BILBAO (dpa-AFX) - Spanish financial services firm Banco Bilbao Vizcaya Argentaria SA or BBVA (BBVA) announced Monday that provisions related to the requirements of Royal Decree Law is estimated to impact its 2012 earnings by about 1.3 billion euros after tax.
Total provisions due to the new bank rules are currently expected to be around 1.8 billion euros. BBVA anticipates the impact to result in a reduction of 38 basis points in the group's capital ratios.
'This impact will be reflected in the BBVA Group's financial statements for December 31st 2012 and it will be absorbed thanks to its recurring, diversified and resilient earnings,' the company noted.
The Royal Decree Law 18/2012, approved by the Spanish Government on May 11, relates to loss provisioning and sale of real estate assets held by the financial sector. The Spanish government said Friday that banks will be required to set aside an extra 30 billion euros in provisions to cover potential losses on property assets.
BBVA Group also said it will continue to comply with various requirements affecting capital.
However, the company stated that the measures in the Royal Decree Law are not expected to change its present dividend policy.
On Sunday, Banco Santander SA (STD, BNC.L, BCDRF.OB) said it will set aside 2.7 billion euros to comply with the decree-law on provisioning of real estate assets. These provisions, along with 2.3 billion euros pending under the decree-law passed in February, come to 5 billion euros before tax, which will be fully absorbed in its 2012 results. The after-tax impact on results will be 2.9 billion euros, the company said.
In April end, rating agency Standard and Poor's downgraded 16 Spanish banks after lowering the credit ratings of the country by two notches. The downgrade comes amid the release of a report by the Spanish statistical agency INE, which showed that the Spanish economy returned to recession in the first quarter of 2012. The lenders being affected by the action include Banco Santander S.A., its core subsidiary Banco Español de Credito S.A., and Banco Bilbao.
All the Spanish banking shares are showing downward trend on Monday. In Madrid, Banco Bilbao shares are currently trading at 5.01 euros, down 4.53 percent, on a volume of 23.28 million shares.
Banco Santander shares are down 3.79 percent at 4.69 euros on 45.56 million shares. Banco de Sabadell dropped 3.39 percent.
Bankia shares are down about 9 percent and Banco Popular Espanol shares are lower nearly 6 percent. Bankinter declined 3.48 percent.
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© 2012 AFX News
