BBVA BBVA Bilbao Vizcaya Argentaria SA

 

 

Filed Pursuant to Rule 424(b)(5)
Registration No. 333-167820

PRELIMINARY PROSPECTUS SUPPLEMENT DATED MAY 11, 2011 (SUBJECT TO COMPLETION)

(To Prospectus dated June 28, 2010)

BBVA U.S. Senior, S.A. Unipersonal

(a wholly-owned subsidiary of Banco Bilbao Vizcaya Argentaria, S.A.)

$      FIXED RATE SENIOR NOTES DUE 2014

$      FLOATING RATE SENIOR NOTES DUE 2014

unconditionally and irrevocably guaranteed, as described in the prospectus, by

Banco Bilbao Vizcaya Argentaria, S.A.

 

The $      fixed rate senior notes due     2014 (the “ Fixed Rate Notes ”) will bear interest at     % per year. The $      floating rate senior notes due 2014 (the “ Floating Rate Notes ” and, together with the Fixed Rate Notes, the “ Notes ”) will bear interest at the then-applicable U.S. dollar three-month LIBOR rate plus     % per year. Interest on the Fixed Rate Notes will be payable on each           and           of each year, beginning on          , 2011, up to, and including,          , 2014 (the “ Fixed Rate Note Maturity Date ”). Interest on the Floating Rate Notes will be payable on each          ,          ,          and           of each year, beginning on          , 2011, up to, and including,          , 2014 (the “ Floating Rate Note Maturity Date ” and the Fixed Rate Note Maturity Date, each a “ Maturity Date ”). The Fixed Rate Notes will mature at 100% of their principal amount on the Fixed Rate Note Maturity Date. The Floating Rate Notes will mature at 100% of their principal amount on the Floating Rate Note Maturity Date. The Fixed Rate Notes and the Floating Rate Notes constitute separate series of securities issued under the Indenture (as defined herein).

 

Subject to applicable law, the Notes of each series will be unsecured and will rank equally in right of payment with other unsecured unsubordinated indebtedness of BBVA U.S. Senior, S.A. Unipersonal (the “ Issuer ”). The senior guarantee (as defined herein) as to the payment of principal, interest and additional amounts (as defined herein) will be a direct, unconditional, unsecured and unsubordinated obligation of Banco Bilbao Vizcaya Argentaria, S.A. (the “ Guarantor ”) and, subject to applicable law, will rank equally in right of payment with its other unsecured unsubordinated indebtedness.

 

Neither the U.S. Securities and Exchange Commission (the “ SEC ”) nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement and of the accompanying prospectus. Any representation to the contrary is a criminal offense.

 

Investing in the Notes involves risks. See “Risk Factors” beginning on page S-12 of this prospectus supplement and page 2 of the accompanying prospectus as well as in the documents incorporated by reference.

 

 

 

 

The Notes are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency of the Kingdom of Spain, the United States or any other jurisdiction.

 

We will apply to list the Notes on the New York Stock Exchange and, if approved, trading is expected to commence within 30 days after the initial delivery of the Notes.

 

The underwriters expect to deliver the Notes in registered book-entry form through the facilities of The Depository Trust Company (“ DTC ”) and Euroclear Bank S.A./N.V. (an indirect participant in DTC), as operator of the Euroclear System (“ Euroclear ”) on or about May          , 2011, which will be the fifth New York business day following the date of pricing of the Notes (such settlement period being referred to as “T+5”). Beneficial interests in the Notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants.

 

 

Joint Bookrunners

 

BBVA Securities

                              Citi

Deutsche Bank Securities

Goldman, Sachs & Co.

 

 

 

The date of this prospectus supplement is          , 2011.

 

TABLE OF CONTENTS

 

Prospectus Supplement

 

 

Prospectus

 

ABOUT THIS PROSPECTUS SUPPLEMENT

 

References in this prospectus supplement to “we”, “our”, “us”, “Guarantor” and “Bank” refer to Banco Bilbao Vizcaya Argentaria, S.A. (including, as the context may require, acting through one of its branches), unless the context otherwise requires, and references to “BBVA”, and “BBVA Group” refer to Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries (including us), unless otherwise indicated or the context otherwise requires.

 

References in this prospectus supplement to “BBVA U.S. Senior” or the “Issuer” refer to BBVA U.S. Senior, S.A. Unipersonal, unless the context otherwise requires.

 

References in this prospectus supplement to “you” mean those who invest in the Notes, whether they are the direct holders or owners of beneficial interests in those securities. References to “holders” mean those who own securities registered in their own names on the books that we maintain for this purpose, and not those who own beneficial interests in securities issued in book-entry form through DTC or another depositary or in securities registered in street name.

 

References in this prospectus supplement to “Spain” refer to the Kingdom of Spain.

 

References in this prospectus supplement to “$”, “US$”, “U.S. dollars” and “dollars” refer to United States dollars and “€” and “euro” refer to euro.

 

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We and the Issuer have not, and the underwriters have not, authorized anyone to provide you with different information.

 

BBVA U.S. Senior is offering the Notes for sale in those jurisdictions in the United States and elsewhere where it is lawful to make such offers. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the Notes in some jurisdictions may be restricted by law. If you possess this prospectus supplement and the accompanying prospectus, you should find out about and observe these restrictions. This prospectus supplement and the accompanying prospectus are not an offer to sell the Notes and neither we, BBVA U.S. Senior nor the underwriters are soliciting an offer to buy the Notes in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or from any person to whom it is not permitted to make such offer or sale. We refer you to the information under “Underwriting” in this prospectus supplement. The delivery of this prospectus supplement, at any time, does not create any implication that there has been no change in our affairs since the date of this prospectus supplement or that the information contained in this prospectus supplement is correct as of any time subsequent to that date.

FORWARD-LOOKING STATEMENTS

 

Some of the statements included in this prospectus supplement are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We also may make forward-looking statements in our other documents filed with, or furnished to, the SEC that are incorporated by reference into this prospectus supplement. Forward-looking statements can be identified by the use of forward-looking terminology such as “believe”, “expect”, “estimate”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “target”, “goal”, “objective”, or by the use of similar expressions or variations on such expressions, or by the discussion of strategy or objectives. Forward-looking statements are based on current plans, estimates and projections, and are subject to inherent risks, uncertainties and other factors that could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements.

 

In particular, this prospectus supplement and certain documents incorporated by reference into this prospectus supplement include forward-looking statements relating but not limited to management objectives, the implementation of our strategic initiatives, trends in results of operations, margins, costs, return on equity and risk management, including our potential exposure to various types of risk such as market risk, interest rate risk, currency risk and equity risk. For example, certain of the market risk disclosures are dependent on choices about key model characteristics, assumptions and estimates, and are subject to various limitations. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future.

 

We have identified some of the risks inherent in forward-looking statements in “Item 3. Key Information — Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk” in our annual report on Form 20-F for the fiscal year ended December 31, 2010, which we refer to as our 2010 Form 20-F, filed with the SEC on April 1, 2011 and incorporated by reference into this prospectus supplement. Other factors could also adversely affect our and the Issuer’s results or the accuracy of forward-looking statements in this prospectus supplement and the accompanying prospectus, and you should not consider the factors discussed here or in the Items in our 2010 Form 20-F listed above to be a complete set of all potential risks or uncertainties. Other important factors that could cause actual results to differ materially from those in forward-looking statements include, among others:

 

 

The forward-looking statements made in this prospectus supplement speak only as of the date of this prospectus supplement. Neither we nor BBVA U.S. Senior intend to publicly update or revise these forward-looking statements to reflect events or circumstances after the date of this prospectus supplement, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events, and we and BBVA U.S. Senior do not assume any responsibility to do so. You should, however, consult any further disclosures of a forward-looking nature we may make in our other documents filed with, or furnished to, the SEC that are incorporated by reference into this prospectus supplement.

 

Potential investors should note the statements under “Spanish Tax Considerations” regarding the tax treatment in Spain of interest payments received in respect of the Notes and the disclosure requirements imposed by Law 13/1985 of May 25, as amended, on the Issuer and the Guarantor relating to the identity and country of tax residence of owners of a beneficial interest in the Notes (each, a “ Beneficial Owner ”). In particular, interest payments in respect of the Notes will be subject to Spanish withholding tax if certain information regarding Beneficial Owners is not received by us and the Guarantor in a timely manner.

 

Therefore, under Spanish law, interest payments in respect of the Notes will be subject to withholding tax in Spain, currently at the rate of 19%, in the case of (i) individual Beneficial Owners who are resident for tax purposes in Spain and (ii) Beneficial Owners who fail to comply with certain information reporting obligations established by the Spanish legislation. Each of the Issuer and the Guarantor is required pursuant to Spanish law and certain binding rulings interpreting that law to submit to the Spanish tax authorities certain information relating to Beneficial Owners who receive interest payments on the Notes. Neither the Issuer nor the Guarantor will pay additional

amounts in respect of any such withholding tax in any of the above cases. See “Spanish Tax Considerations — Evidencing of Beneficial Owner Residency in Connection with Interest Payments”.

 

The Issuer, the Guarantor and The Bank of New York Mellon (in its capacity as paying agent and for other limited purposes, the “ paying agent ”) have arranged certain procedures with Acupay System LLC (“ Acupay ”), DTC and Euroclear that are designed to facilitate the collection of the required Beneficial Owner information through direct and indirect participants of DTC, including Euroclear. These procedures are intended to facilitate the collection of information regarding the identity and residence of Beneficial Owners who (i) are exempt from Spanish withholding tax requirements and therefore entitled to receive payments in respect of the Notes free and clear of Spanish withholding taxes and (ii) (a) are direct participants in DTC, (b) hold their interest through securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a direct or indirect custodial relationship with a direct participant in DTC, including Euroclear (each such entity an “ indirect DTC participant ”), or (c) hold their interests through direct DTC participants. These procedures are set forth in Annexes A and B to this prospectus supplement.

 

If Acupay, DTC or Euroclear or the participants in DTC or Euroclear are unable to facilitate the collection of such information, the Issuer may attempt to remove the Notes from DTC or Euroclear, and this may affect the liquidity of the Notes. Provision has been made for the Notes to be represented by certificated Notes in the event that the Notes cease to be held through DTC. See “Description of the Notes and the Notes Guarantees — Global Certificates” in the accompanying prospectus.

 

The tax certification procedures may be amended to comply with Spanish laws and regulations and the operational requirements of DTC and Euroclear. Beneficial Owners must seek their own tax advice to ensure that they comply with all procedures with respect to providing Beneficial Owner information. None of the Issuer, the Guarantor, the underwriters, the paying agent, Acupay, DTC or Euroclear assume any responsibility therefor.

 

Neither DTC nor Euroclear is under any obligation to continue to perform the tax certification procedures described in Annexes A and B to this prospectus supplement and such procedures may be modified or discontinued at any time. In addition, DTC may discontinue providing its services as depositary with respect to the Notes at any time by giving reasonable notice to the Issuer or paying agent.

 

The tax certification procedures provide that payments of interest through any direct DTC participants that fail or for any reason are unable to comply with the procedures herein for the provision of the required Beneficial Owner information in respect of Beneficial Owners who are otherwise entitled to an exemption from Spanish withholding tax and who hold their beneficial interests in the Notes through such participants, will be paid net of Spanish withholding tax in respect of such beneficial interests in the Notes. In particular, should the required Beneficial Owner information submitted by a direct DTC participant to Acupay be inconsistent with its election via the DTC Elective Dividend Service (“ EDS/Tax Relief Election ”) and DTC holdings in the Notes on any Interest Payment Date (as defined herein), then such direct DTC participant will be paid net of Spanish withholding tax with respect to such direct DTC’s participant’s entire holding in the Notes. If this were to occur, affected Beneficial Owners who hold their beneficial interests in the Notes through such direct DTC participant (other than Beneficial Owners who hold their beneficial interests in the Notes through Euroclear or participants in Euroclear) would have to follow the Quick Refund Procedures set forth in Annex A to this prospectus supplement, and affected Beneficial Owners who hold their beneficial interests in the Notes through Euroclear or participants in Euroclear would have to follow the Quick Refund Procedures set forth in Annex B to this prospectus supplement, or apply directly to the Spanish tax authorities for any refund to which they may be entitled pursuant to the procedures set forth in Annex C to this prospectus supplement.

 

The Issuer and the Guarantor, as applicable, may, in the future, withhold amounts from payments for the benefit of Beneficial Owners who are subject to corporate income tax in Spain if the Spanish tax authorities determine that the Notes do not comply with exemption requirements specified in the Reply to a Consultation of the Directorate General for Taxation ( Dirección General de Tributos ) dated July 27, 2004 or otherwise require such withholding to be made. If this were to occur, neither the Issuer nor the Guarantor will pay additional amounts in respect of such withholding. See “Spanish Tax Considerations” in this prospectus supplement and “Spanish Tax Considerations” in the accompanying prospectus.

 

PROSPECTUS SUPPLEMENT SUMMARY

Issuer		BBVA U.S. Senior, S.A. Unipersonal
Guarantor		Banco Bilbao Vizcaya Argentaria, S.A.
Trustee, Paying Agent and Calculation Agent		The Bank of New York Mellon will be acting as the trustee and paying agent with respect to the Notes under, and as such terms are defined in, the Indenture (as defined herein). The Bank of New York Mellon will

		be acting as Calculation Agent (as defined herein) with respect to the Floating Rate Notes under the Calculation Agency Agreement (as defined herein).

Notes Offered		$      aggregate principal amount of fixed rate senior notes due 2014. The Fixed Rate Notes will bear the following CUSIP:          and the following ISIN:          .
		$      aggregate principal amount of floating rate senior notes due 2014. The Floating Rate Notes will bear the following CUSIP:           and the following ISIN:          .
		The Fixed Rate Notes and the Floating Rate Notes constitute separate series of securities issued under the Indenture (as defined herein).
Issue Price		% (Fixed Rate Notes).           % (Floating Rate Notes).
Issue Date		, 2011 (Fixed Rate Notes).           , 2011 (Floating Rate Notes).
Maturity		, 2014 (Fixed Rate Notes).           , 2014 (Floating Rate Notes).
Interest Payable on the Notes		The Fixed Rate Notes will bear interest at     % per year, payable on each           and          of each year, beginning on          , 2011, up to, and including, the Fixed Rate Maturity Date.
		The Floating Rate Notes will bear interest at the then-applicable U.S. dollar three-month LIBOR rate plus     % per year, payable on each          ,          ,           and           of each year, beginning on          , 2011, up to, and including, the Floating Rate Note Maturity Date.
Form and Denominations; Clearing and Settlement		The denomination of the Notes is $100,000 and all payments on or in respect of the Notes will be made in U.S. dollars. The Notes of each series will be initially represented by one or more global security certificates (each, a “ Global Certificate ”) which will be deposited with a custodian for DTC and Notes represented thereby will be registered in the name of Cede & Co., as nominee for DTC. Beneficial interests in the Notes will be shown on, and transfers thereof will be effected only through, the book-entry records maintained by DTC and its participants. You will not receive certificated notes (as defined in the accompanying prospectus) unless one of the events described under the heading “Description of the Notes and the Notes Guarantees — Global Certificates” occurs.
Status of the Notes		The Notes will constitute direct, unconditional and unsecured indebtedness of the Issuer and will rank pari passu with all other unsubordinated and unsecured indebtedness of the Issuer, but in the case of insolvency, only to the extent permitted by creditor’s rights.
Early Redemption for Taxation or Listing Reasons		In the event of various tax law changes that would require the Issuer or the Guarantor, as the case may be, to pay additional amounts and other limited circumstances as described under “Certain Terms of the Notes and the Notes Guarantees — Early Redemption for Taxation or Listing Reasons” in this prospectus supplement and “Description of the Notes and the Notes Guarantees — Optional Tax Redemption” in the

		accompanying prospectus the Issuer may redeem all, but not less than all, of the Notes of any series prior to maturity.
		In addition, if any series of the Notes is not listed on an organized market in an OECD country no later than 45 days prior to the initial Interest Payment Date on such series of Notes, the Issuer or the Guarantor, as the case may be, may, at its election and having given not less than 15 days’ notice to the holders of such series of Notes in accordance with the terms described under the heading “Certain Terms of the Notes and the Notes Guarantees — Notices”, redeem all of the outstanding Notes of such series.
Optional Redemption of the Notes		The Issuer may, at its election and having given not less than 30 nor more than 60 days’ notice to the holders of the Fixed Rate Notes in accordance with the terms described under the heading “Certain Terms of the Notes and the Notes Guarantees — Notices”, redeem from time to time all or a portion of the outstanding Fixed Rate Notes at a redemption price determined in the manner set forth in this prospectus supplement. See “Certain Terms of the Notes and the Notes Guarantees — Optional Redemption of the Notes”.
Purchases of the Notes		The Issuer and the Guarantor and any of their respective subsidiaries may at any time purchase the Notes in the open market or otherwise and at any price.
Guarantees		The payment of any principal of and interest on the Notes and additional amounts or any other amounts of whatever nature which may become payable under the Notes or the Indenture (as defined herein) are irrevocably and unconditionally guaranteed by the Guarantor as explained under “Description of the Notes and Notes Guarantees — Senior Notes and Senior Guarantees” in the accompanying prospectus.
		The Guarantees constitute direct, unconditional, unsubordinated and unsecured obligations of the Guarantor and will at all times rank pari passu among themselves and pari passu with all other unsubordinated and unsecured indebtedness of the Guarantor, but in the case of insolvency, only to the extent permitted by creditor’s rights.
		For a full description of the Guarantees, see “Description of the Notes and the Notes Guarantees” in the accompanying prospectus.
		As of March 31, 2011, the Guarantor had an aggregate of €46.1 billion of outstanding secured indebtedness and €60 billion of outstanding unsecured indebtedness. For additional information about the Guarantor’s principal transactions since March 31, 2011, see “Consolidated Capitalization and Indebtedness of the BBVA Group”.

Use of Proceeds		We expect that the net proceeds from this offering, after deducting the underwriters’ discounts but before expenses, will be approximately $          . The proceeds of the issue of the Notes, after deducting the underwriters’ discounts and paying any issue expenses, will be, in accordance with Spanish law, deposited on a permanent basis with us and will be used for the BBVA Group’s general corporate purposes. See “Use of Proceeds”.
Syndicate of Holders		The Spanish Capital Companies Act ( Ley de Sociedades de Capital ) requires that a representative ( comisario or “ Commissioner ”) of the holders of Notes of such series of each series is appointed and that a Syndicate (as defined in the accompanying prospectus) of holders of Notes of each series is established in relation to each series of Notes issued under the Indenture (as defined herein). By purchasing a Note of any series, you will be deemed to have agreed (i) to membership in the Syndicate in respect of the Notes of such series and (ii) if you purchased such Note prior to the record date for the first meeting of the Syndicate, to have granted full power and authority to The Bank of New York Mellon with respect to Notes of such series to act as your proxy to vote at the first meeting of the Syndicate of holders of Notes of such series in favor of the ratification of the Regulations in respect of such Syndicate, the ratification of the designation and appointment of The Bank of New York Mellon as Commissioner of such Syndicate and the ratification of the actions of the Commissioner performed prior to such first meeting of the Syndicate.
		For more information on the Regulations and duties and responsibilities of the Commissioner and Syndicate and additional timing and other requirements under Spanish law, see “Description of the Notes and the Notes Guarantees — Syndicate of Holders, Meetings, Modifications and Waivers” in the accompanying prospectus.
Substitution		The Notes contain provisions allowing for the substitution of the Issuer as principal debtor of the obligations of the relevant Issuer under the Notes, as more fully described in the accompanying prospectus under “Description of the Notes and the Notes Guarantee — Substitution of the Issuer”.
Beneficial Owner Identification Requirements under Spanish Tax Laws		Under Spanish Law 13/1985 of May 25, as amended, Royal Decree 1065/2007 of July 27 and certain binding rulings interpreting that law and regulations, the Issuer and the Guarantor are required to provide to the Spanish tax authorities certain information relating to Beneficial Owners of the Notes who receive interest payments free of Spanish withholding tax.
		This information includes the identity and country of tax residence of Beneficial Owners and the amount of interest received by such Beneficial Owners, and must be obtained with respect to each date on which interest will be paid by 8:00 p.m. (New York time) on the fourth New York Business Day (as defined herein), before such date on which interest will be paid or, under certain circumstances, by 9:45 a.m. (New York time) on such date on which interest will be paid and filed by the Issuer and the Guarantor with the Spanish tax authorities on an annual basis.

		The Issuer, the Guarantor and the paying agent have arranged certain procedures with Acupay, DTC and Euroclear that are designed to facilitate the collection of the required Beneficial Owner information through direct and indirect participants of DTC, including Euroclear. The procedures arranged by Acupay are intended to facilitate the collection of information regarding the identity and residence of Beneficial Owners who (i) are exempt from Spanish withholding tax requirements and therefore entitled to receive payments in respect of the Notes free and clear of Spanish withholding taxes and (ii) (a) are direct participants in DTC, (b) hold their interest through indirect DTC participants, including Euroclear, or (c) hold their interests through direct DTC participants.
		See “Spanish Tax Considerations — Evidencing of Beneficial Owner Residency in Connection with Interest Payments” and Annexes A, B and C to this prospectus supplement.
		No additional amounts will be payable in respect of present or future withholding taxes.
Listing		We will apply to list the Notes on the New York Stock Exchange and, if approved, trading is expected to commence within 30 days after the initial delivery of the Notes.
Governing Law		The Notes and the Indenture (as defined herein) will be governed by and construed under the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state, except that the authorization and execution by the Issuer and the Guarantor of the Indenture (as defined herein) and the Notes, the issuance of the Notes, certain provisions of the Notes and the Indenture (as defined herein) related to the establishment of a Syndicate (as defined in the accompanying prospectus) and the appointment of a Commissioner and certain provisions of the Indenture (as defined herein) related to the execution and delivery of the Guarantees shall be governed by and construed in accordance with Spanish law. The Guarantees will be governed by and construed in accordance with Spanish law. The Regulations (as defined in the accompanying prospectus) of each Syndicate and the duties of and all matters relating to the Commissioner shall be governed by and construed in accordance with Spanish law.
Settlement		The underwriters expect to deliver the Notes to purchasers in registered form through DTC and Euroclear (an indirect participant in DTC) on or about          , 2011 which will be the fifth New York business day following the date of pricing of the Notes (such settlement period being referred to as “T+5”).
Conflict of Interest		BBVA Securities Inc. is a subsidiary of the Guarantor and an affiliate of the Issuer. BBVA Securities Inc. will conduct this offering in compliance with the requirements of FINRA Rule 5121 of the Financial Industry Regulatory Authority, Inc., which is commonly referred to as FINRA, regarding a FINRA member firm’s distribution of the securities of an affiliate and related conflicts of interest. Neither BBVA Securities Inc. nor any of our other affiliates may make sales in this offering to any discretionary account without the specific written approval of the accountholder.

 

You should carefully consider the risk factors contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement, including, but not limited to, those risk factors in “Item 3. Key Information — Risk Factors”, in our 2010 Form 20-F, in deciding whether to invest in the Notes. In addition, investing in the Notes involves risks. Any of the risks described below, in the accompanying prospectus or in our 2010 Form 20-F, if they actually occur, could materially and adversely affect our and the Issuer’s business, results of operations, prospects and financial condition and the value of your investments.

 

Risk Relating to BBVA and the Issuer

 

For a description of risks associated with BBVA and the Issuer, see the section entitled “Risk Factors” of our 2010 Form 20-F, which is incorporated by reference herein.

 

Risks Relating to the Notes

 

An active trading market may not develop for the Notes.

 

Prior to the offering, there was no existing trading market for the Notes. We intend to apply for listing of the Notes on the New York Stock Exchange. If, however, an active trading market does not develop or is not maintained, the market price and liquidity of the Notes may be adversely affected. In that case, holders of the Notes may not be able to sell Notes at a particular time or may not be able to sell Notes at a favorable price. The liquidity of any market for the Notes will depend on a number of factors including:

 

 

We cannot assure you that an active market for the Notes will develop or, if developed, that it will continue.

 

Your right to receive payments of interest and principal on the Notes and the Guarantees is effectively junior to certain other obligations of the Issuer and the Guarantor.

 

The Notes of each series will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and will rank pari passu without any preference among themselves and (subject to any applicable statutory exceptions) the payment obligations of the Issuer under the Notes of such series will rank at least pari passu with all other unsecured and unsubordinated indebtedness, present and future, of the Issuer, except as the obligations of the Issuer may be limited by Spanish bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors’ rights generally in the Kingdom of Spain. Pursuant to the Guarantees, the Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Notes of each series on an unsubordinated and unconditional basis. The obligations of the Guarantor under the Guarantees in respect of the Notes of a series will constitute direct, unconditional, unsubordinated and unsecured obligations of the Guarantor under the Guarantees and will rank pari passu without any preference among such obligations of the Guarantor under the Guarantees in respect of the Notes of such series and at least pari passu with all other unsubordinated and unsecured indebtedness and monetary obligations involving or otherwise related to borrowed money of the Guarantor, present and future; provided that the obligations of the Guarantor under the Guarantees in respect of the Notes will be effectively subordinated to those obligations that are preferred under Law 22/2003 ( Ley Concursal ) dated July 9, 2003, as amended, regulating insolvency proceedings in Spain. However, the Notes and the Guarantees will be effectively subordinated to all of, respectively, the Issuer’s and the Guarantor’s secured indebtedness, to the extent of the value of the assets securing such indebtedness, and other obligations that rank senior under Spanish law. At March 31, 2011, the Guarantor had €46.1 billion of secured indebtedness outstanding and €60 billion of unsecured indebtedness outstanding.

 

Our credit ratings may not reflect all risks of an investment in the Notes.

 

Our credit ratings may not reflect the potential impact of all risks related to the market values of the Notes. However, real or anticipated changes in our credit ratings will generally affect the market values of the Notes. A

credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.

 

We may redeem the Notes at any time for certain tax reasons.

 

We may redeem the Notes at any time in whole (but not in part) upon the occurrence of certain tax changes as described in this prospectus supplement and accompanying prospectus.

 

If the Notes of a series are not listed on an organized market in an OECD country no later than 45 days prior to the initial Interest Payment Date for the Notes of such series, the Issuer or the Guarantor, as the case may be, may, at its election, redeem such series of Notes without penalty or premium.

 

If any series of Notes is not listed on an organized market in an OECD country no later than 45 days prior to the initial Interest Payment Date on such series of Notes, the Issuer or the Guarantor, as the case may be, may, at its election and having given no less than 15 days’ notice to the holders of such series of Notes in accordance with the terms described under the heading “Certain Terms of the Notes and the Notes Guarantees — Notices”, redeem all of the outstanding Notes of such series at their principal amount without any penalty or premium in respect thereof, together with accrued interest, if any, thereon to but not including the redemption date. The Issuer will apply to list the Notes on the New York Stock Exchange; however, no such listing can be assured. See “Certain Terms of the Notes and the Notes Guarantees — Early Redemption for Taxation or Listing Reasons”. For a description of the Spanish tax treatment applicable to the accrued interest, if any, on the Notes upon an early redemption of such Notes as a result of such Notes not being listed on an organized market in an OECD country, see “Spanish Tax Considerations — Senior Notes and Subordinated Notes — 2. Tax Rules for Senior Notes and Subordinated Notes not Listed on an Organized Market in an OECD Country” in the accompanying prospectus.

 

The Issuer and the Guarantor, as the case may be, will withhold Spanish withholding tax from any interest payment in respect of the Notes as to which the required Beneficial Owner information is not provided on a timely basis or at all.

 

Under Spanish Law 13/1985 of May 25, as amended, Royal Decree 1065/2007 of July 27 and certain binding rulings interpreting that law and regulations, the Issuer and the Guarantor are required to provide certain information relating to Beneficial Owners to the Spanish tax authorities. This information includes the identity and country of tax residence of each Beneficial Owner that receives an interest payment on the Notes and the amount of interest received by such Beneficial Owner, and must be obtained with respect to each Interest Payment Date by 8:00 p.m. (New York time) on the fourth New York Business Day prior to such date on which interest will be paid or, in certain circumstances, by 9:45 a.m. (New York time) on such Interest Payment Date and filed by the Issuer and the Guarantor with the Spanish tax authorities on an annual basis. “New York Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions or trust companies in the City of New York are required or authorized by law, regulation or executive order to close.

 

The delivery of the information related to Beneficial Owner identity and country of residence must be made through the relevant direct or indirect participants in DTC, including Euroclear, in accordance with the procedures set forth under “Acupay System LLC Certification Procedures”. Each such DTC participant will be required to provide information in respect of all of the Beneficial Owners holding interests through such participant as of each Interest Payment Date. If DTC or the direct or indirect participants in DTC, including Euroclear, fail for any reason to provide the Issuer or the Guarantor (through Acupay) with the required information as described under “Acupay System LLC Certification Procedures” in respect of the Beneficial Owner of any of the Notes, the Issuer or the Guarantor, as the case may be, will be required to withhold tax and will pay interest and other amounts in respect of such Notes net of the withholding tax applicable to such payments (currently 19%). If withholding occurs due to failure to provide the required tax information through Acupay, affected Beneficial Owners would be required to either follow Quick Refund Procedures set forth in Annex A and Annex B to this prospectus supplement or apply directly to the Spanish tax authorities for any refund to which they may be entitled, as explained in “Acupay System LLC Certification Procedures”, and neither the Issuer nor the Guarantor will be responsible for any damage or loss incurred by Beneficial Owners in connection with such procedures. In addition, neither the Issuer nor the Guarantor will pay any additional amounts with respect to any such withholding.

 

The Issuer and the Guarantor have agreed to provide certain procedures arranged by Acupay, DTC and Euroclear to facilitate the collection of information concerning the identity and residence of Beneficial

Owners through the relevant direct or indirect participants in DTC, including Euroclear. If the agreed procedures prove ineffective or if the relevant participants in DTC or Euroclear fail to provide and verify the required information as of each Interest Payment Date, the Issuer or the Guarantor, as the case may be, will withhold tax at the then-applicable rate (currently 19%) from any interest payment in respect of the Notes as to which the agreed procedures prove ineffective or have not been followed, and neither the Issuer nor the Guarantor will pay any additional amounts with respect to any such withholding.

 

The delivery of the Beneficial Owner identity and country of residence information required by the Spanish tax authorities must be made through the relevant direct or indirect participants in DTC (including Euroclear) in accordance with the procedures set forth under “Acupay System LLC Certification Procedures”. Each such DTC participant must provide the required information in respect of all of the Beneficial Owners holding interests through such participant as of each Interest Payment Date, and neither the Issuer nor the Guarantor shall be responsible for any DTC participant’s failure to do so. Such failure may arise as a result of the failure of an indirect DTC participant (including Euroclear) holding through a direct DTC participant to provide the necessary information in a timely manner. In the event of any error in a direct DTC participant’s compliance with these procedures, Acupay will seek to notify such direct DTC participant of any deficiencies in the information provided by such direct DTC participant, but in the event such direct DTC participant fails to correct such deficiencies in a timely manner, the Issuer or the Guarantor, as the case may be, will withhold tax at the then-applicable rate from any interest payment in respect of the entire outstanding principal amount of the Notes held through such DTC participant. Neither the Issuer nor the Guarantor will pay any additional amounts with respect to any such withholding. In order to obtain a refund of any amounts withheld, affected Beneficial Owners will have to either follow the Quick Refund Procedure set forth in Annex A and Annex B to this prospectus supplement or apply directly to the Spanish tax authorities for any refund to which they may be entitled, as set forth in Annex A and Annex B to this prospectus supplement, and neither the Issuer nor the Guarantor shall be responsible for any damage or loss incurred by Beneficial Owners in connection with such procedures.

 

You may be unable to enforce judgments obtained in U.S. courts against the Issuer or the Guarantor.

 

All of the Issuer’s directors and substantially all the directors and executive officers of the Guarantor are not residents of the United States, and substantially all the assets of these companies are located outside of the United States. As a consequence, you may not be able to effect service of process on these non-U.S. resident directors and executive officers in the United States or to enforce judgments against them outside of the United States. Spanish counsel has advised that there is doubt as to whether a Spanish court would enforce a judgment of liability obtained in the United States against the Issuer or the Guarantor predicated solely upon the securities laws of the United States.

 

There is a risk of conflict between U.S. and Spanish law as they apply to the Notes.

 

The Spanish Companies Act ( Ley de Sociedades de Capital ) requires that a representative ( comisario or “ Commissioner ”) of the holders of Notes of each series is appointed and that a Syndicate (as defined in the accompanying prospectus) of holders of Notes of each series is established in relation to each series of Notes issued under the Indenture (as defined herein). In addition, the Indenture (as defined herein) pursuant to which the Notes will be issued is qualified under the U.S. Trust Indenture Act of 1939, as amended (the “ Trust Indenture Act ”), and includes mandatory provisions related to the appointment of a trustee whose duties overlap in part with those of the comisario under Spanish law. We believe that none of the provisions of the Indenture conflict with Spanish law. Moreover, the Indenture provides that if any provision of the Indenture (as defined herein) or the Regulations (as defined in the accompanying prospectus) conflicts with a mandatory provision of the Trust Indenture Act, the provision of the Trust Indenture Act shall control. However, we cannot assure you that Spanish law will remain unchanged or that a Spanish court would not find that the obligations of the Issuer or the trustee under the Indenture and the Trust Indenture Act are inconsistent with the obligations of the Issuer or the Commissioner (as defined herein) under Spanish law, and would not seek to prevent the trustee under the Indenture or the Issuer from taking actions required to be taken under the Indenture or the Trust Indenture Act. Any such finding would not, however, affect the enforceability in Spain of a judgment on any guarantees granted by the guarantor in respect of Notes of each series. In addition, there may be delays involved in complying with certain Spanish law requirements. For example, the Regulations provide for notice periods of as long as 60 days.

CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES

 

The following table sets forth BBVA’s consolidated ratio of earnings to fixed charges, using financial information compiled in accordance with International Financial Reporting Standards adopted by the EU (“ EU-IFRS ”) required to be applied under the Bank of Spain’s Circular 4/2004 (“ Circular 4/2004 ”), for the three months ended March 31, 2011 and the years ended December 31, 2010, 2009, 2008, 2007 and 2006:

 

 

 

USE OF PROCEEDS

 

BBVA U.S. Senior expects the net proceeds from this offering, after deducting the underwriters’ discounts but before expenses, will be approximately $     . The proceeds of the issue of the Notes, after deducting the underwriters’ discounts and paying any issue expenses, will be, in accordance with Spanish law, deposited on a permanent basis with us and will be used for the BBVA Group’s general corporate purposes.

 

The following table sets forth the capitalization and indebtedness of the BBVA Group on an unaudited consolidated basis in accordance with EU-IFRS required to be applied under Circular 4/2004 as of March 31, 2011 and on an as adjusted basis as of such date to reflect this offering and the use of proceeds therefrom.

 

 

 

 

The following are the principal transactions affecting the capitalization of the BBVA Group after March 31, 2011:

 

 

BBVA U.S. Senior was incorporated by a public deed executed on February 22, 2006 and registered in the Mercantile Registry of Vizcaya on February 28, 2006 as a company with unlimited duration and with limited liability under the laws of Spain ( sociedad anónima ). The registered office of BBVA U.S. Senior is located at Gran Vía, 1, 48005 Bilbao, Spain, and its principal office is located at Paseo de la Castellana, 81, 28046 Madrid, Spain, and its telephone number is 011-34-91-537-7000 or 011-34-91-374-6000.

 

BBVA U.S. Senior is a 100% owned finance subsidiary of the Guarantor, who fully and unconditionally guarantees the securities offered hereunder. No other subsidiary of the Guarantor guarantees such securities. We and

BBVA U.S. Senior are not aware of any legal or economic restrictions on the ability of this subsidiary to transfer funds to the Guarantor in the form of cash dividends, loans or advances, capital repatriation or otherwise. There is no assurance that in the future such restrictions will not be adopted.

 

As of the date of this prospectus supplement, BBVA U.S. Senior has issued and outstanding:

 

 

All of the ordinary shares of BBVA U.S. Senior are owned, directly or indirectly, by us. BBVA U.S. Senior exists for the purpose of issuing debt securities, the proceeds of which, in accordance with Spanish law, will be deposited with us. BBVA U.S. Senior does not have any subsidiaries.

 

The name and other position in the BBVA Group of each of the directors of BBVA U.S. Senior are set out below:

 

 

The business address of each of the directors of BBVA U.S. Senior is Paseo de la Castellana, 81, 28046 Madrid, Spain.

 

There exist no potential conflicts of interest between (i) any duties owed to BBVA U.S. Senior by any director of BBVA U.S. Senior and (ii) the private interests and/or other duties of such directors.

 

The directors of BBVA U.S. Senior do not have any significant functions outside the BBVA Group.

 

The auditors of BBVA U.S. Senior are Deloitte, S.L.

 

The following is a summary of certain terms of the Fixed Rate Notes and the Floating Rate Notes. Each series of Notes will be issued under the indenture (the “ Indenture ”), dated June 28, 2010 among the Issuer, BBVA and The Bank of New York Mellon, a New York banking corporation, as trustee (the “ Trustee ”). Each series of Notes will be issued pursuant to the resolution adopted by the sole shareholder of the Issuer on June 21, 2010 and the resolutions of the board of directors of the Issuer adopted on June 21, 2010 and reflected in a public deed of issuance executed and registered with the Mercantile Registry of Vizcaya (the “ Public Deed of Issuance ”) on or prior to the date of settlement of the offering, which is currently expected to be on or around May   , 2011. The giving of the Guarantees has been duly authorized by a resolution of the board of directors of the Guarantor dated May 25, 2010. The Fixed Rate Notes and the Floating Rate Notes shall be designated Series           and           of the Issuer, respectively, in the Public Deed of Issuance.

 

The following summary of certain provisions of each series of Notes, the Guarantee and the Indenture does not purport to be complete and is subject, and is qualified in its entirety by reference, to all of the provisions of the Notes, the Guarantee and the Indenture, including the definitions of the terms provided therein. Upon request, you may obtain a copy of the Public Deed of Issuance after its registration before the Mercantile Registry of Vizcaya and the Indenture from the Trustee.

 

A description of the general terms and provisions of the Indenture is included under “Description of the Notes and the Notes Guarantees” in the accompanying prospectus. All terms and provisions described in the accompanying prospectus as applying to the “senior indenture”, the “notes”, the “senior notes” and the “senior guarantee” apply to the Indenture, and the Notes and Guarantees being offered pursuant to this prospectus supplement, except as described in this prospectus supplement.

 

References in the accompanying prospectus to the “Spanish Corporation Law” will be deemed to have been made to the Spanish Companies Act ( Ley de Sociedades de Capital ), approved by Royal Legislative Decree 1/2010 of July 2. In particular, the following references shall be replaced:

 

(a) In the definition of “Commissioner” ( comisario ) in the Indenture and in “Description of the Notes and the Notes Guarantees” in the accompanying prospectus, references to Section 303 of the Spanish Corporation Law, shall be deemed to have been made to Section 427 of the Spanish Companies Act.

 

(b) In the definition of “Syndicate” ( sindicato ) in the Indenture and in “Description of the Notes and the Notes Guarantees” in the accompanying prospectus, references to Chapter X, Section 4 of the Spanish Corporation Law, shall be deemed to have been made to Title XI, Chapter IV of the Spanish Companies Act.

 

(c) In the unofficial English translation of the Syndicate regulations, attached as Annex A to the Indenture, references to Chapter VI and Article 300 of the Spanish Corporation Law, shall be deemed to have been made to Title XI and Section 424 of the Spanish Companies Act.

 

General

 

The Fixed Rate Notes will be issued in $      aggregate principal amount and will mature at 100% of their principal amount on          , 2014 (the “ Fixed Rate Note Maturity Date ”). The Floating Rate Notes will be issued in $      aggregate principal amount and will mature at 100% of their principal amount on          , 2014 (the “ Floating Rate Note Maturity Date ” and, together with the Fixed Rate Note Maturity Date, each a “ Maturity Date ”). The Notes may be offered and sold in multiple series with different maturities, interest rates and other terms. The Notes of each series will be issued only in registered form in denominations of $100,000. No series of Notes will be entitled to the benefit of any sinking fund or similar custodial arrangement.

 

The Fixed Rate Notes and the Floating Rate Notes constitute separate series of securities issued under the Indenture. The Indenture provides that, in addition to the Fixed Rate Notes and the Floating Rate Notes, notes, bonds and other evidences of indebtedness of other series may in the future be issued thereunder without limitation as to aggregate principal amount. The Issuer may from time to time, without the consent of the holders of Notes of such series, create and issue further Notes having the same terms and conditions as the previously issued Notes of such series in all respects (or in all respects except for the issue date, the first payment of interest thereon and/or

issue price), so that such further issue may be consolidated and form a single series with the outstanding Notes of such series; provided, however , that any such further issuance will only be made if either such additional Notes are issued with no more than de minimis original issue discount for U.S. federal income tax purposes or such further issuance is a “qualified reopening” as such term is defined under U.S. Treasury Regulations Section 1.1275-2(k)(3) promulgated under the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”).

 

Payment of Interest

 

Fixed Rate Notes

 

The Fixed Rate Notes will bear interest from          , 2011 at an annual rate of     %. Subject to and in accordance with the tax certification procedures set forth in Annex A and Annex B to this prospectus supplement, the Issuer or the Guarantor, as the case may be, will pay interest in arrears on the Fixed Rate Notes semi-annually on each           and           of each year, beginning on          , 2011, up to, and including, the Fixed Rate Note Maturity Date or any date of earlier redemption. Each of the dates on which interest on the Fixed Rate Notes is payable is referred to as a “ Fixed Interest Payment Date ”. Interest on the Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months. Except as described below for the first Fixed Interest Payment Date for the Fixed Rate Notes, on each Fixed Interest Payment Date for such Fixed Rate Notes, the Issuer or the Guarantor, as the case may be, will pay interest on the Fixed Rate Notes for the period commencing on and including the immediately preceding Fixed Interest Payment Date for such Fixed Rate Notes and ending on and including the day immediately preceding that Fixed Interest Payment Date. On the first Fixed Interest Payment Date, the Issuer or the Guarantor, as the case may be, will pay interest for the period beginning on and including          , 2011 and ending on and including          , 2011.

 

If any Fixed Interest Payment Date falls on a day that is not a Fixed Rate Business Day (as defined below), the related interest or principal payment shall be postponed to the next day that is a Fixed Rate Business Day, and no interest on such payment shall accrue for the period from and after such Fixed Interest Payment Date. For the purposes of this prospectus supplement, a “ Fixed Rate Business Day ” is a day (other than a Saturday or a Sunday) on which foreign exchange markets are open for business in New York City that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City and on which the TARGET2 system is open.

 

Floating Rate Notes

 

The interest rate per annum for the Floating Rate Notes will be reset on the first day of each Interest Period (as defined below) and will be equal to, in the case of the Floating Rate Notes, LIBOR (as defined below) plus     % as determined by the Calculation Agent. The Bank of New York Mellon will act as calculation agent (the “ Calculation Agent ”) pursuant to a Calculation Agency Agreement to be entered into among The Bank of New York Mellon, the Issuer and BBVA on or prior to the settlement date of the offering. The amount of interest for the Floating Rate Notes for each day such Floating Rate Notes are outstanding, which is referred to as the “ Daily Interest Amount ”, will be calculated by dividing the applicable interest rate in effect for that day by 360 and multiplying the result by the aggregate outstanding principal amount of Floating Rate Notes on that day. The amount of interest to be paid on the Floating Rate Notes for each Interest Period will be calculated by adding the applicable Daily Interest Amounts for each day in the Interest Period.

 

Subject to and in accordance with the tax certification procedures set forth in Annex A and Annex B to this prospectus supplement, the Issuer or the Guarantor, as the case may be, will pay interest in arrears on the Floating Rate Notes quarterly on each          ,          ,           and           of each year beginning on          , 2011, up to, and including, the Floating Rate Note Maturity Date or any date of earlier redemption. Each of the dates on which interest on the Floating Rate Notes is payable is referred to as a “ Floating Interest Payment Date ”. If any Floating Interest Payment Date would fall on a day that is not a Floating Rate Business Day (as defined below) that Floating Interest Payment Date will be postponed to the following day that is a Floating Rate Business Day, except that if such next Floating Rate Business Day is in a different month, then that Floating Interest Payment Date will be the immediately preceding day that is a Floating Rate Business Day. If the Floating Rate Note Maturity Date or date of earlier redemption falls on a day that is not a Floating Rate Business Day, payment of

principal and interest on the Floating Rate Notes will be made on the next day that is a Floating Rate Business Day, and no interest on such Floating Rate Notes will accrue for the period from and after the Floating Rate Note Maturity Date or date of earlier redemption. For the purposes of this prospectus supplement, a “ Floating Rate Business Day ” is a day (other than a Saturday or a Sunday) on which foreign exchange markets are open for business in New York City that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City and on which the TARGET2 System is open.

 

Except as described below for the first Interest Period (as defined herein), on each Floating Interest Payment Date, the Issuer or the Guarantor, as the case may be, will pay interest on the Floating Rate Notes for the period commencing on and including the immediately preceding Floating Interest Payment Date and ending on and including the day immediately preceding that Floating Interest Payment Date. The first Interest Period will begin on and include          , 2011 and, subject to the immediately preceding paragraph, will end on and include          , 2011. Each period for which interest is payable on the Floating Rate Notes is referred to as an “ Interest Period ”.

 

“ LIBOR ” with respect to each Interest Period shall be the rate (expressed as a percentage per annum) for deposits of U.S. dollars having a maturity of three months that appears on Reuters LIBOR01 Page (as defined below) as of 11:00 a.m., London time, on such Determination Date (as defined below). If the Reuters LIBOR01 Page as of 11:00 a.m., London time, does not include the applicable rate or is unavailable on the Determination Date, the Calculation Agent will request the principal London office of each of four major reference banks in the London interbank market (which may include affiliates of the underwriters), as selected by the Calculation Agent (after consultation with the Issuer), to provide that bank’s offered quotation (expressed as a percentage per annum) as of approximately 11:00 a.m., London time, on such Determination Date to prime banks in the London interbank market for deposits in U.S. dollars for a term of three months and in a principal amount equal to an amount that in the Calculation Agent’s judgment is representative for a single transaction in U.S. dollars in such market at such time (a “ Representative Amount ”). If at least two offered quotations are so provided, LIBOR on such Determination Date will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of those quotations. If fewer than two quotations are so provided, the Calculation Agent (after consultation with the Issuer) will request each of three major banks in New York City, as selected by the Calculation Agent, to provide that bank’s rate (expressed as a percentage per annum), as of approximately 11:00 a.m., New York City time, on the Determination Date for loans in a Representative Amount to leading European banks for a three-month period beginning on the first day of that Interest Period. If at least three rates are so provided, LIBOR for the Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of those rates. If fewer than three rates are so provided, then LIBOR for the Interest Period will be LIBOR in effect with respect to the immediately preceding Interest Period.

 

“ Determination Date ” with respect to any Interest Period will be the second London Banking Day preceding the first day of that Interest Period.

 

“ London Banking Day ” is any day on which dealings in United States dollars are transacted or, with respect to any future date, are expected to be transacted in the London interbank market.

 

“ Reuters LIBOR01 Page ” means the display designated on page LIBOR01 on the Reuters Page (or such other successive page as may replace the LIBOR01 page on the Reuters Page or any successive service or such other service of major banks for the purpose of displaying London interbank offered rates for U.S. dollar deposits).

 

“ Reuters Page ” means the display on Reuters 3000 Xtra Service, or any successor service.

 

The interest rate on the Floating Rate Notes will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application.

 

The Calculation Agent will, upon the request of any holder, provide the interest rate on the Floating Rate Notes then in effect.

 

The Calculation Agent may at any time resign as Calculation Agent by giving written notice to the Issuer and the Guarantor of such intention on its part, specifying the date on which its desired resignation shall become effective; provided, however , that such date shall not be earlier than 60 days after the receipt of such notice by the

Issuer and the Guarantor, unless the Issuer and the Guarantor agree in writing to accept less notice. The Calculation Agent may be removed (with or without cause) at any time by the filing with it of any instrument in writing signed on behalf of the Issuer and the Guarantor by any proper officer or an authorized person thereof and specifying such removal and the date when it is intended to become effective, subject to (if such Calculation Agent is not the Trustee) the written consent of the Trustee, which consent shall not be unreasonably withheld. Such resignation or removal shall take effect only upon the date of the appointment by the Issuer and the Guarantor, as hereinafter provided, of a successor Calculation Agent. If within 60 days after notice of resignation or removal has been given, a successor Calculation Agent has not been appointed, the Calculation Agent may petition a court of competent jurisdiction to appoint a successor Calculation Agent. A successor Calculation Agent shall be appointed by the Issuer and the Guarantor by an instrument in writing signed on behalf of the Issuer and the Guarantor, as the case may be, by any proper officer or an authorized person thereof and the successor Calculation Agent. Upon the appointment of a successor Calculation Agent and acceptance by it of such appointment, the Calculation Agent so superseded shall cease to be such Calculation Agent under the Indenture. Upon its resignation or removal, the Calculation Agent shall be entitled to the payment by the Issuer and the Guarantor of its compensation, if any is owed to it, for services rendered under the Indenture and to the reimbursement of all reasonable out-of-pocket expenses incurred in connection with the services rendered by it under the Indenture.

 

Any successor Calculation Agent appointed under the Indenture shall execute and deliver to its predecessor and to the Issuer and the Guarantor an instrument accepting such appointment under the Indenture, and thereupon such successor Calculation Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as such Calculation Agent under the Indenture, and such predecessor, upon payment of its charges and disbursements then unpaid, shall thereupon become obliged to transfer and deliver, and such successor Calculation Agent shall be entitled to receive, copies of any relevant records maintained by such predecessor Calculation Agent.

 

Any person into which the Calculation Agent may be merged or converted or with which the Calculation Agent may be consolidated, or any person resulting from any merger, conversion or consolidation to which the Calculation Agent shall be a party, or any person succeeding to all or substantially all of the assets and business of the Calculation Agent, or all or substantially all of the corporate trust business of the Calculation Agent shall, to the extent permitted by applicable law and provided that it shall have an established place of business in The City of New York, be the successor Calculation Agent under the Indenture without the execution or filing of any paper or any further act on the part of any of the parties hereto. Notice of any such merger, conversion, consolidation or sale shall forthwith be given to the Issuer and the Guarantor within 30 days of such merger, conversion, consolidation or sale.

 

All calculations of the Calculation Agent, in the absence of manifest error, shall be conclusive for all purposes and binding on the Issuer, the Guarantor and the holders of Floating Rate Notes. The Issuer and the Guarantor may appoint a successor Calculation Agent with the written consent of the Trustee, which consent shall not be unreasonably withheld.

 

Common Terms

 

Interest on each Note will be paid only to the person in whose name such Note was registered at the close of business on the 15th calendar day prior to the applicable Interest Payment Date (each such date, a “ Regular Record Date ”). Notwithstanding the Regular Record Dates established in the terms of the Notes, the Issuer has been advised by DTC that through their accounting and payment procedures they will, in accordance with their customary procedures, credit interest payments received by DTC on any Interest Payment Date based on DTC participant holdings of the Notes of the applicable series on the close of business on the New York Business Day immediately preceding each such Interest Payment Date.

 

Optional Redemption of the Notes

 

The Issuer may redeem all or a portion of the Fixed Rate Notes at its election at any time or from time to time as set forth below. Notice of redemption shall be given by first-class mail postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date to each holder of Fixed Rate Notes to be redeemed at his or her

address appearing in the register kept by the Trustee, with a copy being sent to the Trustee. The Issuer may redeem such Fixed Rate Notes at a redemption price equal to the greater of:

 

 

“ Comparable Treasury Issue ” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“ Remaining Life ”) of the Fixed Rate Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Fixed Rate Notes being redeemed.

 

“ Comparable Treasury Price ” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations or, if only one such quotation is obtained, such quotation.

 

“ Independent Investment Banker ” means an independent investment banking institution of national standing appointed by the Issuer and the Guarantor and may include an underwriter or its affiliate.

 

“ Reference Treasury Dealer ” means (1) each of Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co. and their affiliates or their respective successors, provided that if any of the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a “ Primary Treasury Dealer ”), the Issuer and the Guarantor will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Issuer and the Guarantor.

 

“ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to

the Independent Investment Banker by such Reference Treasury Dealer at 5:00 p.m. on the third New York Business Day preceding such redemption date.

 

“ Treasury Rate ” means, with respect to any redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities”, for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month), (2) if the period from the redemption date to the maturity date of such Fixed Rate Notes to be redeemed is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year, or (3) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate shall be calculated by the Independent Investment Banker on the third New York Business Day preceding the redemption date.

 

Except as set forth below under “Early Redemption for Taxation or Listing Reasons”, the Floating Rate Notes may not be redeemed prior to maturity.

 

Early Redemption for Taxation or Listing Reasons

 

The Issuer may redeem the Notes of any series in whole but not in part in the event of certain changes or amendments to the laws or regulations of Spain (including any treaty to which Spain is a party) or any political subdivision or any authority thereof or therein having power to tax, or changes in the application or official interpretation of such laws or regulations. In the event of such a redemption, the redemption price of the Notes will be 100% of their principal amount together with any accrued but unpaid payments of interest to the date of redemption.

 

If the Issuer elects to redeem the Notes of any series, they will cease to accrue interest from the redemption date, unless the Issuer fail to pay the redemption price on the payment date. The circumstances in which the Issuer may redeem the Notes and the applicable procedures are described further in the accompanying prospectus under “Description of the Notes and the Notes Guarantees — Optional Tax Redemption” and below under “— Notices”.

 

In addition, if any series of Notes is not listed on an organized market in an OECD country no later than 45 days prior to the initial Interest Payment Date on such series of Notes, the Issuer or the Guarantor, as the case may be, may, at its election and having given no less than 15 days’ notice to the holders of such series of Notes in accordance with the terms described below under “— Notices”, redeem all of the outstanding Notes of such series at their principal amount, together with accrued interest, if any, thereon to but not including the redemption date; provided that from and including the issue date of the Notes of such series to and including such Interest Payment Date, the Issuer will use its reasonable efforts to obtain or maintain such listing, as applicable.

 

In the event of an early redemption of the Notes for the reasons set forth in the preceding paragraph, the Issuer or the Guarantor, as the case may be, may be required to withhold tax and will pay interest in respect of the principal amount of the Notes redeemed net of the Spanish withholding tax applicable to such payments (currently 19%). If this were to occur, Beneficial Owners would have to either follow the Quick Refund Procedures set forth in Article II of Annex A to this prospectus supplement (other than Beneficial Owners holding their interests through Euroclear or participants in Euroclear, who would have to follow the Quick Refund Procedures set forth in Article II of Annex B to this prospectus supplement) or apply directly to the Spanish tax authorities for any refund to which they may be entitled pursuant to the direct refund procedure set forth in Article II of Annex C to this prospectus supplement. See “Spanish Tax Considerations — Evidencing of Beneficial Owner Residency in Connection with Interest Payments”.

 

For a description of the Spanish tax treatment applicable to the accrued interest, if any, on the Notes upon an early redemption of such Notes as a result of such Notes not being listed on an organized market in an OECD

country, see “Spanish Tax Considerations — Senior Notes and Subordinated Notes — 2. Tax Rules for Senior Notes and Subordinated Notes not Listed on an Organized Market in an OECD Country” in the accompanying prospectus.

 

Events of Default

 

See “Description of the Notes and the Notes Guarantees — Senior Notes and Senior Guarantees — Events of Default” in the accompanying prospectus for a discussion of events of default with respect to the Notes.

 

Purchases of the Notes

 

The Issuer and the Guarantor and any of their respective subsidiaries may at any time purchase the Notes in the open market or otherwise and at any price.

 

Listing

 

We will apply to list the Notes on the New York Stock Exchange and, if approved, trading is expected to commence within 30 days after the initial delivery of the Notes.

 

The Guarantee

 

The Notes will be guaranteed by the Guarantor as explained in the accompanying prospectus under “Description of the Notes and the Notes Guarantees — Senior Notes and Senior Guarantees”.

 

Notices

 

All notices to holders of Notes shall be validly given if mailed to them at their respective addresses in the register maintained by the Trustee, with copies of such notices being sent to the Trustee. In addition, notice of any meeting of a Syndicate of holders of Notes of a particular series shall be validly given if done in accordance with the Regulations of the Syndicate of holders of Notes of such series (which generally provide for notice periods of between 10 and 60 days), with a copy of such notice being sent to the Trustee. The Trustee’s address for purposes of the foregoing is The Bank of New York Mellon, One Canada Square, London E14 5AL, United Kingdom.

 

The following is a general description of certain Spanish tax considerations relating to the Notes. The information provided below does not purport to be a complete analysis of the tax law and practice currently applicable in Spain and does not purport to address the tax consequences applicable to all categories of investors, some of which may be subject to special rules. Prospective purchasers of the Notes are advised to consult their own tax advisers as to the tax consequences, including those under the tax laws of the country of which they are resident, of purchasing, owning and disposing of Notes. The summary set out below is based upon Spanish law as in effect on the date of this prospectus supplement and is subject to any change in such law that may take effect after such date. References in this section to holders of Notes include the Beneficial Owners of the Notes. The statements regarding Spanish law and practice set forth below assume that the Notes will be issued, and transfers thereof will be made, in accordance with the Spanish law.

 

Evidencing of Beneficial Owner Residency in Connection with Interest Payments

 

As described in the accompanying prospectus under “Spanish Tax Considerations — Senior Notes and Subordinated Notes — 3. Evidencing of Beneficial Owner Residency in connection with Interest Payments — Individuals and Legal Entities without tax residency in Spain”, interest and other financial income paid with respect to the Notes for the benefit of non-Spanish resident investors not acting, with respect to the Notes, through a permanent establishment in Spain, will be exempt from Spanish withholding tax unless such non-Spanish tax resident investor (including any custodial intermediaries or agents acting on its behalf) fails to comply with the relevant information procedures, as described below.

 

Both the Issuer and the Guarantor, as the case may be, will thus withhold tax from any payments of interest or income from the redemption or repayment of the Notes with regard to which required information has not been provided or the required information procedures have not been followed. The information reporting obligations to be complied with in order to apply the exemption are those set forth in Section 44 of the Spanish Royal Decree 1065/2007 (“ Section 44 ”), being the following:

 

In accordance with sub-section 1 of Section 44, an annual return must be filed with the Spanish tax authorities, by the Guarantor, specifying the following information with respect to the Notes:

 

(A) the identity and country of residence of the recipient of the income on the Notes (when the income is received on behalf of a third party (i.e., a Beneficial Owner), the identity and country of residence of that third party);

 

(B) the amount of income received; and

 

(C) details identifying the Notes.

 

In accordance with sub-section 2 of Section 44, for the purpose of preparing the annual return referred to in sub-section 1 of Section 44, certain documentation regarding the identity and tax residence of the Beneficial Owners receiving each payment must be submitted to the Issuer and the Guarantor at the time of each such payment, as specified in more detail in Annexes A and B to this prospectus supplement.

 

In particular, Beneficial Owners who are (i) not resident in Spain for tax purposes, (ii) act for their own account and (iii) are a central bank, other public institution or international organization, a bank or credit institution or a financial entity, including collective investment institutions, pension funds and insurance entities, resident in an OECD country (including the United States) or in a country with which Spain has entered into a treaty for the avoidance of double taxation, and subject to a specific administrative registration or supervision scheme (each a “ Qualified Institution ”), must certify their name and tax residency by means of a certificate which is included as Exhibit I to Annex C of this prospectus supplement.

 

In the case of payments received by a Qualified Institution, as a holder of Notes acting as an intermediary, the entity in question must, in accordance with the information contained in its own records, certify the name and tax residency of each Beneficial Owner not resident in Spain for tax purposes as of the Interest Payment Date by means of a certificate substantially in the form of which is included as Exhibit II of Annex C to this prospectus supplement.

 

In the case of payments which are channeled through a securities clearing and deposit entity recognized for these purposes by Spanish law or by the law of another OECD member country (such as DTC), the entity in question (i.e., the clearing system participant) must, in accordance with the information contained in its own records, certify the name and tax residency of each Beneficial Owner not resident in Spain for tax purposes as of the Interest

Payment Date by means of a certificate substantially in the form of which is included as Exhibit II to Annex C of this prospectus supplement.

 

In any other case, the Beneficial Owner must submit annually proof of beneficial ownership and a certificate of tax residency issued by the tax authorities of the country of residency of such Beneficial Owner (a “ Government Tax Residency Certificate ”).

 

In addition to the above, as described in the accompanying prospectus under “Spanish Tax Considerations — Senior Notes and Subordinated Notes — 1. Tax Rules for Senior Notes and Subordinated Notes Listed on an Organized Market in an OECD Country — 1(b) Legal Entities with Residency in Spain — Legal Entities with Tax Residency in Spain — Corporate Income Tax ( Impuesto sobre Sociedades )”, Spanish corporate taxpayers will not be subject to withholding tax on income derived from the Notes, provided that such Spanish corporate taxpayers provide relevant information to qualify as such at the time of each such interest payment. For these purposes, the relevant Qualified Institution, with respect to each Beneficial Owner who is a legal entity subject to Spanish Corporate Income Tax, must submit a certification, substantially in the form as set forth in Exhibit III to Annex C to this prospectus supplement, specifying such Beneficial Owner’s name, address and Tax Identification Number, the ISIN code of the Notes, the Beneficial Owner’s beneficial interest in the principal amount of Notes held at each Interest Payment Date, the amount of gross income and amount of tax withheld. The same rules apply in case the Notes form part of the assets of a permanent establishment in Spain of a person or legal entity who is not resident in Spain for tax purposes.

 

In light of the above, the Issuer, the Guarantor, DTC, Euroclear and Acupay have arranged certain procedures to facilitate the collection of information concerning the identity and tax residence of Beneficial Owners of the Global Notes through and including the close of business on the New York Business Day prior to each relevant Interest Payment Date. Beneficial Owners whose identity and tax residence may be delivered through the Acupay system are those who are (i) either non-Spanish tax residents or CIT taxpayers (ii) who hold Global Certificates and (iii) are direct participants in DTC or hold their interests through direct participants in DTC or an indirect DTC participant (such as Euroclear), provided that the relevant DTC or Euroclear participant is a Qualified Institution. The delivery of such information will be made through the relevant direct participants in DTC or indirect DTC participant (including Euroclear). The Issuer will withhold at the then-applicable rate (currently 19%) from any payment of interest or income from the redemption or repayment of the Notes as to which the required information has not been provided or the required procedures have not been followed.

 

The procedures set forth in Article I of Annex A and Article I of Annex B to this section (together, the “ Immediate Refund Procedures ”) are intended to facilitate the identification of Beneficial Owners who are either (i) corporations resident in Spain for tax purposes or (ii) individuals or entities not resident in Spain for tax purposes (and therefore in each case entitled to receive payments in respect of the Notes free and clear of Spanish withholding taxes) and who are direct participants in DTC or hold their interests through direct participants in DTC or indirect DTC participants (such as Euroclear), provided in each case that the relevant DTC or Euroclear participant is a Qualified Institution.

 

A detailed description of the Immediate Refund Procedures to be followed by DTC participants (other than Euroclear) is set forth under Annex A to this prospectus supplement. A detailed description of the Immediate Refund Procedures to be followed by participants in Euroclear is set forth under Annex B to this prospectus supplement.

 

Investors are cautioned that no arrangements have been made by the Issuer or the Guarantor with respect to any direct participants in DTC or indirect DTC participants, other than Euroclear.

 

Beneficial Owners who are entitled to receive payments of interest or income from the redemption or repayment of the Notes paid by the Issuer or the Guarantor free of any Spanish withholding taxes may nonetheless receive such payments net of Spanish withholding tax in certain circumstances, such as where (i) there is a failure to comply with the applicable Immediate Refund Procedures, (ii) such Beneficial Owners do not hold their Notes through a Qualified Institution or (iii) holders (other than Cede & Co. as nominee of DTC) hold Notes in definitive form. To have such withheld amounts refunded, Beneficial Owners who do not hold their Notes through a Qualified Institution can follow the Quick Refund Procedures set forth in Article II of Annex A to this prospectus supplement (other than Beneficial Owners holding their interests through Euroclear or participants of Euroclear, who would have to follow the Quick Refund Procedures set forth in Article II of Annex B to this prospectus supplement). Noteholders holding certificated Notes or Notes in definitive form can follow the Direct Refund from Spanish Tax Authorities Procedure set forth in Article II of Annex C to this prospectus supplement in order to have such withheld amounts refunded.

Investors should note that neither the Issuer nor the Guarantor accepts any responsibility relating to the procedures established for the collection of information concerning the identity and tax residence of Beneficial Owners in connection with any exemption from Spanish withholding tax. Accordingly, neither the Issuer nor the Guarantor will be liable for any damage or loss suffered by any Beneficial Owner who would otherwise be entitled to an exemption from Spanish withholding tax but whose payments of interest or income from the redemption or repayment of the Notes paid by the Issuer or the Guarantor are nonetheless paid net of Spanish withholding tax either because these procedures prove ineffective or because the relevant direct participants in DTC or indirect DTC participants, including Euroclear, as applicable, fail to correctly follow such procedures. Moreover, neither the Issuer nor the Guarantor will pay any additional amounts with respect to any such withholding.

 

Participants in DTC who are Qualified Institutions who have been paid net of Spanish withholding tax because of a failure to comply with the Immediate Refund Procedures set forth under Article I of Annex A to this prospectus supplement will be entitled to a refund of the amount withheld pursuant to the Quick Refund Procedures set forth in Article II of Annex A to this prospectus supplement.

 

Participants in Euroclear who are Qualified Institutions and have been paid net of Spanish withholding tax because of a failure to comply with the Immediate Refund Procedures set forth under Article I of Annex B to this prospectus supplement will be entitled to a refund of the amount withheld pursuant to the Quick Refund Procedures set forth in Article II of Annex B to this prospectus supplement.

 

Beneficial Owners entitled to receive payments of interest or income from the redemption or repayment of the Notes paid by the Issuer or the Guarantor free of any Spanish withholding taxes but in respect of whom relevant documentation is not timely received by the Issuer and/or Acupay under the Immediate Refund Procedures or the Quick Refund Procedures may seek a full refund of withholding tax directly from the Spanish tax authorities by following the direct refund procedure established by Spanish tax law set forth in Article II of Annex C to this prospectus supplement.

 

Beneficial Owners, their custodians, or DTC participants with questions about these Spanish tax information reporting and withholding procedures, including the submission of tax certification information, may contact Acupay at one of the following locations. Please mention the CUSIP and/or the ISIN for the Notes when contacting Acupay. There is no cost for this assistance.

 

Via email:

info@acupay.com

 

By post, telephone or fax:

 

In New York:

 

Acupay System LLC

Attention: Rosa Lopez

30 Broad Street — 46th Floor

New York, New York 10004

United States

 

Telephone: +1-212-422-1222

Fax: +1-212-422-0790

 

In London:

 

Acupay System LLC

Attention: Maria Mercedes

28 Throgmorton Street — First Floor

London EC2N 2AN

United Kingdom

 

Telephone: +44 (0) 207-382-0340

Fax: +44 (0) 207-256-7571

 

For a discussion of certain U.S. federal income tax considerations, please see “U.S. Tax Considerations — BBVA U.S. Senior Notes or BBVA Subordinated Capital Subordinated Notes” in the accompanying prospectus.

 

BBVA Securities Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co. are acting as underwriters as named below. Subject to the terms and conditions set forth in a firm commitment underwriting agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co. has agreed, severally and not jointly, to purchase from us, the principal amount of Notes set forth opposite its name below. BBVA Securities Inc. has agreed, severally and not jointly, to act as a best efforts underwriter and will purchase up to $      of Fixed Rate Notes from the principal amount of Fixed Rate Notes and up to $      of Floating Rate Notes from the principal amount of Floating Rate Notes underwritten by Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co., which will be allocated to BBVA Securities Inc. on a pro rata basis.

 

 

Subject to the terms and conditions set forth in the underwriting agreement, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co. have agreed, severally and not jointly, to purchase all of the Notes sold under the underwriting agreement if any of these Notes are purchased.

 

We have agreed to indemnify the several underwriters and their controlling persons against certain liabilities in connection with this offering, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

 

The underwriters are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the Notes, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

 

Commissions and Discounts

 

The underwriters have advised us that they propose initially to offer the Notes to the public at the public offering price set forth on the cover page of this prospectus supplement. After the initial offering, the public offering price or any other term of the offering may be changed.

 

The expenses of the offering, not including the commissions payable to the underwriters, are estimated at $     . The underwriters have agreed to reimburse us for certain out-of-pocket expenses up to $      in connection with this offering.

 

New Issue of Notes

 

The Notes are a new issue of securities with no established trading market. We have been advised by the underwriters that they presently intend to make a market in the Notes after completion of the offering. However, they are under no obligation to do so and may discontinue any market-making activities at any time without any notice. We cannot assure the liquidity of the trading market for the Notes or that an active public market for the Notes will develop. If an active public trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected. If the Notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our operating performance and financial condition, general economic conditions and other factors.

 

Settlement

 

We expect that delivery of the Notes will be made to investors on or about          , 2011, which will be the fifth business day following the date of this prospectus supplement (such settlement being referred to as “T+5”). Under Rule 15c6-1 under the Securities Exchange Act of 1934, trades in the secondary market are required to settle in three

business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes prior to the delivery of the Notes hereunder will be required, by virtue of the fact that the Notes initially settle in T+5, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to trade the Notes prior to their date of delivery hereunder should consult their advisors.

 

No Sales of Similar Securities

 

We have agreed that we will not, for a period of           days after the date of this offering memorandum, without first obtaining the prior written consent of BBVA Securities Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co. directly or indirectly, issue, sell, offer to contract or grant any option to sell, pledge, transfer or otherwise dispose of, any debt securities or securities exchangeable for or convertible into debt securities, except for the Notes sold to the underwriters pursuant to the underwriting agreement.

 

Short Positions

 

In connection with the offering, the underwriters may purchase and sell the Notes in the open market. These transactions may include short sales and purchases on the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater principal amount of Notes than they are required to purchase in the offering. The underwriters must close out any short position by purchasing Notes in the open market. A short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Notes in the open market after pricing that could adversely affect investors who purchase in the offering.

 

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the Notes or preventing or retarding a decline in the market price of the Notes. As a result, the price of the Notes may be higher than the price that might otherwise exist in the open market.

 

The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased notes sold by or for the account of such underwriter in stabilizing or short covering transactions.

 

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Notes. In addition, neither we nor any of the underwriters make any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

 

Other Relationships

 

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and their affiliates have engaged in, and may in the future engage in, commercial and investment banking services, hedging services and other commercial dealings in the ordinary course of business with us. They have received customary fees and commissions for these transactions and may do so in the future.

 

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the Issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

 

Conflict of Interest

 

BBVA Securities Inc. is a subsidiary of the Guarantor and an affiliate of the Issuer. BBVA Securities Inc. will conduct this offering in compliance with the requirements of FINRA Rule 5121 of the Financial Industry Regulatory Authority, Inc., which is commonly referred to as FINRA, regarding a FINRA member firm’s distribution of the securities of an affiliate and related conflicts of interest. BBVA Securities Inc. or any of our other affiliates may not make sales in this offering to any discretionary account without the specific written approval of the accountholder.

Selling Restrictions

 

The Kingdom of Spain

 

The Notes may not be offered or sold in Spain.

 

European Economic Area

 

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a “ Relevant Member State ”), including each Relevant Member State that has implemented the 2010 PD Amending Directive with regard to persons to whom an offer of securities is addressed and the denomination per unit of the offer of securities (each, an “ Early Implementing Member State ”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “ Relevant Implementation Date ”), no offer of securities will be made to the public in that Relevant Member State (other than offers (the “ Permitted Public Offers ”) where a prospectus will be published in relation to the securities that has been approved by the competent authority in a Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive), except that with effect from and including that Relevant Implementation Date, offers of securities may be made to the public in that Relevant Member State at any time:

 

A. to “qualified investors” as defined in the Prospectus Directive, including:

 

(a) (in the case of Relevant Member States other than Early Implementing Member States), legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities, or any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43.0 million and (iii) an annual turnover of more than €50.0 million as shown in its last annual or consolidated accounts; or

 

(b) (in the case of Early Implementing Member States), persons or entities that are described in points (1) to (4) of Section I of Annex II to Directive 2004/39/EC, and those who are treated on request as professional clients in accordance with Annex II to Directive 2004/39/EC, or recognized as eligible counterparties in accordance with Article 24 of Directive 2004/39/EC unless they have requested that they be treated as non-professional clients; or

 

B. to fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive), as permitted in the Prospectus Directive, subject to obtaining the prior consent of the underwriters for any such offer; or

 

C. in any other circumstances falling within Article 3(2) of the Prospectus Directive,

 

provided that no such offer of securities shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive.

 

Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any securities or to whom any offer is made will be deemed to have represented, acknowledged and agreed that (A) it is a “qualified investor”, and (B) in the case of any securities acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (x) the securities acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of the Subscribers has been given to the offer or resale, or (y) where securities have been acquired by it on behalf of persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, the offer of those securities to it is not treated under the Prospectus Directive as having been made to such persons.

 

For the purpose of the above provisions, the expression “ an offer to the public ” in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer of any securities to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “ Prospectus Directive ” means Directive 2003/71 EC (including the 2010 PD Amending

Directive, in the case of Early Implementing Member States) and includes any relevant implementing measure in each Relevant Member State and the expression “ 2010 PD Amending Directive ” means Directive 2010/73/EU.

 

United Kingdom

 

Each underwriter has represented and agreed that:

 

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the United Kingdom Financial Services and Markets Act 2000 (“ FSMA ”)) received by it in connection with the issue or sale of the Notes or the Guarantee in circumstances in which Section 21(1) of the FSMA does not apply to us or the Guarantor; and

 

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes or the Guarantee in, from or otherwise involving the United Kingdom.

 

Hong Kong

 

The Notes may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

 

Singapore

 

This Prospectus Supplement has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Prospectus Supplement and the accompanying Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “ SFA ”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

 

Where the Notes are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

 

Japan

 

The Notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

WHERE YOU CAN FIND MORE INFORMATION

 

This prospectus supplement is part of a registration statement on Form F-3 (File No. 333-167820) we and BBVA U.S. Senior have filed with the SEC under the Securities Act. This prospectus supplement omits some information contained in the registration statement in accordance with SEC rules and regulations. You should review the information in and exhibits to the registration statement for further information on us and BBVA U.S. Senior and the securities we and BBVA U.S. Senior are offering. Statements in this prospectus supplement concerning any document we or BBVA U.S. Senior filed or will file as an exhibit to the registration statement or that we or BBVA U.S. Senior otherwise filed with the SEC are not intended to be comprehensive and are qualified in their entirety by reference to these filings. You should review the complete document to evaluate these statements.

 

The SEC allows us to “incorporate by reference” much of the information we file with the SEC, which means that we can disclose important information to you by referring you to those publicly available documents. The information that we incorporate by reference in this prospectus supplement is an important part of this prospectus supplement. We and BBVA U.S. Senior incorporate by reference into this prospectus supplement (i) our 2010 Form 20-F, (ii) our report on Form 6-K furnished to the SEC on May 9, 2011 and (iii) our report on Form 6-K furnished to the SEC on May 11, 2011. For information on the other documents we incorporate by reference in this prospectus supplement and the accompanying prospectus, we refer you to “Where You Can Find More Information” on page v of the accompanying prospectus.

 

In addition to these documents, we and BBVA U.S. Senior incorporate by reference in this prospectus supplement and the accompanying prospectus any future documents we or BBVA U.S. Senior file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this prospectus supplement until this offering is completed. Reports on Form 6-K we or BBVA U.S. Senior furnish to the SEC after the date of this prospectus supplement (or portions thereof) are incorporated by reference in this prospectus supplement only to the extent that the report expressly states that it (or such portions) is incorporated by reference in this prospectus supplement.

 

You may request, at no cost to you, a copy of these documents (other than exhibits not specifically incorporated by reference) by writing or telephoning us at: Banco Bilbao Vizcaya Argentaria, S.A., New York Branch, 1345 Avenue of the Americas, 45th Floor, New York, New York 10105, Attention: Investor Relations (at telephone number +1-212-728-1660).

VALIDITY OF THE SECURITIES

 

The validity of the Notes and the Guarantees will be passed upon as to matters of Spanish law for us by J&A Garrigues, S.L.P. Certain matters of U.S. federal and New York law will be passed on for us by Davis Polk & Wardwell LLP and for the underwriters by Sidley Austin LLP.

EXPERTS

 

The consolidated financial statements incorporated by reference in this prospectus supplement from BBVA’s 2010 Form 20-F and the effectiveness of internal control over financial reporting have been audited by Deloitte S.L., an independent registered public accounting firm, as stated in their reports which are incorporated herein by reference (which reports (1) express an unqualified opinion on the consolidated financial statements of the BBVA Group and include an explanatory paragraph stating that International Financial Reporting Standards adopted by the EU required to be applied under the Bank of Spain’s Circular 4/2004 vary in certain significant respects from U.S. GAAP, that the information relating to the nature and effect of such differences is presented in Note 60 to the consolidated financial statements of the BBVA Group and (2) express an unqualified opinion on the effectiveness of internal control over financial reporting), and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

 

The following procedures apply to the Notes in order to permit the Issuer and the Guarantor to comply with their withholding and reporting obligations pursuant to applicable Spanish tax legislation as described below and in order for holders of the Notes to qualify to receive payments under the Notes gross of withholding on account of Spanish taxes pursuant to the immediate refund (“ relief at source ”) procedure (See Annex A — Article I below) or to qualify for a quick refund (See Annex A — Article II below). Holders of the Notes must seek their own advice to ensure that they comply with all procedures to ensure correct tax treatment of their Notes. None of the Issuer, the Guarantor, the underwriters, the paying agent, Acupay, DTC or Euroclear assume any responsibility therefor.

 

Capitalized terms used but not otherwise defined in this Annex A shall have the meaning ascribed to them elsewhere in this prospectus supplement.

 

Article I

 

Immediate Refund (aka “Relief at Source”) Procedure (procedure that complies with Spanish Law 13/1985
(as amended by Laws 19/2003, 23/2005 and 4/2008), Royal Decree 1065/2007 and Section 59.s) of the
Corporate Income Tax Regulation approved by Royal Decree 1777/2004 of July 30, 2004

 

 

1. At least five New York Business Days prior to each Regular Record Date preceding an Interest Payment Date, the Issuer shall provide an issuer announcement to the Paying Agent, and the Paying Agent shall, (a) provide The Depository Trust Company (“ DTC ”) with such issuer announcement that will form the basis for a DTC important notice (the “ Important Notice ”) regarding the relevant interest payment and tax relief entitlement information for the Notes, (b) request DTC to post such Important Notice on its website as a means of notifying direct participants of DTC (“ DTC Participants ”) of the requirements described in this Annex, and (c) with respect to each series of Notes confirm to Acupay the interest rate and the number of days in the relevant Notes Interest Period.

 

2. Beginning on the New York Business Day following each Regular Record Date and continuing until 8:00 p.m. New York time on the fourth New York Business Day prior to each date on which interest will be paid (each such date, a “ Payment Date ”, and such deadline, the “ Standard Deadline ”), each DTC Participant that is a Qualified Institution must (i) enter directly into the designated system established and maintained by Acupay (the “ Acupay System ”) the Beneficial Owner identity and country of tax residence information required by Spanish tax law (as set forth in Article I of Annex C) in respect of the portion of such DTC Participant’s position in the Notes that is exempt from Spanish withholding tax (the “ Beneficial Owner Information ”) and (ii) make an election via the DTC Elective Dividend Service and the DTC Tax Relief Service (collectively, “ EDS/Tax Relief Service ”) certifying that such portion of Notes for which it submitted such Beneficial Owner Information is exempt from Spanish withholding tax (the “ EDS/Tax Relief Election ”).

 

3. Each DTC Participant must ensure the continuing accuracy of the Beneficial Owner Information and EDS/Tax Relief Election, irrespective of any changes in, or in beneficial ownership of, such DTC Participant’s position in the Notes through 8:00 p.m. New York time on the New York Business Day immediately preceding each Payment Date by making adjustments through the Acupay System and EDS/Tax Relief Service. All changes must be reflected, including those changes (via Acupay) which do not impact the DTC Participant’s overall position at DTC or the portion of that position at DTC as to which no Spanish withholding tax is being assessed.

 

 

After entry of Beneficial Owner Information into the Acupay System by a DTC Participant, the Acupay System will produce completed forms of Exhibit I, Exhibit II or Exhibit III to Annex C (as required by Spanish law) (the “ Interest Payment Tax Certificates ”), which shall summarize the Beneficial Owner Information introduced and maintained by such DTC Participant into the Acupay System. When any Payment Date is also a Maturity Date or a redemption date for any series of Notes, and if the Notes of such series were initially issued below par with an original issue discount (“ OID ”), a separate set of Tax Certificates (the “ OID Tax Certificates ” and, together with the Interest Payment Tax Certificates, the “ Tax Certificates ”) will be generated by the Acupay System reporting income resulting from the payment of OID at the Maturity Date or such earlier redemption date. Such DTC Participant will then be required to (i) print out, (ii) review, (iii) sign and (iv) fax or send by email a PDF copy of the duly signed Tax Certificates directly to Acupay for receipt by the close of business on the Standard Deadline. The original of each Tax Certificate must be sent to Acupay for receipt no later than the 15th calendar day of the month immediately following the Payment Date. All Tax Certificates will be dated as of the relevant Payment Date.

NOTE:  A DTC Participant that obtains favorable tax treatment through the Immediate Refund (aka “Relief at Source”) Procedure and fails to submit to Acupay the original Tax Certificates as described above may be prohibited by the Issuer from using the procedure to obtain favorable tax treatment with respect to future payments. In such event, the DTC Participant will receive the interest payment on its entire position net of the applicable withholding tax (currently 19%), and relief will need to be obtained directly from the Spanish tax authorities by following the direct refund procedure established by Spanish tax law.

 

 

1. In addition to its other duties and obligations set forth herein, Acupay will be responsible for the following tasks (collectively, the “ Acupay Verification Procedures ”):

 

(a) comparing the Beneficial Owner Information and Tax Certificates provided in respect of each DTC Participant’s position with the EDS/Tax Relief Elections provided by that DTC Participant in order to determine whether any discrepancies exist between such information, the corresponding EDS/Tax Relief Elections and the DTC Participant’s position in the Notes at DTC;

 

(b) collecting and collating all Tax Certificates received from DTC Participants;

 

(c) reviewing the Beneficial Owner Information and the Tax Certificates using appropriate methodology in order to determine whether the requisite fields of Beneficial Owner Information have been supplied and that such fields of information are responsive to the requirements of such Tax Certificates in order to receive payments without Spanish withholding tax being assessed; and

 

(d) liaising with the DTC Participants in order to request that such DTC Participants:

 

(i) complete any missing, or correct any erroneous, Beneficial Owner Information identified pursuant to the procedures set forth in (a) and (c) above;

 

(ii) correct any erroneous EDS/Tax Relief Election identified pursuant to the procedures set forth in (a) and (c) above; and

 

(iii) revise any Tax Certificates identified pursuant to the procedures set forth in (a) and (c) above as containing incomplete or inaccurate information.

 

 

1. By 9:30 a.m. New York time on the New York Business Day following the Standard Deadline, DTC will transmit to Acupay an “ EDS Standard Cut-off Report ” confirming DTC Participant positions and EDS/Tax Relief Elections as of the Standard Deadline. By 12:00 p.m. New York time on the New York Business Day following the Standard Deadline, Acupay will transmit to DTC a provisional summary report of all Beneficial Owner Information which has been submitted through the Acupay System as of the Standard Deadline, provisionally confirmed, to the extent possible, against the information set forth in the EDS Standard Cut-off Report. The provisional summary report shall set forth (i) the position in the Notes held by each DTC Participant as of the Standard Deadline and (ii) the portion of each DTC Participant’s position in the Notes in respect of which Tax Certificates have been provided to support the payment of interest without Spanish withholding tax being assessed.

 

2. DTC Participants will be required to ensure that Beneficial Owner Information entered into the Acupay System and the EDS/Tax Relief Elections are updated to reflect any changes in beneficial ownership or in such DTC Participants’ positions in the Notes occurring between the Standard Deadline and 8:00 p.m. New York time on the New York Business Day immediately preceding the Payment Date. For this purpose, EDS/Tax Relief Service will remain accessible to DTC Participants until 8:00 p.m. New York time on the New York Business Day immediately preceding the Payment Date. In addition, Acupay will accept new or amended Beneficial Owner Information before 9:45 a.m. New York time, and DTC will accept requests for changes to EDS/Tax Relief Elections at the request of DTC Participants until 9:45 a.m. New York time, on each Payment Date.

 

3. Beginning at 7:45 a.m. New York time on the Payment Date, Acupay will through the Acupay Verification Procedures (as defined above) perform the final review of each DTC Participant’s Beneficial Owner Information, EDS/Tax Relief Elections and changes in DTC position since the Standard Deadline. Based on these Acupay Verification Procedures, Acupay will (i) seek to notify any affected DTC Participant until 9:45 a.m. New York time on such Payment Date of any inconsistencies among these data, or erroneous or incomplete information provided by such

DTC Participant and (ii) use its best efforts to obtain revised Beneficial Owner Information, Tax Certificates (as defined above) and/or EDS/Tax Relief Elections from any such DTC Participant as necessary to correct any inconsistencies or erroneous or incomplete information. The failure to correct any such inconsistencies, (including the failure to fax or send PDF copies of new or amended Tax Certificates) by 9:45 a.m. New York time on the Payment Date (or if Acupay, despite its best efforts to do so, does not confirm receipt of such correction by 9:45 a.m. New York time on the Payment Date) will result in the payments in respect of the entirety of such DTC Participant’s position being made net of Spanish withholding tax. Upon receipt of a report of EDS/Tax Relief Elections as of 9:45 a.m. New York time on the Payment Date from DTC, Acupay will then notify DTC of the final determination of which portion of each DTC Participant’s position in the Notes should be paid gross of Spanish withholding tax and which portion of such position should be paid net of such tax. Based on such Acupay determination, DTC will make adjustments to EDS/Tax Relief Service in order to reduce to zero the EDS/Tax Relief Elections received by DTC from DTC Participants as of 9:45 a.m. New York time on the relevant Payment Date, where as a result of any inconsistencies between such DTC Participant’s Beneficial Owner Information, EDS/Tax Relief Election and DTC position, the entirety of such DTC Participant position will be paid net of Spanish withholding taxes.

 

The adjustments described in the preceding paragraph will be made by DTC exclusively for the purposes of making payments, when applicable, net of Spanish withholding taxes and will have no impact on the EDS/Tax Relief Election made by the relevant DTC Participants as of 9:45 a.m. New York time on the relevant Payment Date.

 

4. DTC will transmit a final “ Report to Paying Agent ” to Acupay by 10:30 a.m. New York time on each Payment Date setting forth each DTC Participant’s position in the Notes as of 8:00 p.m. New York time on the New York Business Day immediately preceding each Payment Date and the portion of each such DTC Participant’s position in the Notes on which interest payments should be made net of Spanish withholding tax and the portion on which interest payments should be made without Spanish withholding tax being assessed, as applicable, based on the status of the EDS/Tax Relief Elections received by DTC for each DTC Participant as of 9:45 a.m. New York time on the Payment Date and reflecting the adjustments, if any, to be made by DTC to EDS/Tax Relief Service described in paragraph D.3 above of this Article I of Annex A.

 

5. Acupay shall immediately, but no later than 11:00 a.m. New York time on each Payment Date, release (through a secure data upload/download facility) PDF copies of the final Report to Paying Agent to the Paying Agent and the Issuer, along with PDF copies of the related signed Tax Certificates to the Issuer.

 

6. Acupay will forward original paper Tax Certificates it receives for receipt by the Issuer no later than the 18th calendar day of the month immediately following each Payment Date. Acupay shall maintain records of all Tax Certificates (and other information received through the Acupay System) for the longer of (x) five years from the date of delivery thereof or (y) five years following the final maturity or redemption of the Notes, and shall, during such period, make copies of such records available to the Issuer at all reasonable times upon request. In the event that the Issuer notifies Acupay in writing that it is the subject of a tax audit, Acupay shall maintain such duplicate backup copies until the relevant statute of limitations applicable to any tax year subject to audit expires.

 

 

1. On or prior to each Payment Date, the Issuer will transmit to the Paying Agent an amount of funds sufficient to make interest payments on the outstanding principal amount of the Notes without Spanish withholding tax being assessed.

 

2. By 1:00 p.m. New York time on each Payment Date, the Paying Agent will, subject to receipt of funds, (i) pay the relevant DTC Participants (through DTC) for the benefit of the relevant Beneficial Owners the interest payment gross or net of Spanish withholding tax, as set forth in the final Report to Paying Agent and (ii) promptly return the remainder of the funds to the Issuer. The transmission of such amounts shall be contemporaneously confirmed by the Paying Agent to Acupay. The Issuer has authorized the Paying Agent to rely on the final Report to Paying Agent in order to make the specified payments on each Payment Date. Notwithstanding anything herein to the contrary, the Issuer may direct the Paying Agent to make interest payments on the Notes in a manner different from that set forth in the final Report to Paying Agent if the Issuer (i) determines that there are any inconsistencies with the Tax Certificates provided or any information set forth therein is, to the Issuer’s knowledge, inaccurate, and (ii) provides notice of such determination in writing to DTC, Acupay and the Paying Agent prior to 11:30 a.m. New York time on the relevant Payment Date along with a list of the affected DTC Participants showing the amounts to be paid to each such DTC Participant.

Article II

 

Quick Refund Procedures

 

 

 

a. Beginning at 9:00 a.m. New York time on the New York Business Day following each Payment Date until 5:00 p.m. New York time on the tenth calendar day of the month following the relevant Payment Date (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day) (the “ Quick Refund Deadline ”), a DTC Participant (i) which is a Qualified Institution (ii) holds Notes on behalf of Beneficial Owners entitled to exemption from Spanish withholding tax and (iii) which was paid net of Spanish withholding taxes due to a failure to comply with the Immediate Refund (aka “ Relief at Source ”) Procedure set forth above in Article I of this Annex A, may submit through the Acupay System new or amended Beneficial Owner Information with respect to such Beneficial Owners’ holdings.

 

b. After entry of Beneficial Owner Information into the Acupay System by such DTC Participant, the Acupay System will produce completed Tax Certificates. Such DTC Participant will then be required to (i) print out, (ii) review, (iii) sign and (iv) fax or send by email a PDF copy of the duly signed Tax Certificate directly to Acupay for receipt by Acupay no later than the Quick Refund Deadline. Any such Tax Certificates will be dated as of the relevant Payment Date. The original Tax Certificates must be sent to Acupay for receipt no later than the 15th calendar day of the month immediately following the relevant Payment Date.

 

c. Acupay will then conduct the Acupay Verification Procedures with respect to the Beneficial Owner Information submitted by the DTC Participants pursuant to paragraph A.1.a above of this Article II of Annex A by comparing such Beneficial Owner Information with the amount of Notes entitled to the receipt of income on the Payment Date as reported to Acupay by (i) the Paying Agent, (ii) DTC, as having been held in such DTC Participant’s account, and (iii) as established by DTC EDS/Tax Relief Elections. Until the Quick Refund Deadline, DTC Participants may revise or resubmit Beneficial Owner Information in order to cure any inconsistency identified.

 

d. Acupay will collect payment instructions from DTC Participants or their designees and, no later than 12:00 p.m. New York time on the third calendar day following the Quick Refund Deadline (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day), will forward PDF copies of the verified Tax Certificates to the Issuer and the payment instructions to the Issuer and the Paying Agent.

 

 

a. Beneficial Owners entitled to receive interest payments or OID income in respect of any Notes gross of any Spanish withholding taxes but who have been paid net of Spanish withholding taxes as a result of holding interests in such Notes through DTC Participants who are not Qualified Institutions will be entitled to utilize the Quick Refund Procedures set forth below.

 

b. Such Beneficial Owners may request from the Issuer the reimbursement of the amount withheld by providing Acupay, as an agent of the Issuer, with (i) documentation to confirm their securities entitlement in respect of the Notes on the relevant Payment Date (which documentation must include statements from (A) DTC and (B) the relevant DTC Participant setting forth such DTC Participant’s aggregate DTC position on the Payment Date as well as the portion of such position that was paid net and gross of Spanish withholding taxes, together with an accounting record of the amounts of such position and payments which were attributable to the Beneficial Owner) and (ii) a Government Tax Residency Certificate. Such Government Tax Residency Certificate (which will be generally valid for a period of one year after its date of issuance) together with the information regarding the securities entitlement in respect of the Notes must be submitted to Acupay, acting on the behalf of the Issuer, no later than the Quick Refund Deadline. Acupay will collect payment instructions from DTC Participants or their designees, as the case may be, and, no later than 12:00 p.m. New York time on the third calendar day following the Quick Refund Deadline (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day), will forward to the Issuer PDF copies and originals of the Government Tax Residency Certificates, and to the Issuer and the Paying Agent (x) the related payment instructions and (y) a reconciliation of such payment instructions to (1) the outstanding principal amount of Notes owned through each

DTC Participant as of the relevant Payment Date and (2) the outstanding principal amount of such Notes on which interest was paid net of Spanish withholding tax on the relevant Payment Date.

 

 

In the case of early redemption, Quick Refund Procedures substantially similar to those procedures set forth in this Article II of Annex A will be made available to Beneficial Owners. Detailed descriptions of such Quick Refund Procedures will be available upon request from Acupay in the event of such early redemption.

 

 

1. Upon receipt of the relevant Tax Certificates and Government Tax Residency Certificates together with related documentation (if any) from Acupay pursuant to the procedures in paragraph A. of this Article II, the Issuer will review such Government Tax Residency Certificates together with related documentation (if any) and confirm the related payments no later than the 18th calendar day of the month following the relevant Payment Date (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day).

 

2. On the 19th calendar day of the month following the relevant Payment Date (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day), the Issuer will make payments equal to the amounts initially withheld from DTC Participants complying with the Quick Refund Procedure to the Paying Agent and the Paying Agent shall, within one New York Business Day of such date, transfer such payments to DTC Participants directly for the benefit of Beneficial Owners.

 

Capitalized terms used but not otherwise defined in this Annex B shall have the meaning ascribed to them elsewhere in this Prospectus Supplement.

 

ARTICLE I

 

Immediate Refund (aka “Relief at Source”) Procedure (procedure that complies with Spanish Law 13/1985
(as amended by Laws 19/2003, 23/2005 and 4/2008), Royal Decree 1065/2007 and Section 59.s) of the
Corporate Income Tax Regulation approved by Royal Decree 1777/2004 of July 30, 2004

 

 

1. Twenty-three Business Days prior to each Interest Payment Date the Issuer shall instruct the Paying Agent and the Paying Agent shall (a) provide Euroclear and JP Morgan Chase Bank, N.A., its specialized depositary (“ Specialized Depositary ”), with an announcement which will form the basis for a Euroclear “ DACE Notice ” regarding the related interest payment and tax relief entitlement information and (b) request Euroclear to send such DACE Notice to its participants, notifying them of the requirements described below in this Article I of this Annex B.

 

2. At least 20 calendar days prior to each Interest Payment Date, Euroclear will release a DACE Notice to its participants with positions in the Notes notifying them of the requirements described below in this Article I of this Annex B.

 

3. Beginning at 6:00 a.m. CDET/CET time as of the first New York Business Day following the issuance of the DACE Notice and until 6:45 p.m. CDET/CET time on the New York Business Day preceding each date on which interest will be paid (each such date, a “ Payment Date ”) (the “ Routine Certification Deadline ”), each Euroclear participant that is a Qualified Institution must enter the Beneficial Owner identity and country of tax residence information required by the Spanish tax law and set forth in Article I of Annex C in respect of the portion of its position in the Notes that is exempt from Spanish withholding tax (the “ Beneficial Owner Information ”) directly into the system established and maintained for that purpose (the “ Acupay System ”) by Acupay System LLC (“ Acupay ”). Each Euroclear participant must ensure that Beneficial Owner Information is accurate and that it is maintained in line with its income entitlement determined based on its holdings at the close of business in New York on the New York Business Day preceding the Payment Date. All changes in beneficial ownership must be reflected, including those changes (via Acupay), which do not impact the Euroclear participant’s overall position at Euroclear or the portion of that position at Euroclear as to which no Spanish withholding tax is required. Beginning on the 20th New York Business Day prior to the Payment Date Euroclear will provide to Acupay via the Acupay System confirmations of securities entitlements for Euroclear participants. Such confirmations will be kept up to date and reflective of any changes in such securities entitlements that occur through 3:45 p.m. CDET/CET time on the Payment Date.

 

 

1. After entry of Beneficial Owner Information into the Acupay System by a Euroclear participant, the Acupay System will produce completed forms of Exhibit I, Exhibit II or Exhibit III to Annex C (as required by the Spanish law) (the “ Interest Payment Tax Certificates ”), which shall summarize the Beneficial Owner Information introduced by such Euroclear participant into the Acupay System. When any Interest Payment Date is also the Maturity Date or a redemption date for the Notes, and if the Notes were initially issued below par with an Original Issue Discount (“ OID ”), a separate set of Tax Certificates (the “ OID Tax Certificates ” and together with the Interest Payment Tax Certificates, the “ Tax Certificates ”) will be generated by the Acupay System reporting income resulting from the payment of OID at maturity or such earlier redemption date. Such Euroclear participant will then be required to (i) print out, (ii) review, (iii) sign and (iv) fax or send by email a PDF copy of the duly signed Tax Certificates to Acupay and Euroclear for receipt by the Routine Certification Deadline. The Euroclear participants must also send the original signed Tax Certificates to Acupay for receipt no later than the 15th calendar

day of the first month following the relevant Payment Date. All Tax Certificates will be dated as of the Payment Date.

 

NOTE:  A Euroclear participant that obtains favorable tax treatment through the Immediate Refund (aka “Relief at Source”) Procedure and fails to submit to Acupay the original Tax Certificates as described above may be prohibited by the Issuer from using the procedure to obtain favorable tax treatment for future payments. In such event, the Euroclear participant will receive the interest payments on its entire position net of the applicable withholding tax (currently 19%) and relief will need to be obtained directly from the Spanish tax authorities by following the direct refund procedure established by Spanish tax law.

 

 

1. In addition to its other duties and obligations set forth herein, Acupay will be responsible for the following tasks (collectively, the “ Acupay Verification Procedures ”):

 

(a) comparing the Beneficial Owner Information and Tax Certificates provided in respect of each Euroclear participant’s position, as confirmed by Euroclear to Acupay, with the EDS/Tax Relief Elections provided by Euroclear’s Specialized Depositary in order to determine whether any discrepancies exist between such information, the corresponding EDS/Tax Relief Elections and the Euroclear participant’s position in the Notes at Euroclear;

 

(b) collecting and collating all Tax Certificates received from the Euroclear participants;

 

(c) reviewing the Beneficial Owner Information and the Tax Certificates using appropriate methodology in order to determine whether the requisite fields of Beneficial Owner Information have been supplied and that such fields of information are responsive to the requirements of such Tax Certificates in order to receive payments without Spanish withholding tax being assessed;

 

(d) liaising with the relevant Euroclear participants in order to request that such Euroclear participants:

 

(i) complete any missing or correct any erroneous Beneficial Owner Information or Tax Certificates identified pursuant to the procedures set forth in (a), (c) and (d) above;

 

(ii) correct any erroneous EDS/Tax Relief Election identified pursuant to the procedures set forth in (a) and (c) above; and

 

(iii) revise any Tax Certificates identified pursuant to the procedures set forth in (a) and (c) above as containing incomplete or inaccurate information.

 

 

1. Euroclear will direct its Specialized Depositary to (a) transmit to Acupay via the Acupay System periodic position confirmations (of Euroclear’s aggregate settled position of the Notes held through the Specialized Depositary’s account at DTC). Therefore, the Specialized Depositary will transmit such reports by (i) 7:00 p.m. CDET/CET time on the tenth New York Business Day prior to the Payment Date (reporting Euroclear’s aggregate settled position as of 6:00 p.m. on such date); (ii) 7:00 p.m. CDET/CET time on the second New York Business Day prior to the Payment Date (reporting Euroclear’s aggregate settled position as of 6:00 p.m. CDET/CET time on such date) and (iii) 6:30 p.m. CDET/CET time on the New York Business Day preceding the Payment Date (reporting Euroclear’s aggregate settled position as of 6:00 p.m. CDET/CET time on such date), and (b) make elections via EDS/Tax Relief Service (as defined in Annex A) relaying the aggregate position of Euroclear participants for which tax relief has been requested through the Acupay System. Such EDS/Tax Relief Elections must be made prior to 3:45 p.m. CDET/CET time on the Payment Date with respect to Beneficial Owner Information received prior to the Routine Certification Deadline or as agreed in accordance with paragraphs D.3 and D.4 of this Article I of this Annex B below.

 

2. Beginning on the first New York Business Day following the issuance of the DACE Notice and continuing through to the Routine Certification Deadline, Acupay will utilize the Acupay Verification Procedures to attempt to identify any problems that may exist with Tax Certificates that have been received via the Acupay System and will seek to notify Euroclear and any affected Euroclear participants of any inconsistencies among these data, or erroneous or incomplete information provided with respect to such Euroclear participant’s position. In case inconsistencies (including the failure to fax or send PDF copies of new or amended Tax Certificates) are not

corrected by the Routine Certification Deadline, the entire coupon payment for any affected position will be made net of Spanish withholding tax. Should, at that moment, the situation arise whereby the sum of the positions certified through the Acupay System by a Euroclear participant exceeds the total relevant positions held in that participant’s account at Euroclear, the entirety of such participant’s position held at Euroclear will be paid net of Spanish withholding taxes.

 

3. At the Routine Certification Deadline, the Acupay System will be closed to Euroclear participants, unless the Specialized Depositary, Euroclear and Acupay jointly agree to allow Euroclear participants access to the Acupay System for exceptional late cancellations or late submissions of Tax Certificates. At 7:00 p.m. CDET/CET on the New York Business Day preceding the Payment Date, Acupay will deliver to Euroclear the “ Prior Night Coupon Planning Report ”. This report will indicate for each Note position held by Euroclear participants, the portion of such position which is planned for payment gross of Spanish withholding tax and the portion of such position which is planned for payment net of Spanish withholding tax. The Prior Night Coupon Planning Report will also contain the calculated interest payment which would (based on the above conditions) be credited on the Payment Date (i) to each Euroclear participant, and (ii) to Euroclear in aggregate.

 

4. Beginning at 9:00 a.m. New York time on the relevant Payment Date Acupay will perform a final review of each Euroclear participant’s Beneficial Owner Information, Euroclear positions and changes in Euroclear’s aggregate position since the Routine Certification Deadline, using the Acupay Verification Procedures. Based on this final review, Acupay will seek to notify any affected Euroclear participant and Euroclear of any inconsistencies among these data, or erroneous or incomplete information provided with respect to such Euroclear participant’s position and may (but only as described above in paragraph D.3 of this Article I of this Annex B) accept revised Tax Certificates from Euroclear participants as necessary to correct such inconsistencies. No changes to Beneficial Owner Information or Tax Certificates should occur. However, in case of incomplete Beneficial Owner Information, errors in Tax Certificates, or the need to input new certificates after the Routine Certification Deadline the Specialized Depositary, Euroclear and Acupay may jointly agree to allow Euroclear participants with access to the Acupay System on a Payment Date for exceptional late (i) cancellations of previously submitted Tax Certificates and/or (ii) submissions of new Tax Certificates. Such exceptional operations must be completed prior to 2:45 p.m. CDET/CET time on the relevant Payment Date and must be accompanied, as necessary, by appropriate (x) position confirmations by the Specialized Depositary, (y) elections by the Specialized Depositary in EDS/Tax Relief Service as instructed by Euroclear, and (z) position confirmations by Euroclear. In case inconsistencies (including the failure to fax or send PDF copies of new or amended Tax Certificates) are not corrected by 3:45 p.m. CDET/CET time on the relevant Payment Date, the entire coupon payment for any affected position will be made net of Spanish withholding tax. Should, at that moment, the situation arise whereby the sum of the positions certified through the Acupay System by a Euroclear participant exceeds the total relevant positions held in that participant’s account at Euroclear, the entirety of such participant’s position held at Euroclear will be paid net of Spanish withholding taxes. Should any additional tax relief be necessary at that moment in addition to tax relief granted during this Immediate Refund (aka “ Relief at Source ”) Procedure, requests for such additional relief may be made during the Quick Refund Procedures, as described below in Article II of this Annex B.

 

5. At 4:15 p.m. CDET/CET time on a Payment Date, Acupay will deliver to Euroclear a Final Coupon Payment Report. This report will contain, for the Note positions held by Euroclear participants (which are entitled to receive payment on the Payment Date), the portion of each such position which should be paid gross of Spanish withholding tax and the portion of each such position which should be paid net of Spanish withholding tax. The Final Coupon Payment Report also contains the calculated interest payments which should (based on the above conditions) be credited on the Payment Date (i) to each such Euroclear participant, and (ii) to Euroclear in aggregate (from its Specialized Depositary).

 

 

1. By 5:00 p.m. CDET/CET time on a Payment Date, Acupay will release to the Issuer PDF copies of all Tax Certificates which have been properly verified and to the Issuer and the Paying Agent the final Report to the Paying Agent (which will include the results of a calculation of the portion of the positions held via Euroclear which should be paid gross of Spanish withholding tax in accordance with the Tax Certifications received by Acupay and submitted to the Issuer). The Issuer has authorized the Paying Agent to rely on the final Report to the Paying Agent in order to make the specified payments on each Payment Date. However, the Issuer may direct the Paying Agent to

make interest payments on the Notes in a manner different from that set forth in the final Report to the Paying Agent if the Issuer determines that there are any inconsistencies with the Tax Certificates provided or any information set forth therein that is, to the Issuer’s knowledge, inaccurate and provides notice of such determination in writing to the Paying Agent prior to 5:30 p.m. CDET/CET time on the relevant Payment Date.

 

2. Acupay will forward original paper Tax Certificates it receives for receipt by the Issuer no later than the 18th calendar day of the month immediately following each Payment Date. Acupay shall maintain records of all Tax Certificates (and other information received through the Acupay System) for the longer of (x) five years from the date of delivery thereof or (y) five years following the final maturity or redemption of the Notes, and shall, during such period, make copies of such records available to the Issuer at all reasonable times upon request. In the event that the Issuer notifies Acupay in writing that it is the subject of a tax audit, Acupay shall maintain such duplicate backup copies until the relevant statute of limitations applicable to any tax year subject to audit expires.

 

3. By 7:00 p.m. CDET/CET time on each Payment Date the Paying Agent will pay DTC the aggregate interest to be distributed on the Notes on the Payment Date. Such amount will include all amounts referred to in the final Report to the Paying Agent (which shall include all amounts embraced in the Final Coupon Payment Report).

 

4. On each relevant Payment Date, Euroclear will credit interest payments to its participants in accordance with the Final Coupon Payment Report.

 

ARTICLE II

 

Quick Refund Procedure

 

 

 

(a) Beginning at 6:00 a.m. CDET/CET time on the Business Day following each Payment Date until 5:00 p.m. CDET/CET time on the tenth calendar day of the month following the relevant Payment Date (or if such day is not a Business Day, the first Business Day immediately preceding such day) (the “ Quick Refund Deadline ”), a Euroclear participant which (i) is a Qualified Institution, (ii) held Notes entitled to the receipt of income on the Payment Date on behalf of Beneficial Owners entitled to exemption from Spanish withholding tax and (iii) which was paid net of Spanish withholding tax on any portion of such exempt holdings during the procedures set forth in Article I of this Annex B above, may submit through the Acupay System new or amended Beneficial Owner Information with respect to such Beneficial Owners’ holdings.

 

(b) After entry of Beneficial Owner Information into the Acupay System by such Euroclear participant, the Acupay System will produce completed Tax Certificates. Such Euroclear participant will then be required to (i) print out, (ii) review, (iii) sign and (iv) fax or send by email a PDF copy of the duly signed Tax Certificates directly to Euroclear/Acupay for receipt no later than the Quick Refund Deadline. Such Tax Certificates will be dated as of the relevant Payment Date. The Euroclear participants must also send the original Tax Certificates to Acupay for receipt no later than the 15th calendar day of the month following the relevant Payment Date.

 

(c) Acupay will then conduct the Acupay Verification Procedures with respect to the Beneficial Owner Information submitted by the Euroclear participants pursuant to this Article II by comparing such Beneficial Owner Information with the amount of Notes entitled to the receipt of income on the Payment Date as reported to Acupay by (i) Euroclear, as having been held in such Euroclear participant’s account, (ii) the Specialized Depositary as having been held on behalf of Euroclear, and (iii) DTC as having been held on behalf of the Specialized Depositary. Until the Quick Refund Deadline, Euroclear participants may revise or resubmit Beneficial Owner Information in order to cure any inconsistency detected.

 

 

(a) Beneficial Owners entitled to receive interest payments or OID income in respect of the Notes gross of any Spanish withholding taxes but who have been paid net of Spanish withholding taxes as a result of holding interests in the Notes through Euroclear participants who are not Qualified Institutions will be entitled to utilize the following Quick Refund Procedure.

(b) Such Beneficial Owners may request from the Issuer the reimbursement of the amount withheld by providing Acupay, as an agent of the Issuer, with documentation to confirm their securities entitlement in respect of the Notes. Such documentation must include statements from the relevant Euroclear participant setting forth (x) such Euroclear participant’s aggregate Note entitlement held through Euroclear; (y) the portion of such entitlement that was paid net and gross of Spanish withholding taxes; together with (z) an accounting record of the portion of such entitlement and payments that were attributable to the Beneficial Owner. Such Beneficial Owners must also procure a Government Tax Residence Certificate (which will be generally valid for a period of one year after its date of issuance) which together with the above-referenced information regarding the Note entitlements must be submitted to Acupay on behalf of the Issuer no later than the Quick Refund Deadline. The Euroclear participants must also send the original Government Tax Residence Certificates to Acupay for receipt no later than the 15th calendar day of the month following the relevant Payment Date.

 

3. Early Redemption of the Notes

 

In the case of early redemption, Quick Refund Procedures substantially similar to those procedures set forth in this Article II of Annex B will be made available to Beneficial Owners. Detailed descriptions of such Quick Refund Procedures will be available upon request from Acupay in the event of such early redemption.

 

 

1. Upon receipt of the relevant Tax Certificates and Government Tax Residence Certificates together with related documentation (if any) from Acupay pursuant to the procedures in paragraph A of this Article II, the Issuer will review such certificates together with related documentation (if any) and confirm the approved certification requests and related payment instructions no later than the 18th calendar day of the month following the relevant Payment Date (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day). Acupay will forward original paper tax certificates it receives for receipt by the Issuer no later than the 18th calendar day of the first month following each Payment Date.

 

2. On the 19th calendar day of the month following the relevant Payment Date (or if such day is not a New York Business Day, the first New York Business Day immediately preceding such day), the Issuer will instruct the Paying Agent to make payments of the amounts arising out of these Quick Refund Procedures, and within one New York Business Day of such date the Paying Agent will transfer such payments to Euroclear for further credit to the respective Euroclear participants for the benefit of the relevant Beneficial Owners.

 

Capitalized terms used but not otherwise defined in this Annex C shall have the meaning ascribed to them elsewhere in this Prospectus Supplement.

 

ARTICLE I

 

Documentation Required by Spanish Tax Law Pursuant to the Relief at Source Procedure

 

1. If the holder of a Note is not resident in Spain for tax purposes and acts for its own account and is a Qualified Institution, the entity in question must certify its name and tax residency substantially in the manner provided in Exhibit I to this Annex C.

 

2. In the case of transactions in which a Qualified Institution which is a holder of Notes acts as intermediary, the entity in question must, in accordance with the information contained in its own records, certify the name and country of tax residency of each Beneficial Owner not resident in Spain for tax purposes as of the date on which interest will be paid (each such date, a “ Payment Date ”) substantially in the form provided in Exhibit II to this Annex C.

 

3. In the case of transactions which are channeled through a securities clearing and deposit entity recognized for these purposes by Spanish law or by the law of another OECD member country, the entity in question (i.e., the clearing system participant) must, in accordance with the information contained in its own records, certify the name and country of tax residency of each Beneficial Owner not resident in Spain for tax purposes as of the Payment Date substantially in the form provided in Exhibit II to this Annex C.

 

4. If the Beneficial Owner is resident in Spain for tax purposes and is subject to the Spanish Corporate Income Tax, the entities listed in paragraphs 2 or 3 above (such as DTC participants or Euroclear participants which are Qualified Institutions) must submit a certification specifying the name, address, Tax Identification Number, the CUSIP or ISIN code of the Notes, the beneficial interest in the principal amount of Notes held at each Payment Date, gross income and amount withheld, substantially in the form set out in Exhibit III to this Annex C.

 

5. In the case of Beneficial Owners who do not hold their interests in the Notes through Qualified Institutions or whose holdings are not channeled through a securities clearing and deposit entity recognized for these purposes by Spanish law or by the law of another OECD member country, the Beneficial Owner must submit (i) proof of beneficial ownership and (ii) a Government Tax Residency Certificate.

 

ARTICLE II

 

Direct Refund from Spanish Tax Authorities Procedure

 

1. Beneficial Owners entitled to exemption from Spanish withholding tax who have not timely followed either the Immediate Refund (aka “ Relief at Source ”) Procedure set forth in Article I of Annex A or Article I of Annex B to this Prospectus Supplement or the “Quick Refund Procedures” set forth in Article II of Annex A or Article II of Annex B to this Prospectus Supplement, and therefore have been subject to Spanish withholding tax, may request a full refund of the amount that has been withheld directly from the Spanish tax authorities.

 

2. Beneficial Owners have up to the time period allowed pursuant to Spanish law (currently, a maximum of four years as of the day when the term for the file and pay in the corresponding withholding tax return ends) to claim the amount withheld from the Spanish Treasury by filing with the Spanish tax authorities, among other documents (i) the relevant Spanish tax form, (ii) proof of beneficial ownership and (iii) a Government Tax Residency Certificate (from the IRS in the case of U.S. resident Beneficial Owners).

EXHIBIT I

 

[English translation provided for informational purposes only]

 

Modelo de certificación en inversiones por cuenta propia

Form of Certificate for Own Account Investments

 

(nombre) (name)

 

(domicilio) (address)

 

(NIF) (tax identification number)

 

(en calidad de), en nombre y representación de la Entidad abajo señalada a los efectos previstos en el artículo 44.2.a) del Real Decreto 1065/2007,

 

(function), in the name and on behalf of the Entity indicated below, for the purposes of article 44.2.a) of Royal Decree 1065/2007,

 

CERTIFICO:

I CERTIFY:

 

1. Que el nombre o razón social de la Entidad que represento es:

that the name of the Entity I represent is:

 

2. Que su residencia fiscal es la siguiente:

that its residence for tax purposes is:

 

3. Que la Entidad que represento está inscrita en el Registro de

that the institution I represent is recorded in the Register of
( país, estado, ciudad ), con el número

(country, state, city), under number

 

4. Que la Entidad que represento está sometida a la supervisión de (Órgano supervisor)

that the institution I represent is supervised by (Supervision body)

 

en virtud de (normativa que lo regula)

under (governing rules).

 

Todo ello en relación con:

All the above in relation to:

 

Identificación de los valores poseidos por cuenta propia

Identification of securities held on own account:

 

Importe de los rendimientos

Amount of income

 

Lo que certifico en           a           de           de 20

I certify the above in [location] on the [day] of [month] of [year]

 

EXHIBIT II

 

[English translation provided for informational purposes only]

 

Modelo de certificación en inversiones por cuenta ajena

Form of Certificate for Third Party Investments

 

(nombre) (name)

 

(domicilio) (address)

 

(NIF) (tax identification number)

 

(en calidad de), en nombre y representación de la Entidad abajo señalada a los efectos previstos en el artículo 44.2.b) y c) del Real Decreto 1065/2007,

 

(function), in the name and on behalf of the Entity indicated below, for the purposes of article 44.2.b) and c) of Royal Decree 1065/2007,

 

CERTIFICO:

 

I CERTIFY:

 

1. Que el nombre o razón social de la Entidad que represento es:

that the name of the Entity I represent is:

 

2. Que su residencia fiscal es la siguiente:

that its residence for tax purposes is:

 

3. Que la Entidad que represento está inscrita en el Registro de

that the institution I represent is recorded in the Register of

(país, estado, ciudad), con el número

(country, state, city), under number

 

4. Que la Entidad que represento está sometida a la supervisión de (Órgano supervisor)

that the institution I represent is supervised by (Supervision body)

en virtud de (normativa que lo regula)

under (governing rules).

 

5. Que, de acuerdo con los Registros de la Entidad que represento, la relación de titulares adjunta a la presente certificación, comprensiva del nombre de cada uno de los titulares no residentes, su país de residencia y el importe de los correspondientes rendimientos, es exacta, y no incluye personas o entidades residentes en España o en los países o territorios que tienen en España la consideración de paraíso fiscal de acuerdo con las normas reglamentarias en vigor . ¹

 

That, according to the records of the Entity I represent, the list of Beneficial Owners attached hereto, including the names of all the non-Spanish resident Beneficial Owners, their country of residence and the relevant income is accurate, and does not include person(s) or institution(s) resident either in Spain or in tax haven countries or territories as defined under Spanish applicable regulations . ²

 

 

¹  Derogado en virtud de lo previsto en el artículo 4 y la Disposición Derogatoria Única del Real Decreto — ley 2/2008, de 21 de abril, de medidas de impulso a la actividad económica.

²  Abolished by virtue of article 4 and Repealing Disposition of Royal Decree Law 2/2008 of April 21 on measures to promote economic activity.

Lo que certifico en           a           de           de 20

I certify the above in [location] on the [day] of [month] of [year]

 

RELACIÓN ADJUNTA A CUMPLIMENTAR:

TO BE ATTACHED:

 

Identificación de los valores:

Identification of the securities

 

Listado de titulares:

List of Beneficial Owners:

 

Nombre/País de residencia/Importe de los rendimientos

Name/Country of residence/Amount of income

EXHIBIT III

 

[English translation provided for informational purposes only]

 

Modelo de certificación para hacer efectiva la exclusión de retención a los sujetos pasivos del Impuesto sobre Sociedades y a los establecimientos permanentes sujetos pasivos del Impuesto sobre la Renta de no Residentes

 

Form of Certificate for application of the exemption from withholding to Spanish Corporate Income Tax taxpayers and to permanent establishments of Non-Resident Income Tax taxpayers

 

(nombre) (name)

 

(domicilio) (address)

 

(NIF) (tax identification number)

 

(en calidad de), en nombre y representación de la Entidad abajo señalada a los efectos previstos en el artículo 59.s) del Real Decreto 1777/2004,

 

(function), in the name and on behalf of the Entity indicated below, for the purposes of article 59.s) of Royal Decree 1777/2004,

 

CERTIFICO:

 

I CERTIFY:

 

1. Que el nombre o razón social de la Entidad que represento es:

that the name of the Entity I represent is:

 

2. Que su residencia fiscal es la siguiente:

that its residence for tax purposes is:

 

3. Que la Entidad que represento está inscrita en el Registro de

that the institution I represent is recorded in the Register of

 

( país, estado, ciudad ), con el número

(country, state, city), under number

 

4. Que la Entidad que represento está sometida a la supervisión de (Órgano supervisor)

that the institution I represent is supervised by (Supervision body)

 

en virtud de ( normativa que lo regula )

under (governing rules).

 

5. Que, a través de la Entidad que represento, los titulares incluidos en la relación adjunta, sujetos pasivos del Impuesto sobre Sociedades y establecimientos permanentes en España de sujetos pasivos del Impuesto sobre la Renta de no Residentes, son perceptores de los rendimientos indicados.

That, through the Entity I represent, the list of Beneficial Owners hereby attached, are Spanish Corporate Income Tax taxpayers and permanent establishments in Spain of Non-Resident Income Tax taxpayers, and are recipients of the referred income.

 

6. Que la Entidad que represento conserva, a disposición del emisor, fotocopia de la tarjeta acreditativa del número de identificación fiscal de los titulares incluidos en la relación.

That the Entity I represent keeps, at the disposal of the Issuer, a photocopy of the card evidencing the Fiscal Identification Number of the Beneficial Owners included in the attached list.

Lo que certifico en           a           de           de 20

I certify the above in [location] on the [day] of [month] of [year]

 

RELACIÓN ADJUNTA:

TO BE ATTACHED:

 

Identificación de los valores:

Identification of the securities

 

Razón social/Domicilio/Número de identificación fiscal/Número de valores/Rendimientos brutos/ Retención al 19%

Name/Domicile/Fiscal Identification Number/Number of securities/Gross income/Amount withheld at 19%.

 

PROSPECTUS

 

Banco Bilbao Vizcaya Argentaria, S.A.

 

Ordinary Shares

 

American Depositary Shares, each representing one Ordinary Share

Rights to Subscribe for Ordinary Shares

BBVA International Preferred, S.A. Unipersonal

 

Preferred Securities

Fully, irrevocably and unconditionally guaranteed, on a subordinated basis,

as described in this prospectus, by Banco Bilbao Vizcaya Argentaria, S.A.

BBVA U.S. Senior, S.A. Unipersonal

 

Senior Debt Securities

Fully, irrevocably and unconditionally guaranteed, on a senior basis,

as described in this prospectus, by Banco Bilbao Vizcaya Argentaria, S.A.

 

BBVA Subordinated Capital, S.A. Unipersonal

 

Subordinated Debt Securities

Fully, irrevocably and unconditionally guaranteed, on a subordinated basis,

as described in this prospectus, by Banco Bilbao Vizcaya Argentaria, S.A.

 

Banco Bilbao Vizcaya Argentaria, S.A. may offer from time to time ordinary shares, American Depositary Shares (each representing one ordinary share, commonly referred to as ADSs) or rights to subscribe for ordinary shares (including in the form of ADSs), in one or more offerings.

 

BBVA International Preferred, S.A. Unipersonal may offer from time to time preferred securities in one or more offerings. The preferred securities will be fully, irrevocably and unconditionally guaranteed on a subordinated basis, as described in this prospectus, by Banco Bilbao Vizcaya Argentaria, S.A.

 

BBVA U.S. Senior, S.A. Unipersonal may offer from time to time senior debt securities in one or more offerings. The senior debt securities will be fully, irrevocably and unconditionally guaranteed on a senior basis, as described in this prospectus, by Banco Bilbao Vizcaya Argentaria, S.A.

 

BBVA Subordinated Capital, S.A. Unipersonal may offer from time to time subordinated debt securities in one or more offerings. The subordinated debt securities will be fully, irrevocably and unconditionally guaranteed on a subordinated basis, as described in this prospectus, by Banco Bilbao Vizcaya Argentaria, S.A.

 

This prospectus describes the general terms of these securities and the general manner in which we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal and BBVA Subordinated Capital, S.A. Unipersonal will offer these securities. The specific terms of any securities we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal or BBVA Subordinated Capital, S.A. Unipersonal offer will be included in a supplement to this prospectus. The applicable prospectus supplement will also describe the specific manner in which we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal or BBVA Subordinated Capital, S.A. Unipersonal will offer the securities. Such supplements may also add to, update, supplement or clarify information contained in the prospectus. We will not use this prospectus to issue any securities unless it is attached to a prospectus supplement.

 

We may offer and sell these securities to or through one or more underwriters, dealers and agents, or directly to purchasers, on a delayed or continuous basis. We will indicate the names of any underwriters in the applicable prospectus supplement.

 

Our ordinary shares are listed on each of the Madrid, Barcelona, Bilbao and Valencia stock exchanges (the “Spanish Stock Exchanges”) and quoted on the Automated Quotation System of the Spanish Stock Exchanges (the “Automated Quotation System”) as well as quoted on SEAQ International in London. Our ordinary shares are also listed on the London and Mexico stock exchanges. Our ordinary shares in the form of ADSs are listed on the New York Stock Exchange and are also traded on the Lima (Peru) Stock Exchange by virtue of an exchange agreement entered into between these two exchanges. If we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal or BBVA Subordinated Capital, S.A. Unipersonal decide to list any of the other securities on a national securities exchange upon issuance, the applicable prospectus supplement to this prospectus will identify the exchange and the date when we expect trading to begin.

 

Investing in our, BBVA International Preferred, S.A. Unipersonal’s, BBVA U.S. Senior, S.A. Unipersonal’s and BBVA Subordinated Capital, S.A. Unipersonal’s securities involves risks. See “Risk Factors” beginning on page 2.

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The securities are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency of the Kingdom of Spain, the United States or any other jurisdiction.

 

The date of this prospectus is June 28, 2010.

 

You should rely only on the information contained in or incorporated by reference in this prospectus. Neither we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal, nor BBVA Subordinated Capital, S.A. Unipersonal, nor any underwriter has authorized anyone to provide you with different information. Neither we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal, BBVA Subordinated Capital, S.A. Unipersonal, nor any underwriter is making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.

 

 

TABLE OF CONTENTS

 

 

 

 

This prospectus is part of registration statements that we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal and BBVA Subordinated Capital, S.A. Unipersonal filed with the Securities and Exchange Commission (the “SEC”), utilizing a “shelf” registration process. Under this shelf registration process, we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal and/or BBVA Subordinated Capital, S.A. Unipersonal may sell any combination of the securities described in this prospectus in one or more offerings.

 

This prospectus provides you with a general description of the securities we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal, and BBVA Subordinated Capital, S.A. Unipersonal, may offer. Each time we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal, or BBVA Subordinated Capital, S.A. Unipersonal, sell securities, we, BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal, and/or BBVA Subordinated Capital, S.A. Unipersonal, as the case may be, will provide a prospectus supplement containing specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. If a prospectus supplement is inconsistent with this prospectus, the terms of the prospectus supplement will control. Therefore, the statements made in this prospectus may not be the terms that apply to the securities you purchase. You should read both this prospectus and any applicable prospectus supplement together with additional information described under the heading “Incorporation of Documents by Reference.”

 

In this prospectus, the terms “we”, “us”, “our”, “Bank”, “BBVA”, and “Guarantor” refer to Banco Bilbao Vizcaya Argentaria, S.A., unless otherwise indicated or the context otherwise requires. “BBVA Group” refers to Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

 

The terms “subsidiary issuer”, “subsidiary issuers”, “issuer” and “issuers” refer to BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal and BBVA Subordinated Capital, S.A. Unipersonal or to any one of them. Banco Bilbao Vizcaya Argentaria, S.A. has guaranteed securities previously issued by BBVA International Preferred, S.A. Unipersonal, BBVA U.S. Senior, S.A. Unipersonal and BBVA Subordinated Capital, S.A. Unipersonal and will fully, irrevocably and unconditionally guarantee any securities issued by them pursuant to this prospectus.

 

The term “BBVA International Preferred” refers to BBVA International Preferred, S.A. Unipersonal; the term “BBVA U.S. Senior” refers to BBVA U.S. Senior, S.A. Unipersonal; and the term “BBVA Subordinated Capital” refers to BBVA Subordinated Capital, S.A. Unipersonal. Each of BBVA International Preferred, BBVA U.S. Senior and BBVA Subordinated Capital is also referred to as a “subsidiary issuer” and they are collectively referred to as “subsidiary issuers”.

 

All references to the “shares” are to the ordinary shares of BBVA, par value €0.49 per share; all references to the “ADSs” are to the American Depositary Shares of BBVA, each representing one share; all references to the “ADRs” are to the American Depositary Receipts of BBVA, each representing one ADS; all references to the “rights” are to the rights to subscribe for our ordinary shares (including in the form of ADSs); all references to the “preferred securities” are to the preferred securities of BBVA International Preferred; all references to the “senior notes” are to the senior debt securities of BBVA U.S. Senior; and all reference to the “subordinated notes” are to the subordinated debt securities of BBVA Subordinated Capital. References to the “notes” are to the senior notes and the subordinated notes, collectively. All references to a “preferred security guarantee” are to a guarantee by the Guarantor of a preferred security; all references to a “senior guarantee” are to a guarantee by the Guarantor of a senior note; all references to a “subordinated guarantee” are to a guarantee by the Guarantor of a subordinated note; and all references to the “notes guarantees” are to the senior guarantees and the subordinated guarantees, collectively. All references to the “securities” are to the shares, rights, ADSs, the preferred securities, the notes, the preferred securities guarantee and the notes guarantees, collectively.

 

All references to “Spain” refer to the Kingdom of Spain.

 

In this prospectus and any prospectus supplement, “$”, “US$”, “U.S. dollars” and “dollars” refer to United States dollars; “€” and “euro” refer to euro; “£” refers to pounds sterling and “¥” refers to Japanese yen.

 

Ongoing Reporting

 

We file annual reports on Form 20-F with, and furnish other reports and information on Form 6-K to, the SEC. You may read and copy any document we file with, or furnish to, the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at +1-800-SEC-0330 for more information about the SEC’s Public Reference Room. The SEC also maintains an Internet site at http://www.sec.gov that contains in electronic form the reports and other information that we have electronically filed with, or furnished to, the SEC. You may also read this material at the offices of the New York Stock Exchange, Inc. at 20 Broad Street, New York, New York 10005. In addition, the securities may specify that certain documents are available for inspection at the office of the trustee, a paying agent or the ADR depositary, as the case may be.

INCORPORATION OF DOCUMENTS BY REFERENCE

 

The rules of the SEC allow us and the subsidiary issuers to “incorporate by reference” the information we file with, or furnish to, the SEC, which means:

 

 

We and the subsidiary issuers incorporate by reference the following documents:

 

 

You may request, at no cost to you, a copy of these documents (other than exhibits not specifically incorporated by reference) by writing or telephoning us at the following address or telephone number:

 

Banco Bilbao Vizcaya Argentaria, S.A.
New York Branch
1345 Avenue of the Americas, 45th Floor
New York, New York 10105
Attention: Investor Relations
+1-212-728-1660

 

Some of the statements included in this prospectus are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We also may make forward-looking statements in our other documents filed with, or furnished to, the SEC that are incorporated by reference into this prospectus. Forward-looking statements can be identified by the use of forward-looking terminology such as “believe”, “expect”, “estimate”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “target”, “goal”, “objective”, or by the use of similar expressions or variations on such expressions, or by the discussion of strategy or objectives. Forward-looking statements are based on current plans, estimates and projections, and are subject to inherent risks, uncertainties and other factors that could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements.

 

In particular, this prospectus and certain documents incorporated by reference into this prospectus include forward-looking statements relating but not limited to management objectives, the implementation of our strategic initiatives, trends in results of operations, margins, costs, return on equity and risk management, including our potential exposure to various types of risk such as market risk, interest rate risk, currency risk and equity risk. For example, certain of the market risk disclosures are dependent on choices about key model characteristics, assumptions and estimates, and are subject to various limitations. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future.

 

We have identified some of the risks inherent in forward-looking statements in “Item 3. Key Information — Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk” in our 2009 Form 20-F. Other factors could also adversely affect our and the subsidiary issuers’ results or the accuracy of forward-looking statements in this prospectus, and you should not consider the factors discussed here or in the Items in our 2009 Form 20-F listed above to be a complete set of all potential risks or uncertainties. Other important factors that could cause actual results to differ materially from those in forward-looking statements include, among others:

 

 

The forward-looking statements made in this prospectus speak only as of the date of this prospectus. Neither we nor any of the subsidiary issuers intend to publicly update or revise these forward-looking statements to reflect events or circumstances after the date of this prospectus, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events, and neither we nor any of the subsidiary issuers assume any responsibility to do so. You should, however, consult any further disclosures of a forward-looking nature we may make in our other documents filed with, or furnished to, the SEC that are incorporated by reference into this prospectus.

 

You should carefully consider the risk factors contained in the applicable prospectus supplement and the documents incorporated by reference into this prospectus, including, but not limited to, those risks factors in “Item 3. Key Information — Risk Factors” in our 2009 Form 20-F when deciding whether to invest in the securities being offered pursuant to this prospectus. In addition, investing in the securities involves risks. Any of the risks described in the applicable prospectus supplement or in our 2009 Form 20-F, if they actually occur, could materially and adversely affect our and/or any of the subsidiary issuers’ business, results of operations, prospects and financial condition and the value of your investments.

 

BBVA is a highly diversified financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. BBVA’s predecessor bank, Banco Bilbao Vizcaya, referred to as “BBV”, was incorporated in Spain on October 1, 1988. BBVA was formed as the result of a merger by absorption of Argentaria, Caja Postal y Banco Hipotecario, S.A. into BBV that was approved by the shareholders of each institution on December 18, 1999 and registered on January 28, 2000. Additionally, BBVA maintains business activity in other sectors, such as the insurance, real estate and operational leasing sectors as well as other business activities. It also has a portfolio of investments in some of Spain’s leading companies. BBVA, which operates in over 30 countries, is based in Spain and has substantial banking interests in Latin America, the United States, Europe and Asia. The BBVA group had consolidated assets of €553,922 million at March 31, 2010 and net income attributed to parent company of €1,240 million for the three months ended March 31, 2010.

 

Additional information about BBVA and its subsidiaries is included in the 2009 Form 20-F and the March 31, 2010 Form 6-K, which are incorporated by reference in this document.

 

BBVA’s principal executive offices are located at Paseo de la Castellana, 81, 28046 Madrid, Spain, and its telephone number at that location is +34-91-537-7000.

 

BBVA International Preferred

 

BBVA International Preferred was incorporated by a public deed executed on June 30, 2005, and registered in the Mercantile Registry of Vizcaya on July 8, 2005 as a company with unlimited duration and with limited liability under the laws of Spain ( sociedad anónima ). The registered office of BBVA International Preferred is located at Gran Vía, 1, 48001 Bilbao, Spain, and its principal office is located at Paseo de la Castellana, 81, 28046 Madrid, Spain, with telephone number +34-91-537-7000 or +34-91-374-6000.

As of the date of this prospectus, BBVA International Preferred has issued the following:

 

 

The authorized share capital of BBVA International Preferred is €60,102 divided into 10,017 ordinary shares, each with a par value of €6. The subscribed and fully paid up share capital is €60,102.

 

All of the ordinary shares of BBVA International Preferred are owned, directly or indirectly, by us. BBVA International Preferred has no subsidiaries. BBVA International Preferred exists for the purpose of issuing preferred securities, the proceeds of which, in accordance with Spanish law, will be deposited with us.

 

BBVA U.S. Senior

 

BBVA U.S. Senior was incorporated by a public deed executed on February 22, 2006 and registered in the Mercantile Registry of Vizcaya on February 28, 2006 as a company with unlimited duration and with limited liability under the laws of Spain ( sociedad anónima ). The registered office of BBVA U.S. Senior is located at Gran Vía, 1, 48001 Bilbao, Spain, and its principal office is located at Paseo de la Castellana, 81, 28046 Madrid, Spain, and its telephone number is +34-91-537-7000 or +34-91-374-6000.

 

As of the date of this prospectus, BBVA U.S. Senior has issued the following:

 

 

The authorized share capital of BBVA U.S. Senior is €60,102 divided into 10,017 ordinary shares, each with a par value of €6. The subscribed and fully paid up share capital is €60,102.

 

All of the ordinary shares of BBVA U.S. Senior are owned, directly or indirectly, by us. BBVA U.S. Senior exists for the purpose of issuing debt securities, the proceeds of which, in accordance with Spanish law, will be deposited with us. BBVA U.S. Senior does not have any subsidiaries.

BBVA Subordinated Capital

 

BBVA Subordinated Capital was incorporated by a public deed executed on October 29, 2004 and registered in the Mercantile Registry of Vizcaya on November 3, 2004 as a company with unlimited duration and with limited liability under the laws of Spain ( sociedad anónima ). The registered office of BBVA Subordinated Capital is located at Gran Vía, 1, 48001 Bilbao, Spain, and its principal office is located at Paseo de la Castellana, 81, 28046 Madrid, Spain, and its telephone number is +34-91-537-7000 or +34-91-374-6000.

 

As of the date of this prospectus, BBVA Subordinated Capital has issued the following:

 

 

The authorized share capital of BBVA Subordinated Capital is €60,102 divided into 10,017 ordinary shares, each with a par value of €6. The subscribed and fully paid up share capital is €60,102.

 

All of the ordinary shares of BBVA Subordinated Capital are owned, directly or indirectly, by us. BBVA Subordinated Capital exists for the purpose of issuing debt securities, the proceeds of which, in accordance with Spanish law, will be deposited with us. BBVA Subordinated Capital does not have any subsidiaries.

CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND PREFERENCE DIVIDENDS

 

The following table sets forth BBVA’s consolidated ratio of earnings to fixed charges and preference dividends, using financial information compiled in accordance with International Financial Reporting Standards adopted by the EU (“EU-IFRS”) required to be applied under the Bank of Spain’s Circular 4/2004 (“Circular 4/2004”), for the three months ended March 31, 2010 and the years ended December 31, 2009, 2008, 2007, 2006 and 2005:

 

 

 

USE OF PROCEEDS

 

The net proceeds from each issue of securities will, in accordance with Law 13/1985 of May 25, 1985, be deposited on a permanent basis with the Guarantor and will be used for the Group’s general corporate purposes. If, in respect of any particular issue, there is a particular identified use of proceeds, this will be stated in the applicable prospectus supplement.

CONSOLIDATED CAPITALIZATION AND INDEBTEDNESS OF THE BBVA GROUP

 

The following table sets forth the capitalization and indebtedness of the BBVA Group on an unaudited consolidated basis in accordance with EU-IFRS required to be applied under Circular 4 / 2004 as of April 30, 2010.

 

 

 

DESCRIPTION OF BBVA ORDINARY SHARES

 

The following summary describes all material considerations concerning the capital stock of BBVA and briefly describes all material provisions of BBVA’s bylaws ( estatutos ) and relevant Spanish law. A copy of BBVA’s bylaws is incorporated by reference and will be furnished to investors upon request.

 

General

 

As of March 31, 2010, BBVA’s paid in share capital was €1,836,504,869.29, represented by a single class of 3,747,969,121 BBVA ordinary shares with a nominal value of €0.49 each.

 

Non-residents of Spain may hold and vote ordinary shares subject to the general restrictions set forth below.

 

Attendance and Voting at Shareholders’ Meetings

 

Each BBVA ordinary share entitles the shareholder to one vote. Any BBVA ordinary share may be voted by written proxy. Proxies may be given only to another shareholder. Proxies are valid for ordinary and extraordinary

general shareholders’ meetings. A single shareholder may not be represented at a general shareholders’ meeting by more than one shareholder.

 

Shareholders’ meetings

 

Pursuant to BBVA’s bylaws and to the Spanish Corporation Law (Ley de Sociedades Anónimas) , general meetings of shareholders of BBVA may be ordinary or extraordinary.

 

Pursuant to the Spanish Corporation Law, ordinary general shareholders’ meetings shall necessarily be held within the first six months of each financial year, at which shareholders are requested to approve the annual accounts of the previous fiscal year, the management by BBVA Board of Directors of BBVA for the previous fiscal year and the application of BBVA’s net income or loss. Other matters may also be voted on by shareholders during the ordinary general shareholders’ meetings if such items are included on the agenda. Any other meetings of shareholders are considered to be extraordinary general shareholders’ meetings. Extraordinary general shareholders’ meetings may be called from time to time by the BBVA Board of Directors at its discretion. The BBVA Board of Directors must call extraordinary general shareholders’ meetings if so requested by shareholders representing at least five percent of BBVA’s share capital.

 

At ordinary general shareholders’ meetings, shareholders are requested to approve the BBVA Board of Directors’ management of BBVA for the previous fiscal year, the annual accounts of the previous fiscal year and the application of the company’s net income or loss. All other matters may be addressed at extraordinary general shareholders’ meetings called for such purpose. Such other matters can also be voted in ordinary general shareholders’ meetings if such items are included on the agenda.

 

A universal shareholders’ meeting, at which 100% of the share capital is present or duly represented, is considered valid even if no notice of such meeting was given, and, with unanimous agreement, shareholders may consider any matter at such a meeting.

 

Convening notice

 

Notices of all BBVA general shareholders’ meetings must be published in the Official Gazette of the Commercial Registry (Boletín Oficial del Registro Mercantil) and in a widely circulated newspaper in Vizcaya, the Spanish province where the registered office of BBVA is located, at least one month prior to the date of the meeting. The notice must indicate the date of the meeting on the first convening and all the matters to be considered at the meeting, along with other information required by the Spanish Corporation Law. The notice may also include the date on which the meeting should be held on the second convening. At least twenty-four hours should be allowed to elapse between the first and the second meeting.

 

Place of meeting

 

General meetings must be held in Bilbao, Spain, where BBVA has its registered office, on the date indicated in the convening notice.

 

Right of attendance

 

The owners of five hundred or more BBVA ordinary shares which are duly registered in the book-entry record for BBVA ordinary shares at least five days prior to the general shareholders’ meeting are entitled to attend. The holders of fewer than five hundred BBVA ordinary shares may aggregate their shares by proxy to represent at least five hundred BBVA ordinary shares and appoint a member of the group as their representative at the meeting.

 

Quorums

 

Under BBVA’s bylaws and the Spanish Corporation Law, general shareholders’ meetings will be duly constituted on the first convening if BBVA shareholders holding at least 25% of the share capital are present or represented by proxy. On the second convening of a general shareholders’ meeting, there is no quorum requirement.

Notwithstanding the above, certain special events require a quorum of shareholders, present or represented by proxy, holding at least 50% of the share capital on first convening of the general shareholders’ meeting and no less than 25% of the share capital on the second convening of the general shareholders’ meeting. Those special events include: (i) increases or decreases in capital; (ii) in general, any modification of the bylaws; (iii) issuances of bonds; (iv) limitations of the preemptive rights to subscribe for new shares; (v) transformations, mergers, spin-offs and assignments of assets and liabilities; and (iv) the transfer of the registered office abroad. If at the second convening of the general shareholders’ meeting the shareholders present or represented by proxy constitute less than 50% of the share capital, resolutions regarding such matters will be adopted with the approval of two-thirds of the share capital present or represented by proxy at such meeting.

 

BBVA’s bylaws also require the presence, in person or represented by proxy, of two-thirds of the share capital on first convening or 60% of the share capital on the second convening, at general shareholders’ meetings in order to adopt resolutions that concern: (i) amendment of the corporate purpose; (ii) transformation of BBVA’s legal status; (iii) a full spin-off; (iv) dissolution of BBVA; or (v) amendment of the second paragraph of article 25 of BBVA’s bylaws, which establishes this stricter quorum requirement.

 

Adoption of resolutions

 

Subject to the higher vote requirements described in the previous paragraphs, the adoption of resolutions requires a majority vote at the general shareholders’ meeting.

 

Validly adopted resolutions are binding on all the shareholders, including those who were absent, dissented or abstained from voting.

 

Any resolution adopted at the general shareholders’ meeting that is contrary to Spanish law can be contested by any shareholder. Resolutions adopted at the general shareholders’ meeting that are contrary to BBVA’s bylaws, or that are harmful to BBVA’s interests and to the benefit of one or more shareholders or third parties, can be contested by the shareholders who attend the meeting and record their opposition to the resolution in the minutes of the meeting, by shareholders who were absent or by shareholders unlawfully prevented from voting at the meeting.

 

Under the Spanish Corporation Law, in the event of a vacancy on the BBVA Board of Directors, a shareholder or group of shareholders that owns an aggregate number of BBVA ordinary shares equal to or greater than the result of dividing the total capital stock by the number of directors on the BBVA Board of Directors, has the right to appoint a corresponding proportion of the directors (rounded downward to the nearest whole number) to the Board of Directors. Shareholders who exercise this right may not vote on the appointment of other directors to the BBVA Board of Directors.

 

Preemptive Rights

 

Pursuant to the Spanish Corporation Law, shareholders have preemptive rights to subscribe for any new BBVA ordinary shares (except where the new BBVA ordinary shares are issued pursuant to the conversion of convertible bonds, the absorption of another company, or the acquisition of part of the net assets of another company by means of a spin-off) and for bonds issued which are convertible into BBVA ordinary shares. These preemptive rights may be abolished in certain circumstances by shareholder vote in accordance with Article 159 of the Spanish Corporation Law.

 

Form and Transfer

 

BBVA ordinary shares are in book-entry form and are indivisible. Joint holders must nominate one person to exercise their rights as shareholders, though joint holders are jointly and severally liable for all obligations arising from their status as shareholders. Iberclear, which manages the clearance and settlement system of the Spanish Stock Exchanges, maintains the central registry of BBVA ordinary shares reflecting the number of BBVA ordinary shares held by each of its participant entities ( entidades participantes ) as well as the number of such shares held by beneficial owners. Each participant entity in turn maintains a register of the owners of such shares.

 

Transfers of BBVA ordinary shares quoted on the Spanish Stock Exchanges must be made by book-entry registry or delivery of evidence of title to the buyer, through or with the participation of a member of the Spanish

Stock Exchanges that is an authorized broker or dealer. Transfers of BBVA ordinary shares may also be subject to certain fees and expenses.

 

Reporting Requirements

 

As BBVA ordinary shares are listed on the Spanish Stock Exchanges, the acquisition or disposition of BBVA ordinary shares must be reported within four business days of the acquisition or disposition to BBVA, the Comisión Nacional del Mercado de Valores (“CNMV”), the relevant Spanish Stock Exchanges and, where the person or group effecting the transaction is a non-Spanish resident, the Spanish Registry of Foreign Investment, where:

 

 

Each member of the BBVA Board of Directors must report to BBVA, the CNMV and the relevant Spanish Stock Exchanges, shares and stock options held at the time such director joined the Board of Directors. Furthermore, each member of the BBVA Board of Directors must similarly report any acquisition or disposition, regardless of size, of BBVA shares or stock options within five business days of such acquisition or disposition.

 

Additional disclosure obligations apply to voting agreements and to purchasers in jurisdictions designated as tax havens or lacking adequate supervision, where the threshold for such disclosure obligation is reduced to 1% (or successive multiples of 1%).

 

Change of Control Provisions

 

Certain antitrust regulations may also delay, defer or prevent a change of control of BBVA or any of its subsidiaries in the event of a merger, acquisition or corporate restructuring. In Spain, the application of both Spanish and European antitrust regulations requires that prior notice of domestic or crossborder merger transactions be given in order to obtain a “non-opposition” ruling from antitrust authorities.

 

Spanish regulation of takeover bids may also delay, defer or prevent a change of control of BBVA or any of its subsidiaries in the event of a merger, acquisition or corporate restructuring. Spanish regulation of takeover bids set forth in Law 6/2007 and Royal Decree 1066/2007 introduces significant amendments to the Spanish rules governing takeover bids. In particular:

 

 

 

 

 

As further described below in “— Restrictions on Acquisitions of BBVA Ordinary Shares”, since BBVA is a credit entity, it is necessary to obtain approval from the Bank of Spain in order to acquire a number of shares considered to be a significant participation by Law 26/1988, of July 29, 1998 as amended by Act 5/2009 of June 29. Also, any agreement that contemplates BBVA’s merger with another credit entity will require the authorization of the Spanish Ministry of Economy and the Treasury. This could also delay, defer or prevent a change of control of BBVA or any of its subsidiaries that are credit entities in the event of a merger.

 

Exchange Controls

 

In 1991, Spain adopted the EU standards for free movement of capital and services. As a result, exchange controls and restrictions on foreign investments have generally been abolished and foreign investors may transfer invested capital, capital gains and dividends out of Spain without limitation as to amount, subject to applicable taxes.

 

Pursuant to Spanish Law 18/1992 on Foreign Investments (Ley 18/1992, de 1 de julio) and Royal Decree 664/1999 (Real Decreto 664/1999, de 23 de abril) , foreign investors may freely invest in shares of Spanish companies, except in the case of certain strategic industries.

 

Shares in Spanish companies held by foreign investors must be reported to the Spanish Registry of Foreign Investments by the depositary bank or relevant Iberclear member. In addition, when a foreign investor acquires shares in a company that is subject to the reporting requirements of the CNMV, such foreign investor must also give notice directly to the CNMV and the applicable Spanish Stock Exchanges if such acquisition results in such foreign investor exceeding certain ownership thresholds.

 

Investment by foreigners domiciled in enumerated tax haven jurisdictions is subject to special reporting requirements under Royal Decree 1080/1991 (Real Decreto 1080/1991, de 5 de julio) .

 

Restrictions on Acquisitions of BBVA Ordinary Shares

 

BBVA’s bylaws do not provide any restrictions on the ownership of BBVA ordinary shares. Because BBVA is a Spanish bank, however, the acquisition or disposition of a significant participation of BBVA shares is subject to certain restrictions. Such restrictions may impede a potential acquirer’s ability to acquire BBVA shares and gain control of BBVA.

Law 26/1988 on discipline and oversight of financial institutions, amended by Act 5/2009, provides that any individual or corporation, acting alone or in concert with others, intending to directly or indirectly acquire a significant holding in a Spanish financial institution (as defined in article 56 of Law 26/1998) or to directly or indirectly increase its holding such that the percentage of voting rights or of capital owned were equal to or more than any of the thresholds of 20%, 30% or 50% (or by virtue of the acquisition, might take control over the financial institution) must first notify the Bank of Spain. The Bank of Spain will have 60 working days after the date on which the notification was received to evaluate the transaction and, where applicable, challenge the proposed acquisition on the grounds established by law.

 

A significant participation is considered to be 10% of the outstanding share capital of a bank or a lower percentage if such holding allows for the exercise of a significant influence.

 

Any acquisition made without such prior notification, or conducted before 60 working days have elapsed since the date of such notification, or made in circumstances where the Bank of Spain has objected, will produce the following results:

 

 

The Bank of Spain has 60 working days after the date on which the notification was received to object to a proposed transaction. Such objection may be based on the fact that the Bank of Spain does not consider the acquiring person suitable to guarantee the prudent operation of the target bank.

 

Any individual or institution that intends to sell its significant participation in a bank or reduce its participation below the above-mentioned percentages, or which, because of such sale, loses control of the entity, must give prior notice to the Bank of Spain, indicating the amount to be sold and the period in which the transaction is to be executed. Non-compliance with this requirement will result in sanctions.

 

Spain’s Ministry of Economy and the Treasury, following a proposal by the Bank of Spain, may, whenever the control of a bank by a person with a significant participation may jeopardize the sound and prudent management of such bank, adopt any of the following measures as deemed appropriate:

 

 

Payment of Taxes

 

Holders of BBVA ordinary shares will be responsible for any taxes or other governmental charges payable on their BBVA ordinary shares, including any taxes payable on transfer. The paying agent or the transfer agent, as the case may be, may, and upon instruction from BBVA, will:

 

 

The Bank of New York Mellon executes and delivers the BBVA ADRs evidencing BBA ADSs. Each BBVA ADS represents an ownership interest in one BBVA ordinary share. The BBVA ordinary shares will be deposited with BBVA, The Bank of New York Mellon’s custodian in Spain. Each BBVA ADS will also represent securities, cash or other property deposited with The Bank of New York Mellon but not distributed to BBVA ADS holders. The Bank of New York Mellon’s Corporate Trust Office is located at 101 Barclay Street, New York, NY 10286 and its principal executive office is located at One Wall Street, New York, NY 10286.

 

You may hold BBVA ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as a BBVA ADR, which is a certificate evidencing a specific number of BBVA ADSs, registered in your name, or (ii) by having BBVA ADSs registered in your name in the Direct Registration System, or (B) indirectly by holding a security entitlement in BBVA ADSs through your broker or other financial institution. If you hold BBVA ADSs directly, you are an ADS registered holder. This description assumes you are an ADS registered holder. If you hold the BBVA ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of BBVA ADS registered holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

 

The Direct Registration System, or DRS, is a system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership will be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs.

 

BBVA ADS holders are not BBVA shareholders and do not have shareholder rights. Because The Bank of New York Mellon will actually hold the BBVA ordinary shares, you must rely on it to exercise the rights of a shareholder. The obligations of The Bank of New York Mellon are set out in a deposit agreement among BBVA, The Bank of New York Mellon, as depositary, and BBVA ADS holders, as amended, referred to as the deposit agreement. The deposit agreement and the BBVA ADSs are generally governed by New York law.

 

The following is a summary of the deposit agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire agreement and the BBVA ADR. Copies of the deposit agreement and the form of BBVA ADR are available for inspection at the Corporate Trust Office of The Bank of New York Mellon at the address set forth above.

 

Deposit and Withdrawal of Deposited Securities

 

The depositary has agreed that upon the execution in favor of the depositary or its nominee and delivery to the custodian or depositary (if to the depositary, then at the expense and risk of the depositor) of either (i) a certificate of title which has been executed by a Spanish stockbroker and, if required, certificates representing such shares to the custodian together with any documents and payments required under the deposit agreement or (ii) any other evidence of ownership of shares as recognized under the laws of Spain from time to time, and acceptable to the custodian, the depositary will have for delivery at the depositary’s corporate trust office to or upon the order of the person specified by the depositor at the address set forth above, upon payment of the fees, charges and taxes provided in the deposit agreement, registered in the name of such person or persons as specified by the depositor, the number of BBVA ADSs issuable in respect of such deposit.

 

Upon surrender of BBVA ADSs at the depositary’s corporate trust office, together with written instructions from the person or persons in whose name the BBVA ADSs are registered, and upon payment of such charges as are provided in the deposit agreement and subject to its terms, the depositary will request the execution of evidence of ownership in favor of such persons designated in the written instrument and the delivery of such evidence of ownership (by book-entry transfer or physical delivery) of the deposited shares represented by the surrendered BBVA ADSs and any other property that the surrendered BBVA ADRs represent the right to receive. Such delivery is to take place at the office of the custodian or at the depositary’s office as the person designated in the written instructions may request.

 

If a person presents for deposit shares with different distribution rights than other deposited shares, the depositary must identify them separately until such time as the distribution rights are the same.

Pre-Release of BBVA ADSs

 

In certain circumstances, subject to the provisions of the deposit agreement, and with BBVA’s written consent, The Bank of New York Mellon may execute and deliver BBVA ADSs before the deposit of the underlying shares. This is called a pre-release of the BBVA ADS. The Bank of New York Mellon may receive BBVA ADSs instead of shares to close out a pre-release.

 

Each pre-release will be:

 

 

 

 

The Bank of New York Mellon must be able to close out the pre-release on not more than five business days’ notice. In addition, The Bank of New York Mellon will limit the number of BBVA ADSs that may be outstanding at any time as a result of pre-release, although The Bank of New York Mellon may disregard the limit from time to time, if it thinks it is appropriate to do so. The Bank of New York Mellon may also, as it deems appropriate, set U.S. dollar limits with respect to a given pre-release on a case by case basis.

 

The pre-release will be subject to such indemnities and credit regulations as The Bank of New York Mellon considers appropriate.

 

Dividends, Other Distributions and Rights

 

The depositary has agreed to pay to holders of BBVA ADSs the cash dividends or other distributions it or the custodian receives on shares or other deposited securities after deducting its fees and expenses and according to applicable law. Holders of BBVA ADSs will receive these distributions in proportion to the number of shares their BBVA ADSs represent.

 

Cash.   The Bank of New York Mellon will convert all cash dividends and other cash distributions in a foreign currency that it receives in respect of the deposited securities into U.S. dollars if in its judgment it can do so on a reasonable basis and can transfer the U.S. dollars to the United States.

 

Before making a distribution, any withholding taxes that must be paid will be deducted. The Bank of New York Mellon will distribute only whole U.S. dollars and cents. If the exchange rates fluctuate during a time when The Bank of New York Mellon cannot convert euros, holders of BBVA ADSs may lose some or all of the value of the distribution.

 

BBVA Ordinary Shares.   If a distribution by BBVA consists of a dividend in, or free distribution of, BBVA ordinary shares, The Bank of New York Mellon may, or if BBVA requests, will, subject to the deposit agreement, distribute to the holders of outstanding BBVA ADSs, in proportion to their holdings, additional BBVA ADSs representing the number of BBVA ordinary shares received as such dividend or free distribution if BBVA furnishes it with evidence that it is legal to do so. The Bank of New York Mellon will only distribute whole BBVA ADSs. It will sell BBVA ordinary shares which would require it to use fractional BBVA ADSs and distribute the net proceeds

in the same way as it does with cash. If additional BBVA ADSs are not so distributed, each BBVA ADS will represent the additional BBVA ordinary shares distributed in respect of the BBVA ordinary shares represented by such BBVA ADS prior to such dividend or free distribution.

 

Rights.   If BBVA offers or causes to be offered to the holders of shares any rights to subscribe for additional shares or any rights of any other nature, The Bank of New York Mellon will either:

 

 

 

at such place or places and upon such terms as The Bank of New York Mellon may deem proper, and allocate the proceeds of such sales for the account of the holders of the BBVA ADSs entitled to those proceeds, upon an averaged or other practicable basis without regard to any distinctions among such holders of BBVA ADSs due to exchange restrictions, or the date of delivery of any ADSs or otherwise.

 

The net proceeds allocated to the holders of BBVA ADSs so entitled will be distributed to the extent practicable in the case of a distribution in cash. The Bank of New York Mellon will not offer such rights to holders of BBVA ADSs having an address in the United States unless BBVA furnishes to The Bank of New York Mellon (i) evidence that a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) is in effect or (ii) an opinion from U.S. counsel for BBVA, in a form satisfactory to The Bank of New York Mellon, to the effect that such distribution does not require registration under the provisions of the Securities Act.

 

BBVA ordinary shares issuable upon exercise of preemptive rights must be registered under the Securities Act in order to be offered to holders of BBVA ADSs. If BBVA decided not to register those BBVA ordinary shares, the preemptive rights would not be distributed to holders of BBVA ADSs. Pursuant to the deposit agreement under which the BBVA ADSs are issued, however, the depositary will use its best efforts to sell such rights that it receives and will distribute the proceeds of the sale to holders of BBVA ADSs.

 

Other Distributions.   The Bank of New York Mellon will remit to holders of BBVA ADSs any other item of value BBVA distributes on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, The Bank of New York Mellon may adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution. The Bank of New York Mellon may sell, publicly or privately, what BBVA distributed and distribute the net proceeds in the same way as it does with cash.

 

The Bank of New York Mellon is not responsible if it decides that it is unlawful or impractical to make a distribution available to any BBVA ADS holders. BBVA has no obligations to register BBVA ADSs, BBVA ordinary shares, rights or other securities under the Securities Act. BBVA also has no obligation to take any other action to permit the distribution of BBVA ADSs, BBVA ordinary shares, rights or anything else to BBVA ADS holders. This means that holders of BBVA ADSs may not receive the distribution BBVA makes on its shares or any value for them if it is illegal or impractical for BBVA to make them available to them.

 

Payment of Taxes

 

Holders of BBVA ADSs will be responsible for any taxes or other governmental charges payable on their BBVA ADSs or on the deposited securities underlying their BBVA ADSs, including any taxes payable on transfer. The Bank of New York Mellon may, and upon instruction from BBVA, will:

 

 

 

Record Dates

 

The Bank of New York Mellon will fix a record date to establish which holders of BBVA ADSs are entitled to:

 

 

Voting of the Underlying Deposited Securities

 

BBVA has agreed in the depositary agreement that (i) the depositary or its nominee, whichever is the registered holder of the BBVA ordinary shares represented by the BBVA ADSs, will have the same rights as any other registered holder of BBVA ordinary shares and (ii) consistent with BBVA’s bylaws, BBVA will observe the right of the depositary, its nominee or registered holder of the BBVA ordinary shares to attend any ordinary or extraordinary general shareholders’ meeting and to vote or cause to be voted by proxy the BBVA ordinary shares with respect to the BBVA ADSs and that BBVA will not exercise any right it may have under its bylaws to reject or in any way impair such rights.

 

Once The Bank of New York Mellon receives notice in English of any matter affecting holders of BBVA ordinary shares, it will mail, as soon as practicable, such notice to the holders of BBVA ADSs. The notice will (i) contain the information in the notice of meeting, (ii) explain how holders as of a certain date may instruct The Bank of New York Mellon to vote the shares underlying their BBVA ADSs and (iii) contain a statement as to the manner in which instructions may be given.

 

The record holders of BBVA ADSs can instruct The Bank of New York Mellon to vote the shares underlying their BBVA ADSs. The Bank of New York Mellon will try, insofar as practicable, to cause the BBVA ordinary shares so represented to be voted in accordance with any nondiscretionary written instructions of BBVA ADS record holders received.

 

In the event the BBVA ADS record holders do not provide written instructions by a specified date, The Bank of New York Mellon will deem the BBVA ADR holder to have instructed it to give discretionary proxy to a person designated by the BBVA Board of Directors. However, this proxy must not be given to such a person if the board informs The Bank of New York Mellon, in writing, that the board either does not wish the proxy to be given, that substantial opposition exists or that the matter at hand materially affects the rights of BBVA shareholders.

 

Facilities and Register

 

The Bank of New York Mellon will maintain at its transfer office:

 

 

Reports and Notices

 

The Bank of New York Mellon will, at BBVA’s expense:

 

 

BBVA has delivered to The Bank of New York Mellon and the custodian a copy of the provisions of or governing the BBVA ordinary shares BBVA issued. Promptly after any amendment, BBVA will deliver to The Bank of New York Mellon and the custodian a copy in English of such amended provisions. The Bank of New York Mellon may rely upon such copy for all the purposes of the deposit agreement.

 

The Bank of New York Mellon will, at BBVA’s expense, make available for inspection by BBVA ADS holders at the Corporate Trust Office, the office of the custodian and at any other designated transfer office any reports and communications received from BBVA that are made generally available to holders of BBVA ordinary shares.

 

Amendment and Termination of the Deposit Agreement

 

The BBVA ADSs and the deposit agreement may at any time be amended by agreement between BBVA and The Bank of New York Mellon.

 

Any amendment that would impose or increase any charges (other than transmission and delivery charges incurred at the request of depositors of BBVA ordinary shares or holders of BBVA ADSs, transfer, brokerage, registration fees and charges in connection with conversion of currencies, and taxes and other governmental charges) or that will otherwise prejudice any substantial existing right of BBVA ADS holders will not become effective as to outstanding BBVA ADRs until three months have expired after notice of such amendment has been given to the holders of the BBVA ADRs.

 

In no event will any amendment impair the right of any BBVA ADS holder to surrender such BBVA ADSs and receive in return the BBVA ordinary shares and other property which those surrendered BBVA ADSs represent, except in order to comply with mandatory provisions of applicable law.

 

At BBVA’s direction, The Bank of New York Mellon will terminate the deposit agreement by giving notice of such termination to the record holders of BBVA ADSs at least 30 days prior to the date fixed in that notice for the termination. The Bank of New York Mellon may terminate the deposit agreement at any time commencing 90 days after delivery of a written resignation, provided that no successor depositary has been appointed and no successor depositary has accepted its appointment before the end of those 90 days.

 

After the date that has been fixed for termination, The Bank of New York Mellon and its agents will perform no further acts under the deposit agreement, other than:

 

 

As soon as practicable after the expiration of six months from the date that has been fixed for termination, The Bank of New York Mellon will sell BBVA ordinary shares and other deposited securities and may hold the net proceeds of any such sale together with any other cash then held by it under the provisions of the deposit agreement, without liability for interest, for the pro rata benefit of the holders of BBVA ADRs that have not yet surrendered their BBVA ADRs.

Fees and Expenses

 

 

 

The Bank of New York Mellon, as depositary, has agreed to reimburse BBVA for expenses it incurs that are related to establishment and maintenance of the BBVA ADS program, including investor relations expenses and stock market application and listing fees. There are limits on the amount of expenses for which the depositary will reimburse BBVA, but the amount of reimbursement available to BBVA is not related to the amount of fees the depositary collects from investors.

 

The depositary collects its fees for delivery and surrender of BBVA ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

 

Limitations on Obligations and Liability to BBVA ADS Holders

 

The deposit agreement expressly limits BBVA’s obligations and the obligations of The Bank of New York Mellon, and it limits BBVA’s liability and the liability of The Bank of New York Mellon. BBVA and The Bank of New York Mellon:

 

 

The Bank of New York Mellon will not be liable for its failure to carry out any instructions to vote BBVA’s securities or for the effects of any such vote.

 

Other General Limitations on Liability to BBVA ADS Holders

 

Neither The Bank of New York Mellon, its agents, nor BBVA will incur any liability if prevented or delayed in performing its obligations under the deposit agreement by reason of:

 

 

 

The obligations and liabilities of BBVA and its agents and The Bank of New York Mellon and its agents under the deposit agreement are expressly limited to performing their respective obligations specifically set forth and undertaken by them to perform in the deposit agreement without negligence or bad faith.

 

In the deposit agreement, BBVA and The Bank of New York Mellon agree to indemnify each other under certain circumstances.

 

General

 

The Bank of New York Mellon will act as registrar of the BBVA ADSs or, upon BBVA’s request or approval, appoint a registrar or one or more co-registrars for registration of the BBVA ADRs evidencing the BBVA ADSs in accordance with the requirements of NYSE or of any other stock exchange on which the BBVA ADSs may be listed. Such registrars or co-registrars may be removed and a substitute or substitutes appointed by The Bank of New York Mellon upon BBVA’s request or with BBVA’s approval.

 

Any transfer of the BBVA ADSs is registrable on the books of The Bank of New York Mellon. However, The Bank of New York Mellon may close the transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties or at BBVA’s request.

 

As a condition precedent to the execution and delivery, registration of transfer, split-up or combination of any BBVA ADS or the delivery of any distribution or the withdrawal of any BBVA ordinary shares or any property represented by the BBVA ADS, The Bank of New York Mellon or the custodian may, and upon BBVA’s instructions will, require from the BBVA ADR holder or the presenter of the BBVA ADS or the depositor of the BBVA ordinary shares:

 

 

The delivery, registration of transfer, split-up or combination of BBVA ADSs, or the deposit or withdrawal of shares or other property represented by BBVA ADSs, in any particular instance or generally, may be suspended during any period when the BBVA ADSs register is closed, or when such action is deemed necessary or advisable by The Bank of New York Mellon or BBVA at any time or from time to time.

 

Holders have the right to cancel their BBVA ADSs and withdraw the underlying shares at any time except:

 

 

 

This right of withdrawal may not be limited by any other provision of the deposit agreement.

 

The Bank of New York Mellon, upon BBVA’s request or with BBVA’s approval, may appoint one or more co-transfer agents for the purpose of effecting registrations of transfers, combinations and split-ups of BBVA ADSs at designated transfer offices on behalf of The Bank of New York Mellon. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by holders of BBVA ADSs and will be entitled to protection and indemnity to the same extent as The Bank of New York Mellon.

 

Direct Registration System

 

In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System (“Profile”), will apply to uncertificated BBVA ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership will be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of a registered holder of uncertificated ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS registered holder to register that transfer.

 

In connection with the arrangements and procedures relating to DRS and Profile, the parties to the deposit agreement understand that the depositary will not verify, determine or otherwise ascertain that the DTC participant that is claiming to be acting on behalf of a BBVA ADS registered holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS registered holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions received by the depositary through DRS and Profile and in accordance with the deposit agreement, will not constitute negligence or bad faith on the part of the depositary.

 

BBVA ADSs Outstanding

 

As of March 31, 2010, there were 114,187,399 BBVA ADSs outstanding.

DESCRIPTION OF RIGHTS TO SUBSCRIBE FOR ORDINARY SHARES

 

We may issue rights to subscribe for our ordinary shares (including in the form of ADSs). The applicable prospectus supplement will describe the specific terms relating to such subscription rights and the terms of the offering, as well as a discussion of material U.S. federal and Spanish income tax considerations applicable to holders of the rights to subscribe for our ordinary shares (including in the form of ADSs).

PREFERRED SECURITIES

 

This section describes the general terms that will apply to any preferred securities that may be offered pursuant to this prospectus by BBVA International Preferred. The specific terms of the offered preferred securities, and the extent to which the general terms described in this section apply to preferred securities, will be described in one or more related prospectus supplements at the time of the offer.

 

General

 

BBVA International Preferred may issue preferred securities from time to time in one or more series. The preferred securities may be denominated and payable in U.S. dollars or other currencies. BBVA International Preferred may also issue preferred securities from time to time with the principal amount or distributions payable on any relevant payment date to be determined by reference to one or more currency exchange rates, market interest rates, securities or baskets of securities, commodity prices or indices. Holders of these types of preferred securities will receive payments of liquidation preference or distributions that depend upon the value of the applicable

currency, interest rate, security or basket of securities, commodity or index on the relevant payment dates or otherwise as specified in the applicable prospectus supplement.

 

Terms Specified in the Applicable Prospectus Supplement

 

The applicable prospectus supplement will contain, where applicable, the following terms of and other information relating to any offered preferred securities:

 

 

The applicable prospectus supplement may also include, if applicable, a discussion of certain ERISA considerations.

 

Form

 

Unless otherwise provided in the applicable prospectus supplement, the preferred securities will be issued in registered form.

Guarantee

 

The applicable prospectus supplement will contain a summary of the terms of the relevant preferred securities guarantee.

 

Governing Law

 

Unless otherwise provided in the applicable prospectus supplement, the preferred securities and any preferred securities guarantees will be governed by Spanish law.

DESCRIPTION OF THE NOTES AND THE NOTES GUARANTEES

 

This section describes the general terms and provisions of the indenture dated June 28, 2010 (the “senior indenture”) among BBVA U.S. Senior as issuer, BBVA as guarantor and The Bank of New York Mellon as trustee, which sets forth certain provisions with respect to the senior notes and the senior guarantees that may be offered by BBVA U.S. Senior and BBVA, respectively, and the indenture dated June 28, 2010 (the “subordinated indenture”) among BBVA Subordinated Capital as issuer, BBVA as guarantor and The Bank of New York Mellon as trustee, which sets forth certain provisions with respect to the subordinated notes and the subordinated guarantees that may be offered by BBVA Subordinated Capital and BBVA, respectively. In this section, we will refer to BBVA U.S. Senior and BBVA Subordinated Capital as the “issuers”, the senior notes and the subordinated notes as the “notes”, the senior indenture and the subordinated indenture as the “indentures” and the senior guarantees and the subordinated guarantees as the “notes guarantees.” A prospectus supplement of the relevant issuer will describe the specific terms of a particular series of notes and any general terms outlined in this section that will not apply to those notes. If there is any conflict between the prospectus supplement and this prospectus, then the terms and provisions in the prospectus supplement apply unless they are inconsistent with the terms of the indentures or the supplemental indenture or Board resolution creating a particular series of notes.

 

All material information about the notes, notes guarantees and indentures is summarized below and in the applicable prospectus supplement. Because this is only a summary, however, it does not contain all the details found in the full text of the indentures, the notes and the notes guarantees. If you would like additional information, you should read the indentures, the notes and the notes guarantees. Whenever we refer to specific provisions of or terms defined in the indentures in this prospectus we incorporate by reference into this prospectus such specific provisions of or terms defined in the indentures.

 

BBVA U.S. Senior or BBVA Subordinated Capital may issue future notes and BBVA may issue future guarantees of such notes under other indentures or documentation which contain provisions different from those included in the indentures described here. None of the issuers or BBVA are prohibited under the notes, indentures or notes guarantees, as the case may be, from paying any amounts due under any of their respective obligations at a time when they are in default or have failed to pay any amounts due under the notes, indentures or notes guarantees, as the case may be. See “— Subordinated Notes and Subordinated Guarantees”.

 

The senior notes will be issued under the senior indenture and the subordinated notes will be issued under the subordinated indenture. Both such indentures have been filed with the SEC as exhibits to the registration statement that includes this prospectus.

 

General

 

The indentures do not limit the aggregate principal amount of notes that BBVA U.S. Senior or BBVA Subordinated Capital may issue under them. However, on May 25, 2010, the Guarantor’s Board of Directors resolved to provide an irrevocable guarantee up to an aggregate amount of €6,000,000,000 (or its equivalent in any other currency) for future issues of notes made by the issuers, and as of the date of this prospectus the Guarantor has not issued any guarantees under this authorization. The Guarantor’s Board of Directors may at any time increase or decrease the aggregate amount for such guarantees authorized for future issuances.

 

Neither the indentures, nor the notes, nor the notes guarantees will limit or otherwise restrict the amount of other indebtedness or other securities or guarantees which the issuers, the Guarantor or any of its subsidiaries may

incur or issue. The notes will not contain any provision that would provide you, as a holder of the notes, with protection against a sudden and significant decline in the credit quality of BBVA U.S. Senior, BBVA Subordinated Capital or the Guarantor, or against a takeover, recapitalization or highly leveraged similar transaction involving the Guarantor. BBVA U.S. Senior or BBVA Subordinated Capital can issue notes from time to time in one or more series, up to the aggregate principal amount that BBVA U.S. Senior, BBVA Subordinated Capital and the Guarantor may authorize. The notes will be direct, unconditional and unsecured debt obligations of BBVA U.S. Senior or BBVA Subordinated Capital, as the case may be. The notes guarantees will be direct, unconditional and unsecured obligations of the Guarantor.

 

The indentures provide that there may be more than one trustee under such indentures, each with respect to one or more series of notes. Any trustee may resign or be removed with respect to any series of notes issued under the indentures and a successor trustee may be appointed.

 

The issuers, the Guarantor or any of their respective subsidiaries may at any time purchase senior notes or subordinated notes at any price in the open market or otherwise. Such notes purchased may be held, reissued, resold or surrendered to the relevant paying agent and/or the relevant registrar for cancellation, except that senior notes purchased by BBVA U.S. Senior and subordinated notes purchased by BBVA Subordinated Capital must be surrendered to the relevant paying agent and/or the relevant registrar for cancellation in accordance with prevailing Spanish Law and the Bank of Spain’s requirements.

 

General Terms of the Notes and the Notes Guarantees

 

The applicable prospectus supplement will describe the terms of the offered notes and notes guarantees, including some or all of the following:

 

 

 

 

The issuers may issue notes as original issue discount notes. An original issue discount note is a note, including a zero coupon note, offered at a discount from the principal amount of the note due at its maturity. The applicable prospectus supplement will describe any additional material U.S. federal income tax consequences, the amount payable in the event of an acceleration and other special factors applicable to any original issue discount notes.

 

Payments of Additional Amounts

 

Unless otherwise specified in the applicable prospectus supplement, any amounts to be paid with respect to the notes shall be paid without withholding or deduction for or on account of any and all present or future taxes or duties of whatever nature imposed or levied by or on behalf of Spain or any political subdivision or authority thereof or therein having the power to tax unless such withholding or deduction is required by law. In such event, the issuer or, as the case may be, the Guarantor will pay to the relevant holder such additional amounts as may be necessary in order that the net amounts received by the note holders, or their trustees or any paying agent, after such withholding or deduction equals the respective amounts of principal, premium, if any, interest, if any, and sinking fund payments, if any, which would otherwise have been receivable in respect of the notes in the absence of such withholding or deduction; except that no such additional amounts will be payable with respect to any note:

 

(a) to, or to a third party on behalf of, a note holder who is liable for such taxes or duties by reason of such holder (or the beneficial owner for whose benefit such holder holds such note) having some connection with Spain other than the mere holding of such note (or such beneficial interest) or the mere crediting of the note to such holder’s account; or

 

(b) presented for payment (where presentation is required) more than 30 days after the Relevant Date (as defined below) except to the extent that the note holder would have been entitled to additional amounts on presenting the same for payment on such thirtieth day assuming that day to have been a business day in such place of presentment; or

 

(c) to, or to a third party on behalf of, a note holder in respect of whom the issuer or the Guarantor (or the paying agent on its behalf) does not receive such information (which may include a tax residence certificate)

concerning such note holder’s identity and tax residence (as well as the identity and tax residence of the beneficial owner for whose benefit it holds such note) as it may require in order to comply with Second Additional Provision of Spanish Law 13/1985 of 25 May (as amended, among others, by Spanish Law 19/2003 of 4 July and Spanish Law 23/2005 of 18 November) and any implementing legislation or regulation by 10:00 a.m. (CET) on the 10th calendar day of the month following the Relevant Date (as defined below) upon which the payment was due (or if such date is not a day on which commercial banks are open for general business in Spain, the day immediately preceding such date); or

 

(d) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings or any law implementing or complying with, or introduced in order to conform to, such Directive or law; or

 

(e) presented for payment (where presentation is required) by or on behalf of a note holder who would be able to avoid such withholding or deduction by presenting the relevant note to another paying agent.

 

Additional amounts will also not be paid with respect to any payment to a note holder who is a fiduciary, a partnership, a limited liability company or other than the sole beneficial owner of that payment, to the extent that payment would be required by the laws of Spain (or any political subdivision thereof) to be included in the income, for Spanish tax purposes, of a beneficiary or settlor with respect to the fiduciary, a member of that partnership, an interest holder in that limited liability company or a beneficial owner who would not have been entitled to the additional amounts had it been the note holder.

 

As used above, “Relevant Date” means the date on which any payment first becomes due and payable, except that if the full amount of the moneys payable has not been received by the paying agent on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to the note holders, notice to that effect is duly given to the note holders in accordance with the provisions set forth under “— Notices” below.

 

Any reference to principal, interest or premium shall be deemed to include additional amounts to the extent payable in respect thereof.

 

Optional Tax Redemption

 

An issuer may, in compliance with the applicable capital adequacy regulations of the Bank of Spain from time to time in force, redeem the notes of any series it has issued, subject to the restrictions described in this section and, in the case of subordinated notes, to the Bank of Spain’s prior approval, which under current Spanish bank regulations may not be sought prior to the fifth anniversary of the issuance of the series of subordinated notes. Subject to such restrictions, an issuer may, at its option, redeem a series of notes it has issued in whole, but not in part, at any time with not less than 30 days nor more than 60 days notice given in the manner described under “— Notices” below and in the applicable prospectus supplement and indenture.

 

The redemption will be equal to 100% of the principal amount (or such other early tax redemption amount as may be specified in the applicable prospectus supplement) plus interest accrued to the date fixed for redemption.

 

A redemption under this section will only be permitted if, as a result of any change in or amendment to the laws or regulations of Spain (including any treaty to which Spain is a party) or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change, amendment, application or interpretation becomes effective on or after the date of the applicable prospectus supplement, either:

 

 

 

The issuers and the Guarantor are not permitted to give notice to the trustee of the redemption earlier than 60 days prior to the earliest date on which an issuer or the Guarantor would be obligated to deduct or withhold tax or pay additional amounts were a payment on the notes or the notes guarantees then due.

 

In the case of any merger, consolidation, sale or conveyance not considered an event of default, the acquiring or resulting corporation will also be entitled to redeem the notes in the circumstances described above for any change or amendment to, or change in the application or official interpretation of, the laws or regulations of such corporation’s jurisdiction of incorporation or tax residence, which change or amendment must occur subsequent to the date of the merger, consolidation, sale, conveyance or lease if the acquiring or resulting corporation is not incorporated or tax resident in Spain.

 

Form, Transfer, Payment and Paying Agents

 

Unless otherwise indicated in the applicable prospectus supplement, each series of notes will be issued in registered form only, without coupons. There will not be any service charge for any transfer or exchange of notes payable to the issuer, but the issuer may require payment to cover any tax or other governmental charge payable and any other expenses (including the fees and expenses of the trustee) that may be imposed in that regard.

 

Unless the applicable prospectus supplement provides otherwise, the principal, premium and interest on the notes of a particular series will be payable, and transfer or exchange of the notes will be registrable, at the corporate trust office of The Bank of New York Mellon, as paying agent and securities registrar under the applicable indenture. However, BBVA U.S. Senior or BBVA Subordinated Capital may elect to pay any interest by check mailed to the address of the entitled person as it appears in the security register at the close of business on the regular record date for the interest or by transfer to an account maintained by the payee with a bank located in the United States.

 

Unless the applicable prospectus supplement provides otherwise, payment of interest on and any additional amounts with respect to a note on any interest payment date will be made to the person in whose name the note is registered at the close of business on the regular record date for the interest.

 

Global Certificates

 

The issuers may issue the notes of a series in whole or in part in the form of one or more global certificates representing the notes. Unless otherwise stated in the applicable prospectus supplement, DTC will act as securities depository for the notes. Therefore, issuers will issue the notes only as registered securities registered in the name of Cede & Co. (DTC’s nominee) and will deposit with DTC one or more registered certificates representing in aggregate the total number of such notes.

 

As long as DTC or its nominee is the registered holder of a global certificate representing notes, DTC or its nominee, as the case may be, will be considered the sole owner and holder of the notes represented by that global certificate for all purposes under the applicable indenture and the notes. Except as described below, owners of beneficial interests in a note represented by a global certificate will not be entitled to have the notes represented by such global certificate registered in their names, will not receive or be entitled to receive physical delivery of certificated notes (as defined below) and will not be considered the holders of such notes under the applicable indenture. Accordingly, each person owning a beneficial interest in a note represented by a global certificate must rely on the procedures of DTC and, if that person is not a participant in DTC, on the procedures of the participant in DTC through which the person owns its interest, to exercise any rights of a beneficial owner under the applicable indenture.

Beneficial interests in notes of any series represented by a global certificate will be exchangeable for notes of such series represented by individual security certificates, or certificated notes, and registered in the name or names of owners of such beneficial interests as specified in instructions provided by DTC to the trustee only if:

 

 

Outstanding Notes

 

In determining whether the holders of the requisite principal amount of outstanding notes have given any request, demand, authorization, direction, notice, consent or waiver under the notes or the indentures or are present at a meeting of the Syndicate for quorum purposes, any note owned by the issuer, the Guarantor or any other obligor upon the notes or any affiliate of the issuer, the Guarantor or such other obligor (if any such notes are so owned), will be deemed not to be outstanding. In addition, the portion of the principal amount of an original issue discount note that will be outstanding will be the amount that would be declared due and payable as of the date of determination and, unless the applicable prospectus supplement provides otherwise, the principal amount of an indexed note that will be outstanding will be the principal face amount determined on the date of its original issuance.

 

Syndicate of Holders, Meetings, Modifications and Waivers

 

Syndicate of Holders

 

The Spanish Corporation Law (Ley de Sociedades Anónimas) requires that a syndicate (sindicato) of holders of notes be established in relation to each series of notes constituting all holders of notes of such series at any particular time (the “Syndicate”).

 

Each Syndicate of each particular series is governed by its own regulations (the “Regulations”). The Regulations contain the rules governing the functioning of the Syndicate and the rules governing its relationship to the relevant issuer and are attached to the relevant Spanish public deed of issuance with respect to such series of notes. A form of the Regulations is attached to each indenture.

 

As provided in the Regulations, each Syndicate will be represented by the commissioner (comisario) of the Syndicate (the “Commissioner”), who will be the chairman and the legal representative of the Syndicate and shall protect the common interest of the holders of the notes. The Bank of New York Mellon shall serve as Commissioner of the Syndicate of each series of notes until it resigns or is removed as trustee and a person shall have become successor trustee with respect to such series of notes under the applicable indenture. Thereafter, the Commissioner shall be such successor trustee.

 

By purchasing a note, the holder of that note is also deemed to have agreed to membership in the Syndicate in respect of notes of such series and, if such holder purchased such note prior to the record date for the first meeting of the Syndicate, to have granted full power and authority to The Bank of New York Mellon with respect to notes of such series to act as its proxy to vote at the first meeting of the Syndicate of holders of notes of such series in favor of the ratification of the Regulations in respect of such Syndicate, the ratification of the designation and appointment of The Bank of New York Mellon as Commissioner of such Syndicate and the ratification of the actions of the Commissioner performed prior to such first meeting of the Syndicate. The Commissioner is the chairperson and the legal representative of the Syndicate.

 

Meetings

 

Holders of notes of each series shall meet in accordance with the Regulations. Except as otherwise provided under the relevant indenture, the Regulations governing the Syndicate of holders of notes of a series or the Trust

Indenture Act, any request, demand, authorization, direction, notice, consent, waiver or other action provided by or pursuant to the relevant indenture to be given or taken by holders of notes of the relevant series shall be given or taken only by resolution duly adopted in accordance with the relevant indenture and the Regulations governing the Syndicate of holders of notes of the relevant series at a meeting of such Syndicate duly called and held in accordance with such Regulations, which resolution as so adopted is referred to as the “Act” of the holders. Any such meeting is expected to be held in the city where the Commissioner has its principal executive offices, which is currently New York, New York.

 

Convening Meetings

 

The indentures and the Regulations contain provisions for convening meetings of holders of each series of notes to consider matters affecting their interests. A meeting of holders of notes of a series may be called at the request of:

 

 

Quorums

 

Two-thirds in principal amount of the outstanding notes of the relevant series shall constitute a quorum for a meeting of the Syndicate of the holders of notes of that series, and if such a quorum is present or duly represented, all matters set forth in the relevant notice shall be voted on at such meeting. In the absence of a quorum, the meeting shall be adjourned for a period of not less than 30 days. A majority in principal amount of the outstanding notes of the relevant series shall constitute a quorum for any such reconvened meeting of the Syndicate of the holders of notes of that series, and if such a quorum is present, all matters set forth in the relevant notice shall be voted on at such meeting.

 

Voting

 

Voting at a meeting of the Syndicate shall be by written ballot and may be conducted by proxy. Resolutions may be adopted and decisions may be taken at a meeting of the Syndicate only by the affirmative vote of holders present or duly represented at such meeting of outstanding notes of the relevant series representing a majority of principal amount of the notes of such series outstanding on the applicable record date. Any resolution duly adopted or decision duly taken in accordance with the applicable Regulations at any meeting of the Syndicate of holders of notes of a series duly held in accordance with such Regulations shall be binding on all holders of outstanding notes of such series, whether or not such holders were present or represented at such meeting.

 

Notwithstanding the above, any resolution of a Syndicate of holders of notes of a series with respect to any request, demand, authorization, direction, notice, consent or waiver which the relevant indenture or the Trust Indenture Act expressly provides must be made, given or taken by the holders of a specified percentage in principal amount of outstanding notes of a series, or by each holder of outstanding notes of the relevant series, as the case may be, may be adopted only by the affirmative vote of the holders of such specified percentage in principal amount of the outstanding notes of the relevant series, or each holder of notes of the relevant series, as the case may be.

 

Furthermore, notwithstanding any other provision of the Regulations applicable to notes of a series, nothing in the Regulations shall limit the rights of any holder of outstanding notes of such series to make any request, demand, authorization, direction, notice, consent or waiver individually or collectively outside the Syndicate of holders of notes of such series where the relevant indenture or the Trust Indenture Act expressly provides that such request, demand, authorization, direction, notice, consent or waiver may be made, given or taken individually or collectively outside such Syndicate, as the case may be, by holders of outstanding notes of the relevant series.

Modification With Consent of Holders

 

An issuer, the Guarantor (in each case, when authorized by or pursuant to a board resolution) and the applicable trustee may amend or modify the applicable indenture and may waive any future compliance with such indenture by the issuer or the Guarantor with the consent, as evidenced in an Act or Acts, of the holders of not less than a majority in principal amount of the outstanding notes of each series affected thereby voting as a class. However, the modification, amendment or waiver may not, without the consent or the affirmative vote of the holder of each note affected:

 

 

The holders of a majority in aggregate principal amount of the outstanding notes of any series on behalf of the holders of all the notes of such series may, by Act, waive any past default under the indenture with respect to that series, except a default in payment of principal, premium, interest, or additional amounts or in the performance of certain covenants specified in the relevant indenture or a default with respect to a provision which cannot be modified or amended without the consent of each affected holder of outstanding notes of a particular series.

Modification without Consent of Holders

 

An issuer, the Guarantor (in each case, when authorized by or pursuant to a board resolution) and the applicable trustee may modify and amend the applicable indenture without the consent of the holders to:

 

 

Substitution of the Issuer

 

The Guarantor or any controlled subsidiary of the Guarantor may assume the obligations of an issuer under the notes, subject to the prior consent of the Bank of Spain with respect to the subordinated notes, without the consent of the holders of the notes. Any notes so assumed, except if assumed by the Guarantor, will have the benefit of the related notes guarantees. In the event of an assumption of the obligations of an issuer by the Guarantor, the subordination provisions of the subordinated guarantees will apply to the subordinated notes so assumed and the subordination provisions of the subordinated notes will no longer apply. In the event of any assumption, additional amounts under the notes will be payable for taxes imposed by the jurisdiction of incorporation or tax residence of the assuming entity (subject to exceptions equivalent to those that apply to the obligation to pay additional amounts for taxes imposed by the laws of Spain) rather than taxes imposed by Spain.

 

Additional amounts for payments of interest or principal due prior to the date of the assumption will be payable only for taxes imposed by Spain. The Guarantor or the controlled subsidiary of the Guarantor that assumes the obligations of an issuer will also be entitled to redeem the notes in the circumstances described above under the section entitled “— Optional Tax Redemption” for any change or amendment to, or change in the application or official interpretation of, the laws or regulations of the assuming entity’s jurisdiction of incorporation or tax residence, which change or amendment must occur subsequent to the date of such assumption if the assuming entity is not incorporated or tax resident in Spain. Upon such assumption, the applicable issuer will be released from all its obligations under the applicable notes and indentures.

 

An assumption of the obligations of an issuer under the notes might be considered for U.S. federal income tax purposes to be an exchange by the holders of the notes for new notes, resulting in recognition of taxable gain or loss for these purposes and possible other adverse tax consequences for such holders. Holders should consult their tax advisors regarding the U.S. federal, state and local income tax consequences of an assumption.

Discharge, Defeasance and Covenant Defeasance

 

An issuer or the Guarantor may discharge certain obligations to holders of any series of notes and related notes guarantees that have not already been delivered to the applicable trustee for cancellation and that have become due and payable, will become due and payable at their stated maturity within one year or, if redeemable at the option of the issuer, are to be called for redemption within one year, by depositing or causing to be deposited with the applicable trustee, in trust, funds in an amount sufficient to pay and discharge the entire indebtedness on such notes, including principal, interest, premium and any additional amounts to the date of such deposit (if such notes have become due and payable) or to the maturity date of such notes, as the case may be.

 

An issuer or the Guarantor may also elect to have its obligations under the indenture discharged with respect to the outstanding notes of any series and related notes guarantees (“legal defeasance”). Legal defeasance means that the issuer will be deemed to have paid and discharged the entire indebtedness represented by the outstanding notes of such series under the relevant indenture and that the Guarantor will be deemed to have satisfied all of its obligations under the relevant indenture and with respect to the notes guarantees related to such notes, except for:

 

 

In addition, an issuer or the Guarantor may elect to have its obligations released with respect to certain covenants in the indentures (“covenant defeasance”). Any omission to comply with any obligations so released will not constitute a default or an event of default with respect to the notes of any series.

 

In order to exercise either legal defeasance or covenant defeasance with respect to outstanding notes of or within any series and the related notes guarantees:

 

 

 

Unless otherwise provided in the applicable prospectus supplement, if, after an issuer or the Guarantor has deposited funds or U.S. government obligations to effect legal defeasance or covenant defeasance with respect to notes of any series,

 

 

the indebtedness represented by such note and the related notes guarantee shall be deemed to have been and will be fully discharged and satisfied through the payment of the principal of interest and any premium on such note as it becomes due out of the proceeds yielded by converting the amount or other property so deposited into the currency in which such note becomes payable as a result of such election or such conversion event based on the applicable market exchange rate for such currency in effect on the second business day prior to such payment date, except, with respect to a conversion event, for such foreign currency in effect at the time of the conversion event.

 

A “conversion event” means the cessation of use of (i) a foreign currency both by the government of the country which issued such currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community, or (ii) the euro both within the European monetary system and for the settlement of transactions by public institutions of or within the EU.

 

In the event the issuer or the Guarantor effects covenant defeasance with respect to any notes and such notes are declared due and payable because of the occurrence of any event of default, the amount in money and U.S. government obligations deposited in trust will be sufficient to pay amounts due on such notes at the time of their stated maturity. They may not, however, be sufficient to pay amounts due on such notes at the time of the acceleration resulting from such event of default. In this case, the issuer and the Guarantor will remain liable to make payment of such amounts due at the time of acceleration.

 

The applicable prospectus supplement may further describe the provisions permitting legal defeasance or covenant defeasance, including any modifications to the provisions described above, with respect to the notes of a particular series.

 

Notices

 

All notices to holders of registered notes shall be validly given if mailed to them at their respective addresses in the register maintained by the applicable trustee. In addition, notice of any meeting of a Syndicate of holders of

notes of a particular series shall be validly given if done in accordance with the Regulations of the Syndicate of holders of notes of such series.

 

The Trustee

 

The Bank of New York Mellon, the trustee currently appointed pursuant to the indentures, is organized and exists under the laws of the State of New York and has its corporate trust office located at 101 Barclay Street, New York, NY 10286. Any trustee appointed pursuant to the senior indenture or the subordinated indenture shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act.

 

Subject to the provisions of the Trust Indenture Act, a trustee is under no obligation to exercise any of the powers vested in it by the indentures at the request of any holder of notes, unless offered reasonable security or indemnity by the holder against the costs, expenses and liabilities which might be incurred thereby.

 

The Guarantor and some of its subsidiaries maintain deposits with and conduct other banking transactions with The Bank of New York Mellon in the ordinary course of business.

 

Successor Trustees

 

Any trustee in respect of the notes of a series may resign or be removed by holders of a majority in principal amount of notes at any time, effective upon the acceptance by a successor trustee of the respective appointment. The indentures provide that any successor trustee will have a combined capital and surplus of not less than $50,000,000 and shall be a corporation, association, company or business trust organized and doing business under the laws of the United States or any of its states or territories or the District of Columbia and in good standing. No person shall accept its appointment hereunder as a successor trustee with respect to the notes of a series unless at the time of such acceptance such successor trustee shall be qualified and eligible under the relevant article of the relevant indenture and agree to thereby become Commissioner of the Syndicate of holders of notes of such series.

 

Repayment of Funds

 

All monies paid by an issuer or the Guarantor to the applicable trustee or a paying agent for payment of principal, premium or interest and any additional amounts on any notes which remain unclaimed at the end of two years after that payment has been made will be repaid to the issuer or the Guarantor on issuer request in proportion to their respective payments of the monies which remain unclaimed, and all liability of the applicable trustee or the paying agent related to it will cease, and, if permitted by law, the holder of the applicable note will look only to the issuer or the Guarantor for payment as its general unsecured creditor.

 

Prescription

 

All claims against an issuer or the Guarantor for payment of principal or interest, including additional amounts, on or for the notes will become void unless made within ten years, in the case of principal, and five years, in the case of interest, including additional amounts, from the later of the date on which that payment first became due and the date on which the full amount was received by the trustee.

 

Governing Law

 

The notes and the indentures will be governed by and construed under the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state, except that the authorization and execution by the issuers and the Guarantor of the indentures and the notes, certain provisions of the notes and the indentures related to the establishment of a Syndicate and the appointment of a Commissioner, certain provisions of the indentures related to the execution and delivery of the notes guarantees and certain provisions of the subordinated notes and the subordinated indenture related to the subordination of the subordinated notes and the subordinated guarantees shall be governed by and construed in accordance with Spanish law. The notes guarantees will be governed by and construed in accordance with Spanish law. The Regulations of each

Syndicate and the duties of and all matters relating to the Commissioner shall be governed by and construed in accordance with Spanish law.

 

Senior Notes and Senior Guarantees

 

The senior notes will be direct, unconditional and unsecured indebtedness of BBVA U.S. Senior and will rank pari passu with all other unsubordinated and unsecured indebtedness of BBVA U.S. Senior, but in the case of insolvency, only to the extent permitted by creditor’s rights. The senior guarantees will constitute direct, unconditional, unsubordinated and unsecured obligations of the Guarantor and will at all times rank pari passu among themselves and pari passu with all other unsubordinated and unsecured indebtedness of the Guarantor, but in the case of insolvency, only to the extent permitted by creditor’s rights.

 

The Guarantor will unconditionally and irrevocably guarantee the due and punctual payment of any principal of and premium, if any, and interest on the senior notes, payments to sinking funds, if applicable, and additional amounts or any other amounts of whatever nature which may become payable under the senior notes or the senior indenture. If the Guarantor experiences bankruptcy proceedings, the rights and claims of holders under the senior guarantees will, under Spanish law, rank equally with all other unsubordinated and unsecured indebtedness.

 

The senior guarantees will remain in effect until the entire principal and interest on the related senior notes have been paid in full under the provisions of the senior notes, senior guarantees and senior indenture, or until the Guarantor and BBVA U.S. Senior’s obligations under the senior notes have been satisfied in accordance with the provisions of the senior notes, the senior guarantees and the senior indenture.

 

Holders of senior notes may proceed directly against the Guarantor in case of a default under the senior notes without first proceeding against BBVA U.S. Senior.

 

Events of Default

 

“Event of Default” , wherever used below with respect to senior notes of any series, means any one of the following events, unless such event is specifically deleted or modified in or pursuant to supplemental indentures or Board resolutions creating a particular series of senior notes or in the officers’ certificate for such series:

 

 

 

For the purpose of the above definition, a report by the external auditors from time to time of the issuer or the Guarantor, as the case may be, as to whether any part of the business or assets of the issuer or the Guarantor is “substantial” shall, in the absence of manifest error, be conclusive.

 

If an Event of Default with respect to the senior notes of any series at the time outstanding occurs and is continuing, then the applicable trustee, acting pursuant to an Act (as defined in the senior indenture) of the holders of the senior notes of the relevant series, with respect to all outstanding senior notes of such series, or the holder of any outstanding senior note of the relevant series, with respect to such senior note held by such holder, may declare the principal, or such lesser amount as may be provided for in the senior notes of such series, of such senior notes or senior note, as the case may be, to be due and payable immediately in accordance with the terms of the senior indenture.

At any time after such a declaration of acceleration with respect to the senior notes or a senior note, as the case may be, of any series has been made and before a judgment or decree for payment of the money due has been obtained by the applicable trustee as provided in the senior indenture, the holders of not less than a majority in principal amount of the outstanding senior notes of such series may, by Act (as defined in the senior indenture) rescind and annul such declaration and its consequences if:

 

1. BBVA U.S. Senior or the Guarantor has paid or deposited with the applicable trustee a sum of money sufficient to pay:

 

(A) all overdue installments of any interest on and additional amounts with respect to all senior notes of such series;

 

(B) the principal of and any premium on any senior notes of such series which have become due otherwise than by such declaration of acceleration and interest thereon and any additional amounts with respect thereto at the rate or rates borne by or provided for in such senior notes;

 

(C) to the extent that payment of such interest or additional amounts is lawful, interest upon overdue installments of any interest and additional amounts at the rate or rates borne by or provided for in such senior notes; and

 

(D) all sums paid or advanced by the applicable trustee and the reasonable compensation, expenses, disbursements and advances of the applicable trustee, its agents and counsel and all other amounts due to the applicable trustee under the senior indenture; and

 

2. all Events of Default with respect to senior notes of such series, other than the non-payment of the principal of and any premium and interest on, and any additional amounts with respect to senior notes of such series which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in the senior indenture.

 

No such rescission shall affect any subsequent default or impair any right consequent thereon.

 

Subject to payment of the applicable trustee’s fees and expenses, the holders of not less than a majority in principal amount of the outstanding senior notes of any series on behalf of the holders of all the senior notes of such series may, by Act (as defined in the senior indenture) waive any past Event of Default under the senior indenture with respect to such series and its consequences, except a default in the payment of the principal of or any premium, or interest on, or any additional amounts with respect to, any senior note of such series or a covenant or provision of the senior indenture that cannot be modified or amended without the consent of each holder of outstanding senior notes of such series.

 

No holder of any of the senior notes of any series has the right to institute any proceeding, judicial or otherwise, with respect to the senior indenture or any remedy thereunder, unless (i) such holder has previously given written notice to the applicable trustee of a continuing Event of Default with respect to the senior notes of such series; (ii) the holders of not less than 25% in principal amount of the outstanding senior notes of such series have made written request to the applicable trustee to institute proceedings in respect of such Event of Default as trustee under the senior indenture with respect to such series of senior notes and such holder or holders have offered to the applicable trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iii) the applicable trustee has failed to institute any such proceeding within 60 days after its receipt of such notice, request and offer of indemnity; and (iv) the applicable trustee has not received any direction inconsistent with such written request during such 60-day period by the holders of a majority in principal amount of the outstanding senior notes of such series.

 

Such limitations described above do not, however, apply to the right of each holder, which is absolute and unconditional, to receive payment of the principal of, any premium and, subject to certain provisions in the senior indenture with respect to payment of defaulted interest, interest on, and any additional amounts with respect to, his or her senior note or notes on or after the respective maturity or maturities therefor specified in such senior notes (or, in the case of redemption, on or after the redemption date or, in the case of repayment at the option of such holder if provided in or pursuant to the applicable senior indenture, on or after the date such repayment is due) and to institute suit for the enforcement of any such payment, which cannot be impaired or affected without the consent of such

holder, except that holders of not less than 75% in principal amount of outstanding senior notes of a series may consent by Act (as defined in the senior indenture) on behalf of the holders of all outstanding senior notes of such series, to the postponement of the maturity of any installment of interest for a period not exceeding three years from the original maturity of such installment (which original maturity shall have been fixed, for the avoidance of doubt, prior to any previous postponements of such installment).

 

Within 90 days after the occurrence of any default under the senior indenture known to the applicable trustee with respect to the senior notes of any series, such trustee shall transmit by mail to all holders of senior notes of such series entitled to receive reports, notice of such default, unless such default shall have been cured or waived. Except in the case of a default in the payment of the principal of (or premium, if any), or interest, if any, on, or additional amounts with respect to, any senior note of such series, such trustee may withhold such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or responsible officers of such trustee in good faith determine that the withholding of such notice is in the best interest of the holders of senior notes of such series. For the purpose of this paragraph, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to senior notes of such series.

 

Subordinated Notes and Subordinated Guarantees

 

As used in this section:

 

“Issuer Senior Indebtedness” means Senior Indebtedness of BBVA Subordinated Capital.

 

“Guarantor Senior Indebtedness” means Senior Indebtedness of the Guarantor.

 

“Senior Indebtedness” means, with respect to any person, all rights and claims, whether outstanding on the date of the subordinated indenture or thereafter created, incurred, assumed or guaranteed, and all amendments, renewals, extensions, modifications and refundings of indebtedness or obligations represented by such rights and claims, (i) of privileged creditors (acreedores privilegiados) , unsecured and unsubordinated creditors (acreedores comunes) and insolvency estate creditors (acreedores contra la masa) of such person, as determined in accordance with the Insolvency Law (as defined below); or (ii) if such Insolvency Law is no longer in effect, all of such rights and claims of all creditors of such person, unless in any such case the instrument by which the indebtedness or obligations represented by such rights and claims are created, incurred, assumed or guaranteed by such person, or are evidenced, provides that they are subordinate, or are not superior, in right of payment to the subordinated notes.

 

Subordination of Subordinated Notes

 

BBVA Subordinated Capital’s obligations under the subordinated notes, whether on account of principal, interest or otherwise, will constitute direct, unconditional and subordinated obligations. If and to the extent that there is a deficiency in any payment in respect of the subordinated notes and such deficiency is not remedied as a result of a demand for payment under the subordinated guarantee (but without prejudice to the subordinated status of the subordinated guarantee pursuant to the subordinated guarantee) the claims of the holders in respect of such deficiency will, in the event of insolvency (concurso) of BBVA Subordinated Capital (under Spanish law 22/2003 of 9 June, as amended from time to time (the “Insolvency Law”)) or any voluntary or mandatory liquidation of BBVA Subordinated Capital or similar procedure, fall within the category of subordinated credits (créditos subordinados) (as defined in the Insolvency Law) and will rank in right of payment after Issuer Senior Indebtedness (as defined above) and will at all times rank pari passu among themselves and pari passu with all other present and future subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of BBVA Subordinated Capital, except for certain subordinated obligations prescribed by law and subordinated obligations which are expressed to rank junior to the subordinated notes. Accordingly, no amount shall be payable by BBVA Subordinated Capital to the holders of subordinated notes in respect of such deficiency until the claims with respect to all Issuer Senior Indebtedness (other than as aforesaid) admitted in the insolvency (concurso) of BBVA Subordinated Capital under the Insolvency Law or any voluntary or mandatory liquidation of BBVA Subordinated Capital or similar procedure have been satisfied pursuant to the laws of Spain and any amounts in respect of such deficiency thereafter paid to the applicable trustee will be pari passu with the amounts payable with respect to subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of BBVA Subordinated Capital in the insolvency (concurso) of

BBVA Subordinated Capital under the Insolvency Law or any voluntary or mandatory liquidation of BBVA Subordinated Capital or similar procedure and shall be held by the applicable trustee in trust to apply the same:

 

(i) first, in payment or satisfaction of the costs, charges, expenses and liabilities incurred by the applicable trustee in or about the execution of the trusts of these presents and any unpaid remuneration of such trustee;

 

(ii) second, in payment or satisfaction of claims related to Issuer Senior Indebtedness that have been belatedly or inaccurately communicated to the insolvency administrator or which, by administrative order or decision, are deemed to be included in those claims that have been belatedly or inaccurately communicated to the insolvency administrator;

 

(iii) third, in payment or satisfaction of contractually subordinated payments of principal on subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of BBVA Subordinated Capital (including any payments in respect of principal of the subordinated notes) and any other payments in respect of subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of BBVA Subordinated Capital other than payments set forth in paragraph (iv) below;

 

(iv) fourth, in payment or satisfaction of payments of interest, including additional amounts, if any, and interest, if any, on such interest due on subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of BBVA Subordinated Capital (including any payments in respect of interest and additional amounts, if any, on the subordinated notes) (excluding interest on secured indebtedness to the extent secured);

 

(v) fifth, in payment or satisfaction of fines or any other monetary penalties or sanctions;

 

(vi) sixth, in payment or satisfaction of claims of creditors which are related to the BBVA Subordinated Capital as set forth in article 93 of the Insolvency Law;

 

(vii) seventh, in payment or satisfaction of indebtedness arising from transactions set aside by the Spanish court overseeing the insolvency proceeding (rescisión concursal) and in respect of which such court has determined that the relevant creditor has acted in bad faith; and

 

(viii) eighth, in payment of claims arising from contracts with reciprocal obligations as referred to in articles 61, 62 and 69 of the Insolvency Law, wherever the court rules, prior to the administrators’ report of insolvency (administración concursal) that the creditor repeatedly impedes the fulfillment of the contract against the interest of the insolvency.

 

The consolidation of BBVA Subordinated Capital with, or the merger of BBVA Subordinated Capital into, or the conveyance, transfer or lease by BBVA Subordinated Capital of its properties and assets substantially as an entirety to, another person upon the terms and conditions set forth in the subordinated indenture, or the liquidation or dissolution of BBVA Subordinated Capital following any such conveyance or transfer, shall not be deemed an event of insolvency (concurso) (under the Insolvency Law) or the voluntary or mandatory liquidation or similar procedure of BBVA Subordinated Capital for the purposes of the description above if the person formed by such consolidation or into which BBVA Subordinated Capital is merged or the person that acquires by conveyance, transfer or lease of such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in the subordinated indenture.

 

Nothing contained in the subordinated indenture or in any of the subordinated notes will affect the obligation of BBVA Subordinated Capital to make, or prevent BBVA Subordinated Capital from making, at any time except as provided above, payments of principal of (or premium, if any) or interest, if any, on the subordinated notes or on account of the purchase or other acquisition of subordinated notes or prevent the application by the applicable trustee of any moneys deposited with it under the subordinated indenture to the payment of or on account of the principal of (or premium, if any) or interest, if any, on the subordinated notes, unless such trustee shall have received written notice of any event prohibiting the making of such payment.

 

Any renewal or extension of the time of payment of any Issuer Senior Indebtedness or the exercise by the holders of Issuer Senior Indebtedness of any of their rights under any instrument creating or evidencing Issuer

Senior Indebtedness, including, without limitation, the waiver of default thereunder, may be made or done all without notice to or assent from the holders of the subordinated notes or the applicable trustee.

 

No compromise, alteration, amendment, modification, extension, renewal or other change of, or waiver, consent or other action in respect of, any liability or obligation under or in respect of, or of any of the terms, covenants or conditions of any indenture or other instrument under which any Issuer Senior Indebtedness is outstanding or of such Issuer Senior Indebtedness, whether or not such release is in accordance with the provisions of any applicable document, will in any way alter or affect any of the subordination provisions of the subordinated indenture or of the subordinated notes relating to the subordination thereof.

 

Each holder of subordinated notes by his or her acceptance thereof authorizes and directs the applicable trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the subordinated notes as provided in the subordinated indenture and as summarized herein and appoints the applicable trustee his attorney-in-fact for any and all such purposes.

 

The applicable trustee’s claims under the subordinated indenture are not subordinated.

 

Subordination of Subordinated Guarantees

 

The payment of principal and interest or any other amounts as specified in the applicable prospectus supplement and in the subordinated indenture in respect of the subordinated notes has been fully, irrevocably and unconditionally guaranteed, on a subordinated basis, by the Guarantor pursuant to the subordinated guarantees. The obligations of the Guarantor under the subordinated guarantees constitute direct, unsecured and subordinated obligations of the Guarantor. In the event of insolvency (concurso) of the Guarantor under the Insolvency Law or any voluntary or mandatory Guarantor liquidation or similar procedure, claims by holders of subordinated guarantees against the Guarantor will fall within the category of subordinated credits (créditos subordinados) (as defined in the Insolvency Law) and will rank in right of payment after Guarantor Senior Indebtedness and will at all times rank pari passu among themselves and pari passu with all other present and future subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of the Guarantor, except for certain subordinated obligations prescribed by law and subordinated obligations which are expressed to rank junior to the subordinated guarantees. Accordingly, no amount shall be payable by the Guarantor to the Holders in respect of the subordinated guarantees until the claims with respect to all Guarantor Senior Indebtedness admitted in the insolvency (concurso) of the Guarantor under the Insolvency Law or any voluntary or mandatory Guarantor liquidation or similar procedure have been satisfied pursuant to the laws of Spain.

 

After payment in full of all Guarantor Senior Indebtedness but before distributions to shareholders, under article 92 of the Insolvency Law, the Guarantor will pay or satisfy subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of the Guarantor in the following order and pro rata within each class: (i) claims related to Guarantor Senior Indebtedness that have been belatedly or inaccurately communicated to the insolvency administrator or which, by administrative order or decision, are deemed to be included in those claims that have been belatedly or inaccurately communicated to the insolvency administrator; (ii) contractually subordinated payments of principal on subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of the Guarantor (including any payments in respect of principal of the subordinated notes due under the subordinated guarantees) and any other payments in respect of subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of the Guarantor other than payments set forth in subparagraph (iii) of this paragraph; (iii) payments of interest, including additional amounts, if any, and interest, if any, on such interest due on subordinated credits (créditos subordinados) (as defined in the Insolvency Law) of the Guarantor (including any payments in respect of interest and Additional Amounts, if any, on the subordinated notes due under the subordinated guarantees) (excluding interest on secured indebtedness to the extent secured); (iv) fines or any other monetary penalties or sanctions; (v) claims of creditors which are related to the Guarantor as set forth in article 93 of the Insolvency Law; and (vi) indebtedness arising from transactions set aside by the Spanish court overseeing the insolvency proceeding (rescisión concursal) and in respect of which such court has determined that the relevant creditor has acted in bad faith.

 

The Guarantor in the subordinated guarantees agrees and each holder of subordinated notes, by his or her acceptance of a subordinated notes guarantee will be deemed to have agreed to the above described subordination of

the subordinated guarantee. Each such holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of the subordinated guarantee. In addition, each holder of subordinated notes by his or her acceptance thereof authorizes and directs the applicable trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the subordinated guarantees as provided in subordinated indenture and as summarized herein and appoints the applicable trustee his attorney-in-fact for any and all such purposes.

 

Any renewal or extension of the time of payment of any Guarantor Senior Indebtedness or the exercise by the holders of Guarantor Senior Indebtedness of any of their rights under any instrument creating or evidencing Guarantor Senior Indebtedness, including, without limitation, the waiver of default thereunder, may be made or done all without notice to or assent from the holders of the subordinated notes or the applicable trustee.

 

No compromise, alteration, amendment, modification, extension, renewal or other change of, or waiver, consent or other action in respect of, any liability or obligation under or in respect of, or of any of the terms, covenants or conditions of any indenture or other instrument under which any Guarantor Senior Indebtedness is outstanding or of such Guarantor Senior Indebtedness, whether or not such release is in accordance with the provisions of any applicable document, will in any way alter or affect any of the subordination provisions of the subordinated indenture or of the subordinated notes relating to the subordination thereof.

 

Events of Default

 

“Event of Default” , wherever used below with respect to subordinated notes of any series, means any one of the following events, unless such event is specifically deleted or modified in or pursuant to supplemental indentures or Board resolutions creating a particular series of subordinated notes or in the officers’ certificate for such series:

 

 

If an Event of Default with respect to the subordinated notes of any series at the time outstanding occurs and is continuing, then the applicable trustee, acting pursuant to an Act (as defined in the subordinated indenture) of the holders of the subordinated notes of the relevant series, with respect to all outstanding subordinated notes of such series, or the holder of any outstanding subordinated note of the relevant series, with respect to such subordinated note held by such holder, may declare the principal, or such lesser amount as may be provided for in the subordinated notes of such series, of such subordinated notes or subordinated notes, as the case may be, to be due and payable immediately in accordance with the terms of the subordinated indenture.

 

At any time after such a declaration of acceleration with respect to the subordinated notes or a subordinated note, as the case may be, of any series has been made and before a judgment or decree for payment of the money due has been obtained by the applicable trustee as provided in the subordinated indenture, the holders of not less than a

majority in principal amount of the outstanding subordinated notes of such series may, by Act (as defined in the subordinated indenture), rescind and annul such declaration and its consequences if:

 

1. BBVA Subordinated Capital or the Guarantor has paid or deposited with the applicable trustee a sum of money sufficient to pay:

 

(A) all overdue installments of any interest on and additional amounts with respect to all subordinated notes of such series;

 

(B) the principal of and any premium on any subordinated notes of such series which have become due otherwise than by such declaration of acceleration and interest thereon and any additional amounts with respect thereto at the rate or rates borne by or provided for in such subordinated notes;

 

(C) to the extent that payment of such interest or additional amounts is lawful, interest upon overdue installments of any interest and additional amounts at the rate or rates borne by or provided for in such subordinated notes; and

 

(D) all sums paid or advanced by the applicable trustee and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due to the applicable trustee under the subordinated indenture; and

 

2. all Events of Default with respect to subordinated notes of such series, other than the non-payment of the principal of and any premium and interest on, and any additional amounts with respect to subordinated notes of such series which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in the subordinated indenture.

 

No such rescission shall affect any subsequent default or impair any right consequent thereon.

 

Subject to payment of the applicable trustee’s fees and expenses, the holders of not less than a majority in principal amount of the outstanding subordinated notes of any series on behalf of the holders of all the subordinated notes of such series may, by Act (as defined in the subordinated indenture), waive any past Event of Default under the subordinated indenture with respect to such series and its consequences, except a default in the payment of the principal of or any premium, or interest on, or any additional amounts with respect to, any subordinated note of such series or in respect of a covenant or provision of the subordinated indenture that cannot be modified or amended without the consent of the holder of each outstanding subordinated note of such series affected.

 

No holder of any of the subordinated notes of any series has the right to institute any proceeding, judicial or otherwise, with respect to the subordinated indenture or any remedy thereunder, unless (i) such holder has previously given written notice to the applicable trustee of a continuing Event of Default with respect to the subordinated notes of such series; (ii) the holders of not less than 25% in principal amount of the outstanding subordinated notes of such series have made written request to the applicable trustee to institute proceedings in respect of such Event of Default as trustee under the subordinated indenture with respect to such series of subordinated notes and such holder or holders have offered to the applicable trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iii) the applicable trustee has failed to institute any such proceeding within 60 days after its receipt of such notice, request and offer of indemnity; and (iv) the applicable trustee has not received any direction inconsistent with such written request during such 60-day period by the holders of a majority in principal amount of the outstanding subordinated notes of such series.

 

Such limitations described above do not, however, apply to the right of each holder, which is absolute and unconditional, to receive payment of the principal of, any premium and, subject to certain provisions in the subordinated indenture with respect to payment of defaulted interest, interest on, and any additional amounts with respect to, his or her subordinated note or notes on or after the respective maturity or maturities therefor specified in such subordinated notes (or, in the case of redemption, on or after the redemption date or, in the case of repayment at the option of such holder if provided in or pursuant to the applicable subordinated indenture, on or after the date such repayment is due) and to institute suit for the enforcement of any such payment, which cannot be impaired or affected without the consent of such holder, except that holders of not less than 75% in principal amount of outstanding subordinated notes of a series may consent by Act (as defined in the subordinated indenture), on behalf of the holders of all outstanding subordinated notes of such series, to the postponement of the maturity of any

installment of interest for a period not exceeding three years from the original maturity of such installment (which original maturity shall have been fixed, for the avoidance of doubt, prior to any previous postponements of such installment).

 

Within 90 days after the occurrence of any default under the subordinated indenture known to the applicable trustee with respect to the subordinated notes of any series, such trustee shall transmit by mail to all holders of subordinated notes of such series entitled to receive reports, notice of such default, unless such default shall have been cured or waived. Except in the case of a default in the payment of the principal of (or premium, if any), or interest, if any, on, or additional amounts with respect to, any subordinated note of such series, such trustee may withhold such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or responsible officers of such trustee in good faith determine that the withholding of such notice is in the best interest of the holders of subordinated notes of such series. For the purpose of this paragraph, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to subordinated notes of such series.

 

Subrogation

 

Holders of the subordinated notes will have no rights of subrogation in respect of any payments or distributions made to holders of any Issuer Senior Indebtedness as a result of the subordination provisions of the subordinated notes.

 

Perpetual Subordinated Debt

 

Neither BBVA U.S. Senior nor BBVA Subordinated Capital may issue subordinated notes that do not have a stated maturity or which may otherwise be treated as equity for U.S. federal income tax purposes.