Spanish bank BBVA cuts value of US ops
Wednesday, 11 January 2012
MADRID, Jan 10 (AFP): Spain's number two bank BBVA said Tuesday it expected to cut the goodwill value of its US business, resulting in a one-billion-euro ($1.3 billion) impact on 2011 results.
But the asset devaluation would actually boost the group's core capital by 400 million euros, the Spanish bank said, because of way goodwill is taxed.
Goodwill for a company is the name given to intangible assets, such as reputation, good labour relations or patents which are counted on the company's books in the same way that physical assets are included.
Goodwill is often a very important part of a services business such as banking and figures in the overall valuation of activities.
The group's business in the United States, where it operates under the name BBVA Compass, notably in Alabama, Texas and California, was downgraded in an annual evaluation of assets, it said.
The US business improved in 2011 from the previous year both in results and in terms of activity, it said in a statement to the Spanish financial regulator.
But "the latest estimates of economic growth for this country and the impact of the new regulatory framework for the financial sector have slowed the pace of expected growth for future results," it said.
The lowered goodwill asset valuation would have a net impact of about one billion euros on the financial situation of BBVA at the end of 2011, the bank said.
But the asset devaluation would actually boost the group's core capital by 400 million euros, the Spanish bank said, because of way goodwill is taxed.
Goodwill for a company is the name given to intangible assets, such as reputation, good labour relations or patents which are counted on the company's books in the same way that physical assets are included.
Goodwill is often a very important part of a services business such as banking and figures in the overall valuation of activities.
The group's business in the United States, where it operates under the name BBVA Compass, notably in Alabama, Texas and California, was downgraded in an annual evaluation of assets, it said.
The US business improved in 2011 from the previous year both in results and in terms of activity, it said in a statement to the Spanish financial regulator.
But "the latest estimates of economic growth for this country and the impact of the new regulatory framework for the financial sector have slowed the pace of expected growth for future results," it said.
The lowered goodwill asset valuation would have a net impact of about one billion euros on the financial situation of BBVA at the end of 2011, the bank said.