Cheques and orders payable Value adjustments of hedging operations |
--------------- 156,382 75,843 ( 3,986 ) ----------- |
--------------- 171,186 117,294 45,294 ----------- |
| 228,239 | 333,774 | |
| --------------- 20,707,001 ========= |
--------------- 21,497,174 ======== |
|
| 22. DEBT SECURITIES | ||
| This caption is made up as follows: | ||
| 2013 | 2012 | |
| Bonds in circulation Covered bonds Issued Repurchased Interest from covered bonds Bonds issued in securitization operations Issued Repurchased Interest payable Cash bonds Issued Repurchased Interest payable |
7,132,300 ( 6,225,750 ) 5,365 2,714,309 ( 1,538,636 ) ( 1,496 ) 614,557 ( 255,543 ) 11,023 ------------- 2,426,129 ------------- |
5,880,000 ( 4,003,450 ) 23,576 4,270,551 ( 3,004,781 ) ( 1,597 ) 660,960 ( 33,446 ) 9,782 ------------- 3,801,595 ------------- |
| Other EMTN Program Repurchased Interest payable |
141,830 ( 2,940 ) 4 ----------- 138,894 |
160,530 - 1,123 -------------- 161,653 |
| Value adjustments of hedging operations | ----------- ( 30,862 ) ------------- 2,534,161 |
-------------- ( 9, 729 ) ------------- 3,953,519 |
| ======== | ======== |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In accordance with the law, the holders of covered bonds have a special credit privilege on the cover pool, which is a guarantee of the debt to which the bondholders have access in case of insolvency of the issuer.
The conditions of the covered bonds and cash bonds are described in Annex I.
Between May of 2008 and December of 2013, BST made eleven issues of covered bonds under the "€ 12,500,000,000 Covered Bonds Programme". As at December 31, 2013 and 2012, the covered bonds had an autonomous pool of assets comprised by:
| 2013 | 2012 | |
|---|---|---|
| Loans and advances to customers (Note 11) | 8,245,739 | 7,675,686 |
| Interest on loans Commissions |
8,649 ( 36,575 ) |
8,888 ( 34,574 ) |
| Deferred expenses | 11,222 | 14,552 |
| -------------- 8,229,035 |
------------ 7,664,552 |
|
| Hedging derivatives | -------------- 11,642 |
------------ 42,106 |
| -------------- 8,240,677 |
------------ 7,706,658 |
|
| ======== | ======== |
Changes in the debt issued by the Bank during the years 2012 and 2013 were the following:
| Bonds in circulation | EMTN Programme | |||
|---|---|---|---|---|
| Issued | Repurchased | Issued | Repurchased | |
| Balances on December 31, 2011 | 6,370,376 | (3,591,441) | 2,289,570 | (22,920) |
| . Issues made | 250,000 | - | 900 | - |
| . Issues repaid | (79,416) | 8,332 | (2,129,940) | 800,790 |
| . Issues repurchased | - | (453,787) | - | (777,870) |
| Balances on December 31, 2012 | 6,540,960 | (4,036,896) | 160,530 | - |
| . Issues made | 3,250,000 | - | - | - |
| . Issues repaid | (2,044,103) | 1,004,624 | (18,700) | - |
| . Issues repurchased | - | (3,479,021) | - | (2,940) |
| Balances on December 31, 2013 | 7,746,857 | (6,511,293) | 141,830 | (2,940) |
The debt issues repurchased during the year 2013 originated losses in the amount of approximately tEuros 11,100, which have been recorded under the caption "Result from the sale of other assets" (Note 38). Nevertheless, those losses were offset by gains on settlement of derivative transactions.
In 2012 the caption "Issues repaid" includes the early repayment of bonds issued under the EMTN program, in the amount of tEuros 739,860.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the Bank had the following bonds issued under the Euro Medium Term Notes Programme:
| 2013 | 2012 | |
|---|---|---|
| Bonds with remuneration indexed to baskets of shares . Maturity between one and three years |
109,530 | 109,530 |
| Bonds with remuneration indexed to Euribor . Maturity between three and five years |
32,300 | 32,300 |
| Fixed rate bonds | ||
| . Maturity up to one year | - | 18,700 |
| ----------- 141,830 |
---------- 160,530 |
|
| ===== | ====== |
Changes in bonds issued in securitization operations during 2013 and 2012 were as follows:
| Bonds | ||
|---|---|---|
| Issued | Repurchased | |
| Balances on December 31, 2011 | 4,972,943 | (2,748,088) |
| Redemption | (702,392) | 68,117 |
| Repurchases: - Hipototta No. 1 - Class A - Hipototta No. 4 - Class A - Hipototta No. 5 - Class A2 |
- - - - |
(26,140) (241,122) (57,548) (324,810) |
| Balances on December 31, 2012 | 4,270,551 | (3,004,781) |
| Redemption Repurchases: |
(1,556,242) | 1,479,075 |
| - Hipototta No. 4 - Class A | - | (9,803) |
| - Hipototta No. 5 - Class A2 | - | (3,127) |
| - | (12,930) | |
| Balances on December 31, 2013 | 2,714,309 | (1,538,636) |
In 2013 and 2012 the Bank repurchased bonds issued in securitization operations, recording capital gains of tEuros 2,942 and tEuros 84,193, respectively (Note 38).
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Changes in provisions and impairment in the years 2013 and 2012 were as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Changes in the consolidation |
|||||||
| 31/12/2012 | perimeter | Increases | Reversals | Utilizations | 31/12/2013 | ||
| Provision for tax contingencies | 5,246 | - | 835 | (1,607) | - | 4,474 | |
| Provision for pensions and other charges Impairment and provisions for guarantees |
31,846 | - | 9,863 | - | (16,231) | 25,478 | |
| and other sureties given | 14,893 | - | 540 | (6,309) | - | 9,124 | |
| Other provisions | 20,286 | 168 | 14,002 | (10,394) | (1,099) | 22,963 | |
| 72,271 | 168 | 25,240 | (18,310) | (17,330) | 62,039 | ||
| 2012 | |||||||
| 31/12/2011 | Increases | Reversals | Utilizations | Other | 31/12/2012 | ||
| Provision for tax contingencies | 16,683 | 263 | - | - | (11,700) | 5,246 | |
| Provision for pensions and other charges | 29,957 | 14,049 | - | (12,160) | - | 31,846 | |
| Impairment and provisions for guarantees | |||||||
| and other sureties given | 8,254 | 15,570 | (8,931) | - | - | 14,893 | |
| Other provisions | 20,588 | 7,749 | (5,879) | (2,172) | - | 20,286 | |
| 75,482 | 37,631 | (14,810) | (14,332) | (11,700) | 72,271 | ||
| Changes in the | 2013 Reversal of |
||||||
| consolidation | Impairment | impairment | Impairment | ||||
| 31-12-2012 | perimeter | losses | losses | Utilizations | 31-12-2013 | recovery | |
| Impairment of loans and advances to customers (Note 11): | |||||||
| Domestic loans Foreign loans |
319,663 2,120 |
- - |
69,020 - |
(101,647) (463) |
- 287,036 - 1,657 |
- - |
|
| Non-derecognized securitized loans | 22,742 | - | 187 | (8,260) | - 14,669 |
- | |
| Other securitized loans and receivables | 3,460 | - | 8,836 | - | - 12,296 |
- | |
| Impairment of overdue loans and interest (Note 11): | |||||||
| Domestic loans Foreign loans |
543,351 17,269 |
- - |
296,873 6,671 |
(54,264) (2,892) |
(91,192) (245) |
694,768 20,803 |
(7,456) - |
| Non-derecognized securitized loans | 54,480 | - | 13,329 | (20,318) | (844) | 46,647 | - |
| Other securitized loans and receivables | 2,577 | - | - | (2,577) | - | - - |
|
| 965,662 | - | 394,916 | (190,421) | (92,281) | 1,077,876 | (7,456) | |
| Impairment of other financial assets: Impairment of available-for-sale |
|||||||
| financial assets (Note 9) | 58,983 | - | 11,100 | (8,345) | - 61,738 |
- | |
| Impairment of investments in associated companies (Note 16) | 660 | - | 400 | - | - 1,060 |
- | |
| 59,643 | - | 11,500 | (8,345) | - 62,798 |
- | ||
| Impairment of non-financial assets: |
| Impairment of non-financial assets: | |||||||
|---|---|---|---|---|---|---|---|
| Non-current assets held for sale (Note 13) | 94,065 | - | 66,519 | (22,144) | (25,858) | 112,582 | - |
| Tangible assets (Note 15) | 3,895 | - | - | (32) | - | 3,863 | - |
| Other assets (Note 18) | 25,842 | 5,095 | 12,340 | (19,856) | (323) | 23,098 | - |
| 123,802 | 5,095 | 78,859 | (42,032) | (26,181) | 139,543 | - | |
| 1,149,107 | 5,095 | 485,275 | (240,798) | (118,462) | 1,280,217 | (7,456) |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| 31-12-2011 | Impairment losses |
Reversal of impairment losses |
Utilizations | Other | 31-12-2012 | Impairment recovery |
|
| Impairment of loans and advances to customers (Note 11): | |||||||
| Domestic loans | 219,831 | 142,063 | (40,966) | (1,265) | - | 319,663 | - |
| Foreign loans | 869 | 1,251 | - | - | - | 2,120 | - |
| Non-derecognized securitized loans | 67,955 | 2,580 | (47,793) | - | - | 22,742 | - |
| Other securitized loans and receivables | 3,094 | 366 | - | - | - | 3,460 | - |
| Impairment of overdue loans and interest: | |||||||
| Domestic loans | 325,816 | 336,800 | (29,683) | (89,582) | - | 543,351 | (8,544) |
| Foreign loans | 10,095 | 8,405 | (913) | (318) | - | 17,269 | (96) |
| Non-derecognized securitized loans | 44,203 | 23,302 | (11,151) | (1,874) | - | 54,480 | - |
| Other securitized loans and receivables | 51 | 2,526 | - | - | - | 2,577 | - |
| 671,914 | 517,293 | (130,506) | (93,039) | - | 965,662 | (8,640) | |
| Impairment of other financial assets: Impairment of available-for-sale financial assets (Note 9) |
64,670 | 17,280 | (936) | (22,031) | - | 58,983 | - |
| Impairment of investments in associated companies (Note 16) | 500 | 160 | - | - | - | 660 | - |
| 65,170 | 17,440 | (936) | (22,031) | - | 59,643 | - | |
| Impairment of non-financial assets: | |||||||
| Non-current assets held for sale (Note 13) | 67,181 | 48,615 | (5,230) | (16,501) | - | 94,065 | - |
| Tangible assets (Note 15) | 2,529 | 1,389 | (23) | - | - | 3,895 | - |
| Other assets (Note 18) | 21,653 | 9,196 | (4,810) | (197) | - | 25,842 | - |
| 91,363 | 59,200 | (10,063) | (16,698) | - | 123,802 | - | |
| 828,447 | 593,933 | (141,505) | (131,768) | - | 1,149,107 | (8,640) |
On December 31, 2013 and 2012, the provision for pensions and other charges is made up as follows:
| ===== | ===== | |
|---|---|---|
| 25,478 | 31,846 | |
| Directors (Note 46) | 15,598 --------- |
13,735 ---------- |
| Supplementary pension plan of the Board of | ||
| Restructuring plans | 9,880 | 18,111 |
| 2013 | 2012 |
During the year 2013, the reduction recorded in the caption "Impairment and provisions for guarantees and other sureties given" resulted essentially from the reduction of lines of commercial paper (Note 29) and the execution of some guarantees.
On December 31, 2013 and 2012 the caption "Other provisions" includes:
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| ==== | ===== | |
|---|---|---|
| 4,307 | 4,311 | |
| -------- | ------- | |
| Interest payable | 32 | 36 |
| Repurchased securities | ( 284,265 ) | ( 284,265 ) |
| 288,540 | 288,540 | |
| ------------- | ---------- | |
| Subordinated Perpetual Bonds CPP 2001 | 4,275 | 4,275 |
| Subordinated Perpetual Bonds BSP 2001 | 13,818 | 13,818 |
| Subordinated Perpetual Bonds Totta 2000 | 270,447 | 270,447 |
| 2013 | 2012 | |
The conditions of the subordinated liabilities are detailed in Annex II.
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Creditors and other resources | ||
| Creditors resulting from operations with futures (Note 18) | 12,548 | 3,895 |
| Other resources | ||
| Secured account resources | 38,474 | 42,912 |
| Collateral account resources | 3,250 | 892 |
| Other resources | 1,438 | 1,411 |
| Public sector | ||
| VAT payable | 3,047 | 7,828 |
| Withholding taxes | 17,622 | 24,073 |
| Social Security contributions | 3,883 | 3,873 |
| Other | 84 | 12 |
| Collections on behalf of third parties | 162 | 161 |
| Contributions to other health systems | 1,534 | 1,526 |
| Other creditors | ||
| Creditors under factoring contracts | 45,443 | 36,178 |
| Creditors for the supply of goods | 9,196 | 1,635 |
| Other creditors | 15,483 | 8,398 |
| Accrued costs: | ||
| Relating to personnel | ||
| Long service bonuses | 28,552 | 27,140 |
| Vacation and vacation subsidy | 31,211 | 31,559 |
| Other variable remuneration | 24,593 | 17,592 |
| Other personnel costs | 381 | 789 |
| General administrative costs | 25,007 | 33,828 |
| Relating to swap agreements (Note 18) | 5,185 | 10,526 |
| Other | 5,146 | 6,384 |
| Liabilities with pensions (Note 44): | ||
| Total liabilities | 882,308 | 829,811 |
| Fair value of the Pension Fund's assets | ( 871,649 ) | ( 816,279 ) |
| Other deferred income | 1,873 | 1,977 |
| Amounts to be settled with banks and customers | ||
| Liability operations to be settled | 7,229 | 2,865 |
| Other | 900 | 24,431 |
| ---------- | ------------ | |
| 292,900 | 303,417 | |
| ====== | ======= | |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the amounts to be settled with banks and customers correspond essentially to inter-bank electronic transfers that were cleared in the first days of the following year.
On December 31, 2013 and 2012 the Bank's share capital was represented by 656,723,284 shares, with a nominal value of 1 Euro each, fully subscribed and paid up by the following shareholders:
| 2013 | |||
|---|---|---|---|
| Number | % of | ||
| of shares | participation | Amount | |
| Santander Totta, SGPS, S.A. | 641,269,620 | 97.65 | 641,270 |
| Taxagest, SGPS, S.A. (treasury shares) | 14,593,315 | 2.22 | 14,593 |
| Treasury shares | 249,427 | 0.04 | 249 |
| Other | 610,922 | 0.09 | 611 |
| ----------------- | --------- | ----------- | |
| 656,723,284 | 100.00 | 656,723 | |
| ========== | ===== | ====== |
| 2012 | ||||
|---|---|---|---|---|
| Number | % of | |||
| of shares | participation | Amount | ||
| Santander Totta, SGPS, S.A. | 641,269,620 | 97.65 | 641,270 | |
| Taxagest, SGPS, S.A. (treasury shares) | 14,593,315 | 2.22 | 14,593 | |
| Treasury shares | 125,169 | 0.02 | 125 | |
| Other | 735,180 | 0.11 | 735 | |
| ---------------- | --------- | ----------- | ||
| 656,723,284 | 100.00 | 656,723 | ||
| ========== | ===== | ====== |
During the years 2013 and 2012, the Bank proceeded with the acquisition of 124,258 and 26,239 treasury shares by the amount of tEuros 752 and tEuros 160, respectively.
Within the terms of Dispatch no. 408/99, of 4 June, published in the Diário da República – I Série B, no. 129, the share premium, amounting to tEuros 193,390, cannot be used to pay out dividends or to purchase treasury shares.
The other equity instruments refer to supplementary capital contributions made by the shareholder Santander Totta, SGPS, S.A., which neither bear interest nor have a defined redemption term. These instruments can only be redeemed by decision of the Bank's Board of Directors with the previous approval of the Bank of Portugal.
During the years 2013 and 2012, the Bank did not distribute dividends.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the revaluation reserves were made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Revaluation reserves | ||
| Reserves resulting from the fair value valuation: | ||
| Available for sale financial assets (Note 9) | ( 233,775 ) | ( 512,366 ) |
| Available for sale financial assets of companies | ||
| consolidated under the equity method | 3,317 | 2,521 |
| Cash flow hedging instruments | 44,382 | 99,490 |
| Actuarial gains and losses (Note 44) | ||
| Pension Fund - BST | ( 621,069 ) | ( 583,394 ) |
| Pension Fund of the London branch of BST | ( 6,076 ) | ( 5,966 ) |
| Actuarial gains and losses of companies consolidated | ||
| under the equity method | ( 1,378 ) | ( 1,349 ) |
| Foreign exchange differences in consolidation | ( 10,208 ) | ( 5,857 ) |
| Legal revaluation reserves as at the transition date to the IFRS | 23,245 | 23,245 |
| ----------- ( 801,562 ) |
-------------- ( 983,676 ) |
|
| Deferred tax reserves | ----------- | -------------- |
| For temporary differences: | ||
| Reserves resulting from the fair value valuation: | ||
| Available for sale financial assets | 69,983 | 148,587 |
| Available for sale financial assets of companies | ||
| consolidated under the equity method | ( 788 ) | ( 622 ) |
| Cash flow hedging instruments | ( 13,092 ) | ( 28,852 ) |
| Tax impact of actuarial gains and losses | 176,863 | 169,416 |
| Tax impact from the change in accounting policies | ||
| of companies consolidated under the equity method | 400 | 391 |
| Relating to the revaluation of tangible assets | ( 3,861 ) | ( 4,314 ) |
| Relating to the revaluation of tangible assets | ||
| of companies consolidated under the equity method | ( 132 ) | ( 132 ) |
| ----------- 228,373 |
----------- 284,474 |
|
| ----------- ( 573,189 ) |
------------ ( 699,202 ) |
|
| ====== | ====== |
Deferred taxes were calculated based on current legislation and reflect the best estimate of the impact of realization of potential capital gains or losses included in the revaluation reserves.
The revaluation reserves cannot be used to pay dividends or to increase capital.
During 1998, under Decree-Law no. 31/98, of 11 February, the Bank revalued its tangible fixed assets, which resulted in an increase in the respective value, net of accumulated depreciation, of approximately tEuros 23,245, which was recognised in revaluation reserves. The net amount resulting from the revaluation may only be used for capital increases or to offset losses through the use (amortization) or sale of the assets it relates to.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the caption "Other reserves and retained earnings" was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Legal reserve | 245,862 | 245,862 |
| ---------- | ---------- | |
| Other reserves | ||
| Reserves of consolidated companies | 149,216 | 190,849 |
| Reserves of companies consolidated under the equity method | 81,660 | 74,727 |
| Merger reserve | ||
| By incorporation of Totta and BSP | 541,334 | 541,334 |
| By incorporation of BSN | 35,405 | 35,405 |
| By incorporation of Totta IFIC | 90,520 | 90,520 |
| Other | 619 | 1,737 |
| ----------- | ----------- | |
| 898,754 | 934,572 | |
| Retained earnings | ---------- 332,601 |
----------- 241,078 |
| ------------- | ------------- | |
| 1,477,217 | 1,421,512 | |
| ======= | ======= |
In accordance with the provisions of Decree Law no. 298/92, of 31 December, amended by Decree Law no. 201/2002, of 26 September, BST set up a legal reserve fund up to the amount of the share capital or of the sum of the free reserves and the retained earnings, if greater. For this purpose, a fraction of the annual net income on a stand-alone basis is transferred to this reserve each year until the above said amount is reached.
This reserve may only be used to offset accumulated losses or to increase share capital.
Under current legislation, the merger reserve is equivalent to the legal reserve and may only be used to offset accumulated losses or to increase the share capital.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Consolidated net income for 2013 and 2012 may be summarised as follows:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Net income for the year |
Contribution to the consolidated net income |
Net income for the year |
Contribution to the consolidated net income |
|
| Net income of BST (individual basis) | 2,449 | 2,449 | (9,180) | (9,180) |
| Net income of the other Group companies: | ||||
| BST International Bank, Inc | 20,457 | 20,457 | 18,276 | 18,276 |
| Banco Caixa Geral Totta de Angola (BCGTA) | 55,120 | 13,025 | 44,023 | 11,001 |
| Partang, SGPS | 25,616 | 12,552 | 21,433 | 10,502 |
| Totta & Açores, Financing, Ltd (TAF) | 12,360 | 12,360 | 12,360 | 12,360 |
| Santander Gestão de Activos, SGPS, S.A. | 7,784 | 7,784 | 1,331 | 1,331 |
| Santotta - Internacional, SGPS | 4,933 | 4,933 | 4,293 | 4,293 |
| Totta Ireland, Plc.(1) | 43,837 | 43,837 | 60,720 | 60,720 |
| Unicre | 9,785 | 2,104 | 11,256 | 2,420 |
| Totta Urbe | 1,997 | 1,997 | 2,474 | 2,474 |
| Taxagest | 761 | 753 | (37) | (37) |
| Serfin International Bank & Trust (SIBT) | 320 | 320 | 401 | 401 |
| Totta & Açores, Inc. - Newark | 47 | 47 | (88) | (88) |
| Santander Asset Management, SGFIM, S.A. | 3,202 | 3,202 | 11 | 11 |
| Santander Pensões | 624 | 624 | 769 | 769 |
| Novimovest - Fundo de Investimento Imobiliário Aberto | (28,670) | (18,428) | - | - |
| 158,173 | 105,567 | 177,222 | 124,433 | |
| Elimination of dividends: | ||||
| Totta Ireland, Plc. | (45,145) | (45,145) | (63,380) | (63,380) |
| Santotta - Internacional, SGPS, S.A. | (10,826) | (10,826) | (8,216) | (8,216) |
| Banco Caixa Geral Totta Angola, S.A. | (5,595) | (5,595) | (4,411) | (4,411) |
| Partang, SGPS, S.A. | (5,047) | (5,047) | (4,018) | (4,018) |
| Unicre, S.A. | (985) | (985) | (1,036) | (1,036) |
| Santander Gestão de Activos, SGPS, S.A. Santander Pensões, S.A. |
- - |
- (760) |
(9,430) (1,000) |
(9,430) (1,000) |
| (68,358) | (91,491) | |||
| Elimination of the equity method application by Partang in the participation held in BCGTA | (8,110) | (6,534) | ||
| Gains on the repurchase by the Group of bonds issued in mortgage securitization operations (Note 38) |
2,942 | 84,193 | ||
| Adjustments related with securitization operations | ||||
| Impairment and deferral of commissions from securitized loans recorded by BST | 44,278 | (9,381) | ||
| Other adjustments | (11,785) | (7,795) | ||
| Gain on the sale of Santander Asset Management, SGFIM, S.A. and Santander Pensões, S.A. Reversal of impairment recorded by BST for the participating units held in Novimovest - |
12,588 | - | ||
| Fundo de Investimento Imobiliário Aberto | 17,821 | - | ||
| Annulment of impairment reversals for supplementary capital contributions between Group companies | (5,500) | - | ||
| Other | (279) | 3,823 | ||
| Consolidated net income for the year | 89,164 | 88,068 |
(1) The amount reflected corresponds to the net result for the month of December, as this entity closes its financial year on November 30, plus the net result for the period comprised between January 1 to November 30 of 2013 and 2012, which amounted to tEuros 41,105 and tEuros 56,680, respectively.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Basic earnings per share are calculated by dividing the net profit attributable to shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year.
| 2013 | 2012 | |
|---|---|---|
| Consolidated net profit attributable to shareholders of BST | 89,164 | 88,068 |
| Weighted average number of common shares issued | 656,723,284 | 656,723,284 |
| Weighted average number of treasury shares | 14,763,681 | 14,702,114 |
| Weighted average number of ordinary shares outstanding | 641,959,603 | 642,021,170 |
| Basic earnings per share attributable to shareholders | ||
| of BST (in Euros) | 0.14 | 0.14 |
Third party participation in Group's companies in 2013 and 2012 was as follows by entity:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Balance sheet |
Income statement |
Balance sheet |
Income statement |
|
| Preference shares of BST | ||||
| International Bank, Inc | 261,040 | - | 272,851 | - |
| Preference shares of TAF | 300,000 | - | 300,000 | - |
| Santander Multiobrigações Fund | 132,701 | - | - | - |
| Novimovest Fund | 102,353 | ( 8,886 ) | - | - |
| Taxagest | 554 | 3 | 550 | - |
| Dividends received in advance | ( 1,407 ) | - | ( 1,443 ) | - |
| Other | 129 | 1 | 202 | - |
| ----------- | ---- | ----------- | ---- | |
| 795,370 | ( 8,882 ) | 572,160 | - | |
| ====== | ==== | ====== | == |
On June 30, 2006 BST International Bank, Inc (BST Puerto Rico) issued 3,600 non-voting preference shares of 100,000 United States Dollars (USD) each, fully subscribed and paid up by Banco Santander, S.A.. The BST Porto Rico guarantees a non-cumulative dividend on these shares corresponding to an annual remuneration of 6.56% payable if and when declared by BST Puerto Rico's directors, at the beginning of January of each year. BST Puerto Rico may redeem the preference shares, in full or in part, from June 30, 2016 at 100,000 USD per share plus the amount of the dividend accrued monthly since the last payment made.
On June 29, 2005 TAF issued 300,000 non-voting preference shares of 1,000 Euros each, fully subscribed and paid up by Banco Santander, S.A.. The Totta & Açores Financing (TAF) guarantees a non-cumulative dividend on these shares corresponding to an annual remuneration of 4.12% payable if and when declared by TAF's directors, at the beginning of January of each year. TAF may redeem the preference shares, in full or in part, as from June 30, 2015 at 1,000 Euros per share plus the amount of the dividend accrued monthly since the last payment made.
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The above-mentioned issues were classified as equity in accordance with IAS 32. Under this Standard, the preference shares issued are classified as equity if:
During the year 2013, the Bank started to consolidate by the full integration method the Funds Santander Multiobrigações and Novimovest, reason why the caption Minority Interests reflects the share of participation of third parties in those Funds.
On December 31, 2013, the main financial data of BST International Bank, Inc. (BST Puerto Rico) and TAF, were as follows:
| BST Porto Rico (*) | TAF | |
|---|---|---|
| Balance sheet | ||
| Cash and deposits at central banks | - | 11,787 |
| Balances due from other banks | 593,203 | 297,750 |
| Other assets | 1,634 | 2,250 |
| 594,837 | 311,787 | |
| Resources of other credit institutions | 9,207 | - |
| Resources of customers and other debts | 190,623 | - |
| Other liabilities | 2,672 | - |
| 202,502 | - | |
| Shareholders' equity (excluding net income) | 365,179 | 299,427 |
| Net income for the year | 27,156 | 12,360 |
| 594,837 | 311,787 | |
| Statement of income | ||
| Net interest income | 27,499 | 13,110 |
| Operating income | 27,565 | 13,335 |
| Income before tax | 27,156 | 12,360 |
| Net income for the year | 27,156 | 12,360 |
| (*) Amounts expressed in thousands of United States Dollars. |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Off-balance sheet items are made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Guarantees given and other contingent liabilities | ||
| Guarantees and sureties | 1,185,467 | 1,219,730 |
| Documentary credits | 199,314 | 125,913 |
| Assets pledged as guarantee | ||
| On loans of securities | 526,722 | 478,249 |
| Bank of Portugal | 142,677 | 122,829 |
| Deposit Guarantee Fund | 71,645 | 84,425 |
| Investor Indemnity System | 4,980 | 4,864 |
| Other contingent liabilities | 6 | 6 |
| -------------- | -------------- | |
| 2,130,811 ======== |
2,036,016 ======== |
|
| Commitments | ||
| Credit lines | ||
| Revocable | 4,207,922 | 4,502,905 |
| Irrevocable | 652,278 | 1,496,610 |
| Deposit Guarantee Fund | 54,092 | 54,092 |
| Investor Indemnity System | 3,178 | 2,625 |
| Other irrevocable commitments | 11,447 | 11,235 |
| Other revocable commitments | 215 | 478,466 |
| -------------- | --------------- | |
| 4,929,132 ======== |
6,545,933 ======== |
|
| Liabilities for services rendered | ||
| Deposit and custodial services | 51,992,816 | 51,506,012 |
| Amounts received for collection | 142,214 | 131,479 |
| Assets managed by the Bank | ||
| Other values | 13 | 7,656,254 |
| --------------- 52,135,043 |
--------------- 59,293,745 |
|
| ========= ========= |
On December 31, 2012, the caption "Commitments - Credit lines - Irrevocable" included tEuros 553,450 relating to commercial paper lines that terminated during 2013.
During 2013, the reduction in the caption "Commitments - Other revocable commitments" is related essentially to the termination during the year of a securities' loan transaction.
During 2013, the reduction in the caption "Assets managed by the Bank - Other values" is justified by the change in the consolidation perimeter as a result of the sale of 100% of the shares held in Santander Asset Management, SGFIM, S.A. and Santander Pensões, S.A..
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The Deposit Guarantee Fund was created in November 1994 in accordance with Decree-Law no. 298/92, dated December 31, to guarantee customers' deposits in accordance with the limits established in the General Regime for Credit Institutions. The initial contribution to the Fund, which was established by Ministerial Order of the Ministry of Finance, was made in cash and deposit securities, and was amortized over 60 months as from January 1995. Except as mentioned in the following paragraph, regular annual contributions to the Fund are recorded as an expense of the year to which it relates.
In 2011, as allowed by the Bank of Portugal, the Bank paid 90% of the annual contribution to the Fund, in the amount of tEuros 3,918. In this period, the Bank also accepted an irrevocable commitment to the Deposit Guarantee Fund to pay the remaining 10% of the annual contribution if and when required to do so. The total accumulated unpaid amount of this commitment as at December 31, 2013 amounted to tEuros 54,092. Assets pledged as guarantee to the Bank of Portugal are recorded in off-balance sheet accounts at market value. During 2013 and 2012 the Bank paid 100% of the annual contribution amounting to tEuros 4,642 and tEuros 4,906, respectively (Note 39).
The liability to pay the Investor Indemnity System is not recorded as a cost, but is covered by the acceptance of an irrevocable commitment to pay that amount, if required to do so, being part (50%) of the commitment guaranteed by a pledge of Portuguese Treasury Bonds. As at December 31, 2013 and 2012 this liability amounted to tEuros 3,178 and tEuros 2,625, respectively.
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Interest on cash and deposits | ||
| In Central Banks | ||
| In the Bank of Portugal | 950 | 1,719 |
| In credit institutions | 16 | 221 |
| Interest on applications | ||
| In domestic credit institutions | ||
| In the Bank of Portugal | - | 999 |
| In other credit institutions | 5,474 | 7,281 |
| In foreign credit institutions | 53,150 | 49,809 |
| Interest on loans and advances to customers | ||
| Domestic loans | 593,748 | 708,390 |
| Foreign loans | 16,115 | 18,739 |
| Other loans and receivables (commercial paper) | 64,284 | 47,200 |
| Income from commissions received associated to amortised cost | 35,719 | 42,468 |
| Interest from securitized assets not derecognised | 41,725 | 158,077 |
| Interest on overdue credit (Note 48) | 8,643 | 8,087 |
| Interest and similar income on other financial assets | ||
| Available for sale financial assets | 157,758 | 198,167 |
| Financial assets at fair value through profit or loss | 3,506 | 4,267 |
| Hedging derivatives | 248,278 | 302,753 |
| Debtors and other applications | - | 16 |
| Other interest and similar income | ||
| Swap agreements | 40,764 | 98,656 |
| Other | 997 | 1,299 |
| ------------- 1,271,127 |
------------- 1,648,148 |
|
| ======= | ======= |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Interest on customers' deposits | ||
| Public sector | 9,646 | 23,299 |
| Emigrants | 17,421 | 21,462 |
| Other-residents | 346,024 | 406,696 |
| Non-residents | 28,781 | 27,208 |
| ----------- 401,872 ----------- |
---------- 478,665 ---------- |
|
| Interest on other customers' resources Interest on resources of Central Banks |
- | 7,225 |
| Bank of Portugal | 25,542 | 52,015 |
| Interest on resources of credit institutions | ||
| Domestic | 1,000 | 8,448 |
| Foreign | 26,922 | 30,425 |
| Interest on debt securities issued | ||
| Bonds | 44,994 | 86,421 |
| EMTN | 430 | 81,761 |
| Commissions | - | 30 |
| Interest on hedging derivatives | 217,973 | 261,123 |
| Interest and commissions on other subordinated liabilities | 189 | 202 |
| Commissions paid associated with amortized cost of credit Other interest and similar charges |
116 | 246 |
| Swap agreements | 44,821 | 100,053 |
| ----------- 361,987 |
----------- 627,949 |
|
| ----------- 763,859 |
------------- 1,106,614 |
|
| ====== | ======== |
This caption refers to dividends and income received and is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Available-for-sale financial assets: | ||
| SIBS – Sociedade Interbancária de Serviços, S.A. | 881 | 1,075 |
| Finangest | 206 | 16 |
| PME Investimentos | 120 | 88 |
| Unicampus | 88 | 87 |
| Imorent Fund | - | 355 |
| Visa | - | 16 |
| Others | 18 | 61 |
| ------- | ------- | |
| 1,313 | 1,698 | |
| ==== | ==== |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | ||
|---|---|---|---|
| On guarantees given | |||
| Guarantees and sureties | 16,294 | 16,704 | |
| Documentary credits | 3,605 | 3,202 | |
| On commitments to third parties | |||
| Revocable | 4,619 | 4,822 | |
| Irrevocable | 2,823 | 2,369 | |
| On services rendered | |||
| Card transactions | 63,742 | 71,042 | |
| Credit operations | 44,327 | 53,281 | |
| Real estate and mutual fund management | 24,994 | 25,475 | |
| Annuities | 14,434 | 14,067 | |
| Asset management and collection | 12,706 | 13,602 | |
| Other | 7,681 | 9,866 | |
| On operations carried out on behalf of third parties | |||
| On securities | 39,961 | 31,899 | |
| Other | 424 | 482 | |
| Other commission received | |||
| Insurance companies | 89,491 | 93,589 | |
| Demand deposits Cheques |
25,603 11,702 |
20,361 14,517 |
|
| Booklets | 8,192 | 9,381 | |
| Other | 28 | 42 | |
| ----------- | ----------- | ||
| 370,626 | 384,701 | ||
| ====== | ====== | ||
| 34. CHARGES WITH SERVICES AND COMMISSIONS | |||
| This caption is made up as follows: | |||
| 2013 | 2012 | ||
| On guarantees received | |||
| Guarantees and sureties | 805 | 1,083 | |
| Revocable commitments | On commitments assumed by third parties | 76 | 1,734 |
| On banking services rendered by third parties | |||
| Credit operations | 12,868 | 12,050 | |
| Funds for collection and management | 3,535 | 3,813 | |
| Customer transactions | 29,548 | 26,065 | |
| Other | 4,524 | 4,736 | |
| On operations carried out by third parties | |||
| Securities | 1,972 | 2,378 | |
| Other | 1,274 | 1,209 | |
| Other commission paid | 514 | 825 | |
| --------- 55,116 |
--------- 53,893 |
||
| ===== | ===== |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
These captions are made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Financial assets held for trading: | ||
| Equity instruments | 5,034 | 12,629 |
| Derivative instruments: | ||
| . FRA's | ( 14 ) | 410 |
| . Swaps: | ||
| Currency swaps | 256 | ( 117 ) |
| Interest rate swaps | 13,792 | 4,244 |
| Equity swaps | 12,892 | 3,219 |
| Other | ( 10,198 ) | 2,593 |
| . Options: | ||
| Foreign exchange rate contracts | 476 | ( 329 ) |
| Interest rate contracts | - | 104 |
| Equity contracts | ( 24 ) | 474 |
| Other | 135 | - |
| . Interest rate guarantee contracts | 63 | ( 48 ) |
| Financial assets and liabilities at fair value | ||
| through profit or loss | ( 1,777 ) | 14,230 |
| --------- 20,635 |
--------- 37,409 |
|
| --------- | --------- | |
| Hedging derivatives: | ||
| Swaps | ||
| . Interest rate swaps | 62,331 | ( 90,993 ) |
| . Equity swaps | ( 43,648 ) | ( 2,568 ) |
| . "Auto-callable" options | 17,701 | ( 64,328 ) |
| Value adjustments of hedged assets and liabilities: | ||
| . Loans and advances to customers | ( 1,738 ) | 774 |
| . Available-for-sale financial assets | ( 95,965 ) | 111,437 |
| . Resources of customers and other debts | 49,207 | ( 44,747 ) |
| . Debt securities | 11,803 | 90,199 |
| ---------- ( 309 ) |
---------- ( 226 ) |
|
| -------- 20,326 |
------- 37,183 |
|
| ===== | ===== |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Gains | Losses | Net | Gains | Losses | Net | |
| Debt instruments | ||||||
| Issued by residents | ||||||
| National public issuers | 573 | - | 573 | - | (1) | (1) |
| Of other residents | - | - | - | 36 | (35) | 1 |
| Issued by non-residents | ||||||
| Of foreign public issuers | 3,723 | - | 3,723 | 758 | - | 758 |
| Of other non-residents | - | - | - | 3,097 | (3,101) | (4) |
| Equity instruments | ||||||
| Valued at fair value | - | (2) | (2) | 2,199 | - | 2,199 |
| Other | 240 | - | 240 | 9 | (5,658) | (5,649) |
| 4,536 | (2) | 4,534 | 6,099 | (8,795) | (2,696) |
This caption is made up as follows:
| ==== | ==== | |
|---|---|---|
| 4,039 | 5,652 | |
| --------- | ------- | |
| Losses on the revaluation of the foreign exchange position | ( 42,467 ) | ( 36,432 ) |
| Gains on the revaluation of the foreign exchange position | 46,506 | 42,084 |
| 2013 | 2012 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 |
|---|---|
| 12,588 | - |
| 3,728 | 832 |
| 84,193 | |
| 2,855 5,535 |
|
| - | 2 |
| --------- | -------- |
| 93,417 | |
| -------- | |
| - | |
| ( 5,952 ) | ( 297 ) |
| ( 3,869 ) | ( 4,222 ) |
| - | ( 1,418 ) |
| ( 1,791 ) --------- |
|
| ( 21,800 ) | ( 7,728 ) |
| --------- 85,689 |
|
| ==== | ==== |
| 2,942 2,696 2,321 24,276 --------- ( 11,107 ) ( 872 ) ---------- ---------- 2,476 |
In March 2012, BST made a tender offer for the acquisition of a set of bonds issued under mortgage securitization operations held by entities outside the Santander Group with a nominal value of tEuros 311,394. As a result of this operation, the Bank recorded gains of tEuros 80,409.
In August 2012, BST acquired again bonds issued under mortgage securitization operations held by entities outside the Santander Group with a nominal value of tEuros 10,370. As a result of this operation, the Bank recorded a gain of tEuros 3,172.
Finally, in October 2012, BST made an exchange offer of tEuros 3,046 of bonds issued under mortgage securitization operations held by entities outside the Santander Group for covered bonds. As a result of this operation, the Bank recorded a gain of tEuros 612.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Other operating income | ||
| Rent of automatic payment terminals | 15,455 | 16,847 |
| Rents received Income from sundry services rendered |
11,792 5,585 |
322 5,195 |
| Reimbursement of expenses | 2,787 | 2,942 |
| Unrealized gains on investment properties (Note 14) | 2,767 | - |
| Other | 2,180 | 1,580 |
| --------- | --------- | |
| 40,566 | 26,886 | |
| --------- | --------- | |
| Other operating expenses | ||
| Unrealized losses on investment properties (Note 14) | ( 29,214 ) | - |
| Other operating expenses Charges with transactions made by customers |
( 13,882 ) ( 10,677 ) |
( 12,206 ) ( 11,885 ) |
| Subscriptions and donations | ( 5,087 ) | ( 3,820 ) |
| Expenses with automatic teller machines | ( 4,848 ) | ( 4,385 ) |
| Contributions to the Deposit Guarantee Fund (Note 29) | ( 4,642 ) | ( 4,906 ) |
| Contributions to the Resolution Fund | ( 4,205 ) | - |
| Other taxation Direct |
( 1,703 ) | ( 1,596 ) |
| Indirect | ( 738 ) | ( 848 ) |
| --------- ( 74,997 ) |
--------- ( 39,646 ) |
|
| --------- | --------- | |
| ( 34,431 ) | ( 12,760 ) | |
| ==== | ====== |
In the year ending December 31, 2013, the caption "Rents received" includes the amount of tEuros 11,036 relating to the income earned by Novimovest Fund.
The Decree-Law no. 24/2013 of February 19, established the system of contributions of banks to the new Resolution Fund created with the purpose of prevention, mitigation and containment of systemic risk. According to the Dispatch no. 1/2013 and the Instructions no. 6/2013 and 7/2013 of the Bank of Portugal, the banks should pay an initial and a regular contribution to the Resolution Fund.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Remuneration | ||
| Management and supervisory boards (Note 46) | 6,310 | 5,675 |
| Employees | 186,346 | 187,564 |
| Stock option plans (Note 47) | 1,802 | 3,104 |
| Other variable remuneration | 17,189 ----------- |
18,424 ----------- |
| 211,647 | 214,767 | |
| Mandatory social charges | ----------- | ----------- |
| Charges on remuneration | 50,172 | 51,291 |
| Charges with pensions and other benefits (Note 44) | 1,924 | ( 2,167 ) |
| Decrease in liabilities with death subsidy (Note 44) Effect of transfer of pension liabilities |
( 416 ) | ( 13,745 ) |
| to the Social Security | - | 58 |
| Other mandatory social charges | 815 --------- |
968 ---------- |
| 52,495 | 36,405 | |
| --------- | ---------- | |
| Other staff costs | ||
| Staff transfers | 599 | 556 |
| Supplementary retirement plan (Note 44) | 583 | 583 |
| Other | 4,253 | 5,325 |
| -------- 5,435 |
---------- 6,464 |
|
| ----------- 269,577 |
---------- 257,636 |
|
| ====== | ====== |
During 2013 and 2012, the Bank did not record any cost with early retirements as it used part of the provision recorded for that purpose (Note 23).
The balance of the caption "Mandatory social charges - Decrease in liabilities with death subsidy" refers to the reduction in liabilities with pensioners resulting from the amendments introduced by Decree Law no. 133/2012 of 27 of June, which introduced a maximum to the amount for the death subsidy corresponding to six times the amount of the social support index.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
This caption is made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Specialised services | 40,592 | 40,819 |
| Maintenance of software and hardware | 36,624 | 33,859 |
| Communications | 12,953 | 14,288 |
| Rent and leases | 10,273 | 11,037 |
| Advertising and publishing | 9,550 | 10,489 |
| External supplies | ||
| Water, electricity and fuel | 7,778 | 7,888 |
| Current consumable material | 1,894 | 2,212 |
| Other | 278 | 358 |
| Travel, lodging and representation expenses | 4,590 | 5,007 |
| Maintenance and repairs | 3,536 | 2,545 |
| Transportation | 2,337 | 2,393 |
| Staff training | 1,807 | 1,796 |
| Insurance | 1,063 | 819 |
| Other | 3,884 | 3,986 |
| ---------- 137,159 |
----------- 137,496 |
|
| 42. RESULTS FROM ASSOCIATES | ====== | ====== |
| This caption is made up as follows: | ||
| 2013 | 2012 | |
| Partang, SGPS, S.A. | 12,668 | 9,568 |
| Unicre - Instituição Financeira de Crédito, S.A. | 1,473 | 2,420 |
| Benim - Sociedade Imobiliária, S.A. | ( 72 ) | ( 124 ) |
| --------- 14,069 |
---------- 11,864 |
|
| ===== | ===== |
Partang SGPS, S.A. is held by the Bank in 49% and holds 51% of the share capital of Banco Caixa Geral Totta Angola, S.A..
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Income from the insurance brokerage services rendered refers mainly to the commissions charged to Santander Totta Seguros - Companhia de Seguros de Vida S.A. for the placement of their products (Note 18), and is made up as follows:
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Life | Non-Life | Life | Non-Life | |||
| Insurance | Insurance | Total | Insurance Insurance | Total | ||
| (Note 31) | (Note 31) | |||||
| Santander Totta Seguros | 77,742 | 204 | 77,946 | 82,313 | 239 | 82,552 |
| Liberty Seguros | - | 10,268 | 10,268 | - | 9,699 | 9,699 |
| Other | - | 1,277 | 1,277 | - | 1,338 | 1,338 |
| --------- | --------- | --------- | --------- | -------- | ----------- | |
| 77,742 | 11,749 | 89,491 | 82,313 | 11,276 | 93,589 | |
| ===== | ===== | ===== | ===== | ===== | ====== |
On December 31, 2013 and 2012, the caption "Other assets – Income receivable" (Note 18) includes commission's receivable from insurance companies, as follows:
| --------- 62,844 ===== |
---------- 14,718 ===== |
|
|---|---|---|
| Santander Totta Seguros Other |
61,647 1,197 |
13,712 1,006 |
| 2013 | 2012 |
These amounts refer essentially to the commissions earned on premiums for insurances sold during the last three quarters of 2013 and the last quarter of 2012, respectively.
For the purpose of determining BST's past service liability relating to the servicing and retired employees, actuarial studies were carried out in 2013 and 2012 by Towers Watson (Portugal) Unipessoal Limitada. The present value of the past service liability and corresponding current service cost were determined based on the Projected Unit Credit method.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The liabilities of BST with retirement pensions, healthcare benefits and death subsidy as at December 31, 2013 and in the four previous years, as well as the respective coverage, are as follows:
| 2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|
| Estimated past service liability | |||||
| - Pensions | |||||
| . Current employees | 282,028 | 251,252 | 210,669 | 275,580 | 255,009 |
| . Pensioners | 22,891 | 21,002 | 18,455 | 36,406 | 34,692 |
| . Retired and early retired staff | 399,434 | 388,656 | 387,608 | 855,952 | 896,251 |
| 704,353 | 660,910 | 616,732 | 1,167,938 | 1,185,952 | |
| - Healthcare benefits (SAMS) | 137,970 | 129,267 | 117,422 | 127,822 | 127,877 |
| - Death subsidy | 4,562 | 4,331 | 16,973 | 18,184 | 17,728 |
| 846,885 | 794,508 | 751,127 | 1,313,944 | 1,331,557 | |
| Coverage of the liability | |||||
| - Net assets of the Fund | 840,543 | 784,937 | 758,244 | 1,312,888 | 1,395,849 |
| Amount overfunded / (underfunded) | (6,342) | (9,571) | 7,117 | (1,056) | 64,292 |
| Actuarial and financial deviations generated in the year | |||||
| - Change in assumptions | 42,565 | 73,518 | (103,831) | - | (51,086) |
| - Experience ajustments | |||||
| . Other actuarial (gains) / losses | (1,775) | (25,383) | (23,708) | (29,458) | (21,172) |
| . Financial (gains) / losses | (3,115) | (15,796) | 339,627 | 103,392 | 61,639 |
| (4,890) | (41,179) | 315,919 | 73,934 | 40,467 | |
| 37,675 | 32,339 | 212,088 | 73,934 | (10,619) |
The increase in the responsibilities in the year 2013 is mainly explained by the decrease in the discount rate used to calculate the responsibilities for past services.
The reduction in liabilities with death subsidy in 2012 was essentially due to the amendments introduced by Decree Law no. 133/2012 of June 27, which introduced a maximum amount for the death subsidy, corresponding to six times the amount of the social support index. The gain in 2012 arising from the reduction in liabilities resulting from this amendment amounted to tEuros 13,745 (Note 40).
In 2011, a three party agreement was established, between the Finance Ministry, the Portuguese Association of Banks and the Federation for the Financial Sector (FEBASE), regarding the transfer to the Social Security of part of the liabilities with pensioners who as at December 31, 2011 were covered by the substitutive regime of the Social Security under the Collective Labour Agreement (ACT) in force for the banking sector. As a result, the Bank's pension fund assets backing such liabilities were also transferred to the Social Security. Following Decree Law nº 127/2011, dated December 31, the value of pension liabilities transferred to the Social Security was determined considering the following assumptions:
Mortality table male population TV 73/77 less than 1 year Mortality table female population TV 88/90 Actuarial technical rate (discount rate) 4%
The liabilities transferred to the Social Security amounted to tEuros 456,111 and were determined based on the assumptions described above.
The liabilities calculated by the Bank immediately before the transfer, according to the financial and actuarial assumptions used, amounted to tEuros 435,260.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The difference between the liabilities transferred to the Social Security calculated using the assumptions set out in the Decree Law no. 127/2011, dated 31 December (tEuros 456,111) and those used by the Bank (tEuros 435,260), amounting to tEuros 20,851, was recorded in the caption "Staff costs" of the income statement for 2011.
The assumptions used by the Bank for the determination of responsibilities immediately before the transfer to the Social Security were the following:
| Serving Employee's |
Retired Employee's |
|
|---|---|---|
| Mortality table | TV 88/90 | TV 88/90 |
| Actuarial technical rate (discount rate) | 5.92% | 5.00% |
| Salary growth rate | 2.35% | - |
| Pension growth rate | 1.35% | 1.35% |
The liabilities determined considering the above assumptions amounted to tEuros 1,186,387 of which tEuros 435,260 corresponds to the liabilities transferred to the Social Security, as mentioned above.
The main assumptions used by the Bank for determining its liabilities with pensions at December 31, 2013 and 2012 were as follows:
| 2013 | 2012 | |
|---|---|---|
| Mortality table | TV 88/90 | TV 88/90 |
| Pension fund return rate | 4.00% | 4.50% |
| Actuarial technical rate (discount rate) | ||
| - Current employees | 4.30% | 4.85% |
| - Non-serving | 3.54% | 4.00% |
| Salary growth rate for 2014 and 2015 (2013 and 2014) | 0.50% | 0.50% |
| Salary growth rate after 2015 (2014) | 2.35% | 2.35% |
| Pension growth rate for 2014 and 2015 (2013 and 2014) | 0.00% | 0.00% |
| Pension growth rate after 2015 (2014) | 1.35% | 1.35% |
| Inflation rate | 1.75% | 1.75% |
In 2013, the discount rates of 4.30% for current employees and 3.54% for non-serving correspond to an average rate of 4%, more specifically, the use of different rates for different populations leads to the same liability amount that would be determined if a rate of 4% had been used for the entire population. In 2012 the corresponding rate was 4.5%.
To determine the amount of the Social Security pension which, under the terms of the ACT of the banking sector, should reduce the pension to be provided under the ACT, the following assumptions were used on December 31, 2013 and 2012:
| 2013 | 2012 | |
|---|---|---|
| Salary growth rate to calculate the deductible pension: | ||
| For 2014 and 2015 (2013 and 2014) | 0.50% | 0.50% |
| 2.35% | ||
| 1.75% | ||
| 2.00% | ||
| Sustainability factor accumulated until 2011 | Reduction of 3.14% | |
| Future sustainability factor | Reduction of 0.5% per year | |
| After 2015 (2014) Inflation (no. 1 of Article 27) Inflation (no. 2 of Article 27) Sustainability factor accumulated until 2013 Sustainability factor accumulated until 2012 |
2.35% 1.75% 2.00% Reduction of 4.78% Reduction of 3.92% |
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On the other hand, Decree-Law no. 167-E/2013, of December 31, changed the retirement age for the general Social Security regime for 2014 and 2015 to 66 years old. Nevertheless, the sustainability factor charge will not apply to the pensioners who retire at that age.
The discount rate is determined based on the market rates of low risk corporate bonds, for similar maturities as those of the Plan's liabilities.
The economic climate and the sovereign debt crisis of the South of Europe have brought volatility and disruption to the debt market in the Euro Zone, with a consequent abrupt reduction in the market yields on the debt of the companies with the best ratings and have limited the available basket of these bonds. In order to maintain the representativeness of the discount rate taking into consideration the universe of the Euro Zone, on December 31, 2013 the Bank incorporated information on interest rates in the determination of the discount rate, which it is possible to obtain on bonds denominated in Euros, including public debt, which it considers to be of high quality in terms of credit risk.
Changes in the Bank's past service liability for the years ended December 31, 2013 and 2012 may be detailed as follows, with regard to the Bank's pension plan:
| 2013 | 2012 | |
|---|---|---|
| Liabilities at the beginning of the year | 794,508 | 751,127 |
| Current service cost | 1,054 | 398 |
| Interest cost | 32,880 | 37,483 |
| Actuarial (gains)/losses | 40,790 | 48,135 |
| Early retirement | 14,028 | 9,862 |
| Amounts paid | ( 38,285 ) | ( 41,005) |
| Contributions of employees | 2,326 | 2,297 |
| Reduction of liabilities with death subsidy (Note 40) | ( 416 ) | (13,475 ) |
| Correction of liabilities transferred to the Social Security | - | ( 44 ) |
| ----------- | ------------ | |
| Liabilities at the end of the year | 846,885 | 794,580 |
| ====== | ====== |
The cost of the year relating to pensions includes current service and interest cost, deducted from the estimated return from the assets of the Fund. In the years 2013 and 2012, costs with pensions are made up as follows (Note 40):
| 2013 | 2012 | |
|---|---|---|
| Current service cost | 1,054 | 398 |
| Interest cost | 32,880 | 37,483 |
| Return on assets calculated at the discount rate | ( 32,449 ) | ( 40,748 ) |
| Defined benefits plan | --------- ( 1,485 ) |
--------- ( 2,867 ) |
| Defined contribution plan | 42 | 39 |
| London Branch plan | 397 | 603 |
| Other | - | 58 |
| ------- | ----------- | |
| ( 1,924 ) | ( 2,167 ) | |
| ==== | ====== |
As from January 1, 2009, employees hired by BST were integrated in the Social Security and are covered by a supplementary defined contribution pension plan with acquired rights under Article 137 – C of the ACT. The plan is supported by contributions of the employees (1.5%) and from BST(1.5%) over the amount of the effective monthly salary. For this purpose, each employee can choose the Pension Fund to which BST transfers its contribution.
Changes occurred in actuarial gains and losses in 2013 and 2012 were as follows:
| Balance on December 31, 2011 | 551,055 ----------- |
|---|---|
| Actuarial losses on pensions generated in 2012 | 37,239 |
| Actuarial gains on pensions generated in 2012 | ( 12,913 ) |
| Actuarial losses on healthcare benefits and death subsidy in 2012 | 10,896 |
| Financial gains on healthcare and death subsidy in 2012 | ( 2,883 ) |
| ----------- | |
| Balance on December 31, 2012 (Note 26) | 583,394 |
| ----------- | |
| Actuarial losses on pensions generated in 2013 | 32,728 |
| Financial gains on pensions generated in 2013 | ( 2,653 ) |
| Actuarial losses on healthcare and death subsidy in 2013 | 8,062 |
| Financial gains on healthcare and death subsidy in 2012 | ( 462 ) |
| Balance on December 31, 2013 (Note 26) | ------------ 621,069 |
| ====== |
The actuarial deviation on pensions occurred in 2013 and 2012 may be explained as follows:
| 2013 | 2012 | |
|---|---|---|
| Changes in actuarial assumptions | 34,831 | 60,058 |
| Changes in the salary table | ||
| with impact on pensions and salaries | ( 4,362 ) | ( 24,152 ) |
| Changes in the population | 2,693 | 1,837 |
| Mortality deviations | ||
| . Due to departures | ( 4,049 ) | ( 5,227 ) |
| . Due to maintenance | 3,299 | 3,636 |
| . Due to survival pensions and orphan hood | 3,074 | 2,505 |
| Transfer from early retirement to retirement | ( 2,758 ) | ( 1,418 ) |
| --------- | ---------- | |
| 32,728 | ( 37,239 ) | |
| ===== | ====== |
In 2013 the changes of actuarial assumptions included the effect of reducing the discount rate from 4,5% to 4,0%, on average.
In 2012, the changes in actuarial assumptions include the effect of the changes in the discount rate from 5,5% to 4.5%, on average, and the changes in the pensions and salaries growth rates in 2013 and 2014, from 1.35% to 0.0% and 2.35% to 0.5%, respectively.
The increase in estimated salaries and pensions was revised taking into account the current situation in Portugal and the consequent prospects of smaller increases in the future or even of maintenance of the current amounts, particularly in the years 2014 and 2015.
The effective salary growth in 2013 and 2012 for the purpose of the contributions to the Social Security relating to the employees of the former Totta was 1.63% and 2.46% respectively.
There was no effective increase in the pensions and of the salary table in 2013 and 2012.
The actuarial deviations in health care and in the death subsidy in the years 2013 and 2012 can be explained as follows:
| ===== | ===== | |
|---|---|---|
| 8,062 | 10,896 | |
| --------- | --------- | |
| Other | 198 | ( 271 ) |
| Changes in salaries | 130 | ( 2,293 ) |
| Changes in assumptions | 7,734 | 13,460 |
| 2013 | 2012 |
In 2014, BST estimates to make a contribution of tEuros 2,694 to its defined benefit plan.
The average duration of BST's pension liability with employees is 17 years, including active and retired ones.
Santander Pensões – Sociedade Gestora de Fundos de Pensões, S.A. manages BST's Pension Fund. On December 31, 2013 and 2012, the number of participants in the Fund was as follows:
| 2013 | 2012 | |
|---|---|---|
| Serving employees (1) | 5,409 | 5,518 |
| Pensioners | 996 | 954 |
| Retired and early retired staff | 5,339 | 5,332 |
| --------- | --------- | |
| 11,744 | 11,804 | |
| ===== | ===== |
(1) Of whom 181 and 177 employees are included in the new defined contribution plan as at 31 December 2013 and 2012, respectively.
The main demographic changes occurred in 2013 and 2012, were the following:
| Assets | ||||
|---|---|---|---|---|
| Defined | ||||
| Contribution | Defined | Retired and early | ||
| Plan | Benefit Plan | retired staff | Pensioners | |
| Total number on December 31, 2011 | 157 | 5,451 | 5,338 | 926 |
| Exits: | ||||
| . Serving Employees | (18) | (55) | - | - |
| . By death | - | - | (77) | (32) |
| Transfers | - | (56) | 56 | - |
| Entries | 38 | 1 | 15 | 60 |
| Total Number as at December 31, 2012 | 177 | 5,341 | 5,332 | 954 |
| Exits: | ||||
| . Serving Employees | (16) | (42) | - | - |
| . By death | - | - | (78) | (30) |
| Transfers | - | (74) | 74 | - |
| Entries | 20 | 3 | 11 | 72 |
| Total number as at December 31, 2013 | 181 | 5,228 | 5,339 | 996 |
Changes occurred in BST's Pension Fund during the years 2013 and 2012 were the following:
| 758,244 |
|---|
| ----------- 8,959 |
| 2,297 |
| 40,748 |
| 15,796 |
| ( 41,005 ) |
| ( 102 ) |
| ----------- 784,937 |
| ====== |
| 56,000 |
| 2,326 |
| 32,449 |
| 3,116 |
| ( 38,285 ) |
| ----------- 840,543 |
| ====== |
The rates of return of the Pension Fund in 2013 and 2012 were 4.66% and 7.65%, respectively.
The investment and allocation policy of BST's Pension Fund defines that its portfolio should take in consideration adequate levels of safety, profitability and liquidity, through a diverse set of investments, including stocks, bonds, other debt instruments, participations in collective investment institutions, bank deposits and other assets of a monetary nature as well as land and buildings recorded in the real estate property registry.
Furthermore, that policy is guided by risk diversification and profitability criteria, giving to the manager of the Fund the choice for a more or less conservative policy, by increasing or decreasing the exposure to stocks or bonds, according to its expectations about the market developments and in accordance with the defined investment limits.
The current investment policy of BST´s Pension Fund defines the following limits:
| Classes of assets | Limits |
|---|---|
| Liquidity | 0% to 15% |
| Real Estate | 5% to 25% |
| Fixed Rate bonds | 0% to 40% |
| Variable rate bonds | 20% to 60% |
| Commodities | 0% to 5% |
| Shares | 0% to 35% |
| Others | 0% to 10% |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, BST's Pension Fund portfolio included the following assets:
| 2013 | 2012 | |
|---|---|---|
| Debt instruments | ||
| . Rating A | - | 14,394 |
| . Rating BBB | 83,939 | 139,877 |
| . Rating BB | 164,839 | 124,042 |
| . Rating B | 22,161 | 17,822 |
| . Without rating attributed either to the issue or the issuer | 36,372 | 13,082 |
| Securities investment funds | 207,011 | 221,462 |
| Real estate investment funds | 141,059 | 150,809 |
| Deposits | 75,556 | 33,936 |
| Real Estate: | ||
| . Retail buildings | 63,316 | 67,966 |
| . Land | 860 | 860 |
| Equity instruments: | ||
| . Portuguese listed companies | 2,582 | - |
| . Portuguese unlisted companies | 152 | 152 |
| . Foreign listed companies | 44,316 | - |
| Derivative financial instruments | ||
| . Listed options | ( 1,765 ) | - |
| Others | 145 | 535 |
| ---------- 840,543 |
----------- 784,937 |
|
| ====== | ====== |
On December 31, 2013 and 2012, the methodology for calculating the fair value of the above referred assets and liabilities adopted by the Management Company of the BST's Pension Fund, as defined in IFRS 13 (Note 48), was as follows:
| 31-12-2013 | 31-12-2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| Investment funds | 138,865 | 16,004 | 193,201 | 348,070 | 141,699 | 18,020 | 212,552 | 372,271 |
| Debt instruments | 246,197 | 22,846 | 38,268 | 307,311 | 230,436 | 47,076 | 31,705 | 309,217 |
| Equity instruments | 46,898 | - | 152 | 47,050 | - | - | 152 | 152 |
| Derivative financial instruments | (1,765) | - | - | (1,765) | - | - | - | - |
| Real estate | - | - | 64,176 | 64,176 | - | - | 68,826 | 68,826 |
| 430,195 | 38,850 | 295,797 | 764,842 | 372,135 | 65,096 | 313,235 | 750,466 |
On December 31, 2013 and 2012, the portfolio of the Pension Fund included the following assets with Santander Group companies in Portugal:
| ====== | ====== | |
|---|---|---|
| 182,197 | 191,780 | |
| ----------- | ----------- | |
| Securities (including participating units in funds managed by the Group) | 160,279 | 168,989 |
| Leased property | 21,918 | 22,791 |
| 2013 | 2012 |
In 2010 a life insurance policy was taken out with Santander Totta Seguros – Companhia de Seguros de Vida, S.A. to cover the liability arising from the new supplementary retirement plan for the Bank's executives. The initial contribution to the new plan amounted to tEuros 4,430. In 2013 and 2012, the premium paid by the Bank amounted to tEuros 583 (Note 40).
This plan covers the possibilities of retirement, death and absolute permanent incapacity for
regular work or due to disablement.
For all the situations, the payments receivable by the beneficiaries are the accumulated balance in the supplementary plan on the date that these occur. In the event of death of the beneficiary this amount will be further increased by 6,000 Euros.
On December 31, 2013 and 2012, 111 and 107 employees were covered by this plan, respectively.
On December 31, 2013 and 2012, the main assumptions used in the calculation of the liabilities with retirement pensions relating to the pension plan that covers the employees of the London branch were the following:
| 2013 | 2013 | |
|---|---|---|
| Mortality table | AMC00/AFC00 | AMC00/AFC00 |
| Actuarial technical rate (discount rate) | 4.60% | 4.25% |
| Salary growth rate | 3.70% | 2.80% |
| Pension growth rate | 2.10% | 1.90% |
| Inflation rate | 2.70% | 2.20% |
On December 31, 2013 and 2012, the liabilities with the defined benefit pension plan of the London branch and its coverage were as follows:
| ==== | ==== | |
|---|---|---|
| Non-financed amount – London branch | ( 4,317 ) | ( 3,961 ) |
| -------- | -------- | |
| Net assets of the Pension Fund | 30,720 | 31,342 |
| Estimated liabilities for past services | 35,037 | 35,303 |
| 2013 | 2012 |
In relation to the specific pension plan of the London branch, the changes in the liabilities for past services in the years ending on December 31, 2013 and 2012 may be presented as follows:
| Liabilities at December 31, 2011 | 29,260 |
|---|---|
| Current service cost | --------- 207 |
| Interest cost | 1,447 |
| Actuarial losses | 4,533 |
| Amounts paid | ( 831 ) |
| Foreign exchange fluctuations | 687 |
| Liabilities at December 31, 2012 | --------- 35,303 |
| Current service cost | --------- 174 |
| Interest cost | 1,513 |
| Actuarial gains | ( 353 ) |
| Amounts paid | ( 855 ) |
| Foreign exchange fluctuations | ( 745 ) |
| Liabilities at December 31, 2013 | --------- 35,037 |
| ===== |
Changes in the Pension Fund of the London branch during the years ending on December 31, 2013 and 2012 were the following:
| 25,440 |
|---|
| ---------- 2,916 |
| 3,219 |
| ( 831 ) |
| 598 |
| ---------- 31,342 |
| ---------- 741 |
| 152 |
| ( 855 ) |
| ( 660 ) |
| ---------- 30,720 |
| ===== |
The costs of the defined benefit plan of the London branch in the years 2013 and 2012 are as follows:
| 2013 | 2012 | |
|---|---|---|
| Current service cost Interest cost Estimated return of assets calculated with the discount rate |
174 1,513 ( 1,290 ) |
207 1,447 ( 1,051 ) |
| ------- 397 === |
------ 603 === |
|
| The actuarial gains and losses of the London branch are as follows: | ||
| Balance on December 31, 2011 | 3,212 | |
| Actuarial losses on pensions in 2012 Financial gains on pensions in 2012 Foreign exchange fluctuations |
-------- 4,533 ( 1,865 ) 86 |
|
| Balance on December 31, 2012 | ------- 5,966 |
|
| Actuarial losses on pensions in 2013 Financial gains on pensions in 2013 Foreign exchange fluctuations |
-------- ( 353 ) 548 ( 85 ) |
|
| Balance on December 31, 2013 (Note 26) | ------- 6,076 ==== |
On December 31, 2013 and 2012, the London branch's Pension Fund portfolio included the following assets:
| ===== | ===== | |
|---|---|---|
| Fund's net asset value | 30,720 | 31,342 |
| --------- | --------- | |
| Deposits | 89 | 196 |
| Equity instruments | 5,413 | 4,497 |
| Debt instruments | 25,218 | 26,649 |
| 2013 | 2012 |
On December 31, 2013 and 2012, the balance amounts associated with the pension plans can be detailed as follows:
| ====== | ====== | |
|---|---|---|
| Total (Note 25) | ( 10,659 ) | ( 13,532 ) |
| ----------- | ----------- | |
| Insufficient funding (London branch) | ( 4,317 ) | ( 3,961 ) |
| (Insufficient) / excess funding (defined benefit plan) | ( 6,342 ) | ( 9,571 ) |
| 2013 | 2012 |
The liabilities for pension plans with defined benefit expose the Bank to the following risks :
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013, a sensitivity analysis to a variation of the main financial assumptions at that date would lead to the following impacts in the current past services liabilities of the Bank (excluding London Branch):
| (Reduction)/Increase | |||
|---|---|---|---|
| in % | in amount | ||
| Variation of discount rate: | |||
| Increase of 0.5% | ( 7.5% ) | ( 61,988 ) | |
| Reduction of 0.5% | 8.5% | 70,339 | |
| Variation of salary growth rate: | |||
| Increase of 0.5% | 5.1% | 42,095 | |
| Reduction of 0.5% | (4.6% ) | ( 37,779 ) | |
| Variation of pension growth rate: | |||
| Increase of 0.5% | 7.8% | 64,147 | |
| Reduction of 0.5% | ( 7.2% ) | ( 59,372 ) |
On December 31, 2013 and 2012, the amount of liabilities associated with health care (SAMS) resulting from a 1% change in the contribution rate can be presented as follows:
| 2013 | 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| Number of beneficiaries |
Contribution rate -1% |
contribution rate + 1% |
Number of beneficiaries |
Contribution rate -1% |
contribution rate + 1% |
|||
| Serving employees (Defined benefit plan) | 5,228 | 32,130 | 43,814 | 5,341 | 26,997 | 36,813 | ||
| Serving employees (Defined contribution plan) | 181 | 104 | 142 | 177 | 59 | 81 | ||
| Pensioners | 996 | 4,784 | 6,524 | 954 | 4,537 | 6,187 | ||
| Retired and early retired staff | 5,339 | 79,725 | 108,717 | 5,332 | 77,787 | 106,073 | ||
| 11,744 | 116,744 | 159,196 | 11,804 | 109,380 | 149,154 |
This sensitivity analysis may not be representative of the changes that may occur in the future in the pension plan since they are being considered alone and some of them are correlated.
Between July 2003 and February 2011, BST securitized part of its mortgage loan portfolios, through twelve operations, with a total initial amount of tEuros 23,250,000. The loans were sold at their nominal value (book value) to Hipototta FTC Funds, with the exception of the last securitization operations (Hipototta no. 11 and Hipototta no. 12), in which the credits were sold to Tagus – Sociedade de Titularização de Créditos, S.A. (Tagus).
In April 2009, the former Totta IFIC securitized part of its leasing portfolio and long-term rental through an operation with a total initial amount of tEuros 1,300,000. The loans were sold at their nominal value (book value) to a securitization fund called LeaseTotta no. 1 FTC.
In October 2009 BST liquidated Hipototta no. 9 Ltd. which was established under the securitization operation of November 2008, the initial amount of the loans sold being tEuros 1,550,000. The liquidation occurred after a "Mortgage Retransfer Agreement", under which the Bank repurchased the previously securitised loans for tEuros 1,462,000.
In April 2010, BST liquidated Hipototta no. 6 Ltd, which was established under the securitization operation of October 2007, the initial amount of the loans sold being tEuros 2,200,000. The liquidation occurred after a "Mortgage Retransfer Agreement", under which the Bank repurchased the previously securitised loans for tEuros 1,752,357.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In July 2010, BST securitized part of its mortgage loan portfolio, through an operation denominated Hipototta no. 11 for the total initial amount of tEuros 2,000,000. The loans were sold at their nominal value (book value) to Tagus.
In January and February 2011, BST entered into "Mortgage Retransfer Agreements" with Hipototta no. 2 PLC, Hipototta no. 3 PLC and Hipototta no. 10 Ltd. under which it repurchased the loans previously securitised, by the amounts of tEuros 880,636, tEuros 1,548,396 and tEuros 803,494, respectively and the Notes held in its portfolio related to these securitizations have been redeemed at their nominal value.
In May and June of 2012, BST entered into "Mortgage Retransfer Agreements" with Hipototta no. 11 and Hipototta no. 12. Under these agreements BST repurchased the previously securitised loans for tEuros 1,719,660 and tEuros 1,197,009, respectively, and was reimbursed relating to the Notes it held in the portfolio associated to these securitizations at the respective nominal value.
In March 2011, BST securitised part of its portfolio of commercial paper and loans granted to companies through an operation denominated BST SME no. 1, with a total initial amount of tEuros 2,000,000. Additionally, in June 2011 the Bank proceeded to the securitization of part of its consumer credit portfolio through an operation denominated Totta Consumer no. 1 with a total initial amount of tEuros 1,000,000. The credits from these operations were sold at their nominal value to Tagus. In March 2012, BST liquidated the BST SME no. 1. This liquidation took place through the "SME Receivables Retransfer Agreement", under which the Bank repurchased the credits initially securitised for tEuros 1,792,480.
In October 2011, BST liquidated Hipototta no. 8. The liquidation occurred after a "Mortgage Retransfer Agreement", under which the Bank repurchased the previously securitised loans for tEuros 907,828.
In August 2012, BST liquidated the Totta Consumer no. 1. This liquidation occurred after a "Consumer Receivables Retransfer Agreement", under which the Bank repurchased the credits initially securitized for tEuros 626,373.
In May 2013, BST liquidated Hipototta no. 7. The liquidation occurred after a "Mortgage Retransfer Agreement", under which the Bank repurchased the previously securitised credits for tEuros 1,196,403.
Part of the funds Hipototta and Leasetotta are managed by Navegator – Sociedade Gestora de Fundos de Titularização de Créditos, S.A. (Navegator). BST continues to manage the loan contracts, transferring all the amounts received under the loan contracts to Hipototta and Leasetotta Funds and to Tagus. Santander Group holds no direct or indirect participation in Navegator or in Tagus.
To finance these operations, Hipototta and LeaseTotta FTC Funds issued participating units for the same amount of the loans portfolios purchased, which were fully subscribed by the Hipototta and LeaseTotta PLC/Ltd Funds, both incorporated in Ireland.
Furthermore, Hipototta and LeaseTotta FTC Funds pay all the amounts received from BST and from the Portuguese Treasury ("Direcção Geral do Tesouro") to the Hipototta PLC/Ltd Funds and Leasetotta no. 1 Limited, segregating the instalments between principal and interest.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
To finance these operations, the Hipottota and the LeaseTotta PLC/Ltd. Funds issued bonds with different levels of subordination and rating and, consequently, of return. On December 31, 2013, the bonds issued and still active are as follows:
| Early | Remuneration | |||||||
|---|---|---|---|---|---|---|---|---|
| Amount | Rating | Redemption | Redemption | Up to early | After early | |||
| Issued debt | Initial | Current | S&P | Moody's | Date | Date | redemption date | redemption date |
| Class A | 1,053,200 | 164,951 | A- | Baa3 | November of 2034 | August of 2012 | Euribor 3 m + 0.27% | Euribor 3 m + 0.54% |
| Class B | 32,500 | 10,636 | A- | Ba1 | November of 2034 | August of 2012 | Euribor 3 m + 0.65% | Euribor 3 m + 0.95% |
| Class C | 14,300 1,100,000 |
4,687 180,274 |
A- | Ba2 | November of 2034 | August of 2012 | Euribor 3 m + 1.45% | Euribor 3 m + 1.65% |
| Class D | 17,600 11,000 |
November of 2034 | August of 2012 | Residual income of the securitized portfolio | ||||
| 1,117,600 | 191,274 |
| Hipottta nº 4 PLC | ||||||||
|---|---|---|---|---|---|---|---|---|
| Early | Remuneration | |||||||
| Amount | Redemption | redemption | Up to early | After early | ||||
| Issued debt | Initial | Current | Rating Fitch | date | rate | redemption date | redemption date | |
| Class A | 2,616,040 | 971,232 | A | December of 2048 | December of 2014 | Euribor 3 m + 0.12% | Euribor 3 m + 0.24% | |
| Class B | 44,240 | 35,335 | A | December of 2048 | December of 2014 | Euribor 3 m + 0.19% | Euribor 3 m + 0.40% | |
| Class C | 139,720 2,800,000 |
111,592 1,118,159 |
B | December of 2048 | December of 2014 | Euribor 3 m + 0.29% | Euribor 3 m + 0.58% | |
| Class D | 14,000 14,000 |
December of 2048 | December of 2014 | Residual income of the securitized portfolio | ||||
| 2,814,000 | 1,132,159 |
| Hipottta nº 5 PLC | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Early | Remuneration | |||||||||
| Amount | Rating | Redemption | redemption | Up to early | After early | |||||
| Issued debt | Initial | Current | S&P | Moody's | date | date | redemption date | redemption date | ||
| Class A1 | 200,000 | - | February of 2060 | February of 2014 | Euribor 3 m + 0.05% | Euribor 3 m + 0.10% | ||||
| Class A2 | 1,693,000 | 847,992 | BBB | Baa3 | February of 2060 | February of 2014 | Euribor 3 m + 0.13% | Euribor 3 m + 0.26% | ||
| Class B | 26,000 | 26,000 | BBB- | Ba3 | February of 2060 | February of 2014 | Euribor 3 m + 0.17% | Euribor 3 m + 0.34% | ||
| Class C | 24,000 | 24,000 | BBB- | B2 | February of 2060 | February of 2014 | Euribor 3 m + 0.24% | Euribor 3 m + 0.48% | ||
| Class D | 26,000 | 26,000 | BB | B3 | February of 2060 | February of 2014 | Euribor 3 m + 0.50% | Euribor 3 m + 1.00% | ||
| Class E | 31,000 2,000,000 |
31,000 954,992 |
BB- | Caa2 | February of 2060 | February of 2014 | Euribor 3 m + 1.75% | Euribor 3 m + 3.50% | ||
| Class F | 10,000 2,010,000 |
9,951 964,943 |
CCC- | Ca | February of 2060 | February of 2014 | Residual income of the securitized portfolio |
| Leasetotta nº 1 Ltd | ||||
|---|---|---|---|---|
| -- | --------------------- | -- | -- | -- |
| Amount | Rating Redemption |
||||
|---|---|---|---|---|---|
| Issued debt | Initial | Current | DBRS | date | Remnuneration |
| Class A | 1,040,000 | 100,933 | AAH | January of 2042 | Euribor 3 m + 0.30% |
| Class B | 260,000 | 260,000 | January of 2042 | Euribor 3 m + 4.75% | |
| 1,300,000 | 360,933 | ||||
| Class C | 65,000 1,365,000 |
65,000 425,933 |
January of 2042 | Residual income of the securitized portfolio |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The bonds issued by Hipototta no. 1 PLC and Hipototta no. 4 PLC bear interest payable quarterly on March 30, June 30, September 30 and December 31 of each year. The bonds issued by Hipototta PLC no. 5 bear interest payable quarterly on February 28, May 30, August 31 and November 30 of each year. The bonds issued by LeaseTotta no. 1 Ltd bear interest payable quarterly on January 15, April 15, July 15 and October 15 of each year.
BST has the option to early redeem the bonds on the above-mentioned dates. For all Hipototta and Leasetotta PLC/Ltd, BST has the possibility of repurchasing the loan portfolios at their nominal value when the outstanding loan portfolio is equal to or less than 10% of the initial amount of the operations.
Furthermore, up to five days before each quarterly interest payment date, Hipototta and Leasetotta PLC/Ltd have the option to make partial repayments of the Classes A, B and C notes, as well as the Classes D and E notes in the case of Hipototta PLC no. 5, in order to adjust the amount of the liability to that of the outstanding mortgage loan portfolios.
Remuneration of the Class D bonds of Hipototta no. 1 and Hipototta no. 4, the Class F bonds for Hipottota no.5 and the Class C bonds for LeaseTotta no. 1 Ltd are the last liabilities to be paid.
Remuneration of these classes of bonds corresponds to the difference between the income generated by the securitised loan portfolio and the sum of all costs of the operation, namely:
When the securitization operations were launched, the estimated income of the securitised loans portfolios included in the calculation of the remuneration of the Class D bonds for Hipototta PLC no. 1 and no. 4 corresponded to an average annual rate of 1.1% and 0.9%, respectively. For the Class F notes of Hipototta PLC no. 5 it corresponded to an annual average of 0.9% of the total credit portfolio. For the Class C bonds of LeaseTotta no. 1, it corresponded to an annual average rate of 0.7% of the total credit portfolio.
When the securitizations were issued, subordinated loans were granted by BST to Hipotottas for facilities / credit lines in case of need for liquidity by Hipotottas. There were also signed "Swap Agreements" between the Santander Group and the first issued Hipotottas and between the BST and the remaining securitization vehicles to cover the interest rate risk.
Related parties disclosures of the Bank with which it had balances or transactions in 2013 and 2012 were the following:
| Name of the related entity | Head office |
|---|---|
| Entities that directly or indirectly control the Group | |
| Santander Totta, SGPS, S.A. | Portugal |
| Santusa Holding, S.L. | Spain |
| Banco Santander, S.A. | Spain |
| Entities under direct or indirect control by the Group | |
| Totta & Açores Financing, Ltd. | Cayman islands |
| Serfin International Bank & Trust | Cayman islands |
| Totta & Açores, Inc. - Newark | USA |
| Totta Ireland, PLC | Ireland |
| Santotta Internacional, SGPS, Sociedade Unipessoal, Lda. | Portugal |
| TottaUrbe - Empresa de Administração e Construções, S.A. | Portugal |
| BST International Bank, Inc. | Puerto Rico |
| Taxagest, SGPS, S.A. | Portugal |
| Santander - Gestão de Activos, SGPS, S.A. | Portugal |
| Fundo de Investimento Mobiliário Aberto de Obrigações de Taxa Variável – Santander Multiobrigações | Portugal |
| Fundo de Investimento Imobiliário Novimovest | Portugal |
| Entities significantly influenced by the Group | |
| Benim - Sociedade Imobiliária, S.A. | Portugal |
| Partang, SGPS, S.A. | Portugal |
| Banco Caixa Geral Totta de Angola, S.A. | Angola |
| Unicre - Instituição Financeira de Crédito, S.A. | Portugal |
| Special purpose Entities that are directly or indirectly controlled by the Group | |
| HIPOTOTTA NO. 1 PLC | Ireland |
| HIPOTOTTA NO. 4 PLC | Ireland |
| HIPOTOTTA NO. 5 PLC | Ireland |
| HIPOTOTTA NO. 7 Ltd | Ireland |
| LEASETOTTA NO. 1 Ltd | Ireland |
| HIPOTOTTA NO. 1 FTC | Portugal |
| HIPOTOTTA NO. 4 FTC | Portugal |
| HIPOTOTTA NO. 5 FTC | Portugal |
| HIPOTOTTA NO. 7 FTC | Portugal |
| LEASETOTTA NO.1 FTC | Portugal |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| Name of the related entity | Head office |
|---|---|
| Entities under direct or indirect common control by the group | |
| Open Bank Santander Consumer S.A. | Spain |
| Santander Totta Seguros - Companhia de Seguros de Vida, S.A. | Portugal |
| Banco Santander de Puerto Rico | Puerto Rico |
| Banco Santander Consumer Portugal, S.A. | Portugal |
| Santander Bank & Trust Ltd. | Spain |
| Banco Santander Brasil, S.A. | Brazil |
| Produban Servicios Informaticos Generales, S.L. | Spain |
| Portal Universia Portugal - Prestação de Serviços de Informática, S.A. | Portugal |
| Ingeniería de Software Bancário, S.L. | Spain |
| Ibérica de Compras Corporativas | Spain |
| Grupo Banesto | Spain |
| Union de Créditos Inmobiliários, S.A. | Spain |
| Capital Grupo Santander, S.A. S.G.E.C.R. | Spain |
| Abbey National Treasury Services, PLC | United Kingdom |
| Santander Global Facilities | Spain |
| Geoban, S.A. | Spain |
| Gesban Servicios Administrativos Globais | Spain |
| Banco Banif, S.A. | Spain |
| All Funds Bank, S.A. | Spain |
| Santander Consumer, EFC, S.A. | Spain |
| Santander Back-Office Globales Mayorista | Spain |
| Santander Consumer Finance S.A. | Spain |
| Santander Seguros y Reaseguros, Compañía Aseguradora, S.A. | Spain |
| Santander Tecnologia y Operaciones AEIE | Spain |
| Santander de Titulizacion SGFT | Spain |
| Santander Investment, S.A. | Spain |
| Santander Investment Securities, Inc. | USA |
| Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander | Mexico |
| Konecta Portugal, Lda. | Portugal |
| Santander UK PLC | United Kingdom |
| Sovereign Bank | USA |
| Banco Santander (Suisse), S.A. | Switzerland |
| UCI - Mediação de Seguros Unipessoal, Lda. | Portugal |
| Santander Asset Management, S.A., SGIIC | Spain |
| Retama Real Estate, SL | Spain |
| Santander, Asset Management, SGFIM, S.A. | Portugal |
| Santander Pensões - Sociedade Gestora de Fundos de Pensões, S.A. | Portugal |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2013 | |||
|---|---|---|---|
| Entities that directly or indirectly control the Group |
Entities that are siginificantly influenced by the Group |
Entities under direct or indirect common control by the Group |
|
| Assets: | |||
| Balances due from banks | 8.674 | - | 1.780 |
| Financial assets held for trading | 262.686 | 25.416 | 27.450 |
| Available-for-sale financial assets | - | - | 9.251 |
| Loans and advances to credit institutions | 1.256.990 | 1.686 | 218.579 |
| Loans and advances to customers | - | 35.717 | 13.151 |
| Hedging derivatives | 174.964 | - | - |
| Investments in associated companies | - | 147.730 | - |
| Other assets | 17.536 | 5.047 | 64.722 |
| Liabilities: | |||
| Financial liabilities held for trading | 1.552.750 | - | 53.544 |
| Resources of other credit institutions | 574.924 | 154.986 | 7.099 |
| Resources of customers and other debts | 132.692 | 10.801 | 1.402.466 |
| Debt securities | 125.496 | - | 80.985 |
| Hedging derivatives | 370.487 | - | - |
| Subordinated liabilities | - | - | 4.307 |
| Other liabilities | 5.329 | - | 1.586 |
| Costs: | |||
| Interest and similar charges | 228.345 | 551 | 69.893 |
| Charges w ith services and comissions | 26 | - | 1.320 |
| Result of assets and liabilities | |||
| at fair value through profit or loss | 1.009.308 | - | 47.942 |
| Result of foreign exchange valuation | - | - | 312 |
| General administrative costs | - | - | 39.889 |
| Impairment on investments in associated companies | - | 400 | - |
| Income: | |||
| Interest and similar income | 268.873 | 145 | 5.856 |
| Result of assets and liabilities | |||
| at fair value through profit or loss | 1.181.389 | - | 45.839 |
| Result of foreign exchange revaluation | 642 | - | - |
| Income from services and comissions | 161 | - | 86.660 |
| Results from associates Other results |
- - |
14.069 - |
- 12.588 |
| Other operating results | - | - | 203 |
| Off balance sheet items: | |||
| Guarantees provided and other contingent liabilities | 11.642 | - | 96.969 |
| Guarantees received | 710 | - | 1.400 |
| Commitments to third parties | 19.669 | 6.058 | 48.386 |
| Currency operations and derivatives | 20.678.434 | 23.078 | 819.796 |
| Responsibilities for services rendered | 2.761.815 | 32.487 | 2.741.556 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||
|---|---|---|---|
| Entities that are | Entities under | ||
| Entities that | significantly | direct or indirect | |
| directly or indirectly | influenced | common control | |
| control the Group | by the Group | by the Group | |
| Assets: | |||
| Balances due from banks | 8,372 | - | 8,539 |
| Financial assets held for trading | 262,786 | - | 5,825 |
| Available-for-sale financial assets | - | - | 5,973 |
| Loans and advances to credit institutions | 1,825,070 | - | 1,405 |
| Loans and advances to customers | - | - | 38,179 |
| Hedging derivatives | 247,437 | - | - |
| Investments in associated companies | - | 142,994 | - |
| Other assets | 14,553 | 4,018 | 16,186 |
| Liabilities: | |||
| Financial liabilities held for trading | 1,835,739 | - | 69,014 |
| Resources of other credit institutions | 599,332 | 158,341 | 24,286 |
| Resources of customers and other debts | 85,938 | 9,545 | 1,818,110 |
| Debt securities | 165,547 | - | 298,674 |
| Hedging derivatives | 453,444 | - | - |
| Subordinated liabilities | - | - | 4,311 |
| Other liabilities | 10,663 | - | 2,840 |
| Costs: | |||
| Interest and similar charges | 348,656 | 958 | 90,756 |
| Charges w ith services and commissions | 880 | - | 3,081 |
| Result of assets and liabilities | |||
| at fair value through profit or loss | 2,204,438 | - | 102,309 |
| General administrative costs | - | - | 36,922 |
| Impairment on Investments in associated companies | - | 160 | - |
| Income: | |||
| Interest and similar income | 386,852 | 5 | 8,037 |
| Result of assets and liabilities | |||
| at fair value through profit or loss | 1,559,475 | - | 80,279 |
| Result of foreign exchange revaluation | 360 | - | - |
| Income from services and commissions | 275 | - | 85,648 |
| Results from associates | - | 11,864 | - |
| Other operating results | - | - | 199 |
| Off-balance sheet Items: | |||
| Guarantees provided and other contingent liabilities | 15,784 | - | 523,224 |
| Guarantees received | 710 | - | 1,400 |
| Commitments to third parties | 515 | 784 | 561,030 |
| Commitments assumed by third parties | - | - | 301,417 |
| Currency operations and derivatives | 21,073,204 | 881 | 1,073,094 |
| Responsibilities for services rendered | 2,812,706 | 34,592 | 8,079,659 |
As at December 31, 2013 and 2012 the loans and advances to members of management and supervisory boards, considered key management personnel of the Bank, amounted to tEuros 1,009 and tEuros 1,135, respectively. Fixed and variable remuneration at these dates amounted to tEuros 6,310 and tEuros 5,675, respectively (Note 40).
The Santander Group, which includes BST, also has a worldwide long term incentive plan, which is described in Note 47 and is divided into cycles. For the members of the Board of Directors, the amount recorded in the caption staff costs in the reporting years ending on December 31, 2013 and 2012 is presented below:
| 2013 | 2012 | |
|---|---|---|
| Fourth cycle – PI12 - assigned in 2009 exercisable in July 2012 | - | 87 |
| Fifth cycle – PI13 - assigned in 2010 exercisable in July 2013 Sixth cycle – PI14 - assigned in 2011 exercisable in July 2014 |
118 11 |
225 15 |
| ----- | ----- | |
| 129 | 327 | |
| === | === |
The cycles of the share plans linked to objectives of the members of the Board of Directors ended on the dates indicated below and shares were attributed at the following amount per share:
| Cycle | Maturity date | Number of shares attributed | Value per share |
|---|---|---|---|
| First | July 6, 2009 | 97,676 | 8.49 Euros |
| Second | July 8, 2010 | 136,719 | 8.77 Euros |
| Third | July 11, 2011 | 133,727 | 7.51 Euros |
| Fourth | July 9, 2012 | 35,850 | 4.88 Euros |
| Fifth | July 31, 2013 | - | n.a. |
With regard to post-employment benefits, the members of the Board of Directors with a labour contract with BST are included in the pension plan of the Collective Labour Agreement ("Acordo Colectivo de Trabalho" - ACT) for the banking sector subscribed by the Bank. The general conditions of this plan are described in Note 1.3. l).
In the Shareholders' General Meeting held on May 30, 2007, the BST's shareholders approved the "Regulation for supplementary attribution of retirement pensions for age or disability" for the executive members of the Board of Directors of the former BTA Totta that are executive members of the BST's Board of Directors (Executive Committee) which were in office for more than fifteen years, consecutive or interpolated. Under this Regulation they will be entitled to a pension supplement equivalent to 80% of its gross annual salary. The amount of the supplementary retirement pension shall be determined by the Remuneration Committee when the time in office is less than fifteen years. For these situations, it is defined that the supplement of the pension will be 65% of gross annual salary, whenever the time in office is equal to or is more than ten years, and 75% of gross annual salary, whenever the time in office is equal to or is more than twelve years. This defined benefit plan is a supplementary plan dependent from the general Social Security system.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the liabilities with this plan amounted to tEuros 15,598 and tEuros 13,735, respectively, and were covered by a provision of the same amount recorded in the caption "Provision for pensions and other charges" (Note 23).
With regard to employment termination benefits, in accordance with the Commercial Company Law ("Código das Sociedades Comerciais"), whenever the term of a member of the management or supervisory board is terminated early by BST, it will pay the member the future remuneration that he/she would be entitled to up to the end of its term.
The remuneration of the statutory auditors of the Bank and its subsidiaries in 2013, excluding VAT, was as follows:
| Statutory audit and external auditor services rendered (a) | 791 |
|---|---|
| Other assurance services (a) | 1,347 |
| Tax consulting (b) | 122 |
| Other (b) | 95 |
| ------- | |
| 2,355 |
====
The "Share Plan Linked to the Santander Group's Objectives" was approved in a Shareholders' General Meeting of Banco Santander, S.A.. This plan is divided into cycles, and so far six cycles have been approved. BST is also included in this plan.
Each beneficiary of the plan has the right to receive a maximum number of Banco Santander, S.A.'s shares. The final number allocated is determined by multiplying the maximum number of shares initially allocated, by the sum of the coefficients indexed to the evolution of Banco Santander, S.A. in relation to other entities included in a predefined group. The comparison is measured in relation to two parameters: total shareholders' return and increase in earnings per share for the first three cycles and for the remaining cycles the comparison is measured by the total shareholders' return only.
The maturity dates of the cycles for the "Share Plan Linked to the Santander Group's Objectives", the total number of shares granted and the value per share are as follows:
| Total number | ||||
|---|---|---|---|---|
| Cycle | Maturity date | of shares granted | Value per share | |
| First | July 6, 2009 | 326,681 | 8.49 | |
| Second | July 8, 2010 | 540,822 | 8.77 | |
| Third | July 11, 2011 | 571,640 | 7.51 | |
| Fourth | July 9, 2012 | 200,897 | 4.88 | |
| Fifth | July 31, 2013 | - | n.a. |
As described in Note 1.3. o), recognition of the share incentive plans consists in recognizing the right of the Bank's employees to such instruments in the income statement for the year under the caption "Staff costs", as it corresponds to a remuneration for services rendered. Management, hedging and implementation of the plans are provided by Banco Santander S.A. for all employees covered by the Plan worldwide.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In 2013 and 2012, the total cost of the "Share Plan Linked to the Santander Group's Objectives" for all the employees of the Bank covered by it was as follows:
| ==== | ==== | |
|---|---|---|
| 1,802 | 3,104 | |
| ------- | -------- | |
| Sixth cycle – PI14 - assigned in 2011 and exercisable in July 2014 | 1,066 | 1,056 |
| Fifth cycle – PI13 - assigned in 2010 and exercisable in July 2013 | 736 | 1,473 |
| Fourth cycle – PI12 - assigned in 2009 and exercisable in July 2012 | - | 575 |
| 2013 | 2012 |
The employees are entitled to the shares upon their permanence in the Santander Group. The cost per share, as well as the dates of the delivery of the shares are summarised in the following table:
| Estimated date of | |||||
|---|---|---|---|---|---|
| Number of | Cost per share | delivery of the | Number of | Entitlement | |
| Stocks' Plans | shares | (Euros) | shares | employees | date |
| Plans in place as at December 31, 2011 | |||||
| PI12 | 747,059 | 4.5112 | jul-2012 | 318 | 2009 |
| PI13 | 779,212 | 5.5707 | jul-2013 | 320 | 2010 |
| PI14 | 609,358 | 4.5254 | jul-2014 | 309 | 2011 |
| Change in 2012 | |||||
| PI12 - Shares available | (200,897) | - | jul-2012 | (320) | - |
| PI12 - Shares not available (b) | (471,823) | - | - | - | - |
| PI12 - Reversals (a) | (74,339) | - | - | (2) | - |
| PI13 - Reversals (a) | (76,339) | - | - | (2) | - |
| Plans in place as at December 31, 2012 | |||||
| PI13 | 702,873 | 5.5707 | jul-2013 | 318 | 2010 |
| PI14 | 609,358 | 4.5254 | jul-2014 | 309 | 2011 |
| Change in 2013 | |||||
| PI13 -Shares not available | (702,873) | - | jul-2013 | (318) | - |
| PI14 - Reversals (a) | |||||
| (2,600) | - | jul-2014 | (1) | - | |
| Plans in place as at December 31, 2013 | |||||
| PI14 | 606,758 | 4.5254 | jul-2014 | 308 | 2011 |
Notes:
(a) Reversal of the rights granted to beneficiaries who have not completed the requirements of permanence in the Santander Group established in the Regulation Plan.
(b) Difference between the maximum number of allocated shares and the number of shares actually delivered. The number of allocated shares results by applying a coefficient calculated according to the Santander Group's performance applied to the maximum number of shares allocated.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
For the "Share Plan Linked to the Santander Group's Objectives" in force on December 31, 2013 (6th cycle), the fair value was determined in accordance with the following methodology:
| PI14 | |
|---|---|
| Volatility (*) | 51.35% |
| Annual dividend yield in recent years | 6.06% |
| Risk-free interest rate | 4.073% |
(*) Historical volatility of the corresponding period (2 or 3 years)
Application of the above referred simulation model results in a percentage of 55.39% for PI14, to which 50% of the value allocated to determine the accounting cost of the TRS incentive is applied. Since the valuation refers to a market condition, it is not subject to adjustment as from the allocation date.
On December 31, 2013 and 2012, financial instruments had the following book value:
| 2013 | |||||
|---|---|---|---|---|---|
| Valued at | Valued at | Valued at | Net | ||
| fair value | amortised cost | historical cost | Impairment | Value | |
| Assets | |||||
| Cash and deposits at central banks | - | 116,135 | 221,706 | - | 337,841 |
| Balances due from other banks | - | 497,312 | 55,609 | - | 552,921 |
| Financial assets held for trading | 1,949,115 | - | - | - | 1,949,115 |
| Available-for-sale financial assets | 4,423,054 | - | 20,937 | (61,738) | 4,382,253 |
| Loans and advances to banks | - | 3,270,970 | - | - | 3,270,970 |
| Loans and advances to customers | 42,520 | 27,142,877 | - | (1,077,876) | 26,107,521 |
| Hedging derivatives | 199,427 | - | - | - | 199,427 |
| 6,614,116 | 31,027,294 | 298,252 | (1,139,614) | 36,800,048 | |
| Liabilities | |||||
| Resources of central banks | - | 6,241,410 | - | - | 6,241,410 |
| Financial liabilities held for trading | 1,619,768 | - | - | - | 1,619,768 |
| Resources of other credit institutions | - | 4,175,058 | - | - | 4,175,058 |
| Resources of customers and other debts | 3,621,415 | 17,009,744 | 75,842 | - | 20,707,001 |
| Debt securities | 1,326,599 | 1,207,562 | - | - | 2,534,161 |
| Hedging derivatives | 370,684 | - | - | - | 370,684 |
| Subordinated liabilities | - | 4,307 | - | - | 4,307 |
| 6,938,466 | 28,638,081 | 75,842 | - | 35,652,389 | |
| 2012 | |||||
| Valued at | Valued at | Valued at | Net | ||
| fair value | amortised cost | historical cost | Impairment | Value | |
| Assets | |||||
| Cash and deposits at central banks | - | 141,602 | 210,763 | - | 352,365 |
| Balances due from other banks | - | 321,628 | 63,695 | - | 385,323 |
| Financial assets held for trading | 2,265,495 | - | - | - | 2,265,495 |
| Financial assets at fair value through profit or loss | 93,735 | - | - | - | 93,735 |
| Available-for-sale financial assets | 3,527,449 | - | 21,398 | (58,983) | 3,489,864 |
| Loans and advances to banks | - | 3,097,422 | - | - | 3,097,422 |
| Loans and advances to customers | 49,565 | 27,895,746 | - | (965,662) | 26,979,649 |
| Hedging derivatives | 284,850 | - | - | - | 284,850 |
| 6,221,094 | 31,456,398 | 295,856 | (1,024,645) | 36,948,703 | |
| Liabilities | |||||
| Resources of central banks | - | 5,837,242 | - | - | 5,837,242 |
| Financial liabilities held for trading | 2,048,743 | - | - | - | 2,048,743 |
| Resources of other credit institutions | - | 1,949,574 | - | - | 1,949,574 |
| Resources of customers and other debts | 3,070,416 | 18,309,464 | 117,294 | - | 21,497,174 |
| Debt securities | 2,637,250 | 1,316,269 | - | - | 3,953,519 |
| Hedging derivatives | 455,911 | - | - | - | 455,911 |
| Subordinated liabilities | - | 4,311 | - | - | 4,311 |
| 8,212,320 | 27,416,860 | 117,294 | - | 35,746,474 |
In 2013 there were no reclassifications of financial assets.
In 2012 there were no reclassifications of financial assets, except for the reclassification of the participating units held in "Lusimovest" and "Novimovest" real estate funds from the caption "Financial assets held for trading" to the caption "Available-for-sale financial assets" (Note 9).
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The financial assets and liabilities for which fair value hedge accounting was applied are valued at fair value, although only the amounts relating to the hedged risk were subject to fair value adjustment.
In the years ending on December 31, 2013 and 2012, the net gains and losses on financial instruments were as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| By corresponding entry to profit or loss | By corresponding entry to equity | ||||||
| Gains | Losses | Net | Gains | Losses | Net | ||
| Financial assets and liabilities held for trading | 1,855,042 | (1,832,630) | 22,412 | - | - | - | |
| Financial assets at fair value through profit or loss | 3,841 | (2,112) | 1,729 | - | - | - | |
| Available-for-sale financial assets | 75,747 | (11,262) | 64,485 | 278,591 | - | 278,591 | |
| Balances in central banks and other credit institutions | 59,590 | - | 59,590 | - | - | - | |
| Loans and advances to customers | 1,156,998 | (556,752) | 600,246 | - | - | - | |
| Hedging derivatives | 433,812 | (367,122) | 66,690 | - | (55,108) | (55,108) | |
| Resources in central banks and other credit institutions | - | (53,464) | (53,464) | - | - | - | |
| Resources of customers and other debts | 95,610 | (401,938) | (306,328) | - | - | - | |
| Debt securities | 34,453 | (65,155) | (30,702) | - | - | - | |
| Subordinated liabilities | - | (189) | (189) | - | - | - | |
| 3,715,093 | (3,290,624) | 424,469 | 278,591 | (55,108) | 223,483 | ||
| Guarantees given | 24,849 | (217) | 24,632 | ||||
| Credit lines | 8,802 | (323) | 8,479 |
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| By corresponding entry to profit or loss | By corresponding entry to equity | ||||||
| Gains | Losses | Net | Gains | Losses | Net | ||
| Financial assets and liabilities held for trading | 3,217,416 | (3,194,239) | 23,177 | - | - | - | |
| Financial assets at fair value through profit or loss | 18,497 | - | 18,497 | - | - | - | |
| Available-for-sale financial assets | 318,338 | (26,234) | 292,104 | 427,590 | - | 427,590 | |
| Balances in central banks and other credit institutions | 60,028 | - | 60,028 | - | - | - | |
| Loans and advances to customers | 1,188,647 | (532,224) | 656,423 | - | - | - | |
| Hedging derivatives | 452,599 | (568,855) | (116,256) | 40,944 | - | 40,944 | |
| Resources in central banks and other credit institutions | - | (90,889) | (90,889) | - | - | - | |
| Resources of customers and other debts | 43,685 | (531,025) | (487,340) | - | - | - | |
| Debt securities | 187,022 | (180,835) | 6,187 | - | - | - | |
| Subordinated liabilities | - | (202) | (202) | - | - | - | |
| 5,486,232 | (5,124,503) | 361,729 | 468,534 | - | 468,534 | ||
| Guarantees given | 23,082 | (10,595) | 12,487 | ||||
| Credit lines | 12,945 | (4,975) | 7,970 |
The above referred amounts do not include gains and losses resulting from the foreign exchange revaluation of financial instruments, which for the years ended on December 31, 2013 and 2012 corresponded to net gains of tEuros 4,039 and tEuros 5,652, respectively (Note 37).
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
In the years ending on December 31, 2013 and 2012, interest income and costs, determined in accordance with the effective interest rate method, for financial assets and liabilities not recorded at fair value through profit or loss, are as follows:
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Income | Expense | Net | Income | Expense | Net | |
| Assets | ||||||
| Cash and deposits at central banks | 950 | - | 950 | 1,719 | - | 1,719 |
| Balances due from other banks | 16 | - | 16 | 221 | - | 221 |
| Available-for-sale financial assets | 157,758 | - | 157,758 | 198,167 | - | 198,167 |
| Loans and advances to credit institutions | 58,625 | - | 58,625 | 58,089 | - | 58,089 |
| Loans and advances to customers | 765,796 | (116) | 765,680 | 982,961 | (246) | 982,715 |
| 983,145 | (116) | 983,029 | 1,241,157 | (246) | 1,240,911 | |
| Liabilities | ||||||
| Resources of central banks | - | (25,542) | (25,542) | - | (52,015) | (52,015) |
| Resources of other credit institutions | - | (27,922) | (27,922) | - | (38,873) | (38,873) |
| Resources of customers and other debts | 8,872 | (401,872) | (393,000) | 8,417 | (485,890) | (477,473) |
| Debt securities | - | (45,447) | (45,447) | - | (168,212) | (168,212) |
| Subordinated liabilities | - | (189) | (189) | - | (202) | (202) |
| 8,872 | (500,972) | (492,100) | 8,417 | (745,192) | (736,775) | |
| Guarantees given | 19,899 | - | 19,899 | 19,906 | - | 19,906 |
| Credit lines | 7,443 | - | 7,443 | 7,191 | - | 7,191 |
In the years ending on December 31, 2013 and 2012, commissions income and costs, not included in the calculation of the effective interest rate, for financial assets and liabilities not recorded at fair value through profit or loss, are as follows:
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Income | Expense | Net | Income | Expense | Net | |
| Assets | ||||||
| Loans and advances to customers | 44,327 | (14,142) | 30,185 | 53,281 | (12,050) | 41,231 |
| Liabilities | ||||||
| Resources of customers and other debts | 37,307 | - | 37,307 | 20,361 | - | 20,361 |
In 2013 and 2012, the Bank recognised financial income relating to "Interest and similar income" on overdue or impaired credit operations amounting to tEuros 8,643 and tEuros 8,087, respectively (Note 30).
On December 31, 2013 and 2012, hedging derivatives and financial instruments designated as hedged items are as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Hedged item | Hedging instrument | ||||||
| Nominal | Value net | Fair value | Book | Nominal | Fair | ||
| value | of impairment | adjustments | value | value | value | ||
| Fair value hedges: | |||||||
| Loans and advances to customers | 38,085 | 38,323 | 4,200 | 42,523 | 38,086 | (4,477) | |
| Available-for-sale financial assets | 2,075,000 | 2,118,830 | 225,613 | 2,344,443 | 2,075,000 | (267,880) | |
| Resources of customers and other debts | (3,576,534) | (3,625,401) | 3,986 | (3,621,415) | 3,579,439 | 33,602 | |
| Debt securities | (1,341,104) | (1,357,461) | 30,862 | (1,326,599) | 1,449,525 | (23,554) | |
| Cash flow hedges: | |||||||
| Loans and advances to customers | 4,492,042 | 4,492,042 | - | 4,492,042 | 5,450,000 | 80,640 | |
| Debt securities | 1,141,190 | 1,141,190 | - | 1,141,190 | 650,000 | 10,412 | |
| 2,828,679 | 2,807,523 | 264,661 | 3,072,184 | 13,242,050 | (171,257) |
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| Hedged item | Hedging instrument | ||||||
| Nominal | Value net | Fair value | Book | Nominal | Fair | ||
| value | of impairment | adjustments | value | value | value | ||
| Fair value hedges: | |||||||
| Loans and advances to customers | 43,084 | 43,446 | 6,100 | 49,546 | 43,085 | (6,414) | |
| Available-for-sale financial assets | 2,075,000 | 2,118,833 | 321,577 | 2,440,410 | 2,075,000 | (363,798) | |
| Resources of customers and other debts | (3,154,198) | (3,181,058) | (45,294) | (3,226,352) | 3,143,327 | 60,476 | |
| Debt securities | (2,612,943) | (2,646,979) | 9,729 | (2,637,250) | 2,727,613 | (2,590) | |
| Cash flow hedges: | |||||||
| Loans and advances to customers | 3,974,694 | 3,974,694 | - | 3,974,694 | 2,950,000 | 141,265 | |
| 325,637 | 308,936 | 292,112 | 601,048 | 10,939,025 | (171,061) |
The expected cash flows by period that might affect the profit or loss for the year are as follows:
| 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Up to 3 months |
From 3 months to 6 months |
From 6 months to 1 year |
From 1 to 3 years |
Over 3 years |
Total | ||||
| Interest rate sw aps | 40,959 | 8,125 | 6,861 | 48,869 | (13,762) | 91,052 | |||
| 2012 | |||||||||
| Up to 3 | From 3 months | From 6 months | From 1 to | Over | |||||
| months | to 6 months | to 1 year | 3 years | 3 years | Total | ||||
| Interest rate sw aps | 33,743 | 12,489 | 3,821 | 61,976 | 29,236 | 141,265 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The gains and losses recognised on fair value hedging operations in the income statement of the years ended December 31, 2013 and 2012, are as follows:
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Hedged item |
Hedging instrument |
Net | Hedged item |
Hedging instrument |
Net | ||
| Loans and advances to customers | (1,738) | 1,738 | - | 774 | (774) | - | |
| Available-for-sale financial assets | (95,965) | 95,965 | - | 111,437 | (111,437) | - | |
| Resources of customers and other debts | 49,207 | (29,353) | 19,854 | (44,748) | 45,026 | 278 | |
| Debt securities | 11,803 | (31,966) | (20,163) | 90,199 | (90,703) | (504) | |
| (36,693) | 36,384 | (309) | 157,662 | (157,888) | (226) |
On December 31, 2013 and 2012, financial instruments were made up as follows:
| 2013 | |||||
|---|---|---|---|---|---|
| Valued at | Not valued at | ||||
| fair value | fair value | Total | |||
| Assets | |||||
| Cash and deposits at central banks | - | 337,841 | 337,841 | ||
| Balances due from other banks | - | 552,921 | 552,921 | ||
| Financial assets held for trading | 1,949,115 | - | 1,949,115 | ||
| Available-for-sale financial assets | 4,368,744 | 13,509 | 4,382,253 | ||
| Loans and advances to credit institutions | - | 3,270,970 | 3,270,970 | ||
| Loans and advances to customers | 42,523 | 26,064,998 | 26,107,521 | ||
| Hedging derivatives | 199,427 | - | 199,427 | ||
| 6,559,809 | 30,240,239 | 36,800,048 | |||
| Liabilities | |||||
| Resources of central banks | - | 6,241,410 | 6,241,410 | ||
| Financial liabilities held for trading | 1,619,768 | - | 1,619,768 | ||
| Resources of other credit institutions | - | 4,175,058 | 4,175,058 | ||
| Resources of customers and other debts | 3,621,415 | 17,085,586 | 20,707,001 | ||
| Debt securities | 1,326,599 | 1,207,562 | 2,534,161 | ||
| Hedging derivatives | 370,684 | - | 370,684 | ||
| Subordinated liabilities | - | 4,307 | 4,307 | ||
| 6,938,466 | 28,713,923 | 35,652,389 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||
|---|---|---|---|
| Valued at | Not valued at | ||
| fair value | fair value | Total | |
| Assets | |||
| Cash and deposits at central banks | - | 352,365 | 352,365 |
| Balances due from other banks | - | 385,323 | 385,323 |
| Financial assets held for trading | 2,265,495 | - | 2,265,495 |
| Financial assets at fair value through profit or loss | 93,735 | - | 93,735 |
| Available-for-sale financial assets | 3,475,179 | 14,685 | 3,489,864 |
| Loans and advances to credit institutions | - | 3,097,422 | 3,097,422 |
| Loans and advances to customers | 49,546 | 26,930,103 | 26,979,649 |
| Hedging derivatives | 284,850 | - | 284,850 |
| 6,168,805 | 30,779,898 | 36,948,703 | |
| Liabilities | |||
| Resources of central banks | - | 5,837,242 | 5,837,242 |
| Financial liabilities held for trading | 2,048,743 | - | 2,048,743 |
| Resources of other credit institutions | - | 1,949,574 | 1,949,574 |
| Resources of customers and other debts | 3,070,416 | 18,426,758 | 21,497,174 |
| Debt securities | 2,637,250 | 1,316,269 | 3,953,519 |
| Hedging derivatives | 455,911 | - | 455,911 |
| Subordinated liabilities | - | 4,311 | 4,311 |
| 8,212,320 | 27,534,154 | 35,746,474 |
The financial assets and liabilities for which hedge accounting has been applied to are included as valued at fair value, being subject to fair value adjustments on the hedged risk only.
On December 31, 2013 and 2012, the fair value of financial assets and liabilities valued at fair value, or subject to fair value adjustments in accordance with the application of hedge accounting, was as follows:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Value adjustments | Net | |||||
| Acquisition | due to hedging | Impairment and | book | |||
| cost | Accruals | Valuation | operations | depreciation | value | |
| 355,921 | 1,650 | 1,591,544 | - | - | 1,949,115 | |
| 4,369,692 | 61,522 | (233,773) | 225,613 | (54,310) | 4,368,744 | |
| 38,085 | 324 | 4,200 | - | (86) | 42,523 | |
| - | - | 199,427 | - | - | 199,427 | |
| 4,763,698 | 63,496 | 1,561,398 | 225,613 | (54,396) | 6,559,809 | |
| - | - | 1,619,768 | - | - | 1,619,768 | |
| 3,576,534 | 48,867 | - | (3,986) | - | 3,621,415 | |
| 1,340,822 | 16,639 | - | (30,862) | - | 1,326,599 | |
| - | - | 370,684 | - | - | 370,684 | |
| 4,917,356 | 65,506 | 1,990,452 | (34,848) | - | 6,938,466 | |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | ||||||
|---|---|---|---|---|---|---|
| Value adjustments | Net | |||||
| Acquisition | due to hedging | Impairment and | book | |||
| cost | Accruals | Valuation | operations | depreciation | value | |
| Assets | ||||||
| Financial assets held for trading | 233,413 | - | 2,032,082 | - | - | 2,265,495 |
| Financial assets at fair value through profit or loss | 90,279 | 1,344 | 2,112 | - | - | 93,735 |
| Available-for-sale financial assets | 3,665,652 | 52,586 | (512,366) | 321,577 | (52,270) | 3,475,179 |
| Loans and advances to customers | 43,084 | 381 | - | 6,100 | (19) | 49,546 |
| Hedging derivatives | - | - | 284,850 | - | - | 284,850 |
| 4,032,428 | 54,311 | 1,806,678 | 327,677 | (52,289) | 6,168,805 | |
| Liabilities | ||||||
| Financial liabilities held for trading | - | - | 2,048,743 | - | - | 2,048,743 |
| Resources of customers and other debts | 2,999,936 | 25,186 | - | 45,294 | - | 3,070,416 |
| Debt securities | 2,612,943 | 34,036 | - | (9,729) | - | 2,637,250 |
| Hedging derivatives | - | - | 455,911 | - | - | 455,911 |
| 5,612,879 | 59,222 | 2,504,654 | 35,565 | - | 8,212,320 |
The methods used to determine fair value of the financial instruments are based on market prices on active markets or other valuation techniques, such as discounted cash flows.
On December 31, 2013 and 2012, the book value of the financial instruments valued at fair value or subject to value adjustments due to hedging operations, by valuation methodology, is made up as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Method of determining fair value | |||||||
| Quoted in | Other valuation | ||||||
| active markets | techniques | ||||||
| (Level 1) | (Level 2) | (Level 3) | Total | ||||
| Assets | |||||||
| Financial assets held for trading | 267,025 | 1,540,019 | 142,071 | 1,949,115 | |||
| Available-for-sale financial assets | 3,417,440 | 686,315 | 264,989 | 4,368,744 | |||
| Loans and advances to customers | - | 42,523 | - | 42,523 | |||
| Hedging derivatives | - | 199,427 | - | 199,427 | |||
| 3,684,465 | 2,468,284 | 407,060 | 6,559,809 | ||||
| Liabilities | |||||||
| Financial liabilities held for trading | - | 1,619,768 | - | 1,619,768 | |||
| Resources of customers and other debits | - | 3,621,415 | - | 3,621,415 | |||
| Debt securities | - | 1,326,599 | - | 1,326,599 | |||
| Hedging derivatives | - | 370,684 | - | 370,684 | |||
| - | 6,938,466 | - | 6,938,466 | ||||
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| Method of determining fair value | |||||||
| Quoted in | Other valuation | ||||||
| active markets | techniques | ||||||
| (Level 1) | (Level 2) | (Level 3) | Total | ||||
| Assets | |||||||
| Financial assets held for trading | 233,612 | 2,031,883 | - | 2,265,495 | |||
| Financial assets designated at fair value through profit or loss | 93,735 | - | - | 93,735 | |||
| Available-for-sale financial assets | 3,207,474 | 227,682 | 40,023 | 3,475,179 | |||
| Loans and advances to customers | - | 49,546 | - | 49,546 | |||
| Hedging derivatives | - | 284,850 | - | 284,850 | |||
| 3,534,821 | 2,593,961 | 40,023 | 6,168,805 | ||||
| Liabilities | |||||||
| Financial liabilities held for trading | - | 2,048,743 | - | 2,048,743 | |||
| Resources of customers and other debits | - | 3,070,416 | - | 3,070,416 | |||
| Debt securities | - | 2,637,250 | - | 2,637,250 | |||
| Hedging derivatives | - | 455,911 | - | 455,911 | |||
| - | 8,212,320 | - | 8,212,320 |
In accordance with IFRS 7, the Bank's financial assets and liabilities valued at fair value are classified into three levels:
For derivative financial instruments, the main valuation techniques were as follows:
| Derivative instrument | Main Valuation Techniques | |||
|---|---|---|---|---|
| Forwards | Present Value Model | |||
| Interest Rate Swaps | Present Value Model | |||
| Currency Swaps | Present Value Model | |||
| Equity Swaps | Present Value Model | |||
| FRA's | Present Value Model | |||
| Currency Options | Black-Scholes Model, Monte Carlo Model | |||
| Equity Options | Black-Scholes Model, Heston Model | |||
| Interest Rates Options | Black-Scholes Model, Heath-Jarrow-Morton Model | |||
| Options - Other | Black-Scholes Model, Monte Carlo Model, Heath-Jarrow-Morton Model | |||
| Caps/Floors | Black-Scholes Model, Monte Carlo Model, Heath-Jarrow-Morton Model |
Additionally, in the calculation of Credit Value Adjustments and Debit Value Adjustments to financial derivative instruments, the following inputs were used:
When the inputs used in the valuation of derivative financial instruments resulted from observable market data, the Bank classified its derivative financial instruments valued at fair value in Level 2. When such valuation resulted from internal information prepared by the Bank, those financial instruments were classified in Level 3.
In 2013, the movement in financial instruments classified in the column "Level 3", presented the following detail:
| Financial assets held | |||||
|---|---|---|---|---|---|
| for trading | Available for sale | ||||
| Securities | Derivatives | financial assets | Total | ||
| Opening balance | - | - | 40,023 | 40,023 | |
| Entries in the consolidation perimeter ("Multiobrigações") | 32,802 | - | - | 32,802 | |
| Acquisitions | 3,886 | - | 13,807 | 17,693 | |
| Sales | - | - | (694) | (694) | |
| Reclassifications | - | 106,119 | 239,561 | 345,680 | |
| Changes in fair value | (736) | - | (21,190) | (21,926) | |
| Impairment recognized in the year | - | - | (6,518) | (6,518) | |
| Closing balance | 35,952 | 106,119 | 264,989 | 407,060 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The transfers occurred in 2013 to Level 3 can be explained as follows:
On December 31, 2013, the valuation techniques, the inputs used and the relationship between those inputs and the fair value determined for financial instruments classified in Level 3 were as follows:
| Finacial assets Valuation techniques |
Inputs used |
Relationship between the inputs used and the fair value determined |
|
|---|---|---|---|
| Financial assets held for trading | |||
| Debt securities | Price providad by the counterparty | . No information | Not applicable. |
| Participating units in Real Estate Funds |
Price disclosed by the respective Mangement Company | . Yields . Rents per square meter . Occupancy rates |
If an increase of the rent per square meter occurs or an increase in the occupancy rate or a decrease in the yield occurs, the fair value determined will increase. If a decrease in the amount of the rent per square meter occurs or a decrease of the occupancy rate or an increase of the yield occurs, the fair value determined will decrease. |
| Derivative financial instruments | Discounted cash flows/ Valuation models | . Probability of default (PD) taking into account internal credit ratings assigned by the Bank . Specific LGD's |
If a higher probability of default or a higher LGD is used, the fair value of the financial instrument will decrease. On the other hand, if a lower probability of default or a lower LGD is used, the fair value of the financial instrument will increase. |
| Available for sale financial assets | |||
| Debt securities | Discounted cash flows | . Credit spread calculated internally by the Bank |
If a higher credit spread is used, the fair value of the security will decrease. On the other hand, if a lower credit spread is used, the fair value of the security will increase. |
| Participating units in real estate funds |
Price disclosed by the respective Management Company . Yields | . Rents per square meter . Occupancy rates |
If an increase of the rent per square meter occurs or an increase in the occupancy rate or a decrease in the yield occurs, the fair value determined will increase. If a decrease in the amount of the rent per square meter occurs or a decrease of the occupancy rate or an increase of the yield occurs, the fair value determined will decrease. |
| Participating units in Venture Capital Funds |
Price disclosed by the respective Management Company . No information | Not applicable. |
The most representative interest rate curves by maturity and currency are the following:
| 31-12-2013 | 31-12-2012 | |||
|---|---|---|---|---|
| EUR | USD | EUR | USD | |
| Overnight | 0.28% | 0.31% | 0.50% | 0.30% |
| 1 month | 0.44% | 0.25% | 0.12% | 0.19% |
| 3 months | 0.39% | 0.25% | 0.19% | 0.25% |
| 6 months | 0.38% | 0.27% | 0.32% | 0.46% |
| 9 months | 0.39% | 0.29% | 0.43% | 0.62% |
| 1 year | 0.40% | 0.31% | 0.55% | 0.77% |
| 3 years | 0.74% | 0.86% | 0.47% | 0.48% |
| 5 years | 1.26% | 1.80% | 0.76% | 0.83% |
| 7 years | 1.70% | 2.51% | 1.11% | 1.25% |
| 10 years | 2.21% | 3.18% | 1.55% | 1.76% |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the book value and fair value of the financial instruments valued at amortised cost or historical cost was the following:
| 2013 | |||
|---|---|---|---|
| Book | Fair | ||
| value | value | Difference | |
| Assets | |||
| Cash and deposits at central banks | 337,841 | 337,841 | - |
| Balances due from other banks | 552,921 | 552,921 | - |
| Available-for-sale financial assets | 13,509 | 13,509 | - |
| Loans and advances to banks | 3,270,970 | 3,358,931 | 87,961 |
| Loans and advances to customers | 26,064,998 | 23,114,032 | (2,950,966) |
| 30,240,239 | 27,377,234 | (2,863,005) | |
| Liabilities | |||
| Resources of central banks | 6,241,410 | 6,122,608 | 118,802 |
| Resources of other credit institutions | 4,175,058 | 4,197,975 | (22,917) |
| Resources of customers and other debts | 17,085,586 | 17,230,163 | (144,577) |
| Debt securities | 1,207,562 | 920,474 | 287,088 |
| Subordinated liabilities | 4,307 | 4,301 | 6 |
| 28,713,923 | 28,475,521 | 238,402 | |
| 2012 | |||
| Book | Fair | ||
| value | value | Difference | |
| Assets | |||
| Cash and deposits at central banks | 352,365 | 352,365 | - |
| Balances due from other banks | 385,323 | 385,323 | - |
| Available-for-sale financial assets | 14,685 | 14,685 | - |
| Loans and advances to banks | 3,097,422 | 3,279,009 | 181,587 |
| Loans and advances to customers | 26,930,103 | 24,481,609 | (2,448,494) |
| 30,779,898 | 28,512,991 | (2,266,907) | |
| Liabilities | |||
| Resources of central banks | 5,837,242 | 4,936,307 | 900,935 |
| Resources of other credit institutions | 1,949,574 | 1,986,334 | (36,760) |
| Resources of customers and other debts | 18,426,758 | 18,619,478 | (192,720) |
| Debt securities | 1,316,269 | 1,062,612 | 253,657 |
| Subordinated liabilities | 4,311 | 4,299 | 12 |
| 27,534,154 | 26,609,030 | 925,124 |
If at December 31, 2013 the fair value of most of the debt issued subject to hedging operations included in the debt securities issued had been determined, for the second mortgage bonds issue, the valuation would be less than the respective book value by, approximately, tEuros 9,128 (tEuros 28,227 on December 31, 2012).
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
To determine the fair value of financial instruments recorded at amortized cost or historical cost, the valuation methods used consisted of valuation techniques, namely discounting future cash flows. On December 31, 2013, the recorded value of financial instruments measured at amortized cost or historical cost, presents the following detail by valuation methodology:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Methodology for determining fair value Quoted in Other valuation active markets techniques (Level 1) (Level 2) (Level 3) - 337,841 - - 552,921 - - - 13,509 - 3,270,970 - - - 26,064,998 - 4,161,732 26,078,507 - 6,241,410 - - 4,175,058 - - - 17,085,586 |
||||||
| Total | ||||||
| Assets | ||||||
| Cash and deposits at central banks | 337,841 | |||||
| Balances due from other banks | 552,921 | |||||
| Available-for-sale financial assets | 13,509 | |||||
| Loans and advances to credit institutions | 3,270,970 | |||||
| Loans and advances to customers | 26,064,998 | |||||
| 30,240,239 | ||||||
| Liabilities | ||||||
| Resources of central banks | 6,241,410 | |||||
| Resources of other credit institutions | 4,175,058 | |||||
| Resources of customers and other debts | 17,085,586 | |||||
| Debt securities | - | - | 1,207,562 | 1,207,562 | ||
| Subordinated liabilities | - | - | 4,307 | 4,307 | ||
| - | 10,416,468 | 18,297,455 | 28,713,923 |
The main assumptions used in the calculation of the fair value, by type of financial instrument, were the following:
Credit risk management by the Bank includes identification, measurement, integration and evaluation of different credit risk exposures and analysis of return in relation to risk, on an overall basis, as well as for each area of activity.
Credit risk management is provided by an independent area, the Group Risk Area, which is responsible for managing the special client vigilance system, credit risk segmentation based on the characteristics of customers and products and for the scoring systems (applicable to mortgage loans, consumer credit and credit cards) and ratings used by the Bank.
Counterparty risk consists in the potential credit risk on transactions in financial markets, corresponding to the possibility of non-compliance by the counterparty with the contracted terms and subsequent financial loss for the Bank. Such transactions include the purchase and sale of securities, the contracting of sale transactions with repurchase agreements, the loan of securities and derivative instruments. Considering the complexity and volume of the transactions, as well as the requirements of an adequate control of the consolidated risks with certain customer segments, perimeter control is defined in accordance with the segments involved.
Control of these risks is carried out on a daily basis using an integrated system that records the limits approved, updates the positions in real time, provides information on the limits available and aggregate exposure, also in real time, for the different products and maturities. The system also enables the concentration of risk by groups of customers/counterparties to be controlled on a transversal basis (at several levels).
Derivative position risk (known as Equivalent Credit Risk) is determined as the sum of the present value of each contract (or present cost of substitution) with its Potential Risk, a component that reflects the estimated maximum expected value until maturity, in accordance with the volatility of the underlying market and contracted cash flow structure.
For specific customer segments (namely global corporate customers) the Bank has implemented credit limits that consider economic capital, incorporating variables relating to the credit quality of each counterparty in the quantitative control.
On December 31, 2013 and 2012, the maximum exposure to credit risk and the corresponding book value of the financial instruments are made up as follows:
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| Book | Maximum | Book | Maximum | ||
| value | exposure | value | exposure | ||
| Cash and deposits at central banks | 337,841 | 337,841 | 352,365 | 352,365 | |
| Balances due from other banks | 552,921 | 552,921 | 385,323 | 385,323 | |
| Financial assets held for trading | 1,949,115 | 1,949,115 | 2,265,495 | 2,265,495 | |
| Financial assets at fair value through profit or loss | - | - | 93,735 | 93,735 | |
| Available-for-sale financial assets | 4,382,253 | 4,382,253 | 3,489,864 | 3,489,864 | |
| Loans and advances to credit institutions | 3,270,970 | 3,270,970 | 3,097,422 | 3,097,422 | |
| Loans and advances to customers | 26,107,521 | 30,967,721 | 26,979,649 | 32,979,164 | |
| Hedging derivatives | 199,427 | 199,427 | 284,850 | 284,850 | |
| Investments in associated companies | 147,730 | 147,730 | 142,994 | 142,994 | |
| 36,947,778 | 41,807,978 | 37,091,697 | 43,091,212 | ||
| Guarantees given (Note 29) | 1,384,781 | 1,384,781 | 1,345,643 | 1,345,643 |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The maximum exposure in "Loans and advances to customers" on December 31, 2013, includes tEuros 652,278 and tEuros 4,207,922 relating to irrevocable credit lines and revocable credit lines, respectively (tEuros 1,496,610 and tEuros 4,502,905 on December 31, 2012, respectively).
The Bank periodically reviews loans and advances to customers and other receivables in order to identify evidence of impairment. For the purpose of collective analysis of impairment losses, BST segments its credit portfolio in accordance with the type of product and type of customer involved in the operations (Note 11). In this respect, on December 31, 2013 and 2012, loans granted to customers without objective evidence of impairment are made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Consumer credit | 1,047,541 | 1,048,143 |
| Mortgage loans | 14,314,279 | 14,823,138 |
| Other loans and advances to individuals | 353,916 | 412,022 |
| Credit cards of individuals | 221,456 | 235,682 |
| Total credit without objective evidence of impairment granted to individuals | 15,937,192 | 16,518,985 |
| Loans and advances to large companies | 1,468,521 | 1,540,037 |
| Loans and advances to medium-sized companies | 3,226,212 | 3,934,174 |
| Loans and advances to small companies | 574,941 | 582,817 |
| Leasing | 693,098 | 803,190 |
| Factoring | 1,049,553 | 942,936 |
| Credit cards | 12,280 | 12,529 |
| Commercial paper | 2,003,612 | 1,451,056 |
| Total credit without objective evidence of impairment granted to companies | 9,028,217 | 9,266,739 |
| Guarantees given | 1,291,103 | 1,254,586 |
| Total credit granted without evidence of impairment | 26,256,512 | 27,040,310 |
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The risk analysis for clients or economic groups where the Bank has an exposure of more than 500,000 Euros are made by risk analysts that follow customers and are supported by an internally developed rating model approved by the regulators. The risk level inherent to the customer is implied in the allocation of internal rating levels, which can go from 1 to 9, and the probability of default in a one year that the Bank monitors and calibrates in a constant and regular form. The rating is determined based on an analysis of the following parameters:
A classification from 1 (minimum) to 9 (maximum) is attributed to these factors in accordance with the following weighting:
| Wighting parameters | Large Companies | Small and medium size Companies |
|---|---|---|
| Demand/Market | 20% | 20% |
| Partners/Management | 15% | 15% |
| Acess to credit | 10% | 10% |
| Profitability | 15% | |
| Generation of funds | 25% | 55% |
| Solvency | 15% |
The rating is calculated by analysts, based on information supplied by the customer, general information of the business sector and external databases. The final rating, by each weighting parameter, is subsequently introduced into the Bank's IT system.
In general terms, the Bank's internal rating classification may be described and classified in the following manner:
Rating 1 – 3: Customer with high credit risk; Rating 4 – 6: Customer with moderate credit risk;
Rating 7 – 9: Customer with low credit risk.
On December 31, 2013 and 2012, the loans granted to companies without objective evidence of impairment, are made up as follows by internal rating:
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| Credit | Guarantees | Credit | Guarantees | ||
| granted | given | granted | given | ||
| Rating 7 - 9 | 179,533 | 35,001 | 82,325 | 22,249 | |
| Rating 4 - 6 | 4,660,640 | 954,308 | 5,008,549 | 973,574 | |
| Rating 1 - 3 | 821,852 | 92,463 | 759,243 | 115,581 | |
| 5,662,025 | 1,081,772 | 5,850,117 | 1,111,404 | ||
| Without Rating | 1,350,300 | 110,025 | 1,953,037 | 107,554 | |
| 7,012,325 | 1,191,797 | 7,803,154 | 1,218,958 | ||
| Credit cards of companies | 12,280 | - | 12,529 | - | |
| Financial institutions | - | 99,306 | - | 35,628 | |
| Commercial paper | 2,003,612 | - | 1,451,056 | - | |
| 9,028,217 | 1,291,103 | 9,266,739 | 1,254,586 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
With regard to loans granted to individuals without objective evidence of impairment, provisions obtained from the impairment model in force in the Bank as at December 31, 2013 and 2012 amounted to tEuros 53,607 and tEuros 56,185, respectively, corresponding to percentages on those dates of 0.34% and 0.34%, respectively.
On December 31, 2013 and 2012, loans granted to customers with objective evidence of impairment, were made up as follows:
| 2013 | 2011 | |
|---|---|---|
| Performing loans | 1,114,656 | 1,072,211 |
| Overdue loans | ------------- | ------------- |
| . Up to 90 days | 61,292 | 46,934 |
| . Between 90 and 180 days | 32,115 | 97,166 |
| . Over 180 days | 980,557 | 882,487 |
| ------------- | ----------- | |
| 1,073,964 | 1,026,587 | |
| ------------- | ------------- | |
| 2,188,620 | 2,098,798 | |
| ======= | ======= | |
| Guarantees given | 96,639 | 91,057 |
| ===== | ===== |
As at December 31, 2013 and 2012, overdue credit or impaired credit determined by a specific individual analysis guaranteed by mortgage, pledged deposits at the Bank, debt securities issued by the Bank or with no guarantee presents the following detail:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Outstanding principal |
Value of guarantee/collateral |
Outstanding principal |
Value of guarantee/collateral |
|
| Guarantees in excess of the principal due | 407,194 | 1,331,091 | 368,871 | 963,298 |
| Guarantees low er than the principal due | 96,939 | 34,483 | 350,710 | 82,764 |
| Without guarantee | 1,584,634 | - | 1,303,597 | - |
| 2,088,767 | 2,023,178 |
As at December 31, 2013 and 2012, the book value of executed guarantees and other collateral relating to credit granted amounted to tEuros 271,850 and tEuros 272,476, respectively, and are made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Non-current assets held for sale (Note 13): | ||
| . Properties received as settlement of defaulting loans | 268,035 | 245,156 |
| . Participating units | 18,663 | 18,663 |
| . Equipment | 4,021 | 5,558 |
| Investment properties (Note 14) | 18,191 | - |
| Other assets received as settlement of defaulting loans (Note 18) | 72,477 | 104,672 |
| Available for sale financial assets | 22,121 | 22,121 |
| 403,508 | 396,170 | |
| Impairment of non-current assets held for sale (Note 13): | ||
| . Properties received as settlement of defaulting loans | (87,677) | (71,078) |
| . Participating units | (4,000) | (4,000) |
| . Equipment | (2,927) | (3,574) |
| Impairment of other assets received as settlement of defaulting loans (Note 18) | (14,933) | (22,921) |
| Impairment of available for sale financial assets | (22,121) | (22,121) |
| (131,658) | (123,694) | |
| 271,850 | 272,476 |
On December 31, 2013, the operations of restructured credit were identified in accordance with the Instruction n. 32/2013 of Bank of Portugal (which replaced the Instruction n. 18/2012) which established the definition of restructured credit due to client's financial difficulties.
According to the referred Instruction, the institutions shall identify and mark in their information systems credit operations of clients with a difficult financial situation whenever there are changes to the terms and conditions of those operations (namely, postponement of the reimbursement deadline, introduction of grace periods, capitalized interest, reduction in interest rates, forgiveness of interest or principal) or the institution enters into new credit lines for settling (totally or partially) the existing debt service, in which cases the institutions should include the reference "restructured credit by financial difficulties of the client."
A client is considered to be in a difficult financial position whenever he has failed to fulfill any of its financial obligations to the institution or if it is predictable, given the information available, that such situation will occur.
Unmarking restructured credit by financial difficulties of the client can only be verified after a minimum period of two years from the date of its restructuring, provided that certain conditions are cumulatively verified. So far BST has not unmarked any restructured credit.
On December 31, 2013 and 2012, the following amounts related to restructured credit operations have been identified by BST:
| 31-12-2013 | 31-12-2012 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Credit | Credit | |||||||||
| Outstanding | Overdue | Total | Impairment | Outstanding | Overdue | Total | Impairment | |||
| Companies Individuals |
835,336 | 293,063 | 1,128,399 | (303,260) | 867,806 | 264,220 | 1,132,026 | (235,565) | ||
| Mortgage loans | 836,299 | 49,675 | 885,974 | (77,159) | 488,340 | 18,058 | 506,398 | (43,837) | ||
| Other credits | 263,246 | 75,373 | 338,619 | (108,886) | 231,743 | 76,235 | 307,978 | (98,806) | ||
| 1,934,881 | 418,111 | 2,352,992 | (489,305) | 1,587,889 | 358,513 | 1,946,402 | (378,208) |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
As at December 31, 2013 and 2012, the book value associated with to debt and equity instruments is made up as follows, by external rating, in accordance with Standard & Poor's rating:
| Debt instruments | 2013 | 2012 |
|---|---|---|
| Financial assets held for trading Rating S&P |
||
| AA+ / AA / AA- | 2,098 | - |
| A+ / A / A- | 53,382 | - |
| BBB+ / BBB / BBB- | 96,913 | - |
| BB+ / BB / BB- | 101,169 | - |
| B+ / B / B- | 7,815 | - |
| Without external rating | 84,693 | - |
| 346,070 | - | |
| Financial assets at fair value through profit or loss Rating S&P |
||
| BB+ / BB / BB- | - | 93,735 |
| - | 93,735 | |
| Available-for-sale financial assets Rating S&P |
||
| AA+ / AA / AA- | 7,437 | 7,948 |
| BBB+ / BBB / BBB- | 1,067,927 | 981,608 |
| BB+ / BB / BB- | 2,246,906 | 1,658,576 |
| B+ / B / B- | 362,756 | 291,757 |
| Without external rating | 697,227 | 549,975 |
| 4,382,253 | 3,489,864 | |
| 4,728,323 | 3,583,599 |
In cases in which Standard & Poor's rating was not available, the ratings of the agencies Moody's or Fitch were used.
The liquidity risk management policy is decided by the top level area in the organization structure responsible for Asset and Liability Management (ALM) and the Assets and Liabilities Committee (ALCO), which is chaired by the President of the Executive Committee and includes the members of the Executive Committee responsible for the Financial, Treasury, Commercial, Marketing and International Areas. The ALCO Committee meets monthly and analyses balance sheet risks and strategic options.
The following balance sheet risk management limits are defined for the ALM Area:
The Bank financing policy considers the evolution of the balance sheet components, the structural position of terms to maturity of assets and liabilities, the net inter-bank indebtedness level given the credit lines available, dispersion of the maturities and minimization of funding activity related costs.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Under its liquidity policy, as at December 31, 2013 and 2012 the Bank has a Euro Medium Term Notes (EMTN) program, of which tEuros 141,830 and tEuros 160,530 has been issued, respectively.
It should be noted that the Bank does not analyse the liquidity risk of financial instruments held for trading.
The contractual projected cash flows of financial instruments (not discounted) as at December 31, 2013 and 2012 were as follows:
| 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Up to 3 | From 3 months | From 1 to | From 3 to | Over | ||||
| On demand | months | to 1 year | 3 years | 5 years | 5 years | Undetermined | Total | |
| Assets | ||||||||
| Cash and deposits at central banks | 222,107 | 72 | 221 | 588 | 587 | 123,086 | - | 346,661 |
| Balances due from other banks | 552,921 | - | - | - | - | - | - | 552,921 |
| Financial assets held for trading | 1,949,115 | - | - | - | - | - | - | 1,949,115 |
| Available-for-sale financial assets | 2 | 299,222 | 1,106,694 | 532,235 | 1,100,163 | 1,963,112 | 142,567 | 5,143,995 |
| Loans and advances to credit institutions | 1,679,810 | 42,892 | 124,521 | 1,411,556 | 63,308 | 53,578 | - | 3,375,665 |
| Loans and advances to customers | 665,187 | 2,908,286 | 3,989,822 | 4,465,835 | 3,072,981 | 15,022,088 | - | 30,124,199 |
| Hedging derivatives | 199,427 | - | - | - | - | - | - | 199,427 |
| Investments in associates | - | - | - | - | - | - | 147,730 | 147,730 |
| 5,268,569 | 3,250,472 | 5,221,258 | 6,410,214 | 4,237,039 | 17,161,864 | 290,297 | 41,839,713 | |
| Liabilities | ||||||||
| Resources of central banks | 41,410 | 2,200,138 | - | 4,030,742 | - | - | - | 6,272,290 |
| Financial liabilities held for trading | 1,619,768 | - | - | - | - | - | - | 1,619,768 |
| Resources of other credit institutions | 474,345 | 2,869,871 | 86,833 | 575,931 | 5,370 | 206,009 | - | 4,218,359 |
| Resources of customers and other debts | 5,227,653 | 3,018,611 | 5,135,818 | 7,348,145 | 359,500 | 296,950 | - | 21,386,677 |
| Debt securities | (30,862) | 55,762 | 1,228,197 | 348,438 | 188,069 | 812,124 | - | 2,601,728 |
| Hedging derivatives | 370,684 | - | - | - | - | - | - | 370,684 |
| Subordinated liabilities | - | 4,320 | - | - | - | - | - | 4,320 |
| 7,702,998 | 8,148,702 | 6,450,848 | 12,303,256 | 552,939 | 1,315,083 | - | 36,473,826 | |
| 2012 | ||||||||
| Up to 3 | From 3 months | From 1 to | From 3 to | Over | ||||
| On demand | months | to 1 year | 3 years | 5 years | 5 years | Undetermined | Total | |
| Assets | ||||||||
| Cash and deposits at central banks | 210,893 | 265 | 811 | 2,152 | 2,155 | 189,963 | - | 406,239 |
| Balances due from other banks | 385,323 | - | - | - | - | - | - | 385,323 |
| Financial assets held for trading | 2,265,495 | - | - | - | - | - | - | 2,265,495 |
| Financial assets at fair value through profit or loss | - | - | 94,901 | - | - | - | - | 94,901 |
| Available-for-sale financial assets | 2 | 3,394 | 328,007 | 1,380,559 | 408,460 | 2,049,478 | 254,623 | 4,424,523 |
| Loans and advances to credit institutions | 1,121,616 | 62,420 | 41,207 | 1,621,882 | 367,855 | 88,395 | - | 3,303,375 |
| Loans and advances to customers | 502,799 | 2,746,191 | 4,504,003 | 4,864,323 | 3,258,002 | 15,457,201 | - | 31,332,519 |
| Hedging derivatives | 284,850 | - | - | - | - | - | - | 284,850 |
| Investments in associates | - | - | - | - | - | - | 142,994 | 142,994 |
| 4,770,978 | 2,812,270 | 4,968,929 | 7,868,916 | 4,036,472 | 17,785,037 | 397,617 | 42,640,219 | |
| Liabilities | ||||||||
| Resources of central banks | 800,116 | - | - | 5,115,850 | - | - | - | 5,915,966 |
| Financial liabilities held for trading | 2,048,743 | - | - | - | - | - | - | 2,048,743 |
| Resources of other credit institutions | 382,424 | 980,845 | 27,004 | 325,569 | 277,780 | - | - | 1,993,622 |
The projected cash flows of the financial instruments were determined based on principles and assumptions used by the Bank to manage and control liquidity resulting from its operations, namely the following:
Resources of customers and other debts 6,157,636 3,934,261 4,749,942 4,967,092 1,954,508 467,408 - 22,230,847 Debt securities (9,730) 37,907 1,158,565 1,757,213 252,846 866,583 - 4,063,384 Hedging derivatives 455,911 - - - - - - 455,911 Subordinated liabilities - 4,325 - - - - - 4,325
9,835,100 4,957,338 5,935,511 12,165,724 2,485,134 1,333,991 - 36,712,798
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Market risk generally consists in the potential fluctuation of a financial instrument value due to unanticipated variations in the market variables, such as interest rates, exchange rates, credit spreads, equity security prices, precious metals and commodities.
The standard methodology applied for the Bank trading activity is Value at Risk (VaR). Historical simulation with a 99% confidence level and a time horizon of one day is used as the basis, being applied statistical adjustments, to enable the more recent occurrences that affect the level of risk assumed to be included rapidly and effectively. This measure is only used in the Group's treasury management since the Bank uses specific sensitivity measures.
The VaR calculated represents a daily estimate of the maximum potential risk under normal market conditions (individually by portfolio/business sector and for the overall positions), within the underlying assumptions of the model.
In addition, other measures are carried out that enable additional risk control to be maintained. In abnormal market conditions stress testing is carried out. This consists of defining extreme behavioural scenarios with different financial variables, in order to obtain the corresponding potential impact on results. In resume, the analysis of scenarios tries to identify the potential risk in extreme market conditions and scenarios at the limits of probability, not covered by VaR.
In parallel with this, daily positions are also monitored, with an exhaustive control being made of changes in the portfolios so as to detect the existence of possible situations that require immediate correction. A daily income statement is prepared in order to identify the impact of changes in variables or in the composition of the portfolios.
The Bank uses sensitivity measures and equivalent positions. In the case of interest rate it uses the BPV – estimated impact on results of parallel changes in the interest rate curves. Because of the unusual nature of derivative operations, specific sensitivity measures are carried out daily, namely calculation of sensitivity to changes in the underlying prices (delta and gamma), volatility (vega) and time (theta).
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
Quantitative limits, classified into two groups, are used for the trading portfolio, based on the following objectives:
The model used to analyse interest rate structural risk enables all the factors relating to balance sheet market risks to be controlled, namely the risk resulting directly from change in the yield curve, given the existing indexing and re-pricing structure that determine the sensitivity of the financial margin and sensitivity of the asset value of balance sheet instruments.
On December 31, 2013 and 2012, financial instruments by exposure to interest rate risk, are as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Exposure to | Not subject to | ||||||
| Fixed rate | Variable rate | interest rate risk | Derivatives | Total | |||
| Assets | |||||||
| Cash and deposits at central banks | - | 116,135 | 221,706 | - | 337,841 | ||
| Balances due from other banks | - | - | 552,921 | - | 552,921 | ||
| Financial assets held for trading | - | 346,070 | 3,152 | 1,599,893 | 1,949,115 | ||
| Available-for-sale financial assets | 3,457,589 | 790,358 | 134,306 | - | 4,382,253 | ||
| Loans and advances to credit institutions | 2,432,516 | 804,626 | 33,828 | - | 3,270,970 | ||
| Loans and advances to customers | 2,382,892 | 23,698,903 | 25,726 | - | 26,107,521 | ||
| Hedging derivatives | - | - | - | 199,427 | 199,427 | ||
| 8,272,997 | 25,756,092 | 971,639 | 1,799,320 | 36,800,048 | |||
| Liabilities | |||||||
| Resources of central banks | - | 6,200,016 | 41,394 | - | 6,241,410 | ||
| Financial liabilities held for trading | - | - | - | 1,619,768 | 1,619,768 | ||
| Resources of other credit institutions | 3,582,505 | 592,187 | 366 | - | 4,175,058 | ||
| Resources of customers and other debts | 15,696,775 | 4,781,987 | 228,239 | - | 20,707,001 | ||
| Debt securities | 1,341,104 | 1,209,023 | (15,966) | - | 2,534,161 | ||
| Hedging derivatives | - | - | - | 370,684 | 370,684 | ||
| Subordinated liabilities | - | 4,307 | - | - | 4,307 | ||
| 20,620,384 | 12,787,520 | 254,033 | 1,990,452 | 35,652,389 | |||
| Exposure to | 2012 Not subject to |
||||||
| Fixed rate | Variable rate | interest rate risk | Derivatives | Total | |||
| Assets | |||||||
| Cash and deposits at central banks | - | 141,602 | 210,763 | - | 352,365 | ||
| Balances due from other banks | - | - | 385,323 | - | 385,323 | ||
| Financial assets held for trading | - | - | 233,639 | 2,031,856 | 2,265,495 | ||
| Financial assets at fair value through profit or loss | 90,279 | - | 3,456 | - | 93,735 | ||
| Available-for-sale financial assets | 2,880,140 | 551,079 | 58,645 | - | 3,489,864 | ||
| Loans and advances to credit institutions | 1,717,489 | 1,347,731 | 32,202 | - | 3,097,422 | ||
| Loans and advances to customers | 1,639,586 | 25,224,780 | 115,283 | - | 26,979,649 | ||
| Hedging derivatives | - | - | - | 284,850 | 284,850 | ||
| 6,327,494 | 27,265,192 | 1,039,311 | 2,316,706 | 36,948,703 | |||
| Liabilities | |||||||
| Resources of central banks | - | 5,800,016 | 37,226 | - | 5,837,242 |
| Resources of central banks | - | 5,800,016 | 37,226 | - | 5,837,242 |
|---|---|---|---|---|---|
| Financial liabilities held for trading | - | - | - | 2,048,743 | 2,048,743 |
| Resources of other credit institutions | 1,512,634 | 272,851 | 164,089 | - | 1,949,574 |
| Resources of customers and other debts | 16,251,049 | 4,912,351 | 333,774 | - | 21,497,174 |
| Debt securities | 2,629,994 | 1,300,370 | 23,155 | - | 3,953,519 |
| Hedging derivatives | - | - | - | 455,911 | 455,911 |
| Subordinated liabilities | - | 4,275 | 36 | - | 4,311 |
| 20,393,677 | 12,289,863 | 558,280 | 2,504,654 | 35,746,474 |
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The methodology used for the calculation of the sensitivity of the net asset value simulates the variation in the market value of assets and liabilities, based on changes of 100 basis points (bp's) in the forward interest rate curve. This methodology uses the following parameters and assumptions:
The interest rate gap enables an approximation to be made of the sensitivity of the asset value and the financial margin to variations in market rates. This approximation uses the following assumptions:
In terms of variation in net asset value, an increase in the interest rates originates a decrease in the amount of the intervals with positive gaps and an increase in the value of the negative gaps. A decrease in interest rates has the opposite effect.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
As at December 31, 2013 and 2012, the impact in the value of financial instruments sensitive to interest rate of changes of 100 basis points (bp's), over a time frame of one year, correspond to:
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| Change | Change | Change | Change | ||
| Assets | + 100 bp's | - 100 bp's | + 100 bp's | - 100 bp's | |
| Cash and deposits at central banks | 1,132 | (452) | 1,379 | (759) | |
| Available-for-sale financial assets | 5,039 | (2,070) | 3,855 | (2,472) | |
| Loans and advances to credit institutions | 25,314 | (10,162) | 19,133 | (11,033) | |
| Loans and advances to customers | 199,861 | (80,391) | 202,472 | (110,796) | |
| 231,346 | (93,075) | 226,839 | (125,060) | ||
| Hedging derivatives | (34,983) | 14,108 | (36,845) | 21,261 | |
| Liabilities | |||||
| Resources of central banks | 61,056 | (18,487) | 57,222 | (39,964) | |
| Resources of other credit institutions | 35,474 | (14,124) | 21,464 | (13,221) | |
| Resources of customers and other debts | 62,425 | (25,699) | 80,401 | (48,644) | |
| Debt securities | 9,368 | (3,769) | 10,131 | (6,191) | |
| 168,323 | (62,079) | 169,218 | (108,020) | ||
Besides the Bank's own calculation methodology, the basic parameters for the calculation of VaR are as follows:
In any case, the values of VaR are those which are greater when the calculation is made with the factor of deterioration in force and the calculation with uniform weights.
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The calculation of the VaR Percentile assumes that the set of 520 observations considered all have the same weight. The VaR Weighted Percentile assumes the granting of a significantly higher weight to the more recent observations in relation to the reference date of the analysis.
Historic simulation consists of using historic changes as a distribution model of possible changes in risk factors. Therefore the period chosen must be sufficiently long and significant, so that all the interactions between the market factors, the volatility and correlation between them, are well reflected in the historical period selected.
In addition, a complete revaluation of the portfolio requires valuation for each of the instruments, using the respective mathematical expression in order to obtain the market value of each individual position. Upon using revaluation methods, the implicit nonlinear effects on certain financial products as a result of market factor changes are calculated and retained in the VaR amounts.
On December 31, 2013 and 2012, the VaR associated to the interest rate risk corresponds to:
| 2013 | 2012 | |
|---|---|---|
| VaR Percentil 99% | (4) | (9) |
| VaR Weighted Percentil 99% | (2) | (13) |
The profile defined for foreign exchange risk is very conservative and is based on the hedging policy adopted. Implementation of the policy is a responsibility of the Treasury Area so that the risks involved are maintained at a low level, this being achieved mainly through currency swaps. Exchange risk limits are established and monitored by the Market Risk Area.
On December 31, 2013 and 2012, financial instruments by currency are as follows:
| 2013 | ||||
|---|---|---|---|---|
| Euros | US Dollars | Other currencies |
Total | |
| Assets | ||||
| Cash and deposits at central banks | 329,257 | 5,391 | 3,193 | 337,841 |
| Balances due from other banks | 493,501 | 34,386 | 25,034 | 552,921 |
| Financial assets held for trading | 1,908,412 | 38,432 | 2,271 | 1,949,115 |
| Available-for-sale financial assets | 4,374,816 | 7,437 | - | 4,382,253 |
| Loans and advances to credit institutions | 2,924,538 | 326,942 | 19,490 | 3,270,970 |
| Loans and advances to customers | 26,043,429 | 38,177 | 25,915 | 26,107,521 |
| Hedging derivatives | 198,634 | 793 | - | 199,427 |
| 36,272,587 | 451,558 | 75,903 | 36,800,048 | |
| Liabilities | ||||
| Resources of central banks | 6,241,410 | - | - | 6,241,410 |
| Financial liabilities held for trading | 1,618,606 | 1,111 | 51 | 1,619,768 |
| Resources of other credit institutions | 3,779,243 | 393,149 | 2,666 | 4,175,058 |
| Resources of customers and other debts | 19,784,630 | 764,049 | 158,322 | 20,707,001 |
| Debt securities | 2,534,161 | - | - | 2,534,161 |
| Hedging derivatives | 368,086 | 2,598 | - | 370,684 |
| Subordinated liabilities | 4,307 | - | - | 4,307 |
| 34,330,443 | 1,160,907 | 161,039 | 35,652,389 | |
| 2012 | ||||
| Euros | US Dollars | Other currencies |
Total | |
| Assets | ||||
| Cash and deposits at central banks | 346,048 | 3,736 | 2,581 | 352,365 |
| Balances due from other banks | 357,445 | 12,559 | 15,319 | 385,323 |
| Financial assets held for trading | 2,263,593 | 1,871 | 31 | 2,265,495 |
| Financial assets at fair value through profit or loss | 93,735 | - | - | 93,735 |
| Available-for-sale financial assets | 3,481,916 | 7,948 | - | 3,489,864 |
| Loans and advances to credit institutions | 2,704,835 | 352,396 | 40,191 | 3,097,422 |
| Loans and advances to customers | 26,912,436 | 37,617 | 29,596 | 26,979,649 |
| Hedging derivatives | 284,180 36,444,188 |
670 416,797 |
- 87,718 |
284,850 36,948,703 |
| Liabilities | ||||
| Resources of central banks | 5,837,242 | - | - | 5,837,242 |
| Financial liabilities held for trading | 2,046,582 | 2,085 | 76 | 2,048,743 |
| Resources of other credit institutions | 1,576,925 | 366,025 | 6,624 | 1,949,574 |
| Resources of customers and other debts | 20,491,407 | 826,056 | 179,711 | 21,497,174 |
| Debt securities | 3,953,519 | - | - | 3,953,519 |
| Hedging derivatives | 454,133 | 1,778 | - | 455,911 |
| Subordinated liabilities | 4,311 | - | - | 4,311 |
| 34,364,119 | 1,195,944 | 186,411 | 35,746,474 |
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
On December 31, 2013 and 2012, the VaR associated to foreign exchange risk corresponds to:
| 2013 | 2012 | |
|---|---|---|
| VaR Percentil 99% | (7) | (11) |
| VaR Weighted Percentil 99% | (5) | (9) |
On December 31, 2013 and 2012, the Bank had no equity risk of its financial instruments held for trading, therefore the VaR related to this risk is zero.
BST endeavours to have significant financial stability through maintenance of an adequate equity ratio – relationship between Eligible Equity Funds capital and assets weighted by risk above 8%, which is the minimum legal ratio requirement established under Bank of Portugal Notice no 5/2007.
The dividend distribution policy is subject to the maintenance of a capital base that enables the Bank to sustain the development of its operations within its risk policies.
As from June 2009, BST has used the mixed method for credit risk, namely the advanced method (IRB) for some portfolios and the standard method for other portfolios (sovereign risk, cards and small businesses). The cards portfolio began to be treated in accordance with the IRB method as from March 2011 and the small businesses portfolio as from December 2012. Sovereign risk and manual operations are treated using the standard method.
As from December 2010, BST has used the mixed method for market risk, namely internal models for most of the trading derivatives (IRB) and the standard method for the rest of the trading portfolio.
In June 2012, BST started to use the standard method for determining the requirements of operating risk, before which it used the basic indicator method.
(Translation of notes originally issued in Portuguese – Note 52)
(Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
The following table summarizes the composition of regulatory capital and ratios of the Bank, at the end of 2013 and 2012 (amounts in millions of Euros):
| 2013 (*) | 2012 | |
|---|---|---|
| A - BASE OWN FUNDS (TIER I) | 2,292 | 2,069 |
| Share Capital | 943 | 943 |
| Reserves and Retained earnings (excluding Minority Interest) | 1,103 | 967 |
| Minority Interest | 500 | 449 |
| IAS adoption impacts (transitory regime) | 14 | 28 |
| Deductions to base ow n funds | (268) | (318) |
| B - COMPLEMENTARY OWN FUNDS (TIER II) | - | - |
| Perpetual subordinated liabilities | 4 | 4 |
| Term subordinated liabilities | - | - |
| Revaluation reserves | 24 | 24 |
| Other elements/deductions to complementary ow n funds | (28) | (28) |
| C - DEDUCTIONS TO OWN FUNDS | (8) | (7) |
| D - TOTAL OWN FUNDS (A+B+C) | 2,284 | 2,062 |
| E - ASSETS WEIGHTED BY RISK | 16,090 | 18,127 |
| CAPITAL RATIOS | 2013 (*) | 2012 |
|---|---|---|
| TIER I (A/E) | 14.2% | 11.4% |
| CORE CAPITAL | 12.4% | 9.9% |
| TIER II (B/E) | 0.0% | 0.0% |
| CAPITAL ADEQUACY RATIO (D/E) | 14.2% | 11.4% |
(*) In accordance w ith Instruction 16/2004 of the Bank of Portugal, excluding the income generated in 2013, the capital adequacy ratio is 14.2%, TIER I is 14.2% and the Core Tier I is 12.4%.
Despite the difficult macroeconomic context, the Bank´s solvency consolidated ratios increased during 2013. The core capital and the Tier I ratios increased from 9.9% and 11.4% in December 2012 to 12.4% and 14.2%, respectively, in December 2013. The capital adequacy ratio also reached 14.2% in December 2013. The contributing factor to this improvement was fundamentally the deleveraging process carried out by the Bank.
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
From the end of the first quarter of 2013 a movement with public projection arise in Portugal in the sequence of which the validity of some interest rate swap agreements established between some financial institutions and several state owned enterprises, namely in the railway and road transport sectors, have been challenged. These agreements were signed essentially until 2008, that is, before the beginning of the recent financial crisis and represent to those enterprises high charges.
Among those agreements, some established with the Bank were challenged, whose positive fair value at December 31, 2013 arises to approximately tEuros 1,030,000 which is reflected in the accompanying balance sheet under the caption "Financial assets held for trading " (Note 7). These agreements were carried out without incidents until September 2013.
Following the above referred movement, in its conviction of the total regularity and binding force of the agreements established with the state owned enterprises, the Bank requested a legal statement regarding their validity, considering that it was its duty to contribute, by the appropriate way, to eliminate any doubt about their validity and binding force. This initiative took place during the second quarter of 2013, in English courts, as they were the ones chosen by the parties as expressly stated in the respective agreement terms.
In September 2013, after the submission of the above referred legal actions, the state owned enterprises communicated to the Bank that they would suspend the payment of the net interest associated with those swap agreements until the on-going actions were decided. On December 31, 2013, the balance sheet caption "Other assets - Asset transactions pending settlement" includes approximately tEuros 45,000 relating to those interests (Note 18).
In November 2013, the state owned enterprises presented to the English courts their plea to the legal actions posted by the Bank requiring the nullity of the agreements and requesting the refund of the net flows of interests paid in the past, which amounted to approximately tEuros 134,000.
On February 14, 2014, the Bank presented to the English courts its reply to the plea submitted by the state owned enterprises. Currently, those legal actions are in progress following their normal procedures.
It is the Board of Directors of the Bank belief, supported by the opinion of its English and Portuguese legal attorneys, that all the conditions are now met for the court to rule in its favour and consequently to declare the validity of the above referred agreements and notifying the state owned enterprises to liquidate the corresponding interest. For this reason, no provisions were recorded in the accompanying financial statements to address for any eventual adverse outcome of those legal actions.
Furthermore, on December 31, 2013, a set of claims / legal actions were placed against the Bank by its customers relating to swap agreements. In the majority of those complaints / legal actions the customer's request the cancelation of the swap agreements established with the Bank, as well as the reimbursement of the net amount of interest paid by them in the past. On December 31, 2013, the amounts involved in those complaints / legal actions were as follows:
| Interests received from customers | 34,216 |
|---|---|
| Interests paid to customers | (3,992) |
| 30,224 | |
| Interests overdue not paid by customers | 10,911 |
| Swaps Mark to Market | 267 |
| Impairment recorded | (7,195) |
| 3,983 | |
| Exposure | 34,207 |
(Translation of notes originally issued in Portuguese – Note 52) (Amounts expressed in thousands of Euros - tEuros, unless otherwise expressly indicated)
However, it is the Board of Directors of the Bank belief, that the provisions recorded in the accompanying financial statements are sufficient to address an eventual adverse outcome of the above referred complaints / legal actions.
On the other hand, until the date of approval of these financial statements, new legal actions were placed against the Bank related to swap agreements, including two totalling tEuros 290,000, being one a legal action ("Acção Popular") placed against both the Bank and "Metropolitano de Lisboa , EPE" involving a total amount of approximately tEuros 274,500. However, this last legal action is focused in the cancellation of some swap agreements signed between the Bank and "Metropolitano de Lisboa, EPE" which are already being judged by the English courts, since the second quarter of 2013, as a result of the initiatives held by the Bank as described in the beginning of this Note.
These financial statements were approved by the Board of Directors on April 24 2014.
These financial statements are a translation of the financial statements originally issued in Portuguese language. In the event of discrepancies, the Portuguese language version prevails.
(Translation of Annex I originally issued in Portuguese - Note 52)
| Amo unt o f the issu e |
Valu e ad justm ents |
Tota l |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Tota l |
Sub scrib ed |
Con solid ated |
of h edgi ng |
Con solid ated |
Inter est |
Issu e |
Mat urity |
||||
| Sec uritie s iss ued |
Cur renc y |
e Gr by th oup |
She Bala et nce |
Acc rual |
ratio ope ns |
She Bala et nce |
Rate | Dat e |
Dat e |
Inde x |
|
| Bon ds is d sue |
|||||||||||
| Bon ds |
|||||||||||
| Euro pe 1 55 |
EUR | 1.92 0 |
- | 1.92 0 |
- | (3) | 1.91 | 7 Floa ting |
Jun e 28 , 201 0 |
Jun e 28 , 201 4 |
Sto ck e xcha inde nge x |
| Perf Mai orm ance s |
EUR | 63.0 96 |
63.0 96 |
Floa ting |
Nov emb er 2 4, 20 09 |
Nov emb er 2 4, 20 14 |
f ind Bas ket o |
||||
| Perf Mai s II orm ance |
EUR | 13.7 31 |
13.7 31 |
- | - | - | - Floa ting |
Dec emb er 2 2, 20 09 |
Jan 15, 2015 uary |
exes Bas ket o f ind exes |
|
| Ren dime nto E urop eu |
EUR | 99.7 96 |
99.7 96 |
- | - | - | - Floa ting |
Aug ust 0 6, 20 09 |
Aug ust 0 6, 20 14 |
Bas ket o f ind |
|
| ST D ivers ifica Inve st 3º ortiz ação Clie ntes am |
EUR | 23.9 13 |
6.92 5 |
- 16.9 88 |
- 611 |
- 1.67 3 |
19.2 72 |
- Floa ting |
Mar ch 1 7, 20 09 |
Mar ch 2 8, 20 15 |
exes Bas ket o f ind |
| çao ST D ivers ifica Inve st 4º ortiz ação Clie ntes am |
EUR | 23.9 13 |
5 | 88 | 88 | Floa ting |
Mar ch 1 7, 20 09 |
Mar ch 2 8, 20 17 |
exes Bas ket o f ind |
||
| çao erfo Valo rizaç ão P 5 an rma nce os |
EUR | 33 | 6.92 | 16.9 33 |
- | - | 16.9 78 |
ting | Sep tem ber 3 0, 20 10 |
Sep tem ber 3 0, 20 15 |
exes f ind ket o |
| Valo rizaç ão P erfo 5 an os O ctob er 2 010 rma nce |
21.5 3 |
- - |
21.5 3 |
351 | 194 | 22.0 14 |
Floa ting |
emb er 0 2, 20 10 |
emb er 0 2, 20 15 |
Bas exes ket o f ind |
|
| Ger | EUR EUR |
9.99 42 |
42 | 9.99 00 |
158 9 |
63 | 10.2 77 |
Floa | Nov , 201 1 |
Nov , 201 5 |
Bas exes ket o f sha |
| Top man y Ger brua 11 |
EUR | 65.0 92 |
29.3 13 |
35.7 79 |
1.02 5 |
548 | 37.2 14 |
Floa ting |
Feb y 14 ruar ch 0 11 |
Feb y 13 ruar ch 0 15 |
Bas res ket o f sha |
| Top y Fe ry 20 man |
57.8 | 26.5 | 31.3 | 1.10 | 430 | 32.9 | Floa ting |
Mar 9, 20 |
Mar 9, 20 |
Bas res |
|
| App recia tion Chin a |
EUR | 56.3 79 |
9.21 5 |
47.1 64 |
1.29 4 |
582 | 49.0 40 |
Floa ting |
Apr il 11 ,201 1 |
Apr il 02 , 201 5 |
Inde x FT SE C hina 25 |
| Latin Am erica |
EUR | 2.17 5 |
- | 2.17 5 |
57 | 9 | 2.24 | 1 Floa ting |
May 20, 201 1 |
May 20, 2014 |
f fun Bas ket o ds |
| EUA | EUR | 74.6 07 |
- | 74.6 07 |
2.80 6 |
272 | 77.6 85 |
Floa ting |
Jun e 30 , 201 1 |
June 30, 2014 |
Inde x of shar es S tand ard & Po or's 500 |
| Latin Am erica top 3 |
EUR | 99.9 97 |
- | 99.9 97 |
3.61 2 |
663 | 104 .272 |
Floa ting |
Aug ust 0 1, 20 11 |
Oct obe r 31 , 201 4 |
Inde x of shar es F TSE Lat ibex Top |
| Auto Call able 85- 15 |
EUR | 570 | - | 570 | - | (317 ) |
253 | Floa ting |
Aug ust 0 1, 20 11 |
Oct obe r 31 , 201 4 |
Bas ket o f sha res |
| 614 .557 |
255 .543 |
359 .014 |
11.0 23 |
4.11 4 |
374 .151 |
||||||
| Cov ered bon ds |
|||||||||||
| Cov ered Mor e Bo nds 2nd Issu tgag e |
EUR | 1.00 0.00 0 |
125 .750 |
874 .250 |
5.33 4 |
13.8 36 |
893 .420 |
3,25 % |
Oct obe r 21 , 200 9 |
Oct obe r 21 , 201 4 |
Fixe d int t rat eres e |
| Mort Bon ds IV - 1s nche t tra gage |
EUR | 750 .000 |
750 .000 |
- | - | - | - | 3,05 0% |
Jan 12, 201 1 uary |
Jan 12, 2014 uary |
Fixe d int t rat eres e |
| Mort Bon ds IV - 2n d tra nche gage |
EUR | 2.30 0 |
- | 2.30 0 |
31 | - | 2.33 | 1 2,82 5% |
Jan 21, 201 1 uary |
Jan 12, 2014 uary |
Fixe d int t rat eres e |
| Mort Bon ds V gage |
EUR | 1.25 0.00 0 |
1.25 0.00 0 |
- | - | - | - | 2,69 8% |
May 23, 201 1 |
May 23, 2014 |
Fixe d int t rat eres e |
| Mort Bon ds V I - 1s t tra nche gage |
EUR | 250 .000 |
250 .000 |
- | - | - | - | 2,70 7% |
Nov emb er 0 4, 20 11 |
Nov emb er 0 4, 20 14 |
Fixe d int t rat eres e |
| Mort Bon ds V II - 1 nche st tra gage |
EUR | 380 .000 |
380 .000 |
- | - | - | - | 2,70 7% |
Nov emb er 0 4, 20 11 |
Nov emb er 0 4, 20 14 |
Fixe d int t rat eres e |
| Mort Bon ds V III - 1 st tra nche gage |
EUR | 250 .000 |
250 .000 |
- | - | - | - | 2,70 8% |
Nov emb er 0 4, 20 11 |
Nov emb er 0 4, 20 14 |
Fixe d int t rat eres |
| Mort Bon ds IX - 1s t tra nche gage |
EUR | 500 .000 |
500 .000 |
2,58 5% |
Apr il 02 , 201 3 |
Apr il 02 , 201 6 |
e Fixe d int t rat eres |
||||
| Mort Bon ds IX - 2n d tra nche gage |
EUR | 1.00 0.00 0 |
1.00 0.00 0 |
- | - | - | - | 2,46 1% |
Apr il 15 , 201 3 |
Apr il 15 , 201 7 |
e Fixe d int t rat eres |
| Mort Bon ds X gage |
EUR | 750 .000 |
750 .000 |
- | - | - | - | 2,47 5% |
July 26, 2013 |
July 26, 2017 |
e Fixe d int t rat eres |
| Mort Bon ds X I - 1s nche t tra |
EUR | 500 .000 |
500 .000 |
- | - | - | - | 2,14 8% |
Dec emb er 1 9, 20 13 |
Dec emb er 1 9, 20 17 |
e Fixe d int t rat eres |
| gage Mort Bon ds X - 2n d tra nche |
EUR | .000 | .000 | - | - | - | - | 3% | emb er 1 9, 20 13 |
emb er 1 9, 20 17 |
e d int t rat eres |
| gage | 500 | 500 | - | - | - | - | 2,24 | Dec | Dec | Fixe e |
|
| 7.13 2.30 0 |
6.25 5.75 0 |
876 .550 |
5.36 5 |
13.8 36 |
895 .751 |
||||||
| Bon ds is d on uriti zatio ions erat sue sec |
|||||||||||
| n op Hipo 1 - Clas s A - Not totta es |
EUR | 164 .951 |
134 .113 |
30.8 38 |
9 | 30.8 47 |
Floa ting |
July 25, 2003 |
Nov emb er 2 5,20 34 |
Eur ibor 3m+ 0.27 % (u ntil e arly reim burs nt in Aug ust 2 012) eme ; |
|
| - | (aft te) Euri bor 3 m+0 .54% arly reim burs nt da er e eme |
||||||||||
| Hipo 1 - Clas s B - Not totta es |
EUR | 10.6 36 |
10.6 36 |
Floa ting |
May 12, 2004 |
Nov emb er 1 2, 20 34 |
Eur ibor 3m+ 0.65 % (u ntil e arly reim burs nt in Aug ust 2 012) eme |
||||
| - | - | - | - | ; Euri bor 3 m+0 .95% (aft arly reim burs nt da te) er e eme |
|||||||
| Hipo Clas s C - No totta 1 - tes |
EUR | 4.68 7 |
4.68 7 |
Floa ting |
May 12, 2004 |
Nov emb er 1 2, 20 34 |
Eur ibor % (u ntil e arly reim burs nt in Aug 012) 3m+ 1.45 ust 2 eme |
||||
| - | - | - | - | ; Euri bor 3 m+1 .65% (aft arly reim burs nt da te) er e eme |
|||||||
| Clas Hipo totta 1 - s D - No tes |
EUR | 00 | 00 | Floa ting |
12, 2004 |
emb er 1 2, 20 34 |
idua l retu ted b curit ized tfolio nera |
||||
| 4 - Clas s A - Not totta |
EUR | 11.0 .232 |
11.0 .492 |
- .740 |
- | - | .600 | - | May emb er 0 05 |
Nov emb er 3 48 |
Res rn ge y se por ibor 3m+ 0.12 ntil e reim burs nt in Dec emb |
| Hipo es |
971 | 492 | 478 | (1.1 40) |
- | 477 | Floa ting |
Dec 9, 20 |
Dec 0, 20 |
Eur % (u arly eme er 2014 ); Eu ribor 3m +0.2 4% (afte imbu ent d ate) |
|
| rly re r ea rsem |
|||||||||||
| Hipo Clas s B - Not totta 4 - es |
EUR | 35.3 35 |
35.3 35 |
- | - | - | Floa ting - |
Dec emb er 0 9, 20 05 |
Dec emb er 3 0, 20 48 |
Eur ibor % (u ntil e arly reim burs nt in Dec emb 3m+ 0.19 eme er 2014 ribor 3m +0.4 0% imbu ent d |
|
| ); Eu (afte rly re ate) r ea rsem |
|||||||||||
| Clas s C Hipo totta 4 - - No tes |
EUR | 111 .592 |
59.6 78 |
51.9 14 |
2 | - | 51.9 16 |
Floa ting |
Dec emb er 0 9, 20 05 |
Dec emb er 3 0, 20 48 |
% (u Eur ibor 3m+ 0.29 ntil e arly reim burs nt in Dec emb eme er 2014 ribor 3m +0.5 8% imbu ent d |
| Hipo totta 4 - Clas s D - No tes |
EUR | 00 | 00 | Floa ting |
emb er 0 9, 20 05 |
emb er 3 0, 20 48 |
); Eu (afte rly re ate) r ea rsem idua l retu ted b curit ized tfolio nera |
||||
| 14.0 | 14.0 | - | - | - | - | Dec | Dec | Res rn ge y se por |
|||
| Hipo Clas s A2 - No totta 5 - tes |
EUR | 847 .992 |
233 .811 |
614 .181 |
(367 ) |
- | 613 .814 |
Floa ting |
Mar ch 2 2, 20 07 |
Feb y 28 , 206 0 ruar |
Euri bor 3 (un til ea rly re imbu ent i n Fe brua 14); m+0 .13% ry 20 rsem Euri bor 3 m+0 .26% reim burs nt da |
| Clas | (aft arly te) er e eme |
||||||||||
| Hipo totta 5 - s B - Not es |
EUR | 26.0 00 |
26.0 00 |
- | - | - | Floa ting - |
Mar ch 2 2, 20 07 |
Feb y 28 , 206 0 ruar |
(un 14); Euri bor 3 m+0 .17% til ea rly re imbu ent i n Fe brua ry 20 rsem Euri bor 3 m+0 .34% reim burs nt da |
|
| (aft arly te) er e eme |
|||||||||||
| Hipo totta 5 - Clas s C - No tes |
EUR | 24.0 00 |
24.0 00 |
- | - | - | Floa ting - |
Mar ch 1 6, 20 07 |
Feb y 28 , 206 0 ruar |
Euri bor 3 m+0 .24% (un til ea rly re imbu ent i n Fe brua ry 20 14); rsem |
|
| Euri bor 3 (aft arly reim burs nt da te) m+0 .48% er e eme |
|||||||||||
| Hipo 5 - Clas s D - No totta tes |
EUR | 26.0 00 |
26.0 00 |
- | - | - | Floa ting - |
Mar ch 2 2, 20 07 |
Feb y 28 , 206 0 ruar |
Euri bor 3 m+0 .50% (un til ea rly re imbu ent i n Fe brua ry 20 14); rsem (aft te) Euri bor 3 m+1 .00% arly reim burs nt da er e eme |
| Amo unt o f the issu e |
Valu e ad justm ents Tota l |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Sec uritie s iss ued |
Cur renc y |
Tota l |
Sub scrib ed e Gr by th oup |
Con solid ated She Bala et nce |
Acc rual |
of h edgi ng ratio ope ns |
Con solid ated She Bala et nce |
Inter est Rate |
Issu e Dat e |
Mat urity Dat e |
Inde x |
| Hipo totta 5 - Clas s E - Not es |
EUR | 31.0 00 |
31.0 00 |
- | - | - | Floa ting - |
Mar ch 2 2, 20 07 |
Feb y 28 , 206 0 ruar |
Euri bor 3 m+1 .75% (un til ea rly re imbu ent i n Fe brua ry 20 14); rsem Euri bor 3 m+3 .50% (aft arly reim burs nt da te) er e eme |
|
| Hipo totta 5 - Clas s F - Not es |
EUR | 9.95 1 |
9.95 1 |
- | - | - | Floa ting - |
Mar ch 2 2, 20 07 |
Feb y 28 , 206 0 ruar |
Res idua l retu ted b curit ized tfolio rn ge nera y se por |
|
| Clas Leas etott s A - Not a - es |
EUR | 100 .933 |
100 .933 |
- | - | - | Floa ting - |
Apr il 20 , 200 9 |
Jan 15, 2042 uary |
Eur ibor 3m+ 0.30 % |
|
| Leas Clas s B - Not etott a - es |
EUR | 260 .000 |
260 .000 |
- | - | - | Floa ting - |
Apr il 20 , 200 9 |
Jan 15, 2042 uary |
Eur ibor 3m+ 4.75 % |
|
| Leas etott Clas s C - No tes a - |
EUR | 65.0 00 |
65.0 00 |
- | - | - | Floa ting - |
Apr il 20 , 200 9 |
Jan 15, 2042 uary |
Res idua l retu ted b curit ized tfolio rn ge nera y se por |
|
| 2.71 4.30 9 |
- 1.53 8.63 6 |
5.67 1.17 3 |
(1.4 96) |
1.17 4.17 7 - |
|||||||
| Othe r |
| SEC IES ISSU TOT AL D EBT URIT ED |
10.6 02.9 96 |
8.05 2.86 9 |
2.55 0.12 7 |
14.8 96 |
(30 ) .862 |
2.53 4.16 1 |
|---|---|---|---|---|---|---|
| 141. 830 |
2.94 0 |
138 .890 |
4 | (48 .812 ) |
90.0 82 |
|
| EMT N's EUR |
141. 830 |
2.94 0 |
138 .890 |
4 | (48.8 12) |
90.0 82 |
(Translation of Annex II originally issued in Portuguese - Note 52)
| Am t of the iss oun ue |
Acc l rua |
Tot al |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Sec urit ies issu ed |
Cur ren cy |
Tot al |
Sub ibed scr Gro by t he up |
Con soli dat ed e S Bal hee t anc |
Tot al |
Sub ibed scr Gro by t he up |
Con soli dat ed e S Bal hee t anc |
Con soli dat ed e S Bal hee t anc |
Inte t Ra te res |
Mat urity da te |
Ear ly re nt a s fr pay me om |
| Sub ord inat ed Per ual Bon ds 200 0 pet |
EU R |
270 .44 7 |
270 .44 7 |
- | 159 | 159 | - | - | 2,0 8% |
Per ual pet |
Jun e 2 2, 2 010 |
| Sub ord inat ed Per ual Bon ds CP P 2 pet 001 |
EU R |
4.2 75 |
- | 4.2 75 |
32 | - | 32 | 4.3 07 |
2,1 1% |
Per ual pet |
Feb ry 2 3, 2 011 rua |
| Sub ord inat ed Per ual Bon ds BS P 2 001 pet |
EU R |
13.8 18 |
13.8 18 |
- | 104 | 104 | - | - | 2,1 1% |
Per ual pet |
Feb ry 2 3, 2 011 rua |
| 288 .54 0 |
284 .265 |
4.2 75 |
295 | 263 | 32 | 4.3 07 |
Consolidated Reports and Opinions
(Amounts expressed in thousands of Euros – tEuros)
(Translation of a report originally issued in Portuguese – Note 52)
Page 3 of 3
Lisbon, April 28, 2014
Deloitte & Associados, SROC S.A. Represented by Eduardo Manuel Fonseca Moura
(This report is a translation of a report originally issued in Portuguese. Therefore according to Deloitte & Associados, SROC, S.A. internal procedures, the report should not be signed. In the event of discrepancies, the Portuguese language version prevails.)
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