Company: BBVXF
Filing Date: 2025-02-27
Form Type: F-4/A
Source: 0001193125-25-037317
Chunk: 231

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-02-27
Form: F-4/A
Chunk 231
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 non-derivative instruments, between the portion attributable to returns accrued on the instrument, which are recognised as interest applying the effective interest rate method, and the remaining portion, which is
recognised as profit or loss on financial operations under the corresponding heading.

Financial liabilities at amortised cost are financial liabilities that cannot be classified into any of the above categories and which relate to the
typical deposit-taking activity of a financial institution, irrespective of their substance and maturity.

Following initial recognition, financial
liabilities at amortised cost are measured applying the same criteria applicable to financial assets at amortised cost, generally recognising the interest accrued, calculated using the effective interest rate method, in the consolidated income
statement.

The financial liabilities at amortised cost category includes preferred securities contingently convertible into ordinary shares that
meet the requirements that make them eligible in terms of own funds as Additional Tier 1 capital and therefore do not meet the requirements to be classified as consolidated equity for accounting purposes. Their main characteristics are that they
have no defined maturity, they can be redeemed by the issuer in certain circumstances, the associated coupon payments are discretionary, and they can be converted into a variable number of ordinary shares newly issued by the Bank where the latter or
its consolidated group have a CET1 ratio below 5.125%.

Taking the foregoing into account, these securities are compound financial instruments that
simultaneously present attributes of financial liabilities (i.e. there are conversion scenarios in which the issuer must deliver a variable number of its equity instruments to cancel the issuance) and of equity (i.e. discretionary coupon payments).
The Institution estimates that the fair value of the liability component of the compound financial instrument as at the date of origination corresponds to the payment that would need to be made if an instantaneous conversion event were to occur, so
the amount allocated to that component is the entire carrying amount of the issued instrument, which is classified under the heading “Financial liabilities at amortised cost – Debt securities issued” on the consolidated balance sheet.
Furthermore, given that the Institution has the discretion to decide to pay the coupons associated with these instruments, those coupons are considered equity distributions and they are recognised under the “Other reserves” heading of the
balance sheet on each payment date, reducing the Institution’s equity.

Hybrid financial instruments

Hybrid financial instruments are those that combine a non-derivative host contract and a financial derivative,
known as an ‘embedded derivative’, which cannot be transferred separately, nor does it have a different counterparty, and which results in some of the