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BBVA estimates potential goodwill adjustment of ¤1 billion for its U.S. operations
Taking into account current available data and profit forecasts, the BBVA Group estimates a potential adjustment to the goodwill of its U.S. unit due to macroeconomic factors and to the new regulatory framework. This accounting adjustment would not have any negative impact on the Group’s liquidity, solvency or dividend policy.
BBVA evaluates goodwill across the Group on an annual basis. For the U.S. franchise, there is a potential goodwill adjustment due to a slower than anticipated economic recovery, an extended environment of low interest rates and the growing impact of new regulatory requirements. The net value of this adjustment would be approximately ¤1 billion and would be included in the 2011 results.
This accounting adjustment would be a non-cash item and would not impact the Group’s dividend policy. The accounting treatment of goodwill means the adjustment would not negatively impact the Group’s capital position. The adjustment would result in an increase of about ¤400 million in the Group’s core capital due to the tax treatment that corresponds to goodwill.
The Group’s commitment to its U.S. franchise remains intact. Despite the macroeconomic factors and the regulatory environment that have caused this adjustment, the BBVA Group’s performance in the world’s largest economy has been positive in 2011.
During the second half of 2011 international organizations revised their growth expectations for the U.S. The OCDE lowered its 2012 growth expectations from 3.1% to 2.0%. The European Commission also lowered its estimate from 2.7% to 1.5% and the IMF from 2.7% to 1.8%.