Company: BBVXF
Filing Date: 2025-02-27
Form Type: F-4/A
Source: 0001193125-25-037317
Chunk: 612

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-02-27
Form: F-4/A
Chunk 612
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. 1.3.5 Hedging transactions The Group has elected to continue applying IAS 39 for its hedge accounting until the IFRS 9 macro hedge accounting project has been finalised, as permitted by IFRS 9. The Group uses financial derivatives to (i) provide these instruments to customers that request them, (ii) manage risks associated with the Group’s proprietary positions (hedging derivatives), and (iii) realise gains as a result of price fluctuations. To this end, it uses both financial derivatives traded in organised markets and those traded bilaterally with counterparties outside organised markets (over the counter, or OTC). Financial derivatives that do not qualify for designation as hedging instruments are classified as derivatives held for trading. To be designated as a hedging instrument, a financial derivative must meet the following criteria:

| – | It must hedge against the exposure to changes in the value of assets and liabilities caused by interest rate and/or                                                                                                                                    
 exchange rate fluctuations (fair value hedge), the exposure to variability in estimated cash flows that is attributable to a particular risk of financial assets and financial liabilities, firm commitments and highly probable forecast transactions 
 (cash flow hedge), or the exposure associated with net investments in foreign operations (hedge of net investments in foreign operations).                                                                                                             |

| – | The financial derivative must effectively eliminate some portion of the risk that is inherent in the hedged item or                                                                                                                                   
 position throughout the entire expected life of the hedge. This effectiveness should be measured both prospectively and retrospectively. To this end, the Group analyses whether, at the time of its inception, a hedge is expected to operate with a 
 high level of effectiveness in business-as-usual conditions. It also runs effectiveness tests throughout the life of the hedge, in order to verify that the results of                                                                                
 these tests show an effectiveness that falls within a range of between 80% and 125%.                                                                                                                                                                  |

A-498

| – | Suitable documentation must be available to show that the financial derivative was acquired specifically to hedge                                                                                                 
 against certain balances or transactions and to show the intended method for achieving and measuring hedge effectiveness, provided that this method is consistent with the Group’s own risk management processes. |

Hedges are applied either to individual items and balances (micro-hedges) or to portfolios of financial assets and financial liabilities (macro-hedges). In the latter case, the set of financial assets and financial liabilities to be hedged must share the same type of risk, a condition that is met when the individual