1.1
CaixaBank, S.A. (hereinafter, CaixaBank - its trade name - or the Entity), is a Spanish public limited company registered in the Commercial Register of Valencia, Volume 10370, Folio 1, Sheet V-178351, and in the Special Administrative Register of the Bank of Spain, under number 2100. The Legal Entity Identifier (LEI) of CaixaBank is 7CUNS533WID6K7DGFI87, and its tax ID (NIF) is A08663619.
As of 1 July 2011, CaixaBank's shares are listed on the securities exchanges of Madrid, Barcelona, Valencia and Bilbao, in their continuous markets. The registered office and tax address of CaixaBank is Calle Pintor Sorolla, 2-4 in Valencia. The contact numbers for the shareholder service line are 902 11 05 82 / +34 935 82 98 03, and the one for institutional investors and analysts is +34 934 11 75 03.
The corporate purpose of CaixaBank mainly entails:
CaixaBank and its subsidiaries comprise CaixaBank Group (hereinafter "CaixaBank Group" or "the Group”).
CaixaBank is the parent company of the financial conglomerate formed by the Group's entities that are considered to be regulated, recognising CaixaBank as a significant supervised entity, whereby CaixaBank comprises, together with the credit institutions of its Group, a significant supervised group of which CaixaBank is the entity at the highest level of prudential consolidation.
As a listed bank, it is subject to oversight by the European Central Bank and the Spanish national securities market regulator (the Comisión Nacional del Mercado de Valores, CNMV); however, the entities of the Group are subject to oversight by supplementary and industry-based bodies.
Since CaixaBank is a Spanish commercial enterprise structured as a public limited company, it is therefore subject to the amended text of the Spanish Corporate Enterprises Act ("Corporate Enterprises Act"), enacted by Royal Legislative Decree 1/2010 of 2 July and its implementing provisions. Furthermore, given that it is a listed company, it is also governed by the amended text of the Securities Markets Act, approved by Royal Legislative Decree 4/2015, of 23 October, and its implementing provisions.
CaixaBank's corporate website is www.caixabank.com.
The Entity's most relevant company milestones during its period of activity are:
12/12/1980
Incorporation of Grupo de Servicios, S.A. for an indefinite period.
Notary public: Eduardo Blat Gimeno - Record number: 2,375
22/12/1983
Amendment of the trade name to GDS-Grupo de Servicios, S.A.
Notary public: Antonio-Carmelo Agustín Torres - Record number: 5,813
01/06/1992
Adjustment of the by-laws to the -then in force- Act on Public Limited Companies.
Notary: Ladislao Narváez Acero - Record number: 1,124
07/2000
Investee portfolio contribution to CaixaHolding, Caixa d’Estalvis i Pensions de Barcelona.
01/06/2000
Merger by adsorption of CaixaHolding, S.A.U., adopting this trade name.
Notary: Tomás Giménez Duart - Record number: 4,011
07/2000
Aportación de la cartera de participadas a CaixaHolding, S.A.U. por parte de Caixa d’Estalvis i Pensions de Barcelona.
10/2007
The process of Initial Public Offering for the admission to trading of the shares on the Spanish securities exchanges is completed.
02/08/2007
Amendment of the trade name to Criteria CaixaCorp, S.A
Notary public: Tomás Giménez Duart - Record number: 3,511
10/2007
Aportación de la cartera de participadas a CaixaHolding, S.A.U. por parte de Caixa d’Estalvis i Pensions de Barcelona.
27/06/11
Reorganisation of the "la Caixa" Group: Criteria CaixaCorp, S.A. receives the "la Caixa" holding in MicroBank to which the assets and liabilities comprising the Group's financial activity had previously been transferred.
Notary: Tomás Giménez Duart - Record number: 2,617
30/06/2011
Merger by adsorption of "la Caixa" MicroBank by Criteria CaixaCorp, S.A. and amendment of the resulting trade name for that of CaixaBank, S.A.
Notary: Tomás Giménez Duart - Record number: 2,685
05/2014
The General Assembly of "la Caixa" approved the transformation into a banking foundation, terminating the indirect exercise of its activity as a credit institution through CaixaBank, S.A.
05/2014
The General Assembly of "la Caixa" approved the transformation into a banking foundation, terminating the indirect exercise of its activity as a credit institution through CaixaBank, S.A.
09/2017
Fulfillment of the conditions imposed by the European Central Bank for the prudential deconsolidation of CaixaBank, which becomes the parent company of the supervisory group.
09/2017
Fulfillment of the conditions imposed by the European Central Bank for the prudential deconsolidation of CaixaBank, which becomes the parent company of the supervisory group.
1.2
The Group’s consolidated financial statements have been prepared by the directors in accordance with the regulatory financial reporting framework applicable to the Group at 31 December 2020, which is set forth in the International Financial Reporting Standards adopted by the European Union (hereinafter, "IFRS-EU"). In preparing these statements, Bank of Spain Circular 4/2017 of 27 November has been taken into account, which constitutes the adaptation of the IFRS-EU to Spanish credit institutions, and subsequent amendments in force at the end of the financial year.
The financial statements, which were prepared from the accounting records of CaixaBank and the Group's companies, are presented in accordance with the regulatory financial reporting framework applicable to them and, in particular, with the accounting principles and rules contained therein and, accordingly, present fairly the Group’s equity, financial position, results of operations and cash flows for the financial year. The accompanying financial statements include certain adjustments and reclassifications required to apply the policies and criteria used by the Group companies on a consistent basis with those of CaixaBank.
The figures are presented in millions of euros unless another monetary unit is stated. Certain financial information in these notes was rounded off and, consequently, the figures shown herein as totals may differ slightly from the arithmetic sum of the individual figures given before them. Similarly, in deciding what information to disclose in this report, its materiality was assessed in relation to the annual financial data.
In 2020 the following accounting standards became effective:
| STANDARDS AND INTERPRETATIONS * | TITLE | DATE OF APPLICATION |
| Amendment to IFRS 3 | Definition of a business | 1 January 2020 |
| Amendment to IAS 39, IFRS 9 and IFRS 7 | Interest rate benchmark reform (phase 1) | 1 January 2020 |
| Amendment to IAS 1 and IAS 8 | Definition of materiality | 1 January 2020 |
| Amendment to IFRS 16 | Rental concessions related to COVID-19 | 1 June 2020 |
| Amendment to Conceptual Framework | Amendment to the Conceptual Framework of the IFRS | 1 January 2020 |
(*) They have not had a significant effect on the Group.
In the context of the global interest rate benchmark reform (IBORs), the IASB launched a project to review of the main IFRS standards affected, split into two phases. The first phase focused on the accounting impacts before the replacement of the interest rate benchmarks, and finished with the publication in September 2019 of the Amendments to IAS 39, IFRS 9 and IFRS 7, which were approved at European level on 17 January 2020. It came into effect on 1 January 2020.
These amendments provide exceptions so entities do not have to abandon their hedging ratios in an environment of uncertainty regarding the long-term feasibility of some interest rate benchmarks. These exceptions are based, inter alia, on the ability to assume that the interest rate benchmark on which the hedged risk or the cash flows of the hedged item or the hedging instrument is based is not altered as a consequence of the reform.
The Group decided to early adopt the amendments of phase one at the close of 2019, although due to the fact that the majority of its hedging ratios are based on the Euribor index and that the latter has not been subject to replacement – only its calculation methodology was changed – it has not had an impact through the global reform itself, and the broken down information considered in the amendments to phase one do not apply.
As a consequence of the COVID-19 pandemic, many lessors have provided rental reductions to their tenants. These rental reductions are particularly important for tenancies in retail real estate, and, in some cases, are encouraged or required by governments or court authorities. Rental reductions include rental 'holidays' or deductions for a period of time, potentially followed by an increase in the rental payments in future periods.
The IASB has reported that it may be practically difficult to apply the requirements of IFRS 16 to a potentially high volume of rental reductions related to COVID-19, particularly in light of the many challenges faced by those affected. Specifically, tenants have identified difficulties in the current environment in assessing whether rental reductions related to COVID-19 are modifications to their lease, for which the accounting processes required by the Standard is applicable.
In this context, as a practical solution, a modification of IFRS 16 has been approved to allow tenants to not have to evaluate whether specific rental reductions related to COVID-19 are modifications to their lease. Instead, tenants who apply this practical solution will account for said rental reductions as if they are not rental modifications. The amendment to the Standard, which does not propose any changes for lessors, is due to enter into force on 1 June 2020.
The Group has not identified any contracts that may be within the scope of this amendment, and thus it does not anticipate applying the aforementioned solution. Neither will there be an impact on assets nor on the presentation of financial statements derived therefrom.
At the date of authorisation for issue of these consolidated financial statements, following are the main standards and interpretations issued by the IASB but not yet effective, either because their effective date is subsequent to the date of the consolidated financial statements or because they had not yet been endorsed by the European Union:
| STANDARDS AND INTERPRETATIONS | TITLE | MANDATORY APPLICATION FOR ANNUAL PERIODS BEGINNING ON OR AFTER: |
| Amendment to IAS 39, IFRS 9 and IFRS 7 | Interest rate benchmark reform (phase 2) | 1 January 2021 |
| Amendment to IFRS 4 | Scope of the temporary exemption for applying IFRS 9 | 1 January 2021 |
| IFRS 17 | Insurance contracts | 1 January 2023 |
The IASB has completed its response to the global interest rate benchmark reform (IBORs) with a series of amendments to IAS 39, IFRS 9 and IFRS 7 – the so-called phase 2 – which supplement those issued in 2019.
These amendments focus on cases in which entities replace the previous benchmark interest rate for an alternative benchmark rate and on the effects of the amendment on the financial statements. Specifically:
will not have to derecognise or adjust the carrying amount of financial instruments due to the changes required by the reform, but will have to update the effective interest rate in order to reflect the change to the alternative benchmark rate;
Entities will not have to abandon their hedge accounting simply because they have to apply the changes required by the reform if the hedging complies with other hedge accounting criteria; and
Entities must publish information about any new risks that arise following the reform and how they will manage the transition to the alternative benchmark rates.
These amendments will become effective as of 1 January 2021, although early adoption is permitted.
On 25 June 2020, the IASB issued a series of amendments to IFRS 17, with a view to help entities to implement the Standard and facilitate the explanation of their financial performance to users of their financial information. The main principles on which the original Standard is based, first issued in May 2017, are not affected. The newly published amendments are basically designed to: i) reduce costs by simplifying some requirements in the Standard, ii) make financial performance easier to explain, and iii) facilitate the transition by postponing the validity date of the Standard until 2023, whilst giving additional aids to reduce the effort required when applying IFRS 17 for the first time.
As specified in note 2.21 for insurance operations, the Group's insurance companies have made use of the temporary exemption of the application of IFRS 9, thus, this standard is no longer in force for the insurance business by virtue of the application of EU Regulation 2017/1988. This regulation allows for the deferral of IFRS 9 for insurance companies that form part of a financial conglomerate, as stated in article 2, section 14 of Directive 2002/87/EC. This option was adopted by CaixaBank Group for the financial investments of the Group's insurance companies (VidaCaixa and BPI Vida y Pensiones) from 1 January of 2018, as it fulfilled the conditions laid down by article 2 of the EU Regulation EU 2017/1988.
The Group continues to work intensively to implement this standard, in accordance with the plan approved in 2018, which was subject to an update in 2019; in particular, the work is currently focused on developing the actuarial engine and tools for drawing up accounting and management information, as well as testing the first partial results. The implementation of the standard and the assessment of the impact on the CaixaBank Group financial statements remains on-going.
Relevant changes to the project plan are not expected in 2021, despite the fact that the IASB has delayed the first application of IFRS 17 to 1 January 2023. Nevertheless, it is important to point out that the effects that the crisis resulting from COVID-19 will have on the project plan in the short term will be monitored closely.
1.3
The Entity's consolidated financial statements for 2020 were authorised for issue by the Board of Directors at a meeting held on 18 February 2021. They have not yet been approved by the Annual General Meeting, while it is expected that they will be approved without any changes.
In its meeting of 26 March 2020, the Board of Directors agreed to cancel the amount of the dividend contained in the 2019 profit allocation proposal included in the financial statements of said year, and drew up a new profit allocation proposal (see Note 1.8). The 2019 financial statements, as well as the proposal for distributing the income from 2019 in its new terms, were approved by the Annual General Meeting of 22 May 2020.
These consolidated financial statements have been prepared according to a going concern based on the solvency (see Note 4) and liquidity (see Note 3.3.3.) of the Group. The preparation of the consolidated financial statements required the Board of Directors to make certain judgements, estimates and assumptions in order quantify certain assets, liabilities, revenues, expenses and obligations shown in them. These judgements and estimates mainly refer to:
These estimates were made on the basis of the best information available at the date of authorisation for issue of the financial statements. However, considering the uncertainty at this time derived from the impact of COVID-19 on the current economic environment, it is possible that events may occur that make it necessary for them to be changed in future periods. According to applicable legislation, the effects of these changes would be recognised prospectively in the corresponding statement of profit or loss.
1.4
The 2019 and 2018 figures presented in the accompanying 2020 Financial Statements are given for comparison purposes only. In some cases, in order to facilitate comparability, the comparative information is presented in a summarised way, and the full information is available in the 2019 and 2018 Financial Statements.
The Group applied IFRS 16 for the first time on 1 January 2019. Along these lines, it opted not to reassess whether an agreement is a lease or contains a leasing component in accordance with the standard's criteria, applying it solely for agreements that had been identified as leases according to the previous standard.
For leases in which the Group intervenes as lessee, previously classified as operational leases, the Group opted to apply the new leasing criteria retroactively through the modified retrospective approach, whereby enabling an estimation of the value of the right of use by referencing the financial liability in operations; generating no adjustment in reserves whatsoever at 1 January 2019. Additionally, the Group decided to exclude from the scope – in accordance with the simplifications considered in the new regulatory framework on financial information – lease agreements whose underlying asset is not real estate and whose term expires within the twelve months following the initial application date.
The main type of contracts identified for which a right-of-use asset and a lease liability had to be estimated at 1 January 2019 are real estate leases (office buildings), which were in connection with the operating activity.
For sale transactions with subsequent leasing carried out before 1 January 2019 in which the Group acted as a seller-lessee, the subsequent lease has been recorded as any other existing operating lease at 1 January 2019.
The Group applied IFRS 9 for the first time on 1 January 2018. This led to changes to the classification and measurement modifications of certain items on the balance sheet at 31 December 2017. The breakdown and impacts of the application of IFRS 9 are covered in Appendix 7 and in the 2018 Financial Statements.
1.5
The most significant operations carried out by the Group do not have a relevant cyclical or seasonal nature within a single financial year.
1.6
At year-end, the Group held no direct ownership interest equal to or greater than 5% of the capital or voting rights in any credit institution other than the investments and subsidiaries and associates listed in Appendices 1 and 3.
1.7
In this year, the Entity complied with the minimum reserve ratio required by applicable regulations.
1.8
The year 2020 has been marked by the impact of COVID-19 on the wider society and on the activity of the economy. This has required a special attention by CaixaBank and the various companies within its Group, in order to meet its goal of promoting financial services to its customers, while attending to the special needs arising from such a time. To do so, CaixaBank has taken the measures that are set out below:
In order to accommodate the position of the Group to the environment arising from the spread of COVID-19 and to the measures rolled out by the authorities to slow the spread (see Note 3.1), in its sessions of 26 March and 16 April 2020, the Board of Directors agreed the following: i) to cancel the Ordinary Annual General Meeting, which was announced on 25 February 2020, and which was scheduled for 2 and 3 April 2020 at first and second call, respectively, and reschedule it for 21 and 22 May 2020 at first and second call, respectively; ii) to revoke the proposal to apply the profit agreed by the Board of Directors on 20 February 2020, which was included as point four of the agenda of the Annual General Meeting, published on the website of the Spanish national securities market regulator (Comisión Nacional del Mercado de Valores, CNMV) on 25 February 2020; and iii) to reduce the proposed cash dividend for 2019 to EUR 0.07 per share from EUR 0.15 per share, in an exercise of prudence and social responsibility; resulting in a payout of 24.6%. The dividend was paid on 15 April 2020 as a single interim dividend for 2019 (see Note 5).
The new agreed proposal for the distribution of the profits of 2019 included the corresponding declaration from the Entity's accounts auditor, pursuant to the provisions of Article 40.6 bis of Royal Decree-Law 8/2020, of 17 March, on the extraordinary urgent measures to address the economic and social impact of COVID-19, and is as follows:
| 2019 | ||
| Basis of appropriation | ||
| Profit/(loss) for the year | 2,074 | |
| Appropriation: | ||
| To dividends (1) | 418 | |
| To reserves | 1,656 | |
| To legal reserve (2) | 0 | |
| To voluntary reserve (3) | 1,656 | |
| NET PROFIT FOR THE YEAR | 2,074 | |
(1) Amount corresponding to the payment of the dividend of EUR 0.07 per share in cash on 15 April 2020. Treasury stock on the date of the payment of the dividend have been excluded given that, pursuant to the requirements of the Corporate Enterprises Act, dividends cannot be paid to treasury stock.
(2) It is not necessary to transfer part of the 2019 profit to the legal reserve, as this reserve has reached 20% of the share capital (art. 274 of the Spanish Corporate Enterprises Act).
(3) Estimated amount allocated to the voluntary reserve. This amount will increase by the same amount as the amount earmarked for payment of the final dividend decreases (see Note 1 above). Remuneration of AT1 capital instruments corresponding to 2019 issued by CaixaBank, totalling EUR 133 million, will be deemed to have been paid, with this amount charged to voluntary reserves.
As regards the dividend policy in force comprising the distribution of a cash dividend above 50% of the consolidated net profit, the Board of Directors agreed to exclusively amend it for 2020, limiting the distribution to a cash dividend of no more than 30% of the reported consolidated net profit (for further information on payments to shareholders in 2020, see Note 5).
In no case will the remuneration of preference shares eventually convertible into outstanding shares (Additional Tier 1) be affected by prior agreements, and it will continue to be paid in accordance with the regulatory and supervisory framework in force.
1.9
Merger by absorption of Bankia
On 17 September 2020, the Board of Directors of CaixaBank and Bankia, S.A. agreed to approve and enter the shared project involving the takeover merger of Bankia, S.A. by CaixaBank with an exchange ratio of 0.6845 shares of CaixaBank for each share of Bankia. The exchange will be carried out by means of newly issued CaixaBank shares.
This shared merger project was approved by the General Shareholders' Meetings of CaixaBank and Bankia, which were celebrated in the beginning of December 2020. The appointment of the new Directors for the post fusion era was approved by the General Shareholders' Meeting of CaixaBank.
The merger is expected to take place during the first quarter of 2021 —subject to obtaining the necessary regulatory and administrative clearance— while the process of operational integration between both banks will be carried out before the end of 2021.
As a result of this operation:
Once the merger has been completed, the stake in CaixaBank held by CaixaBank de Criteria Caixa, S.A.U. (and indirectly by Fundación Bancaria Caja de Ahorros y Pensiones de Barcelona, ”la Caixa”) will be equal to or above 30% of its share capital, the FROB (via BFA Tenedora de Acciones, S.A.) acquiring a significant stake in CaixaBank, approximately 16%.
Agreement of sale to Lone Star
On 8 June 2018, CaixaBank reached an agreement with the company SH Findel, S.À.R.L. (subsidiary company of TPG Sixth Street Partners) to repurchase 51% of the share capital of Servihabitat at a price of EUR 176.5 million. After this purchase, which obtained the necessary authorisations and which was closed on 13 July 2018, the Group now holds 100% of the share capital of Servihabitat.
As a result of the combination of businesses, Servihabitat is now consolidated through the method of global integration, for accounting purposes, from 1 July 2018. The impact on equity and profit of the difference between the acquisition date and the date that control was effectively obtained (13 July 2018) was not significant. This operation involved the emergence of the following impacts on the Group's income statement:
a
A review of the carrying amount of the prior stake in Servihabitat (49%) by virtue of the update of the valuation of this share, consistent with the sale offer accepted by the Group with regard to the operation announced on 28 June 2018 and described in the following section. It resulted in the recording of a EUR 52 million loss under the heading "Impairment/(reversal) of impairment on investments in joint ventures and associates" of the accompanying consolidated income statement.b
The recognition of a loss amounting to EUR 152 million under the heading "Provisions or reversal of provisions" in the accompanying consolidated income statement, corresponding to the difference between the transaction price (EUR 176.5 million) and the fair value of the share purchased in 51% of Servihabitat, estimated in the context of the sale of this share to Lone Star.Similarly, the result generated by this stake as a consequence of its business combination in July 2018 until sold, after the implementation of the transaction described in the following section, was classified under "Profit/(loss) after tax from discontinued operations" in the consolidated income statement.
On 28 June 2018, CaixaBank arranged to sell 80% of its real estate portfolio to a company owned by Lone Star Fund X and Lone Star Real Estate Fund V. This transaction mainly includes the portfolio of real estate assets available for sale on 31 October 2017, as well as 100% of the share capital of Servihabitat. The gross value of the real estate assets at 31 October 2017 used for the sale was approximately EUR 12,800 million, the net carrying amount of which was approximately EUR 6,700 million.
The Group transferred the aforementioned portfolio, together with 100% of Servihabitat, to a new company (Coral Homes, S.L.), 80% of which was subsequently sold to Lone Star, retaining a 20% stake through BuildingCenter. The overall impact of the sale operation on the consolidated statement of profit or loss (including, expenses, taxes and other costs) was EUR -48 million after tax and +15 basis points in the fully-loaded CET1 ratio at 31 December 2018.
In July 2020, an arbitration was initiated at the request of Lone Star to undo the contribution of a small group of properties included in the portfolio transferred to Coral Homes, S.L. In the event of an unfavorable resolution of abovementioned arbitration, it is estimated that it will not produce a significant equity impact on the Group.
1.10
The operations – in addition to those stated in the rest of the notes – that have taken place between the close and the formulation thereof are set out below.
On 9 January 2021, CaixaBank completed an issuance of a green bond (senior non-preferred debt) amounting to EUR 1,000 million, maturing in 8 years and paying an annual return of 0.50% (equivalent to the midswap + 115 basis points).
