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Filed pursuant to Rule 424(b)(5)
Registration No. 333-266391

 

PROSPECTUS SUPPLEMENT

(to prospectus dated July 29, 2022)

 

LOGO

Banco Bilbao Vizcaya Argentaria, S.A.

$1,000,000,000 Series 12 Non-Step-Up Non-Cumulative Contingent

Convertible Perpetual Preferred Tier 1 Securities

We are offering $1,000,000,000 aggregate liquidation preference of series 12 non-step-up non-cumulative contingent convertible perpetual preferred tier 1 securities (the “Preferred Securities”). The Preferred Securities are perpetual securities with no maturity date.

From and including September 19, 2023 (the “Closing Date”) to but excluding September 19, 2029 (the “First Reset Date”) the Preferred Securities will accrue Distributions (as defined herein) at the rate of 9.375% per annum. In respect of the period from and including the First Reset Date and each fifth anniversary thereafter (each a “Reset Date”) to but excluding the next succeeding Reset Date (a “Reset Period”), the applicable per annum Distribution Rate (as defined herein) will be equal to the aggregate of 5.099% (the “Initial Margin”) and the 5-year UST (as defined herein) for such Reset Period, and such aggregate converted to a quarterly rate in accordance with market convention (rounded to four decimal places, with 0.00005 rounded down), all as determined by the Calculation Agent (as defined in the accompanying prospectus) on the relevant Reset Determination Date (as defined herein). The rate at which the Preferred Securities accrue Distributions in accordance with the Indenture (as defined herein) is referred to herein as the “Distribution Rate”. The Distribution Rate following any Reset Date may be lower than the initial Distribution Rate and/or the Distribution Rate that applies immediately prior to such Reset Date. Subject to the conditions as described further below, we will pay Distributions on the Preferred Securities quarterly in arrears on March 19, June 19, September 19 and December 19 of each year (each a “Distribution Payment Date”), commencing on December 19, 2023. The Preferred Securities carry a liquidation preference of $200,000 per Preferred Security (the “Liquidation Preference”).

We may redeem the Preferred Securities, in whole but not in part, at our option and in our sole discretion, at any time at the Redemption Price (as defined herein) upon the occurrence of a Tax Event or a Capital Event (each as defined herein) or if Preferred Securities representing, in the aggregate, 75% or more of the aggregate Liquidation Preference of the Preferred Securities (including any Preferred Securities issued after the Closing Date and any Preferred Securities which have been cancelled by the trustee in accordance with the Indenture) have been purchased by or on behalf of BBVA or any member of the BBVA Group, subject, in each case, to the conditions described in this prospectus supplement and the accompanying prospectus. The Preferred Securities will also be redeemable in whole but not in part, at our option and in our sole discretion, on any day falling in the period commencing on (and including) March 19, 2029 (the “First Call Date”) and ending on (and including) the First Reset Date, and on any Distribution Payment Date thereafter, at the Redemption Price, subject to the conditions described in this prospectus supplement and the accompanying prospectus.

Unless previously converted into Common Shares (as defined herein) pursuant to the conversion provisions of the Indenture and except as provided in the second paragraph under “Certain Terms of the Preferred Securities—Liquidation Distribution” herein, the payment obligations of BBVA under the Preferred Securities will be direct, unconditional, unsecured and subordinated obligations of BBVA and, upon the insolvency (concurso de acreedores) of BBVA, in accordance with and only to the extent permitted by the Spanish Insolvency Law (as defined herein) and any other applicable laws relating to or affecting the enforcement of creditors’ rights in Spain (including, without limitation, Additional Provision 14.3 of Law 11/2015 (as defined herein)), but subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), for so long as the Preferred Securities constitute an Additional Tier 1 Instrument (as defined herein) of BBVA, such Preferred Securities will rank: (i) junior to: (a) any claim in respect of any unsubordinated obligations of BBVA (including where the relevant claim subsequently becomes subordinated pursuant to Article 281.1.1º of the Spanish Insolvency Law); and (b) any claim in respect of any subordinated obligations of BBVA, present and future, other than under any outstanding Additional Tier 1 Instrument of BBVA (other than, to the extent permitted by law, any Parity Securities (as defined herein), whether so ranking by law or their terms); (ii) pari passu with each other and with all other claims in respect of contractually subordinated obligations of BBVA under any outstanding Additional Tier 1 Instruments, present and future (and, to the extent permitted by law, pari passu with any other Parity Securities, whether so ranking by law or their terms); and (iii) senior to the Common Shares and any other subordinated obligations of BBVA which by law rank junior to the Preferred Securities (including, to the extent permitted by law, any contractually subordinated obligations of BBVA expressed by their terms to rank junior to the Preferred Securities), such that any relevant claim in respect of the Preferred Securities will be satisfied, as appropriate, only to the extent that all claims ranking senior to it have first been satisfied in full, and then pro rata with any claims ranking pari passu with it, in each case as provided herein.

BBVA’s obligations under the Preferred Securities are subject to, and may be limited by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority (each as defined herein).


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As described in this prospectus supplement and the accompanying prospectus, upon the occurrence of a Trigger Event (as defined herein), which shall occur if, at any time, as determined by us, our CET1 ratio or the CET1 ratio of the BBVA Group is less than 5.125% (all as defined herein), the Preferred Securities are mandatorily and irrevocably convertible into Common Shares and all of our obligations under the Preferred Securities (except with respect to the payment of certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares) shall be irrevocably and automatically released in consideration of our issuance and delivery of the Common Shares to the Conversion Shares Depository (as defined herein).

In addition, in the event of a Capital Reduction (as defined herein), except if we have given a redemption notice prior to or at the same time as such Capital Reduction, the Preferred Securities are mandatorily and irrevocably convertible into Common Shares unless a holder elects that the Preferred Securities held by it shall not be so converted by delivery and receipt of a duly completed and signed Election Notice (as defined herein) on or before the tenth Business Day (as defined herein) immediately following the Capital Reduction Notice Date (as defined in the accompanying prospectus), and all of our obligations under the Preferred Securities that are so converted (except with respect to the payment of certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares) shall be irrevocably and automatically released in consideration of our issuance and delivery of the Common Shares to the Conversion Shares Depository (except that we may need to pay certain accrued and unpaid Distributions (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein)).

By its acquisition of any Preferred Securities, each holder (including, for these purposes, each holder of a beneficial interest in a Preferred Security) acknowledges, accepts, consents to and agrees to be bound by the exercise and effects of the Spanish Bail-in Power as set forth under “Certain Terms of the Preferred Securities—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”.

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 accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

The Preferred Securities are not intended to be sold and should not be sold to retail investors (which for the purposes of this prospectus supplement shall include retail clients) in any jurisdiction. Prospective investors are referred to the section headed “Notice to Investors” on page S-2 of this prospectus supplement.

Investing in the Preferred Securities involves significant risks. See “Risk Factors” beginning on page S-40 of this prospectus supplement and page 6 of the accompanying prospectus, as well as in the documents incorporated by reference.

 

     Issue Price     Underwriting
Discounts and
Commissions(1)
    Proceeds to
BBVA, Before
Expenses
 

Per Preferred Security

     100.000     0.750     99.250

Total Preferred Securities

   $ 1,000,000,000     $ 7,500,000     $ 992,500,000  

 

(1)

The underwriters have agreed to reimburse us for certain of the expenses relating to the offering. See “Underwriting (Conflicts of Interest)”.

The initial price to the public set forth above does not include accrued Distributions, if any. Distributions on the Preferred Securities will accrue from September 19, 2023 and, to the extent they are not cancelled or deemed cancelled previously or thereafter in accordance with the terms of the Preferred Securities and as further described herein and in the accompanying prospectus (as amended hereby), must be paid by the purchaser if the Preferred Securities are delivered thereafter.

Potential investors should review the summaries set forth under “Spanish Tax Considerations” and “U.S. Tax Considerations” in the accompanying prospectus and “Material U.S. Federal Income Tax Considerations” of this prospectus supplement for information on certain material tax consequences of the acquisition, ownership and disposition of the Preferred Securities.

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

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

The underwriters expect that the Preferred Securities will be ready for delivery through the book-entry facilities of The Depository Trust Company (“DTC”) and its participants, including Clearstream Banking, S.A. (“Clearstream Luxembourg”) and Euroclear Bank SA/NV (“Euroclear”), on or about September 19, 2023, which will be the sixth New York business day following the date of this prospectus supplement. Pursuant to Rule 15c6-1 under the Exchange Act, trades in the secondary market are generally required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Preferred Securities prior to the delivery of the Preferred Securities hereunder may be required to specify alternative settlement arrangements to prevent a failed settlement. Such purchasers should consult their own advisors.

 

 

Joint Bookrunners

 

Barclays   BBVA   BofA Securities
HSBC   Morgan Stanley   SOCIETE GENERALE

 

 

Prospectus Supplement dated September 11, 2023


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TABLE OF CONTENTS

Prospectus Supplement

 

     Page  

Notice to Investors

     S-2  

About this Prospectus Supplement

     S-10  

Certain Definitions

     S-11  

Incorporation of Information by Reference

     S-13  

Forward-Looking Statements

     S-14  

Regulatory Statement

     S-17  

Summary

     S-18  

Risk Factors

     S-40  

Use of Proceeds

     S-55  

Consolidated Capitalization and Indebtedness of the BBVA Group

     S-56  

Certain Terms of the Preferred Securities

     S-57  

Spanish Tax Considerations

     S-82  

Material U.S. Federal Income Tax Considerations

     S-92  

Underwriting (Conflicts of Interest)

     S-93  

Validity of the Securities

     S-99  

Experts

     S-99  

Prospectus

 

     Page  

About this Prospectus

     1  

Where You Can Find More Information

     2  

Incorporation of Documents by Reference

     2  

Forward-Looking Statements

     4  

Risk Factors

     6  

The BBVA Group

     7  

Use of Proceeds

     8  

Consolidated Capitalization and Indebtedness of the BBVA Group

     9  

Description of BBVA Ordinary Shares

     10  

Description of BBVA American Depositary Shares

     20  

Description of Rights to Subscribe for Ordinary Shares

     28  

Description of the Notes of BBVA

     29  

Description of the Contingent Convertible Preferred Securities of BBVA

     53  

Spanish Tax Considerations

     93  

U.S. Tax Considerations

     104  

Benefit Plan Investor Considerations

     112  

Plan of Distribution

     113  

Validity of the Securities

     115  

Experts

     115  

Enforcement of Civil Liabilities

     115  

 

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NOTICE TO INVESTORS

Agreements and Acknowledgments of Investors, including Holders and Beneficial Owners

Distribution Cancellation

As described under “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein, the terms of the Preferred Securities provide that we may elect, in our sole and absolute discretion, to cancel the payment of any Distribution on the Preferred Securities in whole or in part at any time and for any or no reason. As described under “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” herein, the terms of the Preferred Securities also provide for circumstances under which we will be restricted from making a Distribution (in whole or in part) on the Preferred Securities on a Distribution Payment Date, and the Distribution payable in respect of any such Distribution Payment Date shall be deemed cancelled (in whole or in part) and therefore not due and payable. Distributions will only be due and payable on a Distribution Payment Date to the extent they are not cancelled or deemed cancelled previously or thereafter in accordance with the terms of the Preferred Securities and as further described herein and in the accompanying prospectus (as amended hereby). Any Distributions cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances described herein shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the Preferred Securities shall have no rights thereto or to receive any additional Distributions or compensation as a result of such cancellation or deemed cancellation. For the avoidance of doubt, non-payment of a Distribution (or any part thereof) in respect of the Preferred Securities shall evidence our exercise of our discretion to cancel such Distribution (or such part thereof), and accordingly such Distribution (or such part thereof) shall also not be due and payable. Furthermore, Distributions on the Preferred Securities will be non-cumulative. Accordingly, if any Distribution (or any part thereof) is not paid in respect of the Preferred Securities, then the right of the holders to receive the relevant Distribution (or such part thereof) in respect of the relevant Distribution Period (as defined herein) will be extinguished and we will have no obligation to pay such Distribution (or such part thereof) accrued for such Distribution Period or to pay any interest thereon, whether or not Distributions on the Preferred Securities are paid in respect of any future Distribution Period.

As the Preferred Securities are perpetual and have no fixed maturity or fixed redemption date, unless the Preferred Securities are redeemed, a holder may not receive any payments with respect to the Preferred Securities as we are not required to pay the Liquidation Preference of the Preferred Securities at any time prior to a Liquidation Event (as defined herein) and we will have the sole and absolute discretion at all times and for any or no reason to cancel in whole or in part any Distribution.

No premium, upon redemption or otherwise, shall be payable by BBVA on the Preferred Securities.

By acquiring any Preferred Security, each holder and beneficial owner acknowledges and agrees that: (i) Distributions are payable solely at our discretion, and no amount of Distribution shall become or remain due and payable in respect of the relevant Distribution Period to the extent that it has been cancelled or deemed cancelled by us and/or as a result of the limitations on payment set forth under “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein; and (ii) a cancellation or deemed cancellation of any Distribution (in whole or in part) in accordance with the terms of the Indenture and the Preferred Securities shall not constitute an Enforcement Event (as defined herein) or other default under the terms of the Preferred Securities or the Indenture, or the occurrence of any event related to our insolvency or entitle holders to take any action to cause such Distribution to be paid or the liquidation, dissolution or winding-up of BBVA or in any way limit or restrict us from making any distribution or equivalent payment in connection with any instrument, including any instrument ranking junior to the Preferred Securities (including, without limitation, any CET1 Capital (as defined herein) of BBVA or any member of the BBVA Group), or in respect of any Parity Security or other Security (as defined herein), except to the extent Applicable Banking Regulations (as defined herein) otherwise provide.

Conversion

As described under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus (as amended hereby), if a Trigger Event occurs, then a Trigger Conversion will occur on the Conversion Settlement Date (as defined herein), and if a Capital Reduction occurs, then, except if we have given a redemption notice prior to or at the same time as such Capital Reduction, a Capital Reduction Conversion (as defined herein) will occur on the Conversion Settlement Date, unless (in the case of a Capital

 

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Reduction) a holder elects that the Preferred Securities held by it shall not be so converted by delivery and receipt of a duly completed and signed Election Notice on or before the tenth Business Day immediately following the Capital Reduction Notice Date. Upon occurrence of a Conversion Event (as defined herein), all of our obligations under the Preferred Securities shall be irrevocably and automatically released (except with respect to the payment of certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares and except further that, upon a Capital Reduction Conversion, we may need to pay certain accrued and unpaid Distributions (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein)) in consideration of our issuance and delivery of the Common Shares to the Conversion Shares Depository (as defined herein), and under no circumstances shall such released obligations be reinstated. The Common Shares shall initially be registered in the name of the Conversion Shares Depository (which shall hold the Common Shares on behalf of the holders of the Preferred Securities).

The Preferred Securities are not convertible into Common Shares at the option of holders of Preferred Securities at any time and are not redeemable in cash as a result of a Trigger Event or a Capital Reduction (each, a “Conversion Event”).

Notwithstanding any other term of the Preferred Securities or the Indenture, by its acquisition of any Preferred Security, each holder and beneficial owner of a Preferred Security shall be deemed to have (i) agreed to all the terms and conditions of the Preferred Securities, including, without limitation, those related to (y) Conversion (as defined in the accompanying prospectus) following a Trigger Event or Capital Reduction, as the case may be, and (z) the appointment of the Conversion Shares Depository, the issuance of the Common Shares to the Conversion Shares Depository, and acknowledged that such events in (y) and (z) may occur without any further action on the part of the holders or beneficial owners of the Preferred Securities or the trustee; (ii) agreed that effective upon, and following, a Conversion Event, no amount shall be due and payable to the holders of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion in accordance with the provisions described in “Certain Terms of the Preferred Securities—Conversion—Conversion Upon Capital Reduction” herein (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein), and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares), and our liability to pay any amounts (including the Liquidation Preference of, or any Distribution in respect of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion in accordance with the provisions described in “Certain Terms of the Preferred Securities—Conversion—Conversion Upon Capital Reduction” herein (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein), and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares)) shall be automatically released, and the holders of the Preferred Securities so converted shall not have the right to give a direction to the trustee with respect to the Conversion Event and any related Conversion; (iii) agreed that following a Conversion Event, the Relevant Spanish Resolution Authority may exercise its Spanish Bail-in Power with respect to the Preferred Securities or any Common Shares that may be received following a Conversion, which exercise may result in any of the consequences described in the first paragraph under “Certain Terms of the Preferred Securities—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”, the cancellation of the Conversion and/or the implementation of material changes to the Conversion terms, (iv) waived, to the extent permitted by the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), any claim against the trustee arising out of its acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Indenture and in connection with the Preferred Securities so converted or to be converted, including, without limitation, claims related to or arising out of or in connection with a Conversion Event and/or any Conversion; and (v) authorized, directed and requested DTC, the European Clearing Systems (as defined in the accompanying prospectus) and any direct participant in DTC, the European Clearing Systems or other intermediary or depositary through which it holds such Preferred Securities to be converted to take any and all necessary action, if required, to implement the Conversion without any further action or direction on the part of such holder or beneficial owner of such Preferred Securities or the trustee.

 

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Substitution and Modification

Notwithstanding any other term of the Preferred Securities or the Indenture, by its acquisition of the Preferred Securities, each holder and beneficial owner acknowledges, accepts, consents to and agrees that if a Capital Event (as defined herein) or a Tax Event (as defined herein), as applicable, occurs and is continuing, we may, except if a Trigger Event occurs or shall have occurred, and except if a Capital Reduction occurs or shall have occurred (other than in respect of Preferred Securities with respect to which a duly completed Election Notice has been received during the Election Period), substitute all (but not less than all) of the Preferred Securities or modify the terms of all (but not less than all) of the Preferred Securities, without any requirement for the consent or approval of the trustee or the holders or beneficial owners of the Preferred Securities, so that such Preferred Securities are substituted for, or their terms are modified to, become again, or remain Qualifying Preferred Securities (as defined herein), subject to satisfaction of the requirements and limitations set forth herein.

By its acquisition of any Preferred Security, each holder and beneficial owner acknowledges, accepts, consents to and agrees to be bound by any substitution of or modification to the Preferred Securities and to grant to us and the trustee full power and authority to take any action and/or to execute and deliver any document in the name and/or on behalf of such holder or beneficial owner, as the case may be, which is necessary or convenient to complete the substitution or modification of the terms of the Preferred Securities, as applicable, as described in “Certain Terms of the Preferred Securities—Substitution and Modification of the Preferred Securities” below.

Spanish Bail-in Power

Notwithstanding anything to the contrary in the Preferred Securities, the Indenture or any other agreements, arrangements, or understandings between BBVA and any holder of the Preferred Securities, by its acquisition of any Preferred Security, each holder (which, for the purposes of this section, includes each holder of a beneficial interest in any Preferred Security) acknowledges, accepts, consents to and agrees to be bound by: (i) the exercise and effects of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may be imposed with or without any prior notice with respect to the Preferred Securities, and may include and result in any of the following, or some combination thereof: (a) the reduction or cancellation of all, or a portion, of the Amounts Due (as defined herein) on the Preferred Securities; (b) the conversion of all, or a portion, of the Amounts Due on the Preferred Securities into shares, other securities or other obligations of BBVA or another person (and the issue to or conferral on the holder of any such shares, securities or obligations), including by means of an amendment, modification or variation of the terms of the Preferred Securities; (c) the cancellation of the Preferred Securities; (d) the inclusion of a maturity date for the Preferred Securities or the amendment or alteration thereof, or the amendment of the Liquidation Preference or Distributions payable on the Preferred Securities, or the date on which Distributions become payable, including by suspending payment for a temporary period; and (ii) the variation of the terms of the Preferred Securities or the rights of the holders thereunder or under the Indenture, as deemed necessary by the Relevant Spanish Resolution Authority, to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

Further, by its acquisition of any Preferred Security, each holder acknowledges, accepts, consents to and agrees to be bound by (i) the exercise and effect of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may be imposed with or without any prior notice, with respect to any Common Shares that may be delivered to it upon the Conversion (if any) of the Preferred Securities; and (ii) the variation of the terms of such Common Shares to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

See “Certain Terms of the Preferred Securities—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”.

Restrictions on Marketing and Sales

The Preferred Securities are complex financial instruments with high risk. They are not a suitable or appropriate investment for all investors. In particular, the Preferred Securities are not intended to be sold and should not be sold to retail investors in any jurisdiction, including the United States. See “Risk Factors—The Preferred Securities are not a suitable investment for all investors”.

In the United States, the Preferred Securities are intended to be sold only to institutional investors.

 

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In some jurisdictions, regulatory authorities have adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as the Preferred Securities to retail investors. By purchasing, or making or accepting an offer to purchase, any Preferred Securities from BBVA and/or the underwriters, each prospective investor represents, warrants, agrees with and undertakes to BBVA and each underwriter that it has and will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside or outside the European Economic Area (the “EEA”) or the United Kingdom) relating to the promotion, offering, distribution and/or sale of the Preferred Securities (including without limitation MiFID II (as defined below) as implemented in each Member State of the EEA and the UK MiFIR Product Governance Rules (as defined below) in the United Kingdom) and any other applicable laws, regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the Preferred Securities by investors in any relevant jurisdiction. Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Preferred Securities from BBVA and/or the underwriters, the foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its underlying client.

Notice to Prospective Investors in the EEA

None of this prospectus supplement, the accompanying prospectus or any related free writing prospectus is a prospectus for the purposes of Regulation (EU) 2017/1129. Prospective investors are also referred to the section headed “—Prohibition on Marketing and Sales to Retail Investors” below in this prospectus supplement for further information.

PROHIBITION OF SALES TO EEA RETAIL INVESTORS—The Preferred Securities shall not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a “retail investor” means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97, as amended (the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”) for offering or selling the Preferred Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Preferred Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

MiFID II product governance/Professional investors and ECPs only target market—Solely for the purposes of each manufacturer’s product approval process, the target market assessment in respect of the Preferred Securities has led to the conclusion that: (i) the target market for the Preferred Securities is eligible counterparties (“ECPs”) and professional clients only, each as defined in MiFID II; (ii) the Preferred Securities are incompatible with the knowledge, experience, needs, characteristics and objectives of clients which are retail clients, as defined in MiFID II, and accordingly the Preferred Securities shall not be offered or sold to any retail clients; and (iii) all channels for distribution of the Preferred Securities to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Preferred Securities (an “EU distributor”) should take into consideration the manufacturers’ target market assessment; however, an EU distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Preferred Securities (by either adopting or refining the manufacturers’ target market assessment) and determining appropriate distribution channels.

Notice to Prospective Investors in Spain—The Preferred Securities must not be offered, distributed or sold in Spain in the primary market. However, the Preferred Securities may be sold to Spanish resident investors in circumstances that satisfy the requirements set forth in the ruling 1500/2004 of the Directorate General for Taxation (Dirección General de Tributos) of July 27, 2004.

Notwithstanding this, the Preferred Securities shall not be offered, sold or otherwise made available at any time to any retail investor (as defined above) in Spain and any sales of the Preferred Securities in Spain according to the previous paragraph shall be made only to professional clients (clientes profesionales) as defined in Article 194 of the Spanish Securities Markets and Investment Services Act (Ley 6/2023, de 17 de marzo, de los Mercados de Valores y de los Servicios de Inversión) (the “LMV”) or eligible counterparties (contrapartes elegibles) as defined in Article 196 of the LMV and as further limited by the second paragraph of Article 192 of the LMV.

No publicity of any kind as to the Preferred Securities shall be made in Spain.

 

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Notice to Prospective Investors in the United Kingdom

None of this prospectus supplement, the accompanying prospectus or any related free writing prospectus is a prospectus for the purposes of Regulation (EU) 2017/1129 as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended by the European Union (Withdrawal Agreement) Act 2020 (the “EUWA”). Prospective investors are also referred to the section headed “—Prohibition on Marketing and Sales to Retail Investors” below in this prospectus supplement for further information.

PROHIBITION OF SALES TO UNITED KINGDOM RETAIL INVESTORS—The Preferred Securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any UK retail investor in the United Kingdom. For these purposes, a “UK retail investor” means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law in the United Kingdom by virtue of the EUWA; or (ii) a customer within the meaning of the provisions of the United Kingdom’s Financial Services and Markets Act 2000, as amended (the “FSMA”) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law in the United Kingdom by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law in the United Kingdom by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Preferred Securities or otherwise making them available to UK retail investors in the United Kingdom has been prepared and therefore offering or selling the Preferred Securities or otherwise making them available to any UK retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.

UK MiFIR product governance/Professional investors and ECPs only target market—Solely for the purposes of each manufacturer’s product approval process, the target market assessment in respect of the Preferred Securities has led to the conclusion that: (i) the target market for the Preferred Securities is only eligible counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook (the “COBS”), and professional clients, as defined in Regulation (EU) No 600/2014 as it forms part of domestic law in the United Kingdom by virtue of the EUWA (“UK MiFIR”); (ii) the Preferred Securities are incompatible with the knowledge, experience, needs, characteristics and objectives of clients which are retail clients, as defined in COBS 3.4, and accordingly the Preferred Securities shall not be offered or sold to any retail clients; and (iii) all channels for distribution of the Preferred Securities to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Preferred Securities (a “UK distributor”) should take into consideration the manufacturers’ target market assessment; however, a UK distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Preferred Securities (by either adopting or refining the manufacturers’ target market assessment) and determining appropriate distribution channels.

The communication of this prospectus supplement, the accompanying prospectus, any related free writing prospectus and any other document or materials relating to the issue of the Preferred Securities offered hereby is not being made, and such documents and/or materials have not been approved, by an authorized person for the purposes of section 21 of the FSMA. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. This prospectus supplement and such other documents and/or materials are for distribution only to those persons who (i) have professional experience in matters relating to investments and who fall within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”)), (ii) fall within Article 49(2)(a) to (d) of the Financial Promotion Order, (iii) are outside the United Kingdom or (iv) are persons to whom it may otherwise lawfully be made under the Financial Promotion Order (all such persons together being referred to as “relevant persons”). This prospectus supplement is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this prospectus supplement, the accompanying prospectus, any related free writing prospectus and any other document or materials relates will be engaged in only with relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this prospectus supplement, the accompanying prospectus or any related free writing prospectus or any of their contents.

 

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Prohibition on Marketing and Sales to Retail Investors

The Preferred Securities are complex financial instruments with high risk. They are not a suitable or appropriate investment for all investors, especially retail investors. See “Risk Factors—The Preferred Securities are not a suitable investment for all investors”. In some jurisdictions, regulatory authorities have adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as the Preferred Securities. Each of the underwriters has represented and agreed that offers of the Preferred Securities in the EEA and in the United Kingdom shall only be directed specifically at or made to professional clients as defined in point (10) of Article 4(1) of MiFID II or as defined in point (8) of Article 2(1) of UK MiFIR.

In particular, in the United Kingdom, the COBS requires, in summary, that the Preferred Securities should not be offered or sold to retail clients (as defined in COBS 3.4) in the United Kingdom. In addition, (i) on January 1, 2018, the PRIIPs Regulation became directly applicable in all EEA member states, including in the case of the United Kingdom, under the UK PRIIPs Regulation from January 1, 2021, and (ii) MiFID II was required to be implemented in EEA member states, including the United Kingdom, by January 3, 2018, and was implemented in Spain through Royal Decree-Law 14/2018 of September 28, amending the revised text of the Spanish Securities Markets Act, approved by Royal Legislative Decree 4/2015 of October 23, and Royal Decree 1464/2018 of December 21, developing the revised text of the Spanish Securities Markets Act, approved by Royal Legislative Decree 4/2015 of October 23, and Royal Decree-Law 21/2017 of December 29, on urgent measures for the adaptation of Spanish law to European Union regulations on securities market matters, and partially amending Royal Decree 217/2008, of February 15, on the legal regime of investment services companies and other entities that provide investment services and partially amending the Regulations of Law 35/2003 of November 4, on Collective Investment Institutions, approved by Royal Decree 1309/2005 of November 4, and other royal decrees on securities market matters. Together the COBS, the PRIIPs Regulation, the UK PRIIPs Regulation and MiFID II (including as implemented in Spain and the United Kingdom by virtue of the EUWA) are referred to as the “European Regulations”.

The European Regulations set out various obligations in relation to (i) the manufacture and distribution of financial instruments and (ii) the offering, sale and distribution of packaged retail and insurance-based investment products and certain contingent write-down or convertible securities such as the Preferred Securities.

In addition, in October 2018, the Hong Kong Monetary Authority (the “HKMA”) issued guidance on enhanced investor protection measures on the sale and distribution of debt instruments with loss absorption features and related products (the “HKMA Circular”). Under the HKMA Circular, debt instruments with loss absorption features, being subject to the risk of being written-down or converted to ordinary shares, and investment products that invest mainly in, or whose returns are closely linked to the performance of such instruments, are to be targeted in Hong Kong at professional investors (as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”) and any rules made under the SFO, a Hong Kong professional investor) only and are generally not suitable for retail investors in either the primary or secondary markets.

Further, in Singapore, the Securities and Futures Act 2001 (2020 Revised Edition) of Singapore (as amended, the “SFA”), the Financial Advisers Act (Chapter 110 of Singapore) (the “FAA”), the Guidelines on Fair Dealing—Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers (the “Guidelines on Fair Dealing”) and the Code of Conduct for Private Banking in Singapore (the “PB Code”) contain additional obligations and/or guidance in relation to the marketing, offer and sale of the Preferred Securities to investors in Singapore. Together, the SFA, the FAA, the Guidelines on Fair Dealing and the PB Code are referred to as the “Singapore Regulations”, and the Singapore Regulations, together with the European Regulations and the HKMA Circular, are referred to as the “Regulations”.

In addition to the above obligations and Regulations, there is the need to comply at all times with all other applicable laws, regulations, and regulatory guidance (whether inside or outside the EEA, the United Kingdom, Hong Kong or Singapore) relating to the promotion, offering, distribution and/or sale of the Preferred Securities (or any beneficial interests therein), including (without limitation) MiFID II (including as implemented in Spain and the United Kingdom, and as the relevant implementing regulations form part of UK domestic law by virtue of the EUWA), the UK FCA Handbook and any other such laws, regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the Preferred Securities (or any beneficial interests therein) for investors in any relevant jurisdiction.

 

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Each of BBVA and the underwriters are required to comply with some or all of the Regulations. By purchasing, or making or accepting an offer to purchase, any Preferred Securities (or a beneficial interest in the Preferred Securities) from BBVA and/or any underwriters, each prospective investor will be deemed to represent, warrant, acknowledge, consent, accept, agree with and undertake to BBVA and each of the underwriters that:

 

  (i)

it is not a retail client (as defined in point (11) of Article 4(1) of MiFID II) (an “EEA Retail Client”) or in COBS 3.4 (a “UK Retail Client” and together with an EEA Retail Client, a “retail client”);

 

  (ii)

whether or not it is subject to the Regulations, it will not:

 

  a.

sell or offer the Preferred Securities (or any beneficial interests therein) to any retail clients or any person in Hong Kong that is not a Hong Kong professional investor or any person in Singapore that is not an “accredited investor” or an “institutional investor” (each as defined in Section 4A of the SFA) (a “Singapore professional investor”); or

 

  b.

communicate (including the distribution of this prospectus supplement, the accompanying prospectus and any related free writing prospectus) or approve any invitation or inducement to participate in, acquire or underwrite the Preferred Securities (or any beneficial interests therein) where that invitation or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail client or any person in Hong Kong or Singapore that is not a Hong Kong professional investor or a Singapore professional investor, respectively.

In selling or offering the Preferred Securities or making or approving communications relating to the Preferred Securities, it may not rely on the limited exemptions set out in the COBS;

 

  (iii)

if it is a person in Hong Kong, it is a Hong Kong professional investor;

 

  (iv)

if it is a person in Singapore, it is a Singapore professional investor; and

 

  (v)

it will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside or outside the EEA, the United Kingdom, Hong Kong or Singapore) relating to the promotion, offering, distribution and/or sale of the Preferred Securities (or any beneficial interests therein), including (without limitation) MiFID II (including as implemented in Spain and the United Kingdom, and as the relevant implementing regulations form part of UK domestic law by virtue of the EUWA), the UK FCA Handbook and any other such applicable laws, regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the Preferred Securities (or any beneficial interests therein) by investors in any relevant jurisdiction.

Each prospective investor further acknowledges that:

 

  (i)

the identified target market for the Preferred Securities (for the purposes of the product governance obligations in MiFID II and the UK MiFIR Product Governance Rules) is eligible counterparties and professional clients only;

 

  (ii)

the target market assessment indicates that the Preferred Securities are incompatible with the knowledge, experience, needs, characteristics and objectives of clients which are retail clients (as defined in MiFID II and COBS 3.4) and accordingly the Preferred Securities shall not be offered or sold to any retail clients; and

 

  (iii)

no key information document (KID) under the PRIIPs Regulation and the UK PRIIPs Regulation, respectively, has been prepared and therefore offering or selling the Preferred Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation and the UK PRIIPs Regulation, respectively.

Each potential investor in the Preferred Securities should inform itself of, and comply with, any applicable laws, regulations or regulatory guidance with respect to any resale of the Preferred Securities (or any beneficial interests therein), including the Regulations.

Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Preferred Securities (or any beneficial interests therein) from BBVA and/or the underwriters the foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its underlying client.

 

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Product Classification Pursuant to Section 309B of the Securities and Futures Act 2001 (2020 Revised Edition) of Singapore

In connection with Section 309B of the SFA and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”), BBVA has determined the classification of the Preferred Securities as prescribed capital markets products (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in the Monetary Authority of Singapore (the “MAS”) Notice SFA 04-N12: Notice on the Sale of Investment Products and the MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

 

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ABOUT THIS PROSPECTUS SUPPLEMENT

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

This prospectus supplement, or the information incorporated by reference in this prospectus supplement, may add, update or change information in the accompanying prospectus. If information in this prospectus supplement, or the information incorporated by reference in this prospectus supplement, is inconsistent with the accompanying prospectus, this prospectus supplement, or the information incorporated by reference in this prospectus supplement, will apply and will supersede that information in the accompanying prospectus.

We are offering the Preferred Securities 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 Preferred Securities in some jurisdictions may be restricted by law. See “Notice to Investors—Restrictions on Marketing and Sales” and “Notice to Investors—Prohibition on Marketing and Sales to Retail Investors” 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 Preferred Securities and neither we nor the underwriters are soliciting an offer to buy the Preferred Securities 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. The Preferred Securities are complex financial instruments and are not a suitable or appropriate investment for all investors. In particular, the Preferred Securities are not intended to be sold and should not be sold to retail investors in any jurisdiction. We refer you to the information under “Notice to Investors” and “Underwriting (Conflicts of Interest)” 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.

 

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CERTAIN DEFINITIONS

In this prospectus supplement, the following terms will have the meanings set forth below, unless otherwise indicated or the context otherwise requires:

 

  ·  

1H23 Form 6-K” means our report on Form 6-K containing our unaudited condensed interim consolidated financial statements as of June 30, 2023 and December 31, 2022 and for the six months ended June 30, 2023 and 2022 prepared in accordance with International Accounting Standard 34 (IAS 34) as issued by the International Accounting Standards Board and adopted by the European Union, furnished to the SEC on July 28, 2023 (Accession No. 0000842180-23-000021).

 

  ·  

2022 Form 20-F” means our annual report on Form 20-F for the year ended December 31, 2022, filed with the SEC on March 6, 2023.

 

  ·  

Amounts Due” means the Liquidation Preference, together with any accrued but unpaid Distributions (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary herein), and Additional Amounts (as defined herein), if any, due on the Preferred Securities. References to such amounts will include amounts that have become due and payable, but which have not been paid prior to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority (including monies held in trust by BBVA, any paying agent or the trustee for the payment of such amounts).

 

  ·  

BBVA Group” or the “Group” refers to Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries.

 

  ·  

BRRD” means Directive 2014/59/EU of the European Parliament and of the Council of May 15, 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms or such other directive as may come into effect in place thereof, as implemented into Spanish law by Law 11/2015 and RD 1012/2015, as amended, replaced or supplemented from time to time, and including any other relevant implementing or developing regulatory provisions.

 

  ·  

CNMV” means the Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores).

 

  ·  

Common Shares” refers to ordinary shares in the capital of BBVA, each of which confers on the holder one vote at general meetings of BBVA and is credited as fully paid up.

 

  ·  

Consolidated Financial Statements” means our audited consolidated financial statements as of and for the years ended December 31, 2022, 2021 and 2020, prepared in compliance with the International Financial Reporting Standards as issued by the International Accounting Standards Board and in accordance with the International Financial Reporting Standards adopted by the European Union required to be applied under the Bank of Spain’s Circular 4/2017. The Consolidated Financial Statements are included in our 2022 Form 20-F.

 

  ·  

Law 10/2014” means Law 10/2014 of June 26, on the organization, supervision and solvency of credit institutions (Ley 10/2014, de 26 de junio, de ordenación, supervisión y solvencia de entidades de crédito), as amended, replaced or supplemented from time to time.

 

  ·  

Law 11/2015” means Law 11/2015 of June 18, on the recovery and resolution of credit institutions and investment firms (Ley 11/2015 de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended, replaced or supplemented from time to time.

 

  ·  

Preferred Securities” refers to the non-step-up non-cumulative contingent convertible perpetual preferred tier 1 securities offered hereby.

 

  ·  

Relevant Spanish Resolution Authority” means the Spanish Fund for Orderly Bank Restructuring (Fondo de Reestructuración Ordenada Bancaria), the European Single Resolution Board, the Bank of Spain, the CNMV or any other entity with the authority to exercise the Spanish Bail-in Power from time to time.

 

  ·  

Spain” refers to the Kingdom of Spain.

 

  ·  

Spanish Bail-in Power” means any write-down, conversion, transfer, modification, cancellation or suspension power existing from time to time under: (i) any law, regulation, rule or requirement

 

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applicable from time to time in Spain, relating to the transposition or development of the BRRD, including, but not limited to (a) Law 11/2015, (b) RD 1012/2015 and (c) the SRM Regulation; or (ii) any other law, regulation, rule or requirement applicable from time to time in Spain pursuant to which (a) obligations or liabilities of banks, investment firms or other financial institutions or their affiliates can be reduced, cancelled, modified, transferred or converted into shares, other securities, or other obligations of such persons or any other person (or suspended for a temporary period or permanently) or (b) any right in a contract governing such obligations may be deemed to have been exercised.

 

  ·  

SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of July 15 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended, replaced or supplemented from time to time.

 

  ·  

we”, “us”, “our”, “BBVA” and the “Issuer” refer to Banco Bilbao Vizcaya Argentaria, S.A. unless the context otherwise requires.

 

  ·  

$”, “U.S. dollars” and “dollars” refer to United States dollars.

 

  ·  

” and “euro” refer to euro.

Except as otherwise indicated, terms capitalized but otherwise not defined herein shall have the same meaning as in the accompanying prospectus.

 

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INCORPORATION OF INFORMATION BY REFERENCE

The rules of the SEC allow us to “incorporate by reference” the information we file with, or furnish to, the SEC. This means:

 

  ·  

documents incorporated by reference are considered part of this prospectus supplement;

 

  ·  

we can disclose important information to you by referring you to these documents; and

 

  ·  

information that we file with the SEC may automatically be deemed to update and modify or supersede information included or incorporated by reference into this prospectus supplement.

This means that you must look at all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus supplement or in any document previously incorporated by reference have been modified or superseded. The accompanying prospectus lists documents that are incorporated by reference into the accompanying prospectus and such documents shall be deemed to also be incorporated by reference into this prospectus supplement. In addition to the documents listed in the accompanying prospectus, we incorporate by reference:

 

  ·  

our 2022 Form 20-F;

 

  ·  

our 1H23 Form 6-K;

 

  ·  

our report on Form 6-K containing a summary of the results of the 2023 EU-wide Stress Test conducted by the European Banking Authority, in cooperation with the European Central Bank and the European Systemic Risk Board, furnished to the SEC on July 28, 2023 (Accession No. 0001193125-23-197511);

 

  ·  

our report on Form 6-K containing an announcement on naming Luisa Gómez Bravo as BBVA’s CFO and Javier Rodríguez Soler as Head of Sustainability and Corporate & Investment Banking (CIB), furnished to the SEC on July 27, 2023 (Accession No. 0001193125-23-195987); and

 

  ·  

our report on Form 6-K containing a consent from Ernst & Young, S.L., furnished to the SEC on September 11, 2023.

We also incorporate by reference into this prospectus supplement and the accompanying prospectus any future documents we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from the date of this prospectus supplement until the offering contemplated in this prospectus supplement is completed. Reports on Form 6-K we may file with 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.

As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies you should rely on the statements made in the most recent document.

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, 44th Floor

New York, New York 10105

Attention: Investor Relations

+1-212-728-1660

 

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FORWARD-LOOKING STATEMENTS

Some of the statements included in this prospectus supplement and the accompanying prospectus are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Exchange Act, and the safe harbor provisions 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 and the accompanying 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” and “future” 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, are not guarantees of future performance 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, the accompanying prospectus and certain documents incorporated by reference into this prospectus supplement and the accompanying prospectus include forward-looking statements or guidance regarding or relating but not limited to the Group’s and BBVA’s future financial position, results of operations, impairment charges, provisions, capital, leverage and other regulatory ratios, capital distributions, management objectives and/or strategic initiatives, commitments and targets (including, without limitation, environmental, social and governance commitments and targets), the outcome of certain legal and regulatory actions and proceedings and risk management, including our potential exposure to various types of risk such as market risk, interest rate risk, currency risk and equity risk, and other statements that are not historical fact. 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 2022 Form 20-F and “Business Overview” and “Operating and Financial Review and Prospects” in our 1H23 Form 6-K. Other factors could also adversely affect our results or the accuracy of forward-looking statements in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus, and you should not consider the factors discussed here, in the accompanying prospectus or in such other documents (including the sections of our 2022 Form 20-F and 1H23 Form 6-K 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 expressed or implied by forward-looking statements include, among others:

 

  ·  

the deterioration of economic conditions or the alteration of the institutional environment of the countries in which we operate, especially Spain, Mexico and Turkey, including any adverse developments, or the perception that such developments may occur, regarding credit quality, public debt sustainability and sovereign ratings, particularly Spain’s, among other factors;

 

  ·  

the intensity of geopolitical and economic risks in recent years as a result of, among other factors, US-China trade tensions, Brexit, the rise of populism and the war in Ukraine and the sanctions imposed against and by Russia, which has led to significant disruption, instability and volatility in global markets, as well as higher inflation (including by contributing to increases in the prices of energy, oil and other commodities and further disrupting supply chains) and lower or negative growth;

 

  ·  

changes or volatility in interest rates, foreign exchange rates, asset prices, equity markets, commodity prices, inflation or deflation and, in particular, as of the date of this prospectus supplement, the depreciation of the currencies of the non-euro geographical areas in which we operate, high inflation, stagflation due to more intense or prolonged supply crises, interest rate increases in most of the geographical areas where we operate (which may impact default rates) and low real interest rates in Turkey (which may affect our margins);

 

  ·  

the increased turbulence in the banking sector since March 2023, in particular, following the liquidity and other problems experienced by certain banks in the United States and Switzerland, which have led to increased concerns over the volatility and quality of banks’ deposits and their exposure to rising interest rates, and have adversely affected the valuations of certain banks. BBVA has significant exposure to the global banking sector. In addition, the recent actions by Swiss regulators have led to

 

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increased uncertainty regarding the potential actions to be adopted by the relevant authorities in connection with a bank’s failure. Moreover, regulatory changes are expected in the EU and, particularly, in Spain, in connection with the ranking of claims upon a bank’s insolvency, providing a preference to claims of all depositors relative to ordinary unsecured claims, which may adversely affect the risk profile and cost of banks’ debt securities. Further, there could be changes to the deposit guarantee schemes in certain jurisdictions, which could lead to changes in customer behavior and how banks manage their deposits portfolio;

 

  ·  

adverse developments in emerging economies, in particular Latin America and Turkey, including unfavorable political and economic developments, social instability and changes in governmental policies, including expropriation, nationalization, exchange controls or other limitations on the distribution or repatriation of dividends, international ownership legislation, tax policies, interest rate caps, fee caps and other policies affecting the banking sector, including the “liraization” strategy in Turkey;

 

  ·  

political uncertainty in Spain, where the recent general elections revealed a fragmented political landscape, could have a potential impact on Spain’s economy;

 

  ·  

downgrades in our credit ratings or in sovereign credit ratings, particularly Spain’s credit ratings;

 

  ·  

the monetary, interest rate and other policies of central banks, and the trade, economic and other policies of governments, in the EU, Spain, Mexico, Turkey, the United States and elsewhere. In particular, central banks have increased interest rates in an attempt to tame inflation;

 

  ·  

adjustments in the real estate markets in the geographical areas in which we operate, in particular in Spain, Mexico and Turkey;

 

  ·  

the success of our acquisitions and investments, divestitures, mergers, joint ventures and strategic alliances;

 

  ·  

the effects of competition in the markets in which we operate, which may be influenced by regulation or deregulation affecting us or our competitors, and our ability to implement technological advances;

 

  ·  

our ability to comply with various legal and regulatory regimes and the impact of applicable laws and regulations on our operations, including capital, resolution, liquidity and provision requirements and the increasing tax burden;

 

  ·  

changes in consumer spending and savings habits, including changes in government policies which may influence spending, saving and investment decisions;

 

  ·  

our ability to continue to access sources of liquidity and funding, including public sources of liquidity such as the funding provided by the European Central Bank (“ECB”) under its programs, and our ability to receive dividends and other funds from our subsidiaries;

 

  ·  

our ability to hedge certain risks economically;

 

  ·  

our ability to address physical, regulatory, reputational, transition and business risks associated with climate change and emerging and developing environmental, social and governance standards;

 

  ·  

our ability to make payments on certain substantial unfunded amounts relating to commitments with personnel;

 

  ·  

the performance of our international operations and our ability to manage such operations;

 

  ·  

weaknesses or failures in our Group’s internal or outsourced processes, systems (including information technology systems) and security;

 

  ·  

weaknesses or failures of our anti-money laundering or anti-terrorism programs, or of our internal policies, procedures, systems and other mitigating measures designed to ensure compliance with applicable anti-corruption laws and sanctions regulations;

 

  ·  

security breaches, including cyber-attacks and identity theft;

 

  ·  

the outcome of legal and regulatory actions and proceedings, both those to which the Group is currently exposed and any others which may arise in the future, including actions and proceedings related to former subsidiaries of the Group or in respect of which the Group may have indemnification obligations;

 

  ·  

actions that are incompatible with our ethics and compliance standards, and our failure to timely detect or remedy any such actions;

 

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  ·  

uncertainty surrounding the integrity and continued existence of reference rates and the transition away from the Euro Interbank Offered Rate (EURIBOR), Euro OverNight Index Average (EONIA) and London Inter-bank Offered Rate (LIBOR) to new reference rates;

 

  ·  

our success in managing the risks involved in the foregoing, which depends, among other things, on our ability to anticipate events that are not captured by the statistical models we use; and

 

  ·  

force majeure and other events beyond our control.

Readers are cautioned not to place undue reliance on forward-looking statements. In addition, the forward-looking statements made in this prospectus supplement (or any particular document) speak only as of the date of this prospectus supplement (or any such particular document). We do not intend to publicly update or revise these forward-looking statements to reflect events or circumstances after the date thereof, including, without limitation, changes in our business, strategy, targets or expectations, including as a result of the occurrence of unanticipated events, and we 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 and the accompanying prospectus.

 

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REGULATORY STATEMENT

BBVA and certain of its affiliates will continue to engage, including during the offering contemplated in this prospectus supplement, in various dealing and brokerage activities involving ordinary shares of BBVA (including in the form of American Depositary Shares (“ADSs”)) when and to the extent permitted by applicable law. Among other things, BBVA and certain of its affiliates, as the case may be, intend (i) to provide liquidity to the market, primarily in the context of temporary imbalances in the supply and demand for ordinary shares of BBVA, by purchasing and selling ordinary shares of BBVA for their own account or to facilitate customer transactions; (ii) to make a market, from time to time, in derivatives (such as options, warrants, convertible securities and other instruments) relating to ordinary shares of BBVA for their own account and the accounts of their customers; (iii) to engage in trades in ordinary shares of BBVA for their own account and the accounts of their customers for the purpose of hedging their positions established in connection with the derivatives market making described above; (iv) to market and sell to customers funds which include ordinary shares of BBVA; (v) to provide to customers investment advice and financial planning guidance which may include information about ordinary shares of BBVA; (vi) to engage in unsolicited brokerage transactions in ordinary shares of BBVA and derivatives thereon with their customers; and (vii) to trade in ordinary shares of BBVA and derivatives thereon as part of their asset management activities for the accounts of their customers. These market activities have occurred and are expected to continue to occur both outside and, to a lesser extent, inside the United States, solely in the ordinary course of business and not in contemplation of the offering contemplated in this prospectus supplement.

 

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SUMMARY

The following is a summary of this prospectus supplement and should be read as an introduction to, and in conjunction with, the remainder of this prospectus supplement, the accompanying prospectus and any documents incorporated by reference herein and therein. You should base your investment decision on a consideration of this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein, as a whole. Words and expressions defined elsewhere in this prospectus supplement or, where applicable, in the accompanying prospectus shall have the same meanings in this summary.

The BBVA Group

The BBVA Group is a customer-centric global financial services group founded in 1857. Internationally diversified and with strengths in the traditional banking businesses of retail banking, asset management and wholesale banking, the Group is committed to offering a compelling digital proposition focused on customer experience. BBVA has a leadership position in the Spanish market, it is the largest financial institution in Mexico in terms of assets, it has leading franchises in South America and it is the majority shareholder in Garanti BBVA, Turkey’s largest bank in terms of market capitalization. On May 18, 2022, BBVA closed its voluntary takeover bid for the entire share capital of Garanti BBVA, which resulted in BBVA increasing its stake in Garanti BBVA from 49.85% to 85.97%. The BBVA Group had consolidated assets of €762,456 million as of June 30, 2023 and profit attributable to parent company of €3,878 million for the six months ended June 30, 2023 (€6,420 million for the year ended December 31, 2022).

For information on our capital requirements, our consolidated capital ratios, our risk weighted assets and our MREL requirements (as defined herein) as of June 30, 2023 and as of December 31, 2022, 2021 and 2020, see our 1H23 Form 6-K and Note 32 to our Consolidated Financial Statements and “Item 4. Information on the Company—Business Overview—Supervision and Regulation” and “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital” in our 2022 Form 20-F, respectively.

Additional information about the BBVA Group is included in our 2022 Form 20-F and the 1H23 Form 6-K, which are each incorporated by reference in this prospectus supplement.

 

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The Offering

 

Issuer

Banco Bilbao Vizcaya Argentaria, S.A.

 

Issue

$1,000,000,000 series 12 non-step-up non-cumulative contingent convertible perpetual preferred tier 1 securities (the “Preferred Securities”).

 

  The Preferred Securities will be issued under the Indenture.

 

Closing Date

September 19, 2023, being the date of the initial issue of the Preferred Securities.

 

Perpetual Securities

The Preferred Securities are perpetual securities and have no stated maturity.

 

Liquidation Preference

$200,000 per Preferred Security.

 

Distribution Rates

The Preferred Securities accrue Distributions: (i) in respect of the period from (and including) the Closing Date to (but excluding) the First Reset Date at the rate of 9.375% per annum; and (ii) in respect of each Reset Period, at the rate per annum equal to the aggregate of 5.099% (the “Initial Margin”) and the 5-year UST for such Reset Period, and such aggregate converted to a quarterly rate in accordance with market convention (rounded to four decimal places, with 0.00005 rounded down), all as determined by the Calculation Agent on the relevant Reset Determination Date; provided that any Distribution Rate shall not be less than zero.

 

Reset Date

September 19, 2029 (the “First Reset Date”) and every fifth anniversary thereafter. Each period from (and including) a Reset Date to (but excluding) the following Reset Date shall be a “Reset Period”.

 

Distribution Payment Dates

Subject to the provisions set out below, Distributions will be payable quarterly in arrears on each of March 19, June 19, September 19 and December 19 in each year (each a “Distribution Payment Date”), commencing on December 19, 2023.

 

Reset Determination Date

In relation to each Reset Date, the second Business Day immediately preceding such Reset Date. The term “Business Day” means any day, other than Saturday or Sunday, that is neither a Legal Holiday (as defined herein) nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of New York, London or Madrid.

 

5-year UST

In relation to a Reset Date and the Reset Period commencing on that Reset Date, an interest rate expressed as a percentage determined by the Calculation Agent to be the per annum rate equal to the yield to maturity for U.S. Treasury securities with a maturity of five years as published in the most recent H.15.

 

 

H.15” means the daily statistical release designated as such and published by the Board of Governors of the United States Federal Reserve System under the caption “Treasury constant maturities”, or any successor or replacement publication as reasonably determined by BBVA and notified to the Calculation Agent, that establishes yield on actively traded U.S. Treasury securities, and “most recent H.15” means the H.15 that includes a yield to maturity for U.S. Treasury

 

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securities with a maturity of five years, published closest in time (but prior to) the relevant Reset Determination Date.

 

Regular Record Date

The regular record date for the Distribution payable on any Distribution Payment Date on the Preferred Securities will be the 15th calendar day (whether or not a Business Day) preceding a Distribution Payment Date.

 

Distributions Discretionary

We may elect, in our sole and absolute discretion, to cancel the payment of any Distribution on the Preferred Securities in whole or in part at any time and for any or no reason. Distributions on the Preferred Securities will be non-cumulative. Accordingly, if any Distribution (or any part thereof) is not paid in respect of the Preferred Securities as a result of our election to cancel such Distribution as described under “Certain Terms of the Preferred Securities—Distributions Discretionary” herein or the limitations on payment set out under “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” herein, and (with respect to the latter) the below summary (see “—Restrictions on Payments”), then the right of the holders to receive the relevant Distribution (or such part thereof) in respect of the relevant Distribution Period will be extinguished and we will have no obligation to pay such Distribution (or such part thereof) accrued for such Distribution Period or to pay any interest thereon, whether or not Distributions on the Preferred Securities are paid in respect of any future Distribution Period.

 

  For the avoidance of doubt, non-payment of a Distribution (or any part thereof) in respect of the Preferred Securities shall evidence our exercise of our discretion to cancel such Distribution (or such part thereof), and accordingly such Distribution (or such part thereof) shall also not be due and payable.

 

Restrictions on Payments

Without limitation on the above, payments of Distributions on the Preferred Securities shall be made only out of our Distributable Items. To the extent that (i) we have insufficient Distributable Items to make Distributions on the Preferred Securities scheduled for payment in the then-current financial year and any interest payments or distributions that have been paid or made or are scheduled or required to be paid or made out of our Distributable Items in the then-current financial year, in each case excluding any portion of such payments already accounted for in determining our Distributable Items, and/or (ii) the Regulator, in accordance with Article 68 of Law 10/2014 and/or Article 16 of the SSM Regulation and/or with Applicable Banking Regulations then in force, requires us to cancel the relevant Distribution in whole or in part, then we will, without prejudice to the right set forth under “—Distributions Discretionary” above to cancel at our discretion the payment of any such Distributions on the Preferred Securities at any time, make partial or, as the case may be, no payment of the relevant Distribution on the Preferred Securities. No payments will be made on the Preferred Securities (whether by way of a repayment of the Liquidation Preference, the payment of any Distribution or otherwise) if and to the extent that such payment would cause a breach of any regulatory restriction or prohibition on payments on Additional Tier 1 Instruments pursuant to Applicable Banking Regulations (including, without limitation, any such restriction or prohibition relating to any Maximum Distributable

 

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Amount (as defined herein) or MREL-MDA (as defined herein) applicable to us and/or the BBVA Group).

 

  Additional Tier 1 Capital” means Additional Tier 1 capital (capital de nivel 1 adicional) as provided under Applicable Banking Regulations.

 

  Additional Tier 1 Instrument” means any instrument of BBVA qualifying as Additional Tier 1 Capital, in whole or in part.

 

  Applicable Banking Regulations” means, at any time, the laws, regulations, requirements, guidelines and policies relating to capital adequacy, resolution and/or solvency then applicable to BBVA and/or the BBVA Group including, without limitation to the generality of the foregoing, CRD V, the BRRD, the SRM Regulation and those laws, regulations, requirements, guidelines and policies relating to capital adequacy, resolution and/or solvency then in effect in Spain (whether or not such regulations, requirements, guidelines or policies have the force of law and whether or not they are applied generally or specifically to BBVA and/or the BBVA Group).

 

  CRD V” means any or any combination of the CRD Directive, the CRR, and any CRD Implementing Measures.

 

  CRD Directive” means Directive 2013/36/EU of the European Parliament and of the Council of June 26, on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, as amended, replaced or supplemented from time to time.

 

  CRD Implementing Measures” means any regulatory rules implementing or developing the CRD Directive or the CRR which may from time to time be introduced, including, but not limited to, delegated or implementing acts (regulatory technical standards) adopted by the European Commission, national laws and regulations, and regulations and guidelines issued by the Regulator, the European Banking Authority or any other relevant authority, which are applicable to BBVA (on a standalone basis) or the BBVA Group (on a consolidated basis), including, without limitation, Law 10/2014 and any other regulation, circular or guidelines implementing or developing Law 10/2014, as amended, replaced or supplemented from time to time.

 

  CRR” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 26, on the prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012, as amended, replaced or supplemented from time to time.

 

  Distributable Items” means the profits and reserves (if any) available for the payment of a Distribution at any given time together with any other distributions and payments to be made from such profits and reserves, in each case in accordance with Applicable Banking Regulations then in force, and including as such term is further defined in CRD V, as interpreted and applied in accordance with Applicable Banking Regulations.

 

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  Regulator” means the European Central Bank, the Bank of Spain or the Relevant Spanish Resolution Authority, as applicable, or such other or successor authority having primary bank supervisory authority, in each case, with respect to prudential matters or the exercise of resolution powers in relation to BBVA and/or the BBVA Group from time to time.

 

  SSM Regulation” means Council Regulation (EU) No. 1024/2013 of October 15, conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, as amended, replaced or supplemented from time to time.

 

Agreement to Distribution Cancellation

By acquiring Preferred Securities, holders and holders of a beneficial interest in the Preferred Securities acknowledge and agree that (i) Distributions are payable solely at our discretion, and no amount of Distribution shall become or remain due and payable in respect of the relevant Distribution Period to the extent that it has been cancelled or deemed cancelled by us as set forth above and/or as a result of the limitations on payment described above; and (ii) a cancellation or deemed cancellation of any Distribution (in whole or in part) in accordance with the terms of the Indenture and the Preferred Securities shall not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture or the occurrence of any event related to our insolvency or entitle holders to take any action to cause such Distribution to be paid or our liquidation, dissolution or winding-up or in any way limit or restrict us from making any distribution or equivalent payment in connection with any instrument, including any instrument ranking junior to the Preferred Securities (including, without limitation, any CET1 Capital issued by us or any member of the BBVA Group), or in respect of any Parity Security or other Security, except to the extent Applicable Banking Regulations otherwise provide. Distributions will only be due and payable on a Distribution Payment Date to the extent they are not cancelled or deemed cancelled previously or thereafter in accordance with the Indenture. Any Distributions cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances described herein and in the Indenture shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the Preferred Securities shall have no rights thereto or to receive any additional Distributions or compensation as a result of such cancellation or deemed cancellation.

 

  CET1 Capital” means, at any time, our common equity tier 1 capital or the common equity tier 1 capital of the BBVA Group, respectively, as calculated by us in accordance with Chapter 2 (Common Equity Tier 1 Capital) of Title I (Elements of Own Funds) of Part Two (Own Funds and Eligible Liabilities) of the CRR and/or Applicable Banking Regulations at such time, including any applicable transitional, phasing in or similar provisions.

 

  Parity Securities” means any instrument issued or guaranteed by us (including the guarantee thereof), which instrument or guarantee, respectively, ranks pari passu with the Preferred Securities upon the insolvency of BBVA.

 

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  Securities” means any securities including, without limitation, shares in our capital, or options, warrants or other rights to subscribe for or purchase or acquire shares in our capital.

 

Notice of Distribution Cancellation

If practicable, we will provide notice of any cancellation or deemed cancellation of Distributions on the Preferred Securities (in each case, in whole or in part) to the holders of the Preferred Securities through DTC (or, if the Preferred Securities are held in definitive form, to the holders of the Preferred Securities directly at their addresses shown on the Contingent Convertible Preferred Security Register) and to the trustee directly on or prior to the relevant Distribution Payment Date. Failure to provide such notice will have no impact on the effectiveness of, or otherwise invalidate, any such cancellation or deemed cancellation of Distributions (and accordingly, such Distributions will not be due and payable), will not constitute an Enforcement Event or other default with respect to the Preferred Securities, or give the holders or beneficial owners of the Preferred Securities any rights as a result of such failure.

 

Subordination

Unless previously converted into Common Shares pursuant to the conversion provisions of the Indenture and except as provided in the second paragraph under “Certain Terms of the Preferred Securities—Liquidation Distribution” herein, the payment obligations of BBVA under the Preferred Securities will be direct, unconditional, unsecured and subordinated obligations of BBVA and, upon the insolvency (concurso de acreedores) of BBVA, in accordance with and only to the extent permitted by the Spanish Insolvency Law and any other applicable laws relating to or affecting the enforcement of creditors’ rights in Spain (including, without limitation, Additional Provision 14.3 of Law 11/2015), but subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), for so long as the Preferred Securities constitute an Additional Tier 1 Instrument of BBVA, such Preferred Securities will rank: (i) junior to: (a) any claim in respect of any unsubordinated obligations of BBVA (including where the relevant claim subsequently becomes subordinated pursuant to Article 281.1.1º of the Spanish Insolvency Law); and (b) any claim in respect of any subordinated obligations of BBVA, present and future, other than under any outstanding Additional Tier 1 Instrument of BBVA (other than, to the extent permitted by law, any Parity Securities, whether so ranking by law or their terms); (ii) pari passu with each other and with all other claims in respect of contractually subordinated obligations of BBVA under any outstanding Additional Tier 1 Instruments, present and future (and, to the extent permitted by law, pari passu with any other Parity Securities, whether so ranking by law or their terms); and (iii) senior to the Common Shares and any other subordinated obligations of BBVA which by law rank junior to the Preferred Securities (including, to the extent permitted by law, any contractually subordinated obligations of BBVA expressed by their terms to rank junior to the Preferred Securities), such that any relevant claim in respect of the Preferred Securities will be satisfied, as appropriate, only to the extent that all claims ranking senior to it have first been satisfied in full, and then pro rata with any claims ranking pari passu with it, in each case as provided herein.

 

  BBVA’s obligations under the Preferred Securities are subject to, and may be limited by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

 

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  Spanish Insolvency Law” means the restated text of the Insolvency Law, as approved by Spanish Royal Legislative Decree 1/2020 of May 5 (Real Decreto Legislativo 1/2020, de 5 de mayo, por el que se aprueba el texto refundido de la Ley Concursal), as amended, replaced or supplemented from time to time.

 

Waiver of Right of Set-Off

Subject to applicable law, neither any holder or beneficial owner of Preferred Securities nor the trustee acting on behalf of the holders of the Preferred Securities may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by us in respect of, or arising under, or in connection with, the Preferred Securities or the Indenture and each holder and beneficial owner of Preferred Securities, by virtue of its holding of any Preferred Securities or any interest therein, and the trustee acting on behalf of the holders of the Preferred Securities, shall be deemed to have waived all such rights of set-off, compensation or retention. If, notwithstanding the above, any amounts due and payable to any holder or beneficial owner of a Preferred Security or any interest therein by us in respect of, or arising under, the Preferred Securities are discharged by set-off, such holder or beneficial owner shall, subject to applicable law, immediately pay an amount equal to the amount of such discharge to us (or, if a Liquidation Event shall have occurred, our liquidator or administrator, as the case may be) and, until such time as payment is made, shall hold an amount equal to such amount in trust (where possible) or otherwise for us (or our liquidator or administrator, as the case may be) and, accordingly, any such discharge shall be deemed not to have taken place.

 

Conversion

The Preferred Securities are only convertible into Common Shares upon a Trigger Event or a Capital Reduction, in each case as set forth below. The Preferred Securities are not convertible into Common Shares at the option of holders of Preferred Securities at any time and are not redeemable in cash as a result of a Trigger Event or a Capital Reduction.

 

Trigger Event

A “Trigger Event” shall occur if, at any time, as determined by us, our CET1 ratio or the CET1 ratio of the BBVA Group is less than 5.125%.

 

  If a Trigger Event occurs at any time on or after the Closing Date, then we will (i) not pay any Distribution on the Preferred Securities, including any accrued and unpaid Distributions, which shall be deemed to be cancelled by us in accordance with their terms and (ii) irrevocably and mandatorily (and without any requirement for the consent or approval of the holders or beneficial owners of the Preferred Securities) convert all the Preferred Securities into Common Shares (a “Trigger Conversion”) to be delivered on the relevant Conversion Settlement Date. If a Trigger Event occurs, the Preferred Securities will be converted in whole and not in part. For the purposes of determining whether a Trigger Event has occurred, we will (i) calculate the CET1 ratio based on information (whether or not published) available to our management, including information internally reported within BBVA pursuant to our procedures for ensuring effective ongoing monitoring of our capital ratios and the capital ratios of the BBVA Group and (ii) calculate and publish the CET1 ratio on at least a quarterly basis. Our calculation shall be binding on the trustee and the holders and beneficial owners of the Preferred Securities.

 

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  A Trigger Event will not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture or the occurrence of any event related to our insolvency or entitle holders to take any action to cause our liquidation, dissolution or winding-up.

 

  We may not give a notice of redemption with respect to the Preferred Securities if a Trigger Event has occurred. If any notice of redemption of the Preferred Securities has been given and a Trigger Event with respect to the Preferred Securities occurs prior to the redemption date, the relevant redemption notice shall be automatically rescinded and shall be of no force and effect, there shall be no redemption of the relevant Preferred Securities on such redemption date and, instead, the Trigger Conversion of the Preferred Securities shall take place.

 

  Accounting Currency” means euro or such other primary currency used in the presentation of the BBVA Group’s accounts from time to time.

 

  CET1 ratio” means, at any time, with respect to us or the BBVA Group, as the case may be, the reported ratio (expressed as a percentage) of the aggregate amount (in the Accounting Currency) of our CET1 Capital or the CET1 Capital of the BBVA Group, respectively, at such time divided by our Risk Weighted Assets Amount or the Risk Weighted Assets Amount of the BBVA Group, respectively, at such time, all as calculated by us.

 

  Conversion Settlement Date” means the date on which the relevant Common Shares are to be delivered to the Conversion Shares Depository upon Conversion, which shall be as soon as practicable and in any event not later than one month following (or such other period as Applicable Banking Regulations may require) the relevant Conversion Notice Date (as defined in the accompanying prospectus).

 

  Risk Weighted Assets Amount” means at any time, with respect to us or the BBVA Group, as the case may be, the aggregate amount (in the Accounting Currency) of the risk weighted assets of BBVA or the BBVA Group, respectively, calculated in accordance with CRR and/or Applicable Banking Regulations at such time.

 

Capital Reduction

A “Capital Reduction” shall occur upon the adoption, in accordance with Article 418.3 of the consolidated text of the Corporate Enterprises Act (Ley de Sociedades de Capital), approved by the Royal Legislative Decree 1/2010, of July 2, as amended, replaced or supplemented from time to time (the “Spanish Companies Act”), by a general shareholders’ meeting of BBVA of a resolution of capital reduction by reimbursement of cash contributions (restitución de aportaciones) to shareholders by way of a reduction in the nominal value of the shares of such shareholders in our capital. A resolution of capital reduction for the redemption of any Common Shares previously repurchased by us will not be considered a Capital Reduction for the purposes of the Indenture.

 

 

Except if we have given a redemption notice prior to or at the same time as such Capital Reduction, if a Capital Reduction occurs at any time on or after the Closing Date, then we will, subject as otherwise provided in the paragraph immediately below, irrevocably and mandatorily (and without any requirement for the consent or approval of the holders or beneficial owners of Preferred Securities) convert all

 

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the Preferred Securities into Common Shares (a “Capital Reduction Conversion”) to be delivered on the relevant Conversion Settlement Date and on such Conversion Settlement Date pay to the holders, as applicable, where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment as described under “—Distributions Discretionary” and “—Restrictions on Payments” above, an amount equal to the accrued and unpaid Distributions for the then-current Distribution Period up to (but excluding) such Conversion Settlement Date.

 

  Notwithstanding the above paragraph, if a Capital Reduction occurs at any time on or after the Closing Date, each holder of the Preferred Securities will have the right to elect that all (but not part) of its Preferred Securities shall not be converted in accordance with the above paragraph, in which case all Preferred Securities of such holder shall remain outstanding and no payment of any accrued and unpaid Distributions on such Preferred Securities shall be made in respect of such Preferred Securities to that holder on the relevant Conversion Settlement Date pursuant to such paragraph. To exercise such right, a holder must complete, sign and deposit at the specified office of any Paying and Conversion Agent (as defined in the accompanying prospectus) a duly completed and signed notice of election (an “Election Notice”), in the form indicated in the Capital Reduction Notice, on or before the tenth Business Day immediately following the Capital Reduction Notice Date (the period from (and including) the Capital Reduction Notice Date to (and including) such tenth Business Day, the “Election Period”). In the case of any Preferred Securities represented by a Global Preferred Security (as defined herein) held by or on behalf of a Clearing System (as defined in the accompanying prospectus), an Election Notice may be delivered within the Election Period by the holder giving notice to the Paying and Conversion Agent of such election in accordance with the applicable procedures of the relevant Clearing System (which may include notice being given on such holder’s instruction by the relevant Clearing System to the Paying and Conversion Agent by electronic means) in a form acceptable to such Clearing System from time to time.

 

  An Election Notice shall be irrevocable. Any relevant Preferred Securities in respect of which a duly completed and signed Election Notice is not received during the Election Period shall be converted into Common Shares.

 

  A Capital Reduction will not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture or the occurrence of any event related to our insolvency or entitle holders to take any action to cause our liquidation, dissolution or winding-up.

 

  If any notice of redemption of the Preferred Securities has been given and a Capital Reduction with respect to the Preferred Securities occurs prior to the redemption date, such Capital Reduction shall be disregarded for all purposes and shall be of no force and effect with respect to the Preferred Securities and there shall be no conversion of the Preferred Securities and, instead, the redemption of the Preferred Securities shall take place. In addition, holders and beneficial owners of the Preferred Securities shall be deemed to have irrevocably waived their rights under Article 418 of the Spanish Companies Act.

 

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  Any Preferred Securities not converted upon a Capital Reduction as a result of holders delivering a duly completed and signed Election Notice during the Election Period shall remain outstanding and, notwithstanding any of the above, may be the subject of Conversion on the occurrence of a Trigger Event or any further Capital Reduction.

 

Upon Conversion

Subject as provided in this paragraph with respect to fractions, the number of Common Shares to be issued on Conversion in respect of each Preferred Security to be converted shall be determined by dividing the Liquidation Preference of such Preferred Security by the relevant Conversion Price (as defined herein) in effect on the relevant Conversion Notice Date rounded down to the nearest whole number of Common Shares. Fractions of Common Shares will not be issued on Conversion or as otherwise provided in the fifth paragraph from the end under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion—Conversion Price—Anti-Dilution Adjustment of the Floor Price” in the accompanying prospectus, and no cash payment or other adjustment will be made in lieu thereof. Without prejudice to the generality of the foregoing, if one or more Delivery Notices (as defined herein) and the related Preferred Securities are received by or on behalf of a Paying and Conversion Agent such that the Common Shares to be delivered by or on behalf of the Conversion Shares Depository are to be registered in the same name or delivered to the same Clearing System participant account, the number of such Common Shares to be delivered in respect thereof shall be calculated on the basis of the aggregate Liquidation Preference of such Preferred Securities being so converted and rounded down to the nearest whole number of Common Shares.

 

  Upon any Trigger Event, holders (and beneficial owners) of any Preferred Securities shall have no claim against us in respect of (i) any Liquidation Preference of the Preferred Securities or (ii) any accrued and unpaid Distributions in respect of Preferred Securities, and the Preferred Securities shall cease to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes).

 

 

Upon any Capital Reduction, holders (and beneficial owners) of any Preferred Securities (other than holders of Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities as described in the third paragraph under “—Capital Reduction” above) shall have no claim against us in respect of any Liquidation Preference of such Preferred Securities, and the Preferred Securities (other than Preferred Securities in respect of which holders have elected not to convert such Preferred Securities as described under “—Capital Reduction” above) shall cease to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes). However, nothing in this paragraph shall affect our obligation upon any Capital Reduction Conversion to pay to the holders (other than holders of Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities as described in the third paragraph under “—Capital Reduction” above), where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment as described under

 

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“—Distributions Discretionary” and “—Restrictions on Payments” above, an amount equal to the accrued and unpaid Distributions for the then-current Distribution Period up to (but excluding) the Conversion Settlement Date.

 

  On the Conversion Settlement Date, we shall deliver to the Conversion Shares Depository such number of Common Shares (subject as provided above with respect to fractions) as is required to satisfy in full our obligation to deliver Common Shares (i) in respect of a Trigger Conversion, of the aggregate Liquidation Preference of Preferred Securities outstanding on the Trigger Event Notice Date (as defined in the accompanying prospectus), and (ii) in respect of a Capital Reduction Conversion, of the aggregate Liquidation Preference of Preferred Securities outstanding on the Capital Reduction Notice Date, other than Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities as described under “—Capital Reduction” above.

 

  Our obligation to issue and deliver Common Shares to a holder of Preferred Securities on the relevant Conversion Settlement Date shall be satisfied by the delivery of such Common Shares to the Conversion Shares Depository. Receipt of the relevant Common Shares by the Conversion Shares Depository shall discharge our obligations in respect of the Preferred Securities converted, other than, in the case of a Capital Reduction, as provided under “—Capital Reduction” above with respect to the payment of accrued and unpaid Distributions for the then-current Distribution Period up to (but excluding) the Conversion Settlement Date (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment as described under, “—Distributions Discretionary” and “—Restrictions on Payments” above) and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes.

 

  Except as set forth in the immediately succeeding paragraph with respect to a Capital Reduction, if a Conversion Event occurs, holders shall have recourse to us only for the issue and delivery of the relevant Common Shares to the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes). After such delivery by us of the relevant Common Shares to the Conversion Shares Depository, holders of the Preferred Securities so converted shall have recourse to the Conversion Shares Depository only and exclusively for the purposes of the delivery to them of such Common Shares, in the circumstances described in the Indenture.

 

  In the case of a Capital Reduction, holders (other than holders of Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities as described in the third paragraph under “—Capital Reduction” above) shall also have recourse to us as provided under “—Capital Reduction” above with respect to the payment of accrued and unpaid Distributions for the then-current Distribution Period up to (but excluding) the Conversion Settlement Date (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—Restrictions on Payments” and “—Distributions Discretionary” above).

 

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  Holders that elect to receive Common Shares in the form of ADSs must pay any fees that may be payable to the ADS Depositary (as defined in the accompanying prospectus) as a result of the issue and delivery of such ADSs in accordance with the Delivery Notice.

 

  In order to obtain delivery of the relevant Common Shares on Conversion, the relevant holder must deliver a duly completed Delivery Notice together with the Preferred Securities held by it in accordance with the provisions set out in the Indenture. In addition, within ten Business Days following the Conversion Settlement Date, all Common Shares held by the Conversion Shares Depository in respect of which the applicable Preferred Securities and a duly completed Delivery Notice have not been received on or before the Notice Cut-off Date (as defined in the accompanying prospectus) as aforesaid will be sold by or on behalf of a person (which may be us or another member of the BBVA Group or a third party) appointed by us (the “Selling Agent”) as soon as reasonably practicable and (subject to the deduction by or on behalf of the Selling Agent of any amount payable in respect of its liability to taxation and the payment of any capital, stamp, issue, registration and/or transfer taxes and duties (if any) and any fees or costs incurred by or on behalf of the Selling Agent in connection with the issue, allotment and sale thereof) the net proceeds of such sale shall as soon as reasonably practicable be distributed pro rata to the relevant holders in accordance with the Indenture or in such other manner and at such time as we shall determine and notify to the relevant holders.

 

  The Conversion Shares Depository may be us or another member of the BBVA Group or a third party.

 

Conversion Price

The “Conversion Price” shall be, in respect of a Conversion Notice Date, if the Common Shares are: (i) then admitted to trading on a Relevant Stock Exchange, the higher of: (a) the Reference Market Price of a Common Share (translated into U.S. dollars at the Prevailing Rate, if applicable); (b) the Floor Price (translated into U.S. dollars at the Prevailing Rate, if applicable); and (c) the nominal value of a Common Share (€0.49 on the Closing Date) (translated into U.S. dollars at the Prevailing Rate, if applicable); or (ii) not then admitted to trading on a Relevant Stock Exchange, the higher of (b) and (c) above.

 

  Floor Price” means $4.0215. The Floor Price is subject to adjustment as described in “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion—Conversion Price—Anti-Dilution Adjustment of the Floor Price” in the accompanying prospectus.

 

  Prevailing Rate” means, in respect of any currencies on any day, the spot rate of exchange between the relevant currencies prevailing as at 12 noon (London time) on that date as appearing on or derived from Reuters page ECB37 or, if not available, from any other Reference Page or, if such a rate cannot be determined at such time, the rate prevailing as at 12 noon (London time) on the immediately preceding day on which such rate can be so determined or, if such rate cannot be so determined by reference to the Reference Page, the rate determined in such other manner as an Independent Financial Adviser in good faith shall prescribe.

 

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  Reference Market Price” means, in respect of a Common Share at a particular date, the arithmetic mean of the Closing Price per Common Share on each of the five consecutive dealing days on which such Closing Price is available ending on the dealing day immediately preceding such date, rounding the resulting figure to the nearest cent (with 0.5 cents being rounded upwards).

 

  Reference Page” means the relevant page or any successor page on Bloomberg or Reuters or any successor service or such other information service provider that displays the relevant information.

 

  Relevant Stock Exchange” means the Spanish Stock Exchanges or if at the relevant time the Common Shares are not at that time listed and admitted to trading on the Spanish Stock Exchanges, the principal stock exchange or securities market on which the Common Shares are then listed, admitted to trading or quoted or accepted for dealing.

 

Substitution and Modification

Notwithstanding any other term of the Preferred Securities or the Indenture, by its acquisition of the Preferred Securities, each holder and beneficial owner acknowledges, accepts, consents to and agrees that if a Capital Event or a Tax Event, as applicable, occurs and is continuing, we may, except if a Trigger Event occurs or shall have occurred, and except if a Capital Reduction occurs or shall have occurred (other than in respect of Preferred Securities with respect to which a duly completed Election Notice has been received during the Election Period), substitute all (but not less than all) of the Preferred Securities or modify the terms of all (but not less than all) of the Preferred Securities, without any requirement for the consent or approval of the trustee or the holders or beneficial owners of the Preferred Securities, so that such Preferred Securities are substituted for, or their terms are modified to, become again, or remain Qualifying Preferred Securities, subject to satisfaction of the requirements and limitations set forth herein.

 

  By its acquisition of any Preferred Security, each holder and beneficial owner acknowledges, accepts, consents to and agrees to be bound by any substitution of or modification to the Preferred Securities and to grant to us and the trustee full power and authority to take any action and/or to execute and deliver any document in the name and/or on behalf of such holder or beneficial owner, as the case may be, which is necessary or convenient to complete the substitution or modification of the terms of the Preferred Securities, as applicable, pursuant to “Certain Terms of the Preferred Securities—Substitution and Modification of the Preferred Securities” below.

 

  Any variation in the terms of the Preferred Securities resulting from any such modification or, if the Preferred Securities are substituted, any difference between the terms of the Preferred Securities and those of the Qualifying Preferred Securities for which the Preferred Securities are substituted, shall not be materially prejudicial to the interests of the holders of the Preferred Securities. For additional information on this requirement, see “Certain Terms of the Preferred Securities—Substitution and Modification of the Preferred Securities”.

 

 

Qualifying Preferred Securities” means any securities issued by us that: (a) contain terms which comply with the then-current requirements to be included in, or count towards, the BBVA Group’s

 

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and BBVA’s Tier 1 Capital (as defined in the accompanying prospectus); (b) have the same or higher ranking as is applicable to the Preferred Securities on the Closing Date; (c) have the same denomination and aggregate outstanding Liquidation Preference, the same terms for the determination of any applicable Distributions, the same redemption rights and the same dates for payment of Distributions as the Preferred Securities immediately prior to any substitution or modification pursuant to “Certain Terms of the Preferred Securities—Substitution and Modification of the Preferred Securities” herein; (d) preserve any existing rights under the Preferred Securities to any accrued Distribution which has not been paid in respect of the period from and including the Distribution Payment Date last preceding the date of any substitution or modification (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under “Certain Terms of the Preferred Securities—Distributions—Restrictions on Payments” and “Certain Terms of the Preferred Securities—Distributions—Distributions Discretionary” herein); and (e) are listed or admitted to trading on any stock exchange as selected by us, provided that the Preferred Securities were listed or admitted to trading on a stock exchange immediately prior to the relevant substitution or modification.

 

Agreement and Waiver with Respect to Conversion

The Preferred Securities are not convertible into Common Shares at the option of holders of Preferred Securities at any time and are not redeemable in cash as a result of a Conversion Event. Notwithstanding any other provision described herein or in the Indenture, by its acquisition of any Preferred Security, each holder and beneficial owner of a Preferred Security shall be deemed to have (i) agreed to all the terms and conditions of the Preferred Securities, including, without limitation, those related to (y) Conversion following a Trigger Event or Capital Reduction, as the case may be, and (z) the appointment of the Conversion Shares Depository, the issuance of the Common Shares to the Conversion Shares Depository, and acknowledged that such events in (y) and (z) may occur without any further action on the part of the holders or beneficial owners of the Preferred Securities or the trustee, (ii) agreed that effective upon, and following, a Conversion Event, no amount shall be due and payable to the holders of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion as described under “—Capital Reduction” above (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—Restrictions on Payments” and “—Distributions Discretionary” above) and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares), and our liability to pay any amounts (including the Liquidation Preference of, or any Distribution in respect of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion as described under “—Capital Reduction” above (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—Restrictions on Payments” and “—Distributions Discretionary” above) and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares)), shall be automatically released, and the holders of the

 

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Preferred Securities so converted shall not have the right to give a direction to the trustee with respect to the Conversion Event and any related Conversion, (iii) agreed that following a Conversion Event, the Relevant Spanish Resolution Authority may exercise its Spanish Bail-in Power with respect to the Preferred Securities or any Common Shares that may be received following a Conversion, which exercise may result in any of the consequences described in the first paragraph under “—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power” below, the cancellation of the Conversion and/or the implementation of material changes to the Conversion terms, (iv) waived, to the extent permitted by the Trust Indenture Act, any claim against the trustee arising out of its acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Indenture and in connection with the Preferred Securities so converted or to be converted, including, without limitation, claims related to or arising out of or in connection with a Conversion Event and/or any Conversion and (v) authorized, directed and requested DTC, the European Clearing Systems and any direct participant in DTC, the European Clearing Systems or other intermediary or depositary through which it holds such Preferred Securities to be converted to take any and all necessary action, if required, to implement the Conversion without any further action or direction on the part of such holder or beneficial owner of such Preferred Securities or the trustee.

 

Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power

Notwithstanding anything to the contrary in the Preferred Securities, the Indenture or any other agreements, arrangements, or understandings between BBVA and any holder of the Preferred Securities, by its acquisition of any Preferred Securities, each holder (which, for the purposes of the below, includes each holder of a beneficial interest in the Preferred Securities) acknowledges, accepts, consents to and agrees to be bound by: (i) the exercise and effects of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may be imposed with or without any prior notice with respect to the Preferred Securities, and may include and result in any of the following, or some combination thereof: (a) the reduction or cancellation of all, or a portion, of the Amounts Due on the Preferred Securities; (b) the conversion of all, or a portion, of the Amounts Due on the Preferred Securities into shares, other securities or other obligations of BBVA or another person (and the issue to or conferral on the holder of any such shares, securities or obligations), including by means of an amendment, modification or variation of the terms of the Preferred Securities; (c) the cancellation of the Preferred Securities; (d) the inclusion of a maturity date for the Preferred Securities or the amendment or alteration thereof, or the amendment of the Liquidation Preference or Distributions payable on the Preferred Securities, or the date on which Distributions become payable, including by suspending payment for a temporary period; and (ii) the variation of the terms of the Preferred Securities, or the rights of the holders thereunder or under the Indenture, as deemed necessary by the Relevant Spanish Resolution Authority, to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

 

 

In addition, no repayment or payment of Amounts Due on the Preferred Securities will become due and payable or be paid after the

 

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exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority if, and to the extent that, such amounts have been reduced, converted, cancelled, amended or altered as a result of such exercise.

 

  Further, by its acquisition of any Preferred Security, each holder acknowledges, accepts, consents to and agrees to be bound by (i) the exercise and effect of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may be imposed with or without any prior notice, with respect to any Common Shares that may be delivered to it upon the Conversion (if any) of the Preferred Securities; and (ii) the variation of the terms of such Common Shares to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

 

  See “Certain Terms of the Preferred Securities—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”.

 

Optional Redemption

All, and not only some, of the Preferred Securities may be redeemed at our option on any day falling in the period commencing on (and including) March 19, 2029 (the First Call Date) and ending on (and including) the First Reset Date, and on any Distribution Payment Date thereafter, at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force.

 

  The “Redemption Price” is, per Preferred Security, the Liquidation Preference plus, if applicable, where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment described under “—Restrictions on Payments” and “—Distributions Discretionary” above, an amount equal to any accrued and unpaid Distributions for the then-current Distribution Period to (but excluding) the redemption date of the Preferred Securities.

 

Redemption Due to a Tax Event

If, on or after the Closing Date, there is a Tax Event, the Preferred Securities may be redeemed, in whole but not in part, at our option at any time at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force.

 

 

A “Tax Event” will be deemed to have occurred with respect to the Preferred Securities if, as a result of any change in, or amendment to, the laws or regulations applicable in Spain (except as provided under the third paragraph under “Certain Terms of the Preferred Securities—Substitution of Issuer” herein in the case of a successor entity not established under the laws of, or a tax resident in, Spain), or any change in the application or binding official interpretation or administration of any such laws or regulations which change or amendment, or change in the application or binding official interpretation or administration, becomes effective on or after the Closing Date (i) we would not be entitled to claim a deduction in computing our taxation liabilities in Spain (or, following any of the transactions described under “Certain Terms of the Preferred Securities—Substitution of Issuer”, the successor person’s jurisdiction

 

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of incorporation or tax residence), in respect of any Distribution to be made on the next Distribution Payment Date or the value of such deduction to us would be reduced, or (ii) we would be required to pay Additional Amounts pursuant to the Indenture, or (iii) the applicable tax treatment of the Preferred Securities would be materially affected.

 

  If, in accordance with the Indenture, our obligations under the Preferred Securities were to be assumed by another person, references to Spain in the definition of “Tax Event” shall be deemed to refer to the successor entity’s jurisdiction of incorporation or tax residence.

 

Redemption Due to a Capital Event

If, on or after the Closing Date, there is a Capital Event, the Preferred Securities may be redeemed, in whole but not in part, at our option at any time at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force.

 

  A “Capital Event” will be deemed to have occurred with respect to the Preferred Securities if there is a change (or any pending change which the Regulator considers to be sufficiently certain) in Spanish law or Applicable Banking Regulations that results (or would result) in any of the outstanding aggregate Liquidation Preference of the Preferred Securities ceasing to be included in, or counting towards, the BBVA Group’s or BBVA’s Tier 1 Capital.

 

Clean-up Call

If, on or after the Closing Date, Preferred Securities representing, in the aggregate, 75% or more of the aggregate Liquidation Preference of the Preferred Securities (including any Preferred Securities issued after the Closing Date and any Preferred Securities which have been cancelled by the trustee in accordance with the Indenture) have been purchased by or on behalf of BBVA or any member of the BBVA Group, the Preferred Securities may be redeemed, in whole but not in part, at our option at any time at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force (the “Clean-up Call”). See “—Repurchases of the Preferred Securities and Other Securities” below.

 

Repurchases of the Preferred Securities and Other Securities

We or any member of the BBVA Group or any other legal entity acting on behalf of BBVA may purchase or otherwise acquire any of the outstanding Preferred Securities at any price in the open market or otherwise, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations in force at the relevant time. Upon their acquisition, such Preferred Securities will immediately cease to be deemed “outstanding” under the Indenture and must be surrendered to the trustee for their cancellation.

 

 

Notwithstanding any other provision of the Indenture and subject to compliance with the provisions of any applicable law (including the Spanish Companies Act and the Applicable Banking Regulations), we or any member of the BBVA Group may exercise such rights as we or it may from time to time possess to purchase or redeem or buy back any of our shares (including Common Shares) or any depositary or

 

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other receipts or certificates representing the same without the consent of the holders.

 

Payment of Additional Amounts

All payments of Distributions payable in respect of Preferred Securities by us will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Spain or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, we shall (to the extent such payment can be made out of Distributable Items of BBVA on the same basis as for payment of any Distribution) pay, in respect of any withholding or deduction imposed on payments of Distributions only (and not Liquidation Preference or other amount), such Additional Amounts as will result in holders of Preferred Securities receiving such amounts as they would have received in respect of such Distributions had no such withholding or deduction been required.

 

 

This provision is subject to certain important exceptions as described under “Certain Terms of the Preferred Securities—Additional Amounts” below. Among other exceptions, we will not be required to pay any Additional Amounts in relation to any payment in respect of the Preferred Securities: (i) to, or to a third party on behalf of, a holder of Preferred Securities if the holder or the beneficial owner of such Preferred Securities is liable for the relevant taxes in respect of such Preferred Security by reason of his having some connection with Spain other than the mere holding of such Preferred Security, (ii) to, or to a third party on behalf of, a holder of Preferred Securities if the holder or the beneficial owner has not provided such information as may be necessary to comply with any certification, identification or other requirements concerning the nationality, residence, identity or connection with the taxing jurisdiction of such holder or beneficial owner, if such claim or compliance is required by statute, regulation or administrative practice of Spain as a condition to relief or exemption from such taxes, (iii) to, or to a third party on behalf of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish tax authorities determine that the Preferred Securities 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, and require a withholding to be made, (iv) to, or to a third party on behalf of, a holder of Preferred Securities in respect of a withholding tax imposed on payments made to individuals with tax residence in Spain following the criteria held by the Spanish tax authorities under which the withholding regime set out in Royal Decree 439/2007 of March 30 prevails over that set out in RD 1065/2007 (as defined herein), (v) to, or to a third party on behalf of, a holder if we do not receive the relevant information as may be required by Spanish tax law, regulation or binding ruling, including a duly executed and completed Payment Statement (as defined herein) from the Paying Agent (as defined herein), or (vi) where the withholding or deduction is required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (“FATCA”), any regulations or agreements thereunder, any official interpretations thereof, any intergovernmental agreements with respect thereto (including the intergovernmental agreement

 

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between the United States and Spain on the implementation of FATCA), or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement relating thereto.

 

  The payment of any Additional Amounts in respect of the Preferred Securities pursuant to the Indenture is also subject to the same conditions and limitations as the payment of any Distribution, including the conditions and limitations described under “—Distributions Discretionary” above.

 

Additional Issuances

We may, from time to time, without the consent or sanction of the holders of the Preferred Securities: (i) take any action required to issue additional Parity Securities or authorize, create and issue one or more series of Parity Securities ranking equally with the Preferred Securities, as to the participation in our profits and/or assets, without limit as to the amount; or (ii) take any action required to authorize, create and issue one or more classes or series of shares of BBVA, including Common Shares, or securities mandatorily convertible into our Common Shares ranking junior or senior to the Preferred Securities, as to the participation in our profits and/or assets.

 

  By acquiring a Preferred Security, holders and beneficial owners of Preferred Securities agree to renounce any rights of seniority or preference that may be conferred upon it (if any) under applicable Spanish law (to the extent permitted under applicable Spanish law) over any holder of such Parity Securities issued by us from time to time.

 

  The Preferred Securities do not grant the holders of the Preferred Securities pre-emption rights in respect of any possible future issues of Parity Securities, Common Shares or any other securities by us or any of our subsidiaries.

 

  We may, from time to time, without the consent of the holders of the Preferred Securities, issue additional Preferred Securities (“Additional Preferred Securities”) of one or more of the series issued under the Indenture having the same ranking and same Distribution Rate, redemption terms and other terms as the Preferred Securities except for the price to the public, the initial Accrual Date (as defined herein), Closing Date and first Distribution Payment Date. Any such Additional Preferred Securities, together with the Preferred Securities, will constitute a single series of Preferred Securities under the Indenture.

 

  In addition to the above, we may, from time to time, without the consent or sanction of the holders of the Preferred Securities, take any action required to authorize, create and issue one or more series of securities ranking senior or junior to the Preferred Securities, as to the participation in our profits and/or assets, without limit as to the amount.

 

Enforcement Events and Remedies

There are no events of default under the Preferred Securities. In addition, under the terms of the Indenture none of the cancellation or deemed cancellation of any Distribution, a Trigger Event, a Capital Reduction or the exercise of the Spanish Bail-in Power or of any other resolution tool by the Relevant Spanish Resolution Authority, or our failure to provide notice in respect of any of the aforementioned events, will be an Enforcement Event.

 

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  Each of the following events is an “Enforcement Event” with respect to the Preferred Securities: (i) the breach of any term, obligation or condition binding on us under the Preferred Securities (other than any of our payment obligations under or arising from the Preferred Securities, including payment of any Liquidation Preference, Distributions or Additional Amounts (including upon a Capital Reduction), payment of the Redemption Price or payment of any damages awarded for breach of any obligations)) (a “Performance Obligation”); or (ii) the occurrence of any voluntary or involuntary liquidation or winding-up of BBVA (a “Liquidation Event”).

 

  The sole remedies of the holders of the Preferred Securities and the trustee under the Preferred Securities or the Indenture upon the occurrence of an Enforcement Event shall be: (i) with respect to a breach of a Performance Obligation, to seek enforcement of the relevant Performance Obligation; and (ii) with respect to a Liquidation Event, to enforce the entitlement set forth under “Certain Terms of the Preferred Securities—Liquidation Distribution” herein.

 

  No other remedies

 

  Other than the limited remedies mentioned above, no remedy against us shall be available to the trustee (acting on behalf of the holders) or to the holders of the Preferred Securities, whether for the recovery of amounts owing in respect of such Preferred Securities or under the Indenture, or in respect of any breach by us of any of our obligations under or in respect of the terms of such Preferred Securities or under the Indenture in relation thereto; provided, however, that our obligations to the trustee under, and the trustee’s lien provided for in the Indenture and the trustee’s rights to have money collected applied first to pay amounts due to it under such lien shall not be limited or impaired and expressly survive any Enforcement Event and are not subject to the subordination provisions of the Indenture.

 

Denomination and Form; Clearing and Settlement

The Preferred Securities will be represented by one or more fully registered global security certificates (each a “Global Preferred Security”) which will be deposited with a custodian for DTC, and Preferred Securities represented thereby will be registered in the name of Cede & Co., as nominee for DTC.

 

  Beneficial interests in the Preferred Securities 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 definitive Preferred Securities except as described in the Indenture.

 

Listing

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

 

ISIN

US05946KAM36

 

CUSIP

05946K AM3

 

Governing Law

The Preferred Securities and the Indenture (except as set forth herein and therein) shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state,

 

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except that the authorization and execution by BBVA of the Indenture, the authorization, issuance and execution by BBVA of the Preferred Securities and provisions thereof relating to the subordination of the Preferred Securities, the waiver of the right of set-off and the agreements and acknowledgments by holders of Preferred Securities and the trustee, respectively, with respect to the exercise and effects of the Spanish Bail-in Power shall be governed by and construed in accordance with the common laws of Spain.

 

Submission to Jurisdiction

Except as provided in the immediately succeeding paragraph, BBVA will submit (for the purposes of any suit or proceeding arising out of or relating to the Preferred Securities or the Indenture) to the jurisdiction of any U.S. Federal or State court in the Borough of Manhattan, The City of New York, New York, in which any such suit or proceeding is so instituted, and will waive, to the extent it may effectively do so, any objection it may have now or hereafter to the laying of the venue of any such suit or proceeding.

 

  Notwithstanding anything to the contrary in the Preferred Securities or in the Indenture, the Spanish courts shall have exclusive jurisdiction in respect of any suit or proceeding arising out of or relating to the Preferred Securities or the Indenture arising out of, relating to or in connection with the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority (a “Bail-in Dispute”) and accordingly each of BBVA, the trustee, each holder and beneficial owner of any Preferred Security and each agent will submit, to the extent it may effectively do so, to the exclusive jurisdiction of the Spanish courts in relation to any Bail-in Dispute. Each of BBVA, the trustee, each holder and beneficial owner of any Preferred Securities and each agent will further irrevocably waive, to the extent it may effectively do so, any objection to the Spanish courts on the grounds that they are an inconvenient or inappropriate forum in respect of any Bail-in Dispute.

 

Settlement

The underwriters expect that the Preferred Securities will be ready for delivery through the book-entry facilities of DTC and its participants, including Clearstream Luxembourg and Euroclear, on or about September 19, 2023, which will be the sixth New York business day following the date of this prospectus supplement. Pursuant to Rule 15c6-1 under the Exchange Act, trades in the secondary market are generally required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Preferred Securities prior to the delivery of the Preferred Securities hereunder may be required to specify alternative settlement arrangements to prevent a failed settlement. Such purchasers should consult their own advisors.

 

Conflicts of Interest

BBVA Securities Inc., which is participating in this offering, is a wholly-owned subsidiary of BBVA. Because of the foregoing, a “conflict of interest” is deemed to exist within the meaning of FINRA Rule 5121. Accordingly, this offering will be conducted in accordance with FINRA Rule 5121, which requires, among other things, that BBVA Securities Inc. will not confirm any sales of the Preferred Securities to any account over which it exercises discretionary authority without the specific written approval of the transaction from the account holder.

 

  See “Underwriting (Conflicts of Interest)—Conflicts of Interest”.

 

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Trustee and Agents

The Bank of New York Mellon, acting (except with respect to its role as Contingent Convertible Preferred Security Registrar) through its London Branch (at 160 Queen Victoria Street, London EC4V 4LA, United Kingdom or such other location as notified by the trustee to BBVA from time to time), will act as trustee, Paying and Conversion Agent, Calculation Agent, Principal Paying Agent and Contingent Convertible Preferred Security Registrar with respect to the Preferred Securities under, and as such terms are defined in, the Indenture.

 

Use of Proceeds

We expect that the net proceeds from the offering of the Preferred Securities will amount to $990,885,377 after deduction of the underwriting commissions and the other expenses incurred in connection with the offering of the Preferred Securities. We intend to use the net proceeds of the offering for general corporate purposes.

 

  See “Use of Proceeds”.

 

Spanish Tax Law Requirements

Under the regulations established by RD 1065/2007, income (as defined below) obtained in respect of the Preferred Securities will not be subject to withholding tax in Spain, provided certain requirements are met, including that the Paying Agent provides BBVA, in a timely manner, with a duly executed and completed Payment Statement. See “Spanish Tax Considerations—Tax Reporting Obligations of the Issuer”. For these purposes, “income” means, with respect to a Distribution Payment Date, the aggregate Distribution paid on a Distribution Payment Date or, with respect to a redemption date, the amount of the difference, if any, between the aggregate Redemption Price paid upon the redemption of the Preferred Securities (or a portion thereof) and the aggregate Liquidation Preference of such Preferred Securities, provided that such difference corresponds to a Distribution paid by BBVA.

 

  If the Paying Agent fails to deliver a duly executed and completed Payment Statement on a timely basis, in respect of a Distribution Payment Date or in connection with a redemption date, then the related payment will be subject to Spanish withholding tax, currently at the rate of 19%. If this were to occur, BBVA would not pay Additional Amounts and owners of a beneficial interest in the Preferred Securities would have to follow the procedures set forth under “Spanish Tax Considerations—Spanish Direct Refund from Spanish Tax Authorities” herein in order to apply directly to the Spanish tax authorities for any refund to which they may be entitled.

Risk Factors

Investing in the Preferred Securities involves risks. As part of making an investment decision, investors should make sure to thoroughly understand the terms of the Preferred Securities, such as the provisions governing Conversion (including, in particular, the circumstances under which a Trigger Event may occur), the agreement by investors to be bound by the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, that Distributions are due and payable only at our discretion (and in certain circumstances must be cancelled) and that there is no scheduled repayment date for the Liquidation Preference of the Preferred Securities. Investors should note that they bear BBVA’s solvency risk, and that the BBVA Group is subject to the resolution framework applicable to financial institutions in Spain.

In addition to the information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus (including “Item 3. Key Information—Risk Factors” in the 2022 Form 20-F), you should carefully consider the risk factors detailed under “Risk Factors” in this prospectus supplement prior to making any investment decision. You should consult your own financial, tax and legal advisers regarding the risks of an investment in the Preferred Securities.

 

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RISK FACTORS

Prospective investors should consider carefully the risk factors incorporated by reference into this prospectus supplement and as set out below as well as the other information set out elsewhere in this prospectus supplement and the accompanying prospectus (including any other documents incorporated by reference herein, including the 2022 Form 20-F and the 1H23 Form 6-K), and reach their own views prior to making any investment decision with respect to the Preferred Securities.

Risks Relating to BBVA and the BBVA Group

For a description of certain significant risks associated with BBVA and the BBVA Group, including certain risks associated with investments in BBVA’s securities, please refer to “Item 3. Key Information—Risk Factors” in the 2022 Form 20-F (which is incorporated by reference herein).

Risks Relating to the Preferred Securities

The Preferred Securities are not a suitable investment for all investors.

The Preferred Securities are complex financial instruments and are not a suitable or appropriate investment for all investors and, in particular, the Preferred Securities are not intended to be sold and should not be sold to retail investors in any jurisdiction. Further, the Preferred Securities, upon issuance, will not be considered to be investment grade securities and, as such, will be subject to a higher risk of price volatility than higher-rated securities.

Each potential investor in the Preferred Securities must determine if it is advisable or permissible for it to subscribe for or purchase the Preferred Securities in accordance with the restrictions on such subscription and purchase as set out in this prospectus supplement, the accompanying prospectus and the Indenture, and the suitability of that investment in light of its own circumstances and needs and the characteristics of the investment itself. In particular, each potential investor may wish to consider, either on its own or with the help of its financial and other professional advisers, whether it:

 

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has sufficient knowledge and experience to make a meaningful evaluation of the Preferred Securities, the merits and risks of investing in the Preferred Securities and the information contained or incorporated by reference in this prospectus supplement, taking into account that the target market for the Preferred Securities is eligible counterparties and professional clients only (each as defined in MiFID II, the COBS and UK MiFIR, as applicable);

 

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has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Preferred Securities and the impact the Preferred Securities will have on its overall investment portfolio;

 

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has sufficient risk tolerance and financial resources and liquidity to bear losses as well as all of the risks of an investment in the Preferred Securities, including where the currency for payments in respect of the Preferred Securities is different from the potential investor’s currency;

 

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understands thoroughly the terms of the Preferred Securities, including the provisions relating to the payment and cancellation of Distributions and any Conversion of the Preferred Securities into Common Shares, and is familiar with the behavior of financial markets; and

 

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is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

A potential investor should not invest in the Preferred Securities unless it has the knowledge and expertise (either alone or with its financial and other professional advisers) to evaluate how the Preferred Securities will perform under changing conditions, the resulting effects on the value of the Preferred Securities and the impact this investment will have on the potential investor’s overall investment portfolio. Prior to making an investment decision, potential investors should consider carefully, in light of their own financial circumstances and investment objectives, all the information contained in this prospectus supplement and the accompanying prospectus or incorporated by reference herein.

Additionally, the investment activities of certain investors may be subject to legal restrictions or review or regulation by certain authorities. Each potential investors should determine for itself, on the basis of professional advice where appropriate, whether and to what extent (i) the Preferred Securities are lawful investments for it,

 

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(ii) the Preferred Securities can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or any pledge of the Preferred Securities. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Preferred Securities under any applicable risk-based capital or similar rules.

The Preferred Securities are complex financial instruments and may be materially affected by any change in the provisions of Spanish laws and their official interpretation.

While the Preferred Securities (except as set forth therein) shall be governed by, and construed in accordance with, the laws of the State of New York, the common laws of Spain (including EU regulations) and their official interpretation by supervisory authorities such as the Bank of Spain or the ECB, and changes thereto after the date hereof, may affect the rights and effective remedies of holders as well as the market value of the Preferred Securities. Such changes in law may include changes in statutory, tax and regulatory regimes during the life of the Preferred Securities, which may have an adverse effect on any investment in the Preferred Securities.

Such changes, including any future changes that may arise from CRD V, BRRD and the SRM Regulation (collectively, “EU Banking Reforms”) (see “Item 4. Information on the Company—Business Overview—Supervision and Regulation—Capital Requirements, MREL and Resolution” in our 2022 Form 20-F), may include changes affecting:

 

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the calculation of the capital ratios and minimum requirement for own funds and eligible liabilities (“MREL”) of BBVA or the Group or the risk weighted assets (“RWAs”) of BBVA or the Group, which could impact the occurrence of a Trigger Event and restrictions on Distributions where subject to a Maximum Distributable Amount or MREL-MDA;

 

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the redemption of the Preferred Securities, including the occurrence of a Capital Event or a Tax Event or changes affecting the early redemption of the Preferred Securities at the option of BBVA or the Clean-up Call (see “—The Preferred Securities are perpetual and may be redeemed only at the option of BBVA”);

 

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the ranking of claims in insolvency and/or in the application of the Spanish Bail-in Power, including as a result of the creation of a general depositor preference, as well as the amount or types of deposits covered by deposit guarantee schemes; and

 

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the definition or calculation of Distributable Items, which may affect Distributions.

Any legislative and regulatory uncertainty, as well as any uncertainty with respect to regulators’ inclination to write-down or write-off Additional Tier 1 instruments, could affect an investor’s ability to value the Preferred Securities accurately and therefore affect the market price of the Preferred Securities.

Additionally, holders will be subject to any and all changes made with respect to the Common Shares and/or the bylaws of BBVA before the occurrence of a Conversion Event and will not be entitled to any rights with respect to such Common Shares prior to the issue and registration of the Common Shares to be delivered following the occurrence of a Conversion Event.

The Preferred Securities are perpetual and may be redeemed only at the option of BBVA. Accordingly, holders will have no ability to cash in their investment except in very limited circumstances.

The Preferred Securities are perpetual, with no fixed maturity date or fixed redemption date. We are under no obligation to redeem the Preferred Securities at any time, and the holders have no right to call for their redemption. Therefore, you have no ability to cash in your investment except under limited circumstances. In particular, there is no right of acceleration in the case of any non-payment of Liquidation Preference of, or Distributions on, the Preferred Securities, or in the case of a failure by BBVA to perform any other covenant under the Preferred Securities or under the Indenture. It is only in the event of any voluntary or involuntary liquidation or winding-up of BBVA that the Preferred Securities will confer on holders thereof an entitlement to receive, out of the assets of BBVA available for distribution to holders, the Liquidation Distribution (as defined in the accompanying prospectus), and then only in the event that such liquidation occurs prior to a conversion into Common Shares.

Therefore, holders will have no ability to cash in their investment, except:

 

  ·  

if BBVA exercises its rights to redeem or purchase the Preferred Securities in accordance with the Indenture (as further described below), although failure by BBVA to make payment of the relevant Redemption Price would not constitute an Enforcement Event or other default; or

 

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by selling their Preferred Securities or, following the occurrence of a Conversion Event and the issue and delivery of Common Shares in accordance with the Indenture, their Common Shares, provided a secondary market exists at the relevant time for the Preferred Securities or the Common Shares.

All, and not some only, of the Preferred Securities may be redeemed at the option of BBVA, subject to the prior consent of the Regulator, on any day falling in the period commencing on (and including) the First Call Date and ending on (and including) the First Reset Date, and on any Distribution Payment Date thereafter, at the Redemption Price per Preferred Security and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force. BBVA may be expected to exercise this option when its funding costs are lower than the Distribution Rate at which Distributions are then payable in respect of the Preferred Securities.

Further, if, on or after the Closing Date, Preferred Securities representing, in the aggregate, 75% or more of the aggregate Liquidation Preference of the Preferred Securities (including any Preferred Securities issued after the Closing Date and any Preferred Securities which have been cancelled by the trustee in accordance with the Indenture) have been purchased by or on behalf of BBVA or any member of the BBVA Group, the Preferred Securities are also redeemable at the option of BBVA (subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations in force at the relevant time) in whole but not in part, at any time, at the Redemption Price pursuant to the Clean-up Call. The Redemption Price may be less than the amount you would receive if you were to sell your Preferred Securities at a time of your choosing. Further, it will be difficult for you to predict when, if at all, the Clean-up Call will be exercised.

The Preferred Securities are also redeemable on or after the Closing Date at the option of BBVA (subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations in force at the relevant time) in whole but not in part, at any time, at the Redemption Price if there is a Capital Event or a Tax Event. It is not possible to predict whether or when a Capital Event or Tax Event will occur and so lead to the circumstances in which BBVA is able to elect to redeem the Preferred Securities, and if so whether or not BBVA will elect to exercise such option to redeem the Preferred Securities or any prior consent of the Regulator required for such redemption will be given.

Further, if any notice of redemption of the Preferred Securities is given pursuant to the Indenture and a Trigger Event occurs prior to the relevant redemption date, the relevant redemption notice shall be automatically rescinded and shall be of no force and effect, there shall be no redemption of the relevant Preferred Securities on such redemption date and, instead, the Trigger Conversion of the Preferred Securities shall take place as provided in the Indenture.

The redemption features of the Preferred Securities are likely to limit their market value. During any period when BBVA has the right to elect to redeem the Preferred Securities, the market value of the Preferred Securities is unlikely to rise substantially above the price at which they can be redeemed. This may also be true prior to such period. Moreover, there can be no assurance that, in the event of any early redemption, holders will be able to reinvest the proceeds at a rate that is equal to the return on the Preferred Securities.

Payments of Distributions on the Preferred Securities are discretionary and subject to the fulfilment of certain conditions, and they may be restricted as a result of a failure of BBVA to comply with its capital and MREL requirements.

The Preferred Securities accrue Distributions as further described in the Indenture, but BBVA may elect, in its sole and absolute discretion, to cancel the payment of any Distribution in whole or in part at any time and for any or no reason and without any restriction on it thereafter.

Payments of Distributions in any financial year of BBVA shall be made only out of Distributable Items. To the extent that (i) BBVA has insufficient Distributable Items to make Distributions on the Preferred Securities scheduled for payment in the then-current financial year and any interest payments or distributions that have been paid or made or are scheduled or required to be paid or made out of Distributable Items of BBVA in the then-current financial year, in each case excluding any portion of such payments already accounted for in determining the Distributable Items, and/or (ii) the Regulator, in accordance with Article 68 of Law 10/2014 and/or Article 16 of the SSM Regulation and/or with Applicable Banking Regulations then in force, requires BBVA to cancel the relevant Distribution in whole or in part, then BBVA will, without prejudice to the right above to cancel the

 

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payment of all such Distributions on the Preferred Securities, make partial or, as the case may be, no payment of the relevant Distribution on the Preferred Securities. The level of BBVA’s available Distributable Items is affected by a number of factors and could be affected by changes to the Applicable Banking Regulations and other regulations, accounting rules or expectations of regulatory authorities, among other factors.

An entity not meeting its “combined buffer requirement” must calculate its Maximum Distributable Amount, and until the Maximum Distributable Amount has been calculated and communicated to the Bank of Spain, that entity shall not make any discretionary payments (including, in the case of BBVA, the payment of any Distributions on the Preferred Securities). Following such calculation, any discretionary payments by that entity will be subject to the Maximum Distributable Amount so calculated. Likewise, an entity not meeting its MREL-MDA could result, among other things, in the imposition of restrictions or prohibitions on discretionary payments (including, in the case of BBVA, the payment of any Distributions on the Preferred Securities).

As a consequence, upon any failure by BBVA and/or the BBVA Group to comply with the “combined buffer requirement”, it may be necessary to reduce (in whole or in part) Distributions in respect of the Preferred Securities. See “Item 3. Key Information—Risk Factors—Regulatory, Tax, Compliance and Reporting Risks—Increasingly onerous capital and liquidity requirements may have a material adverse effect on the Group’s business, financial condition and results of operations” in our 2022 Form 20-F.

There are a number of factors (including applicable capital requirements, the amount of CET1 Capital, the determination of the systemic risk buffer by the relevant authorities, the composition of the “combined buffer requirement” and the calculation of the Maximum Distributable Amount or the MREL-MDA (as the case may be)) and possible issues of interpretation (including any future changes that may arise from the EU Banking Reforms) which make it difficult to determine how the Maximum Distributable Amount or the MREL-MDA will apply as a practical matter to limit Distributions on the Preferred Securities. This uncertainty and the resulting complexity may adversely impact the market price and liquidity of the Preferred Securities.

Furthermore, upon the occurrence of a Trigger Event, no further Distributions on the Preferred Securities will be made, including any accrued and unpaid Distributions, which will be cancelled.

If, as a result of any of the conditions and restrictions set out above, only part of the Distributions under the Preferred Securities may be paid, BBVA may proceed, in its sole discretion, to make such partial Distributions under the Preferred Securities. Neither the election to cancel the payment of any Distribution (or any part thereof) nor non-payment of any Distribution (or any part thereof) as a result of the limitations on payment mentioned above will constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture and, upon the cancellation of any Distribution (or any part thereof), BBVA will not be in any way limited or restricted from making any distribution or payment in connection with any instrument ranking junior to the Preferred Securities (including, without limitation, any CET1 Capital of BBVA or any member of the BBVA Group) or in respect of any other Parity Security, except to the extent otherwise provided by Applicable Banking Regulations.

As a result of the above, there can be no assurance that a holder will receive payments of Distributions in respect of the Preferred Securities. The payment of any Additional Amounts in respect of the Preferred Securities pursuant to the Indenture is also subject to the same conditions and limitations as the payment of any Distribution. Any cancellation of Distributions (in whole or in part) on the Preferred Securities could occur without warning and any such cancellation or any perceived risk that Distributions may be cancelled may have a negative impact on the value of the Preferred Securities.

Unpaid Distributions are not cumulative or payable at any time thereafter and, accordingly, if any Distribution (or part thereof) is not made in respect of the Preferred Securities as a result of any requirement for, or election of, BBVA to cancel such Distributions then the right of the holders to receive the relevant Distribution (or part thereof) in respect of the relevant Distribution Period will be extinguished and BBVA will have no obligation to pay such Distribution (or part thereof) or to pay any interest thereon, whether or not Distributions on the Preferred Securities are paid in respect of any future Distribution Period.

The Preferred Securities may be traded with accrued Distributions, but under certain circumstances described above, such Distributions may be cancelled and not paid on the relevant Distribution Payment Date.

The Preferred Securities may trade, and/or the prices for the Preferred Securities may appear, on the New York Stock Exchange (if trading thereon is approved) and in other trading systems (if applicable) with accrued

 

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Distributions. If this occurs, purchasers of Preferred Securities in the secondary market will pay a price that reflects such accrued Distributions upon purchase of the Preferred Securities. However, if a payment of a Distribution on any Distribution Payment Date is cancelled or deemed cancelled (in each case, in whole or in part) as described herein and thus is not due and payable, purchasers of such Preferred Securities will not be entitled to that Distribution (or if we elect to make a payment of a portion, but not all, of such Distribution, the portion of such a Distribution not paid) on the relevant Distribution Payment Date. This may affect the value of your investment in the Preferred Securities.

In certain circumstances the terms of the Preferred Securities may be modified, or the Preferred Securities may be substituted for different securities, without the consent of holders.

If a Capital Event or Tax Event, as applicable, occurs and is continuing, BBVA may, except if a Trigger Event occurs or shall have occurred, and except if a Capital Reduction occurs or shall have occurred (other than in respect of Preferred Securities with respect to which a duly completed Election Notice has been received during the Election Period), substitute or modify the terms of all (but not less than all) the Preferred Securities, without any requirement for the consent or approval of the trustee or the holders or beneficial owners of the Preferred Securities, so that such Preferred Securities are substituted for, or their terms are modified to, become again, or remain Qualifying Preferred Securities, subject to satisfaction of the requirements and limitations set forth herein. See “Certain Terms of the Preferred Securities—Substitution and Modification of the Preferred Securities”.

There can be no assurance as to how the terms of any Qualifying Preferred Securities resulting from any such substitution or modification will be viewed by the market or whether any such Qualifying Preferred Securities will trade at prices that are at least equivalent to the prices at which the Preferred Securities would have traded on the basis of their original terms.

In addition, BBVA will not be under any obligation to have regard to the tax position of any holders in connection with any such substitution or modification of the Preferred Securities or to the tax consequences of any such substitution or modification for individual holders. No holder shall be entitled to claim any indemnification or payment from or have any other recourse to BBVA or any other person, in respect of any tax consequences of any such substitution or modification for that holder.

There are no events of default, and there are limited remedies available under the Preferred Securities.

The terms of the Preferred Securities and the Indenture do not provide for any events of default. Holders will have no right of acceleration in the case of any non-payment of Liquidation Preference of, or Distributions on, the Preferred Securities, or in the case of a failure by BBVA to perform any other covenant under the Preferred Securities or under the Indenture.

Accordingly, neither the election by BBVA to cancel the payment of any Distribution (or any part thereof) nor non-payment of any Distribution (or any part thereof) as a result of the limitations on payment mentioned in this prospectus supplement will constitute an event of default, Enforcement Event or similar event or entitle holders to take any action to cause the liquidation, dissolution or winding up of BBVA. Further, if upon a redemption of the Preferred Securities, BBVA failed to make payment of the relevant Redemption Price when due, such failure would not constitute an Enforcement Event or other default but would entitle holders to bring a claim for breach of contract against BBVA which, if successful, could results in damages. In the event that BBVA failed to make any other payments (where such payments were not cancelled pursuant to, or otherwise subject to the limitations on payment set out in, the Indenture) or deliver any Common Shares when the same may be due, the remedies of holders would be limited to bringing a claim for breach of contract.

Further, a Trigger Conversion will not constitute an event of default or the occurrence of any event related to the insolvency of BBVA or entitle holders to take any action to cause the liquidation, dissolution or winding up of BBVA. In addition, if Common Shares are not issued and delivered following a Conversion Event (with such delivery being duly recorded in the Iberclear registry), then on a liquidation or winding-up of BBVA the claim of a holder will not be in respect of the Liquidation Preference of its Preferred Securities but will be an entitlement to receive (i) out of the relevant assets of BBVA, a monetary amount equal to that which holders of such Preferred Securities would have received on any distribution of the assets of BBVA if such Conversion had taken place immediately prior to such liquidation or winding-up, or (ii) such amounts as may be otherwise provided in accordance with the applicable law at such time. Furthermore, under Spanish law only the holders of the Common Shares according to the registry kept by Iberclear are entitled to exercise voting, preemptive and other rights in respect of such shares.

 

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The Preferred Securities are irrevocably and mandatorily convertible into newly issued Common Shares in certain prescribed circumstances.

Upon the occurrence of a Trigger Event, the Preferred Securities will be irrevocably and mandatorily (and without any requirement for the consent or approval of holders or beneficial owners) converted into a number of newly issued Common Shares calculated by BBVA and which shall be binding on the holders. Because a Trigger Event will occur when the CET1 ratio of BBVA or the BBVA Group will have deteriorated significantly, the occurrence of such Trigger Event will likely be accompanied by a prior deterioration in the market price of the Common Shares, which may be expected to continue after announcement of such Trigger Event.

Therefore, in the event of the occurrence of a Trigger Event, the Reference Market Price of a Common Share may be below the Floor Price (which, as of the date of this prospectus supplement, is $4.0215, subject to adjustment as described under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion—Conversion Price—Anti-Dilution Adjustment of the Floor Price” in the accompanying prospectus), and investors could receive Common Shares at a time when the market price of the Common Shares is considerably less than the Conversion Price. In addition, holders will receive the relevant Common Shares on the Conversion Settlement Date, which shall be as soon as practicable and in any event not later than one month following (or such other period as Applicable Banking Regulations may require) the Conversion Notice Date, and, therefore, there may be a delay in a holder receiving its Common Shares following a Trigger Event, during which time the market price of the Common Shares may fall further. Additionally, if a Delivery Notice is not duly delivered by a holder, any Common Shares underlying the relevant Preferred Securities may be sold, which may also decrease the market price of the Common Shares. As a result, the value of the Common Shares received on conversion following a Trigger Event could be substantially lower than the price paid for the Preferred Securities at the time of their purchase.

In addition to the occurrence of a Trigger Event, a Capital Reduction will also constitute a Conversion Event. For these purposes a Capital Reduction means the adoption, in accordance with Article 418.3 of the Spanish Companies Act, by a general shareholders’ meeting of BBVA of a resolution of capital reduction by reimbursement of cash contributions (restitución de aportaciones) to shareholders by way of a reduction in the nominal value of the shares of such shareholders in the capital of BBVA. A resolution of capital reduction for the redemption of any Common Shares previously repurchased by BBVA will not be considered a Capital Reduction for the purposes of the terms and conditions of the Preferred Securities.

Article 418.3 of the Spanish Companies Act provides for holders of convertible securities in the event of any such capital reduction to be able to exercise their rights in respect of the conversion of such securities into ordinary shares in the capital of the issuer before the capital reduction is effected. Such conversion is intended to ensure holders of convertible securities are not detrimentally affected by the decapitalization of the issuer resulting from such capital reduction and may participate in the reimbursement of the relevant cash contributions as shareholders and, thereby, also benefit from such reimbursement.

If a Capital Reduction occurs, each holder will have the right to elect that its Preferred Securities shall not be converted on such Capital Reduction by delivery and receipt of a duly completed and signed Election Notice as provided in the Indenture on or before the tenth Business Day immediately following the Capital Reduction Notice Date. Any failure to make such election by such deadline will result in the conversion of a holder’s Preferred Securities on such Conversion Settlement Date in accordance with the Indenture.

Accordingly, an investor in the Preferred Securities will, following a Conversion, face almost the same risk of loss as an investor in the Common Shares.

The circumstances that may give rise to a Trigger Event are unpredictable.

The occurrence of a Trigger Event is inherently unpredictable as it depends, in part, on factors which are outside of BBVA’s control. For example, the occurrence of one or more of the risks described in “Item 3. Key Information—Risk Factors” in the 2022 Form 20-F, such as macroeconomic deterioration, may have a material adverse effect on the business and future earnings of BBVA and/or the BBVA Group and may therefore substantially increase the likelihood of the occurrence of a Trigger Event.

Furthermore, the occurrence of a Trigger Event depends, in part, on the calculation of the CET1 ratio, which can be affected, among other things, by changes in applicable accounting rules, the BBVA Group’s accounting policies and the application by the BBVA Group of these policies; and regulatory changes (including possible

 

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changes in regulatory capital definitions and calculations of the CET1 ratios and their components or the interpretation thereof by the relevant authorities, including CET1 Capital and RWAs, in each case on either an individual or a consolidated basis, and the unwinding of transitional provisions under CRD IV (as defined in the accompanying prospectus) (see “—The Preferred Securities are complex financial instruments and may be materially affected by any change in the provisions of Spanish laws and their official interpretation”).

Further, the CET1 ratio of BBVA or the BBVA Group at any time may be affected by decisions taken by the BBVA Group in relation to its businesses and operations (including changes in BBVA’s structure or organization), as well as the management of its capital position (including dividends and other distributions paid in respect of instruments ranking junior to the Preferred Securities or Parity Securities, or the execution of share buyback programs). CET1 ratios may also be affected by BBVA’s ability to actively manage the RWAs of BBVA and the BBVA Group.

A Trigger Event is likely to occur at a time of stress for BBVA or the BBVA Group and could occur in connection with an exercise, or the threat of an exercise, of the Spanish Bail-in Power or another resolution tool by the Relevant Spanish Resolution Authority. However, since the Regulator may require BBVA to calculate the CET1 ratio at any time, a Trigger Event could occur at any time. Due to the inherent uncertainty in advance of any determination of whether a Trigger Event may exist, it will be difficult to predict when, if at all, the Preferred Securities will be converted into Common Shares. Accordingly, trading behavior in respect of the Preferred Securities is not necessarily expected to follow trading behavior associated with other types of convertible or exchangeable securities. Any indication that BBVA and/or the BBVA Group, as applicable, is trending towards a Trigger Event can be expected to have an adverse effect on the market price of the Preferred Securities and on the price of the Common Shares. Under such circumstances, investors may not be able to sell their Preferred Securities easily or at prices comparable to other similar yielding instruments.

Moreover, we have never converted any Additional Tier 1 security of BBVA into Common Shares and as such there is uncertainty regarding precisely how such conversion would be undertaken.

You will have limited rights after a Trigger Event and the issuance of the Common Shares to the Conversion Shares Depository will constitute an irrevocable and automatic release of all of our obligations in respect of the Preferred Securities.

Following a Trigger Event, we will be obligated to issue the Common Shares to the Conversion Shares Depository, which will hold the Common Shares on your behalf. Once the Common Shares are delivered to the Conversion Shares Depository, all of our obligations under the Preferred Securities will be (except with respect to the payment of certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares) irrevocably and automatically released in consideration of such issuance to the Conversion Shares Depository of Common Shares, and under no circumstances will such released obligations be reinstated and you will not be entitled to any form of compensation in the event of our potential recovery or change in our fully loaded CET1 ratio after the Trigger Event. After we issue and deliver the relevant Common Shares to the Conversion Shares Depository, you will have recourse only to the Conversion Shares Depository and exclusively for the purposes of the delivery to you of Common Shares or, if you so elect, ADSs.

If we do not deliver the Common Shares to the Conversion Shares Depository following a Trigger Event, the only claim you will have against us will be for specific performance to have such Common Shares issued and delivered. In particular, you will not have any rights against us with respect to repayment of the Liquidation Preference of the Preferred Securities or payment of Distributions or any other amount on, or in respect of, the Preferred Securities, which liabilities will be automatically released.

In addition, we have not yet appointed a Conversion Shares Depository and we may not be able to appoint a Conversion Shares Depository if a Conversion (including a Trigger Conversion) occurs. In the event of a Conversion, we will effect, by means we deem reasonable under the circumstances (including, without limitation, issuance of the Common Shares to another nominee or to you directly), the issuance and/or delivery of the Common Shares or, if you so elect, ADSs.

A Conversion may result in new obligations for you.

Except as provided in the Indenture, neither we nor any member of the BBVA Group will be liable for any taxes or duties (including, without limitation, any stamp duty, stamp duty reserve tax or any other capital, issue, transfer, registration, financial transaction or documentary tax or duty) arising on conversion or that may arise or

 

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be paid in connection with the issue and delivery of Common Shares following a Conversion. You must pay any such taxes and duties arising on conversion in connection with the issue and delivery of Common Shares to the Conversion Shares Depository on your behalf. Furthermore, in accordance with the Indenture any costs incurred by the Conversion Shares Depository or any parent, subsidiary or affiliate of the Conversion Shares Depository in connection with the holding by the Conversion Shares Depository of any Common Shares and any amount received in respect thereof shall be deducted by the Conversion Shares Depository from such amount prior to the delivery of such Common Shares and payment of such amount to the relevant holder.

Further, upon conversion of your Preferred Securities into Common Shares, you may have to comply with certain approval and/or disclosure requirements pursuant to Spanish laws and regulations or the laws and regulations of any other jurisdiction in which the Common Shares are then listed. See “Description of BBVA Ordinary Shares—Reporting Requirements” and “—Restrictions on Acquisitions of Ordinary Shares” in the accompanying prospectus. Non-compliance with such approval and/or disclosure requirements may lead to the incurrence by holders of substantial fines and/or suspension of voting rights associated with the Common Shares.

Moreover, a holder receiving Common Shares may have to make a takeover bid addressed to the shareholders of BBVA pursuant to the LMV if (i) its aggregate holding in BBVA is equal to or exceeds 30% of the available voting rights or (ii) its aggregate holding in BBVA is less than 30% of such voting rights but, within 24 months of the date on which it acquired that lower percentage, it nominates a number of directors that, when taken together with any directors it has previously nominated, represent more than half of the members of BBVA’s management body, in each case as a result of the conversion of the Preferred Securities into Common Shares.

Holders will bear the risk of fluctuations in the price of the Common Shares.

The market price of the Preferred Securities is expected to be affected by fluctuations in the market price of the Common Shares, and it is impossible to predict whether the price of the Common Shares will rise or fall. Market prices of the Common Shares will be influenced by, among other things, the financial position of the BBVA Group, its results of operations and political, economic, financial and other factors. Any decline in the market price of the Common Shares may have an adverse effect on the market price of the Preferred Securities. The level of the CET1 ratio specified in the definition of Trigger Event may also significantly affect the market price of the Preferred Securities and/or the Common Shares. Fluctuations in the market price of the Common Shares between the Conversion Notice Date and the Conversion Settlement Date may also further affect the value to a holder of any Common Shares delivered to that holder on the Conversion Settlement Date.

Holders have limited anti-dilution protection.

The number of Common Shares to be issued and delivered on Conversion in respect of each Preferred Security shall be determined by dividing the Liquidation Preference of such Preferred Security by the Conversion Price in effect on the Conversion Notice Date.

The Floor Price will be adjusted in the event that there is a consolidation, reclassification/redesignation or subdivision affecting the Common Shares, the payment of any extraordinary dividends or non-cash dividends, rights issues or grant of other subscription rights or certain other events which affect the Common Shares, but only in the situations and to the extent provided in the Indenture. There is no requirement that there should be an adjustment for every corporate or other event that may affect the value of the Common Shares or that, if a holder were to have held the Common Shares at the time of such adjustment, such holder would not have benefited to a greater extent.

Furthermore, the Indenture does not provide for certain undertakings from BBVA which are sometimes included in securities that convert into the ordinary shares of an issuer to protect investors in situations where the relevant conversion price adjustment provisions do not operate to neutralize the dilutive effect of certain corporate events or actions on the economic value of the Conversion Price. For example, the Indenture contains neither an undertaking restricting the modification of rights attaching to the Common Shares nor an undertaking restricting issues of new share capital with preferential rights relative to the Preferred Securities.

Further, if BBVA issues any Common Shares credited as fully paid to shareholders by way of capitalization of profits or reserves (including any share premium account or capital redemption reserve), where the shareholders may elect to receive a Dividend in cash in lieu of such Common Shares and such Dividend does not constitute an extraordinary dividend, no Floor Price adjustment shall be applicable in accordance with the Indenture, and therefore holders will not be protected by anti-dilution measures.

 

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Accordingly, corporate events or actions in respect of which no adjustment to the Floor Price is made may adversely affect the value of the Preferred Securities.

In order to comply with increasing regulatory capital requirements imposed by applicable regulations, BBVA may need to raise additional capital. Further capital raisings by BBVA could result in the dilution of the interests of the holders, subject only to the limited anti-dilution protections referred to above.

If a Delivery Notice and the relevant Preferred Securities are not duly delivered by a holder, any Common Shares underlying the relevant Preferred Securities will be sold and the proceeds therefrom distributed to that holder, and that holder will bear the risk of fluctuations in the price of the Common Shares until such Common Shares are sold.

In order to obtain delivery of the relevant Common Shares on Conversion, a holder must deliver a duly completed Delivery Notice together with the Preferred Securities held by it in accordance with the provisions set out in the Indenture on or before the Notice Cut-off Date. If a duly completed Delivery Notice and the relevant Preferred Securities are not received by the Paying and Conversion Agent as provided in the Indenture on or before the Notice Cut-off Date, then within ten Business Days following the Conversion Settlement Date, all Common Shares held by the Conversion Shares Depository in respect of which the applicable Preferred Securities and a duly completed Delivery Notice have not been received on or before the Notice Cut-off Date as aforesaid will be sold by or on behalf of the Selling Agent as soon as reasonably practicable and (subject to the deduction by or on behalf of the Selling Agent of any amount payable in respect of its liability to taxation and the payment of any capital, stamp, issue, registration and/or transfer taxes and duties (if any) and any fees or costs incurred by or on behalf of the Selling Agent in connection with the sale and allotment thereof) the net proceeds of such sale shall as soon as reasonably practicable be distributed pro rata to the relevant holders in accordance with the Indenture or in such other manner and at such time as we shall determine and notify to the relevant holders. Accordingly, if a Delivery Notice and the relevant Preferred Securities are not so duly delivered, then a holder will bear the risk of fluctuations in the price of the Common Shares until such Common Shares are sold and the proceeds therefrom are distributed.

If the applicable Common Shares are not sold by the Selling Agent, the Conversion Shares Depositary will continue to hold the applicable Preferred Securities until a Delivery Notice and the applicable Preferred Securities are duly delivered in accordance with the provisions set out in the Indenture. However, any holder delivering a Delivery Notice after the Notice Cut-off Date will have to provide evidence of its entitlement to the applicable Common Shares satisfactory to the Conversion Shares Depositary in its sole and absolute discretion in order to receive delivery of the applicable Common Shares.

Due to the fact that, in the event of a Conversion Event, investors are likely to receive Common Shares at a time when the market price of the Common Shares is very low, the cash value of the Common Shares received upon any such sale could be substantially lower than the price paid for the Preferred Securities at the time of their purchase. In addition, the proceeds of such sale may be further reduced as a result of the number of Common Shares offered for sale at the same time being much greater than may be the case in the event of sales by individual holders.

BBVA will have no liability in respect of any sale of any Common Shares, whether for the timing of any such sale or the price at or manner in which any such Common Shares are sold or the inability to sell any such Common Shares. Furthermore, BBVA will have no liability to holders or beneficial owners for any loss resulting from any holder’s or beneficial owner’s failure to receive any Common Shares or from any delay in the receipt thereof, in each case as a result of such holder or beneficial owner (or its custodian, nominee, broker or other representative) failing to duly submit a Delivery Notice (and the relevant Preferred Securities, if held in definitive form) on a timely basis or at all. In particular, receipt of the relevant Common Shares by the Conversion Shares Depository shall discharge our obligations in respect of the Preferred Securities converted (except with respect to the payment of certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares), other than, in the case of a Capital Reduction, as provided herein with respect to the payment of accrued and unpaid Distributions for the then-current Distribution Period up to (but excluding) the Conversion Settlement Date (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment as described herein). As a result, BBVA will have no liability to holders for any loss resulting from any holder’s failure to receive any Common Shares or from any delay in the receipt thereof, in each case as a result of the Conversion Shares Depository’s failure to deliver the Common Shares on a timely basis or at all.

 

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The obligations of BBVA under the Preferred Securities are subordinated and will be further subordinated upon conversion into Common Shares, and there is no restriction on the amount or type of further securities which BBVA may issue or indebtedness which BBVA may incur.

The Preferred Securities will constitute direct, unconditional, unsecured and subordinated obligations of BBVA and, in the case of insolvency (concurso de acreedores) of BBVA, rank as set out in the Indenture in accordance with Article 281.1 of the Spanish Insolvency Law and Additional Provision 14.3 of Law 11/2015 but only to the extent permitted by the Spanish Insolvency Law or any other applicable laws relating to or affecting the enforcement of creditors’ rights in Spain and subject to any other ranking that may apply as a result of any mandatory provision of law.

The second paragraph of Article 48(7) of the BRRD, as implemented in Spain through Additional Provision 14.3 of Law 11/2015, clarified that if an instrument is only partly recognized as an own funds instrument, the whole instrument shall be treated in insolvency as a claim resulting from an own funds instrument and shall rank lower than any claim that does not result from an own funds instrument. Accordingly, as of the date of this prospectus supplement and according to Additional Provision 14.3 of Law 11/2015, the ranking of the Preferred Securities, any Parity Securities and any other subordinated instruments of BBVA will depend on whether those instruments constitute at the relevant time an Additional Tier 1 Instrument or a Tier 2 Instrument (as defined herein) of BBVA or an instrument of BBVA not constituting Additional Tier 1 Capital or Tier 2 Capital (as defined herein) of BBVA.

In addition, if BBVA were wound up, liquidated or dissolved, BBVA’s liquidator would first apply the assets of BBVA to satisfy all claims of holders of unsubordinated obligations of BBVA and other subordinated claims ranking ahead of any obligations of BBVA in respect of the Preferred Securities. If BBVA does not have sufficient assets to settle claims of prior ranking creditors in full, the claims of the holders under the Preferred Securities will not be satisfied. Holders will share equally in any distribution of assets with the holders of any other Parity Securities if BBVA does not have sufficient funds to make full payment to all of them. In such a situation, holders could lose all or part of their investment.

Furthermore, if a Conversion Event occurs but the relevant conversion of the Preferred Securities into Common Shares pursuant to the Indenture is still to take place at the time of the liquidation or winding-up of BBVA, the entitlement of holders will be to receive (i) out of the relevant assets of BBVA a monetary amount equal to that which holders of such Preferred Securities would have received on any distribution of the assets of BBVA if such Conversion had taken place immediately prior to such liquidation or winding-up or (ii) such amounts as may be otherwise provided in accordance with applicable law at such time.

Therefore, if a Conversion takes place, each holder will be effectively further subordinated from being the holder of a subordinated debt instrument to being the holder of Common Shares and there is an enhanced risk that holders will lose all or some of their investment.

Additionally, there is no restriction on the amount or type of further securities or indebtedness which BBVA may issue or incur which ranks senior to, or pari passu with, the Preferred Securities. The incurrence of any such further indebtedness may reduce the amount recoverable by holders on a liquidation or winding-up of BBVA in respect of the Preferred Securities and may limit the ability of BBVA to meet its obligations in respect of the Preferred Securities, and result in a holder losing all or some of its investment in the Preferred Securities. In addition, the Preferred Securities do not contain any restriction on BBVA issuing securities that may have preferential rights to the Common Shares or securities ranking pari passu with the Preferred Securities and having similar or preferential terms to the Preferred Securities.

The terms of the Preferred Securities contain a waiver of set-off rights.

No holder of the Preferred Securities may at any time exercise any and all rights or claims against BBVA for deduction, set-off, netting, compensation, retention or counterclaim arising directly or indirectly under or in connection with any Preferred Security against any right, claim or liability of BBVA or that BBVA may have or acquire against such holder, directly or indirectly and howsoever arising (and including all such rights, claims and liabilities arising under or in relation to any and all agreements or other instruments of any kind, whether or not relating to such Preferred Securities). The Preferred Securities and the Indenture provide that holders shall be deemed to have waived all such set-off rights to the fullest extent permitted by applicable law in relation to all such actual and potential rights, claims and liabilities. As a result, holders will not at any time be entitled to set-off BBVA’s obligations under the Preferred Securities against obligations owed by them to BBVA.

 

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The Preferred Securities may be subject to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. This and other powers contained in Law 11/2015 and the SRM Regulation could materially affect your rights under, and the value of your investment in, the Preferred Securities.

The BRRD and the SRM Regulation (each as defined herein) are designed to provide authorities with a credible set of tools to intervene sufficiently early and quickly in failing or likely to fail credit institutions or investment firms so as to ensure the continuity of any such institution’s critical financial and economic functions, while minimizing the impact of such institution’s failure on the economy and financial system. For a description of such set of tools, including the Spanish Bail-in Power, see “Item 4. Information on the Company—Business Overview—Supervision and Regulation—Capital Requirements, MREL and Resolution” in our 2022 Form 20-F.

In accordance with the provisions of Article 48 of Law 11/2015 (without prejudice to any exclusions that may be applied by the Relevant Spanish Resolution Authority in accordance with Article 43 of Law 11/2015), in the event of any application of the Spanish Bail-in Power, any write-down or conversion power exercised by the Relevant Spanish Resolution Authority will be carried out in the following sequence: (i) CET1 Capital; (ii) the principal amount of Additional Tier 1 Instruments (which includes the Preferred Securities); (iii) the principal amount of instruments of BBVA qualifying as Tier 2 capital (capital de nivel 2) as provided under Applicable Banking Regulations (“Tier 2 Capital”), in whole or in part; (iv) the principal amount of other instruments that do not qualify as Additional Tier 1 Capital or Tier 2 Capital; and (v) the principal or outstanding amount of the remaining eligible liabilities in the order of the hierarchy of claims in normal insolvency proceedings.

Upon any application of the Spanish Bail-in Power, holders of the Preferred Securities may be subject to, among other things, write-down (including to zero, which, in the case of the Preferred Securities, would result in there being no conversion of the Preferred Securities) and/or conversion into equity or other securities or obligations of the Preferred Securities under terms different or less advantageous for holders as compared to the conversion process envisaged under the terms and conditions of the Preferred Securities. The exercise of any such powers (or any of the other resolution powers and tools) may result in such holders losing some or all of their investment or otherwise having their rights under the Preferred Securities adversely affected, including by becoming holders of further subordinated instruments such as BBVA’s ordinary shares. Such exercise could also involve modifications to, or the disapplication of, provisions in the terms and conditions of the Preferred Securities, including, among other provisions, the Liquidation Preference or any Distributions payable on the Preferred Securities, or the dates on which payments may be due, as well as the suspension of payments for a certain period (but without limiting the right of BBVA under the Preferred Securities and the Indenture to cancel payment of any Distributions at any time and for any (or no) reason) or indefinitely. As a result, the exercise of any power under Law 11/2015, or any suggestion of such exercise, could materially adversely affect the rights of holders of Preferred Securities, the market price or value or trading behavior of any Preferred Securities and/or the ability of BBVA to satisfy its obligations under the Preferred Securities.

Furthermore, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the Preferred Securities is likely to be inherently unpredictable and may depend on a number of factors which may be outside of BBVA’s control. In addition, the Relevant Spanish Resolution Authority will retain a broad element of discretion and it may exercise any of its powers without any prior notice to the holders of any securities. Holders of the Preferred Securities may not be able to refer to publicly available criteria in order to anticipate any potential exercise of the Spanish Bail-in Power. Because of this inherent uncertainty, it will be difficult to predict when, if at all, the exercise of any such powers by the Relevant Spanish Resolution Authority may occur.

This uncertainty may adversely affect the value of the Preferred Securities. The price and trading behavior of the Preferred Securities may be affected by the threat of a possible exercise of any power under Law 11/2015 and/or the SRM Regulation (including early intervention measures before becoming subject to resolution measures) or any suggestion of such exercise, even if the likelihood of such exercise is remote. Moreover, the Relevant Spanish Resolution Authority may exercise any such powers without providing any advance notice to the holders of the Preferred Securities.

In addition, the European Banking Authority may continue to publish regulatory technical standards and implementing technical standards to be adopted by the European Commission and certain other guidelines. These standards and guidelines could be potentially relevant to determining when or how a Relevant Spanish Resolution Authority may exercise the Spanish Bail-in Power. No assurance can be given that these standards and guidelines will not be detrimental to the rights of a holder of Preferred Securities under, and the value of a holder’s investment in, the Preferred Securities.

 

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Finally, to the extent that any resulting treatment of a holder of the Preferred Securities pursuant to the exercise of the Spanish Bail-in Power is less favorable than would have been the case under the hierarchy in normal insolvency proceedings, a holder of such affected Preferred Securities may have a right to compensation under the BRRD and the SRM Regulation based on an independent valuation of the institution, in accordance with Article 10 of RD 1012/2015 and the SRM Regulation, together with any other compensation provided for in any Applicable Banking Regulations, including, inter alia, compensation in accordance with Article 36.5 of Law 11/2015. Any such compensation right is unlikely to compensate that holder for the losses it has actually incurred and, in any event, there is likely to be a considerable delay in the recovery of such compensation.

Spanish courts will have exclusive jurisdiction in respect of any suit or proceeding arising out of, relating to or in connection with the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

The Indenture and the Preferred Securities provide that the courts of Spain will have exclusive jurisdiction in respect of a Bail-in Dispute, and each holder and beneficial owner of any Preferred Securities will submit, to the extent it may effectively do so, to the exclusive jurisdiction of the Spanish courts in relation to any Bail-in Dispute. They also provide that each holder and beneficial owner of any Preferred Securities irrevocably waives, to the extent it may effectively do so, any objection to the Spanish courts on the grounds that they are an inconvenient or inappropriate forum in respect of any such suit or proceeding. Litigation in Spain is subject to procedural rights and other rules that are different from those of the United States. Litigation and legal enforcement in Spain may be more costly, time-consuming and slow than in other jurisdictions. Furthermore, it may be more complex to predict the outcome of administrative and court proceedings in Spain than in other jurisdictions.

The value of the Preferred Securities may be adversely affected by movements in market interest rates.

The Distribution Rate on the Preferred Securities will initially be 9.375% per annum. However, the Distribution Rate will be reset on each Reset Date such that from (and including) each Reset Date, the applicable per annum interest rate will be equal to the aggregate of the Initial Margin and the 5-year UST for such Reset Period, and such aggregate converted to a quarterly rate in accordance with market convention (rounded to four decimal places, with 0.00005 rounded down), all as determined by the Calculation Agent on the relevant Reset Determination Date. The Distribution Rate applicable from (and including) each Reset Date could be less than the initial Distribution Rate and/or the Distribution Rate that applied immediately prior to such Reset Date, and could be less than the return an investor could realize from another equivalent investment on such Reset Date, which in turn could have a material adverse effect on the market value of an investment in the Preferred Securities.

Additionally, because the Distribution Rate on the Preferred Securities will be fixed until the next Reset Date, an investment in the Preferred Securities involves the risk that if market interest rates increase from time to time, this will adversely affect their market value as the return realized on such Preferred Securities may then be less than the return an investor could realize from another equivalent investment at the relevant time.

Credit ratings assigned to BBVA or the Preferred Securities may not reflect all risks of an investment in the Preferred Securities, and a downgrade in credit ratings could adversely affect the trading prices of the Preferred Securities.

Credit ratings may not reflect the potential impact of all risks related to the structure of or market for the Preferred Securities, or any of the additional factors discussed above, and do not address the price, if any, at which the Preferred Securities may be resold (which may be substantially less than the original offering price of the Preferred Securities) and other factors that may affect the value of the Preferred Securities.

Any real or anticipated change in the credit ratings assigned to BBVA or the Preferred Securities may affect the market value of the Preferred Securities. Such change may, among other factors, be due to a change in the methodology applied by a rating agency to rating securities with similar structures to the Preferred Securities, as opposed to any revaluation of BBVA’s financial strength or other factors such as conditions affecting the financial services industry generally. For example, credit ratings may be revised as a result of changes in rating agencies’ views of the level of implicit sovereign support for European banks. In general terms, any ratings downgrade will adversely affect the trading prices of the Preferred Securities or the trading markets for such Preferred Securities to the extent trading markets for the Preferred Securities develop, and any ratings improvement will not necessarily increase the value of the Preferred Securities and will not reduce market risk and other investment risks related to the Preferred Securities.

 

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A credit rating is not a recommendation to buy, sell or hold securities and may be revised, suspended or withdrawn by the rating agency at any time. Similar ratings assigned to different types of securities do not necessarily mean the same thing and any rating assigned to BBVA or the Preferred Securities does not address the likelihood that Distributions or any other payments in respect of the Preferred Securities will be made on any particular date or at all. Credit ratings also do not address the marketability or market price of securities. Potential investors should not rely on any rating of the Preferred Securities and should make their investment decision on the basis of considerations such as those outlined herein. See “—The Preferred Securities are not a suitable investment for all investors”. BBVA does not participate in any decision making of the rating agencies and any revision or withdrawal of any credit rating assigned to BBVA or any securities of BBVA is a third party decision for which BBVA does not assume any responsibility.

In general, European regulated investors are restricted under Regulation (EC) No. 1060/2009 (as amended) (the “CRA Regulation”) from using credit ratings for regulatory purposes in the EEA, unless such ratings are issued by a credit rating agency established in the EU and registered under such regulation (and such registration has not been withdrawn or suspended). Such general restriction will also apply in the case of credit ratings issued by third-country non-EEA credit rating agencies, unless the relevant credit ratings are endorsed by an EEA-registered credit rating agency or the relevant third-country rating agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended). Investors regulated in the United Kingdom are subject to similar restrictions under the CRA Regulation as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (the “UK CRA Regulation”).

If the status of the rating agency rating the Preferred Securities (if any) changes for the purposes of the CRA Regulation or the UK CRA Regulation, relevant regulated investors may no longer be able to use the rating for regulatory purposes in the EEA or the United Kingdom, as applicable, and the Preferred Securities may have a different regulatory treatment. This may result in relevant regulated investors selling the Preferred Securities which may affect the trading prices of the Preferred Securities or the trading markets for such Preferred Securities to the extent trading markets for the Preferred Securities develop.

An active secondary market in respect of the Preferred Securities may never be established or may be illiquid, and the market price of the Preferred Securities may be subject to factors outside of BBVA’s control, all of which could adversely affect the price at which you could sell the Preferred Securities.

This is a new issue of preferred securities for which there is no active trading market. If an active trading market does not develop or is not maintained, the market price and liquidity of the Preferred Securities may be adversely affected. Even if a market does develop with respect to the Preferred Securities, it may not be very liquid. The market price of the Preferred Securities could also be affected by market conditions more generally and other factors outside of BBVA’s control and unrelated to the BBVA Group’s business, financial condition and results of operations. These factors include, but are not limited to, changes in the supply and demand for Additional Tier 1 instruments such as the Preferred Securities resulting from investors’ perceptions of the stability of financial institutions and their confidence in regulatory authorities to promote this stability, as well as economic, financial, political or regulatory events or judicial decisions that affect BBVA, the BBVA Group, the banking sector or the financial markets generally. In particular, demand for Additional Tier 1 instruments has been recently adversely affected by the collapse of the U.S.-based Silicon Valley Bank (SVB), Signature Bank and First Republic Bank and Credit Suisse’s fallout.

We intend to apply to list the Preferred Securities on the New York Stock Exchange, and, if approved, trading is expected to commence within 30 days after the initial delivery of the Preferred Securities. If listing on the New York Stock Exchange is not approved or, if listing is approved and the Preferred Securities are subsequently removed from listing, we will endeavor to list the Preferred Securities on another organized market in an OECD (as defined in the accompany prospectus) country as soon as practicable and to maintain such listing. Irrespective of where the Preferred Securities are listed, there is no assurance as to the development or liquidity of a trading market for the Preferred Securities. The liquidity of any market will depend on a number of factors, including: (i) the number of holders of the Preferred Securities (which may be affected by the fact that the Preferred Securities are complex, non-investment grade securities, not suitable for all investors and that, in the United States, the Preferred Securities are intended to be sold only to institutional investors); (ii) our ratings published by major credit rating agencies; (iii) our financial performance; (iv) the market for similar securities; (v) the interest of securities dealers in making a market in the Preferred Securities; and (v) prevailing interest rates.

 

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In addition, any liquidity in a trading market for the Preferred Securities could be significantly affected by any purchase and cancellation of the Preferred Securities by BBVA or any member of the BBVA Group as provided in the Indenture or any Capital Reduction Conversion.

As a result of any of the factors mentioned above, investors may not be able to sell their Preferred Securities at a particular time or at a favorable price. This is particularly the case for securities that are especially sensitive to interest rates, currency or market risks, are designed for specific investment objectives and strategies, have been structured to meet the investment requirements of limited categories of investors or include features such as Conversion, the Spanish Bail-in Power and BBVA’s ability to substitute or modify the terms of the Preferred Securities upon a Capital Event or a Tax Event. These types of securities would generally have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a material adverse effect on the market value of the Preferred Securities.

Spanish tax rules may have a detrimental effect on an investment in the Preferred Securities.

According to Article 44 of the regulations approved by Royal Decree 1065/2007 of July 27, as amended by Royal Decree 1145/2011 of July 29 (as so amended, “RD 1065/2007”), income (as defined herein) obtained in respect of the Preferred Securities will not be subject to withholding tax in Spain, provided certain requirements are met, including that the paying agent appointed by BBVA (the “Paying Agent”) provides BBVA, in a timely manner, with a duly executed and completed statement setting forth certain information (the “Payment Statement”). See “Spanish Tax Considerations—Contingent Convertible Preferred Securities—Tax Reporting and Withholding Obligations of the Issuer” in the accompanying prospectus and “Spanish Tax Considerations—Tax Reporting Obligations of the Issuer” herein. The Indenture provides for the timely provision by the Paying Agent of a duly executed and completed Payment Statement in connection with each payment of income under the Preferred Securities. See “Certain Terms of the Preferred Securities—Maintenance of Tax Procedures”. If, however, the Paying Agent fails to deliver a duly executed and completed Payment Statement on a timely basis, in respect of a Distribution Payment Date or in connection with a redemption date, then the related payment will be subject to Spanish withholding tax, currently at the rate of 19%. If this were to occur, BBVA would not pay Additional Amounts and owners of a beneficial interest in the Preferred Securities would have to follow the procedures set forth under “Spanish Tax Considerations—Spanish Direct Refund from Spanish Tax Authorities” herein in order to apply directly to the Spanish tax authorities for any refund to which they may be entitled. Prospective investors should note that BBVA will not be liable for any damage or loss suffered by any holder or beneficial owner who would otherwise be entitled to an exemption from Spanish withholding tax but whose payments under the Preferred Securities are nonetheless paid net of Spanish withholding tax because the relevant Payment Statement was not duly delivered to BBVA.

In the event that there are changes to Spanish law, regulations, interpretations or rulings of the Spanish tax authorities, the procedures set forth in the Indenture may become insufficient or obsolete, and BBVA may be required to apply withholding tax on Distributions (or other payments of income) in respect of the Preferred Securities if, for example, the holders do not comply with any new information requirements that may be imposed.

Certain dealings in the Preferred Securities may be subject to a financial transaction tax, if approved.

On February 14, 2013, the European Commission published a proposal (the “Commission’s Proposal”) for a directive for a common financial transaction tax (“FTT”).

The Commission’s Proposal has a very broad scope and could, if introduced, apply to certain dealings in the Preferred Securities (including secondary market transactions) in certain circumstances. While primary market transactions referred to in Article 5(c) of Regulation EC No 1287/2006 are expected to be exempt, there is uncertainty in relation to the intended scope of this exemption for certain money market instruments and structured issues. However, the issuance and subscription of the Preferred Securities should be exempt.

Under the Commission’s Proposal, the FTT could apply in certain circumstances to persons both within and outside the participating Member States. Generally, it would apply to certain dealings in the Preferred Securities where at least one party is a financial institution and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (i) by transacting with a person established in a participating Member State or (ii) where the financial instrument which is subject to the dealings is issued in a participating Member State.

 

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However, the Commission’s Proposal remains subject to negotiation among the participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate and participating Member States may decide not to participate.

If the FTT is approved, certain dealings in the Preferred Securities may be subject to the FTT. Neither BBVA nor any other person would be obliged to pay Additional Amounts with respect to any Preferred Security as a result of the imposition of such tax.

You may be unable to enforce judgments obtained in U.S. courts against BBVA.

Substantially all the directors and executive officers of BBVA are not residents of the United States, and substantially all the assets of BBVA 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 BBVA predicated solely upon the securities laws of the United States.

 

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USE OF PROCEEDS

The net proceeds from the offering of the Preferred Securities are expected to amount to $990,885,377 after deduction of the underwriting commissions and the other expenses incurred in connection with the offering of the Preferred Securities. We intend to use the net proceeds of the offering for general corporate purposes.

 

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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 International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS-IASB”) and in accordance with the International Financial Reporting Standards adopted by the European Union (“EU-IFRS”) required to be applied under the Bank of Spain’s and Circular 4/2017, as of June 30, 2023 on an actual basis and as adjusted to reflect the issuance by us of the Preferred Securities pursuant to this offering (converting the aggregate Liquidation Preference of the Preferred Securities into euros at the European Central Bank reference rate for euro at June 30, 2023 of $1.0866 per €1.00), prior to the application of the net proceeds thereof. The exchange rate as of September 11, 2023 was $1.0724 per €1.00.

 

     As of June 30, 2023  
     Actual      As adjusted  
     (in millions of euros)  

Outstanding indebtedness(1)

     

Short-term indebtedness(2)

     8,062        8,062  

Long-term indebtedness

     58,738        59,738  

Of which: Preferred securities(3)

     9,071        9,071  
  

 

 

    

 

 

 

Total indebtedness(4)

     66,800        67,800  

Stockholders’ equity

     

Ordinary shares

     2,923        2,923  

Ordinary shares held by consolidated companies

     (21      (21

Reserves

     63,068        63,068  

Dividends

     —          —    

Accumulated other comprehensive income

     (16,919      (16,919
  

 

 

    

 

 

 

Total shareholders’ equity

     49,051        49,051  

Preferred shares

     —          —    

Non-controlling interest

     3,517        3,517  
  

 

 

    

 

 

 

Total capitalization and indebtedness

     119,368        120,368  
  

 

 

    

 

 

 

 

(1)

No third party has guaranteed any of the debt of the BBVA Group.

(2)

Includes all outstanding promissory notes and bonds, debentures and subordinated debt (including preferred securities) with a remaining maturity of up to one year as of June 30, 2023.

(3)

In accordance with IFRS-IASB and in accordance with EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2017, our preferred securities are accounted for as subordinated debt. Nonetheless, for Bank of Spain regulatory capital purposes, such preferred securities are treated as Tier 1 capital instruments.

(4)

Approximately 31% of the BBVA Group’s indebtedness was secured as of June 30, 2023.

The following is the principal transaction affecting the capitalization of the BBVA Group after June 30, 2023:

 

  ·  

On August 31, 2023, BBVA issued subordinated Tier 2 notes due November 2033 in an aggregate principal amount of £300,000,000 under its €40,000,000,000 Global Medium Term Note Program.

 

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CERTAIN TERMS OF THE PREFERRED SECURITIES

The following is a summary of certain terms of the Preferred Securities. It amends and supplements in certain material respects the description of the general terms of any series of contingent convertible preferred securities we may issue contained in the accompanying prospectus under the heading “Description of the Contingent Convertible Preferred Securities of BBVA”. If there is any inconsistency between the following summary and the description in the accompanying prospectus, the following summary governs. The summary set forth below does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Indenture (as defined herein).

The Preferred Securities will be issued under the indenture dated September 25, 2017 (the “Contingent Convertible Preferred Securities Indenture”) between BBVA, as issuer, and The Bank of New York Mellon, acting (except with respect to its role as Contingent Convertible Preferred Security Registrar) through its London Branch, as trustee, Paying and Conversion Agent, Principal Paying Agent and Contingent Convertible Preferred Security Registrar, as amended and supplemented, with respect to the Preferred Securities, by the third supplemental indenture to be dated as of or around September 19, 2023 between BBVA, as issuer, The Bank of New York Mellon, acting (except with respect to its role as Contingent Convertible Preferred Security Registrar) through its London Branch, as trustee, Paying and Conversion Agent, Calculation Agent, Principal Paying Agent and Contingent Convertible Preferred Security Registrar (the Contingent Convertible Preferred Securities Indenture, as so amended and supplemented with respect to the Preferred Securities, the “Indenture”). The third supplemental indenture will amend and supplement the Contingent Convertible Preferred Securities Indenture in certain material respects.

The Preferred Securities will be issued pursuant to the resolution of the board of directors of BBVA adopted on June 27, 2023 and reflected in a public deed of issuance executed on or prior to the date of settlement of the offering, which is currently expected to be on or around September 19, 2023. The Preferred Securities will be designated Series 12 in the public deed of issuance.

The following summary of certain provisions of the Preferred Securities and the Indenture does not purport to be complete and is subject, and qualified in its entirety by reference, to all the provisions of the Preferred Securities and the Indenture, including the definitions of the terms provided therein. Whenever we refer to specific provisions of or terms defined in the Indenture in this prospectus supplement we incorporate by reference into this prospectus supplement such specific provisions of or terms defined in the Indenture. The Contingent Convertible Preferred Securities Indenture has been, and the third supplemental indenture referred to above will be, filed as exhibits to the registration statement of which this prospectus supplement forms part. Upon request, you may obtain a copy of the Indenture from the trustee. To the extent the below information with respect to the Preferred Securities is inconsistent with the information contained in the accompanying prospectus, the information below updates and supersedes such information in the accompanying prospectus.

BBVA may issue future preferred securities under other indentures or documentation that contains provisions different from those included in the Indenture, including future preferred securities under the Contingent Convertible Preferred Securities Indenture (as it may be amended and supplemented by any relevant supplemental indenture). BBVA is not prohibited under the Preferred Securities or the Indenture from paying any amounts due under any of its obligations at a time when they are in default or BBVA has failed to pay any amounts due under the Preferred Securities or the Indenture.

If you purchase the Preferred Securities, your rights will be determined by their terms, the Indenture and the Trust Indenture Act, unless your Preferred Securities are converted to Common Shares after a Conversion Event as described in the accompanying prospectus under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” (as amended hereby) in which case your rights will be determined in accordance with the terms of our shares as described in the accompanying prospectus under “Description of BBVA Ordinary Shares”.

General

The Preferred Securities will be initially issued in an aggregate Liquidation Preference of $1,000,000,000. The Preferred Securities are perpetual instruments with no fixed maturity or fixed redemption date. The Preferred Securities will be issued only in registered form and will carry a liquidation preference of $200,000 per Preferred Security. The Preferred Securities constitute a series of contingent convertible preferred securities under the Contingent Convertible Preferred Securities Indenture.

 

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The Preferred Securities will be initially represented by one or more global security certificates (each a “Global Preferred Security”) which will be deposited with a custodian for DTC and Preferred Securities represented thereby will be registered in the name of Cede & Co., as nominee for DTC.

Beneficial interests in the Preferred Securities 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 definitive Preferred Securities except as described in the Indenture.

As described under “—Distributions—Distributions Discretionary” herein, the terms of the Preferred Securities provide that we may elect, in our sole and absolute discretion, to cancel the payment of any Distribution on the Preferred Securities in whole or in part at any time and for any or no reason. As described under “—Distributions—Restrictions on Payments” herein, the terms of the Preferred Securities also provide for circumstances under which we will be restricted from making a Distribution (in whole or in part) on the Preferred Securities on a Distribution Payment Date, and the Distribution payable in respect of any such Distribution Payment Date shall be deemed cancelled (in whole or in part) and therefore not due and payable. Distributions will only be due and payable on a Distribution Payment Date to the extent they are not cancelled or deemed cancelled previously or thereafter in accordance with the provisions of the Indenture. Any Distributions cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances described herein shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the Preferred Securities shall have no rights thereto or to receive any additional Distributions or compensation as a result of such cancellation or deemed cancellation. For the avoidance of doubt, non-payment of a Distribution (or any part thereof) in respect of the Preferred Securities shall evidence our exercise of our discretion to cancel such Distribution (or such part thereof), and accordingly such Distribution (or such part thereof) shall also not be due and payable. Furthermore, Distributions on the Preferred Securities will be non-cumulative. Accordingly, if any Distribution (or any part thereof) is not paid in respect of the Preferred Securities, then the right of the holders to receive the relevant Distribution (or such part thereof) in respect of the relevant Distribution Period will be extinguished and we will have no obligation to pay such Distribution (or such part thereof) accrued for such Distribution Period or to pay any interest thereon, whether or not Distributions on the Preferred Securities are paid in respect of any future Distribution Period.

As the Preferred Securities are perpetual and have no fixed maturity or fixed redemption date, unless the Preferred Securities are redeemed, a holder may not receive any payments with respect to the Preferred Securities as we are not required to pay the Liquidation Preference of the Preferred Securities at any time prior to a Liquidation Event and we will have the sole and absolute discretion at all times and for any or no reason to cancel in whole or in part any Distribution.

No premium, upon redemption or otherwise, shall be payable by BBVA on the Preferred Securities.

By acquiring any Preferred Security, each holder and beneficial owner acknowledges and agrees that: (i) Distributions are payable solely at our discretion, and no amount of Distribution shall become or remain due and payable in respect of the relevant Distribution Period to the extent that it has been cancelled or deemed cancelled by us and/or as a result of the limitations on payment set forth under “—Distributions—Restrictions on Payments” and “—Distributions—Distributions Discretionary herein; and (ii) a cancellation or deemed cancellation of any Distribution (in whole or in part) in accordance with the terms of the Indenture and the Preferred Securities shall not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture, or the occurrence of any event related to our insolvency or entitle holders to take any action to cause such Distribution to be paid or the liquidation, dissolution or winding-up of BBVA or in any way limit or restrict us from making any distribution or equivalent payment in connection with any instrument, including any instrument ranking junior to the Preferred Securities (including, without limitation, any CET1 Capital of BBVA or any member of the BBVA Group), or in respect of any Parity Security or other Security, except to the extent Applicable Banking Regulations otherwise provide.

As described under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus (as amended hereby), if a Trigger Event occurs, the Preferred Securities will be converted in whole and not in part, and if a Capital Reduction occurs, the Preferred Securities will be converted in whole and not in part except for Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities. To exercise such right, a holder of Preferred Securities must complete, sign and deposit at the specified office of any Paying and Conversion Agent a duly completed and signed Election Notice, in the form indicated in the Capital Reduction Notice, on or before the tenth Business Day immediately following the Capital Reduction Notice Date.

 

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Upon any Trigger Event, holders (and beneficial owners) of any Preferred Securities shall have no claim against BBVA in respect of (i) any Liquidation Preference of the Preferred Securities or (ii) any accrued and unpaid Distributions in respect of Preferred Securities, and the Preferred Securities shall cease to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares).

Upon any Capital Reduction, holders (and beneficial owners) of any Preferred Securities, other than holders of Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities as provided under “—ConversionConversion Upon Capital Reduction” herein, shall have no claim against BBVA in respect of any Liquidation Preference of such Preferred Securities, and the Preferred Securities, other than Preferred Securities in respect of which holders have elected not to convert such Preferred Securities as provided under “—ConversionConversion Upon Capital Reduction” herein shall cease to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository (except as noted in the Indenture with respect to certain stamp and similar taxes.

As described under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion—Settlement Procedures” in the accompanying prospectus, holders of the Preferred Securities may elect to have their Common Shares delivered in the form of Common Shares or ADSs. The obligation to deliver ADSs if a holder elects to have its Common Shares delivered in such form will apply only if on the relevant Conversion Settlement Date BBVA continues to maintain an ADS depositary facility. Holders that elect to receive Common Shares in the form of ADSs must pay any fees that may be payable to the ADS Depositary as a result of the issue and delivery of such ADSs in accordance with the Delivery Notice.

In order to obtain delivery of the relevant Common Shares on Conversion, the relevant holder must deliver a duly completed Delivery Notice together with the Preferred Securities held by it in accordance with the provisions set out in the Indenture. In addition, within ten Business Days following the Conversion Settlement Date, all Common Shares held by the Conversion Shares Depository in respect of which the applicable Preferred Securities and a duly completed Delivery Notice have not been received on or before the Notice Cut-off Date as aforesaid will be sold by or on behalf of the Selling Agent as soon as reasonably practicable and (subject to the deduction by or on behalf of the Selling Agent of any amount payable in respect of its liability to taxation and the payment of any capital, stamp, issue, registration and/or transfer taxes and duties (if any) and any fees or costs incurred by or on behalf of the Selling Agent in connection with the sale and allotment thereof) the net proceeds of such sale shall as soon as reasonably practicable be distributed pro rata to the relevant holders in accordance with the Indenture or in such other manner and at such time as we shall determine and notify to the relevant holders.

The Conversion Shares Depository may be us or another member of the BBVA Group or a third party.

The Preferred Securities are not convertible into Common Shares at the option of holders of Preferred Securities at any time and are not redeemable in cash as a result of a Conversion Event. Notwithstanding any other provision of the Indenture or herein, by its acquisition of the Preferred Securities, each holder and beneficial owner shall be deemed to have (i) agreed to all the terms and conditions of the Preferred Securities, including, without limitation, those related to (x) Conversion following a Trigger Event or Capital Reduction, as the case may be, and (y) the appointment of the Conversion Shares Depository, the issuance of the Common Shares to the Conversion Shares Depository, and acknowledged that such events in (x) and (y) may occur without any further action on the part of the holders or beneficial owners of the Preferred Securities or the trustee, (ii) agreed that effective upon, and following, a Conversion Event, no amount shall be due and payable to the holders of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion in accordance with the provisions set forth under “—Conversion—Conversion Upon Capital Reduction” herein (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—DistributionsRestrictions on Payments” and “—Distributions—Distributions Discretionary herein and except as provided under “—Conversion—Conversion Upon Capital Reduction” herein) and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares), and BBVA’s liability to pay any amounts (including the Liquidation Preference of, or any Distribution in respect of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion in accordance with the provisions described in “—Conversion—Conversion Upon Capital Reduction” herein (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—Distributions—Restrictions on Payments” and “—Distributions—Distributions Discretionary” herein and

 

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except as provided under —Conversion—Conversion Upon Capital Reduction” herein), and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares)) shall be automatically released, and the holders of the Preferred Securities so converted shall not have the right to give a direction to the trustee with respect to the Conversion Event and any related Conversion, (iii) agreed that following a Conversion Event, the Relevant Spanish Resolution Authority may exercise its Spanish Bail-in Power with respect to the Preferred Securities or any Common Shares that may be received following a Conversion, which exercise may result in any of the consequences described in the first paragraph under “—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”, the cancellation of the Conversion and/or the implementation of material changes to the Conversion terms, (iv)waived, to the extent permitted by the Trust Indenture Act, any claim against the trustee arising out of its acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Indenture and in connection with the Preferred Securities so converted or to be converted, including, without limitation, claims related to or arising out of or in connection with a Conversion Event and/or any Conversion and (v) authorized, directed and requested DTC, the European Clearing Systems and any direct participant in DTC, the European Clearing Systems or other intermediary or depositary through which it holds such Preferred Securities to be converted to take any and all necessary action, if required, to implement the Conversion without any further action or direction on the part of such holder or beneficial owner of such Preferred Securities or the trustee.

Our obligations under the Preferred Securities are subject to, and may be limited by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. See “Notice to Investors—Agreements and Acknowledgments of Investors, including Holders and Beneficial Owners—Spanish Bail-in Power” and “Risk Factors—Risks Relating to the Preferred Securities—The Preferred Securities may be subject to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. This and other powers contained in Law 11/2015 and the SRM Regulation could materially affect your rights under, and the value of your investment in, the Preferred Securities”.

See “Description of the Contingent Convertible Preferred Securities of BBVA” in the accompanying prospectus for a description of other terms of the Preferred Securities in addition to those described herein.

Certain Defined Terms

The following terms have the following meanings:

5-year UST” means, in relation to a Reset Date and the Reset Period commencing on that Reset Date, an interest rate expressed as a percentage determined by the Calculation Agent to be the per annum rate equal to the yield to maturity for U.S. Treasury securities with a maturity of five years as published in the most recent H.15;

Accrual Date” means the date from which Distributions began to accrue. Distributions begin to accrue on the first day of a Distribution Period, which is either a Distribution Payment Date or, in the case of the first Distribution Period, the date of issuance;

Applicable Banking Regulations” means, at any time, the laws, regulations, requirements, guidelines and policies relating to capital adequacy, resolution and/or solvency then applicable to BBVA and/or the BBVA Group including, without limitation to the generality of the foregoing, CRD V, the BRRD, the SRM Regulation and those laws, regulations, requirements, guidelines and policies relating to capital adequacy, resolution and/or solvency then in effect in Spain (whether or not such regulations, requirements, guidelines or policies have the force of law and whether or not they are applied generally or specifically to BBVA and/or the BBVA Group);

Business Day” means any day, other than Saturday or Sunday, that is neither a Legal Holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of New York, London or Madrid;

Closing Date” means September 19, 2023, being the date of the initial issue of the Preferred Securities;

Conversion Settlement Date” means the date on which the relevant Common Shares are to be delivered to the Conversion Shares Depository upon Conversion, which shall be as soon as practicable and in any event not later than one month following (or such other period as Applicable Banking Regulations may require) the relevant Conversion Notice Date;

 

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Conversion Shares Depository” means, when used with respect to the Preferred Securities, a reputable financial institution, trust company or similar entity (which may be BBVA or another member of the BBVA Group or a third party) to be appointed by BBVA on or prior to any date when a function ascribed to the Conversion Shares Depository is required to be performed, to perform such functions and to hold Common Shares in Iberclear or any of its participating entities (entidades participantes) in a designated trust or custody account for the benefit of the holders of the Preferred Securities and otherwise on terms consistent with the terms of the Preferred Securities and the Indenture;

Delivery Notice” means a notice to be provided by the relevant holder, in such form as may be acceptable to the relevant Clearing System from time to time, which contains the relevant account and related details for the delivery of any Common Shares (or ADSs) and such other information as is set forth in the Indenture, and which is required to be delivered in connection with a Conversion of the Preferred Securities and the delivery of the Common Shares (or ADSs);

Distribution” means the non-cumulative cash distribution, if any, in respect of the Preferred Securities in a Distribution Period, determined in accordance with the Indenture;

Distribution Payment Date” means, with respect to the Preferred Securities, each of March 19, June 19, September 19 and December 19 in each year, commencing on December 19, 2023;

Distribution Period” means the period from and including one Distribution Payment Date (or, in the case of the first Distribution Period, the date of issuance) to but excluding the next Distribution Payment Date;

First Call Date” means March 19, 2029;

First Reset Date” means September 19, 2029;

Floor Price” means $4.0215, subject to adjustment as described under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion—Conversion Price—Anti-Dilution Adjustment of the Floor Price” in the accompanying prospectus;

H.15” means the daily statistical release designated as such and published by the Board of Governors of the United States Federal Reserve System under the caption “Treasury constant maturities”, or any successor or replacement publication as reasonably determined by BBVA and notified to the Calculation Agent, that establishes yield on actively traded U.S. Treasury securities, and “most recent H.15” means the H.15 that includes a yield to maturity for U.S. Treasury securities with a maturity of five years, published closest in time (but prior to) the relevant Reset Determination Date;

Iberclear” means the Spanish clearing and settlement system (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U.);

Initial Margin” means 5.099% per annum;

Legal Holiday”, with respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking institutions in such Place of Payment or other location are not authorized or obligated to be open;

Liquidation Preference” means $200,000 per Preferred Security;

Maximum Distributable Amount” means, at any time, any maximum distributable amount required to be calculated at such time in accordance with (a) Article 48 of Law 10/2014 and any provision developing Article 48 of Law 10/2014, and any other provision of Spanish law transposing or implementing Article 141 of the CRD Directive and/or (b) Applicable Banking Regulations;

MREL-MDA” means, at any time, the lower of any maximum distributable amount required to be calculated, if applicable, at such time in accordance with Article 16.a) of BRRD, as implemented in Spain by Article 16 bis of Law 11/2015;

Parity Securities” means any instrument issued or guaranteed by BBVA (including the guarantee thereof), which instrument or guarantee, respectively, ranks pari passu with the Preferred Securities upon the insolvency of BBVA;

 

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Payment Business Day” means any day, other than Saturday or Sunday, that is neither a Legal Holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of New York or Madrid;

Qualifying Preferred Securities” means any securities issued by us that: (a) contain terms which comply with the then-current requirements to be included in, or count towards, the BBVA Group’s and BBVA’s Tier 1 Capital; (b) have the same or higher ranking as is applicable to the Preferred Securities on the Closing Date; (c) have the same denomination and aggregate outstanding Liquidation Preference, the same terms for the determination of any applicable Distributions, the same redemption rights and the same dates for payment of Distributions as the Preferred Securities immediately prior to any substitution or modification pursuant to “—Substitution and Modification of the Preferred Securities” herein; (d) preserve any existing rights under the Preferred Securities to any accrued Distribution which has not been paid in respect of the period from and including the Distribution Payment Date last preceding the date of any substitution or modification (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—DistributionsRestrictions on Payments” and —Distributions—Distributions Discretionary” herein); and (e) are listed or admitted to trading on any stock exchange as selected by us, provided that the Preferred Securities were listed or admitted to trading on a stock exchange immediately prior to the relevant substitution or modification;

Regulator” means the European Central Bank, the Bank of Spain or the Relevant Spanish Resolution Authority, as applicable, or such other or successor authority having primary bank supervisory authority, in each case, with respect to prudential matters or the exercise of resolution powers in relation to BBVA and/or the BBVA Group from time to time;

Reset Date” means the First Reset Date and every fifth anniversary thereafter;

Reset Determination Date” means, in relation to each Reset Date, the second Business Day immediately preceding such Reset Date;

Reset Period” means the period from (and including) a Reset Date to (but excluding) the next succeeding Reset Date; and

Shareholders” means the holders of Common Shares, meaning the persons in whose names the relevant Common Shares are from time to time registered in the central registry of the Spanish clearance and settlement system managed by Iberclear or, as the case may be, the accounting book of the relevant participating entity (entidad participante) in Iberclear (or, in the case of a joint holding, the first such named holder).

Tier 2 Instrument” means any instrument of BBVA qualifying as Tier 2 Capital.

Distributions

The Preferred Securities accrue Distributions: (i) in respect of the period from (and including) the Closing Date to (but excluding) the First Reset Date at the rate of 9.375% per annum; and (ii) in respect of each Reset Period, at the rate per annum equal to the aggregate of the Initial Margin and the 5-year UST for such Reset Period, and such aggregate converted to a quarterly rate in accordance with market convention (rounded to four decimal places, with 0.00005 rounded down), all as determined by the Calculation Agent on the relevant Reset Determination Date; provided that any Distribution Rate shall not be less than zero. As of the date of this prospectus supplement, the market convention for quarterly rate conversion is as follows:

 

 

LOGO

Subject as described herein (including under “—Restrictions on Payments” and —Distributions Discretionary”) and in the accompanying prospectus (as amended hereby), such Distributions will be payable quarterly in arrears on each Distribution Payment Date.

If a Distribution is required to be paid in respect of a Preferred Security on any date other than a Distribution Payment Date, it shall be calculated by the Calculation Agent by applying the Distribution Rate to the Liquidation Preference in respect of each Preferred Security, multiplying the product by (i) the actual number of days in the period from (and including) the applicable Accrual Date to (but excluding) the date on which

 

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Distributions fall due divided by (ii) the actual number of days from (and including) the applicable Accrual Date to (but excluding) the next following Distribution Payment Date multiplied by four, and rounding the resulting figure to the nearest cent (half a cent being rounded upwards).

We will be discharged from our obligations to pay Distributions on the Preferred Securities by payment to the Principal Paying Agent (as defined in the accompanying prospectus) for the account of the holders on the relevant Distribution Payment Date or as otherwise provided in this section “—Distributions”. Subject to any applicable fiscal or other laws and regulations, each such payment in respect of the Preferred Securities will be made in U.S. dollars (or such coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts) by transfer to an account capable of receiving payments in such currency, as directed by the Principal Paying Agent.

If any date on which any payment is due to be made on the Preferred Securities would otherwise fall on a date which is not a Payment Business Day, the payment will be postponed to the next Payment Business Day and the holders shall not be entitled to any interest or other payment in respect of any such delay.

If we do not pay a Distribution or part thereof in accordance with this section “—Distributions”, such non-payment shall evidence the cancellation of such Distribution (or relevant part thereof), and accordingly, such Distribution shall not in any such case be due and payable. For the avoidance of doubt, if we provide notice to cancel a portion, but not all, of a Distribution in respect of the Preferred Securities, and we subsequently do not make a payment of the remaining portion of such Distribution on the relevant Distribution Payment Date, such non-payment shall evidence our exercise of our discretion to cancel also such portion of such Distribution, and accordingly such portion of the Distribution shall also not be due and payable.

The Calculation Agent will at or as soon as practicable after the relevant time on each Reset Determination Date at which the Distribution Rate is to be determined, determine the Distribution Rate for the relevant Reset Period. The Calculation Agent will cause the Distribution Rate for each Reset Period to be notified to BBVA and the stock exchange on which the Preferred Securities are listed and notice thereof to be published in accordance with the notice provisions of the Indenture as soon as possible after its determination but in no event later than the fourth Business Day after each Reset Determination Date.

The regular record date for the Distribution payable on any Distribution Payment Date on the Preferred Securities will be the 15th calendar day (whether or not a Business Day) preceding a Distribution Payment Date.

Distributions Discretionary

We may elect, in our sole and absolute discretion, to cancel the payment of any Distribution on the Preferred Securities in whole or in part at any time and for any or no reason.

Distributions on the Preferred Securities will be non-cumulative. Accordingly, if any Distribution (or any part thereof) is not paid in respect of the Preferred Securities as a result of our election to cancel such Distribution in accordance with this section “—Distributions Discretionary” or the limitations on payment set out under “—Restrictions on Payments” below then the right of the holders to receive the relevant Distribution (or such part thereof) in respect of the relevant Distribution Period will be extinguished and we will have no obligation to pay such Distribution (or such part thereof) accrued for such Distribution Period or to pay any interest thereon, whether or not Distributions on the Preferred Securities are paid in respect of any future Distribution Period.

No such election to cancel the payment of any Distribution (or any part thereof) pursuant to this section “—Distributions Discretionary” or non-payment of any Distribution (or any part thereof) as a result of the limitations on payment set out under “—Restrictions on Payments” below will constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture or the occurrence of any event related to our insolvency or entitle holders to take any action to cause such Distribution (or part thereof) to be paid or the liquidation, dissolution or winding-up of BBVA or in any way limit or restrict us from making any distribution or equivalent payment in connection with any instrument ranking junior to the Preferred Securities (including, without limitation, any CET1 Capital of BBVA or any member of the BBVA Group) or in respect of any Parity Security or other security, except to the extent Applicable Banking Regulations otherwise provide.

 

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Restrictions on Payments

Payments of Distributions on the Preferred Securities shall be made only out of Distributable Items of BBVA.

To the extent that (i) BBVA has insufficient Distributable Items to make Distributions on the Preferred Securities scheduled for payment in the then-current financial year and any interest payments or distributions that have been paid or made or are scheduled or required to be paid or made out of Distributable Items of BBVA in the then-current financial year, in each case excluding any portion of such payments already accounted for in determining the Distributable Items of BBVA, and/or (ii) the Regulator, in accordance with Article 68 of Law 10/2014 and/or Article 16 of the SSM Regulation and/or with Applicable Banking Regulations then in force, requires BBVA to cancel the relevant Distribution in whole or in part, then BBVA will, without prejudice to the right set forth under “—Distributions Discretionary” above to cancel at its discretion the payment of any such Distributions on the Preferred Securities at any time, make partial or, as the case may be, no payment of the relevant Distribution on the Preferred Securities.

No payments will be made on the Preferred Securities (whether by way of a repayment of the Liquidation Preference, the payment of any Distribution or otherwise) if and to the extent that such payment would cause a breach of any regulatory restriction or prohibition on payments on Additional Tier 1 Instruments pursuant to Applicable Banking Regulations (including, without limitation, any such restriction or prohibition relating to any Maximum Distributable Amount or MREL-MDA applicable to BBVA and/or the BBVA Group).

Agreement to Distribution Cancellation

By acquiring Preferred Securities, holders (which, for the purposes of this section includes holders of a beneficial interest in the Preferred Securities) acknowledge and agree that:

 

  (a)

Distributions are payable solely at BBVA’s discretion, and no amount of Distribution shall become or remain due and payable in respect of the relevant Distribution Period to the extent that it has been cancelled or deemed cancelled by BBVA as set forth under “—Distributions Discretionary” above and/or as a result of the limitations on payment set forth under “—Restrictions on Payments” above; and

 

  (b)

a cancellation or deemed cancellation of any Distribution (in whole or in part) in accordance with the terms of the Preferred Securities or the Indenture shall not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture, or the occurrence of any event related to the insolvency of BBVA or entitle holders to take any action to cause such Distribution to be paid or the liquidation, dissolution or winding-up of BBVA or in any way limit or restrict BBVA from making any distribution or equivalent payment in connection with any instrument, including any instrument ranking junior to the contingent convertible preferred securities of such series (including, without limitation, any CET1 Capital of BBVA or any member of the BBVA Group), or in respect of any Parity Security or other Security, except to the extent Applicable Banking Regulations otherwise provide.

Distributions will only be due and payable on a Distribution Payment Date to the extent they are not cancelled or deemed cancelled previously or thereafter in accordance with the provisions described herein and in the accompanying prospectus. Any Distributions cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances described herein shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the contingent convertible preferred securities shall have no rights thereto or to receive any additional Distributions or compensation as a result of such cancellation or deemed cancellation.

Liquidation Distribution

Except as set forth in the following paragraph, in the event of any voluntary or involuntary liquidation or winding-up of BBVA (a “Liquidation Event”), holders of the Preferred Securities (unless previously converted into Common Shares in accordance with “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus, as amended hereby) shall be entitled to receive out of the assets of BBVA available for distribution to holders of such Preferred Securities, the Liquidation Distribution. Such entitlement will arise before any distribution of assets is made to holders of Common Shares or any other instrument of BBVA ranking junior to the Preferred Securities.

If, upon the occurrence of a Liquidation Event, a Conversion Event has occurred or occurs but the relevant conversion of the Preferred Securities into Common Shares in accordance with “Description of the Contingent

 

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Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus (as amended hereby) is still to take place at such time, holders of the Preferred Securities will be entitled to receive (i) out of the relevant assets of BBVA a monetary amount equal to that which holders of such Preferred Securities would have received on any distribution of the assets of BBVA if such Conversion had taken place immediately prior to such Liquidation Event or (ii) such amounts as may be otherwise provided in accordance with applicable law at such time.

After payment of the relevant entitlement in respect of a Preferred Security as described in this section, such Preferred Security will confer no further right or claim to any of the remaining assets of BBVA.

Form, Book-Entry Issuance, Settlement and Clearance

The Preferred Securities will be represented by one or more fully registered Global Preferred Security registered in the name of a nominee for, and deposited with a custodian for, DTC. You will hold beneficial interests in the Preferred Securities through DTC and its direct and indirect participants, including the European Clearing Systems, and DTC and its direct and indirect participants will record your beneficial interest on their books. Settlement of the Preferred Securities will occur through DTC in same day funds. Secondary market trading between Clearstream Luxembourg customers and/or Euroclear participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of the relevant European Clearing System and will be settled in immediately available funds. We will not issue definitive Preferred Securities except as described in the Indenture.

Additional Issuances

The Preferred Securities shall be initially limited in aggregate Liquidation Preference to $1,000,000,000. We may from time to time, without the consent of the holders, issue Additional Preferred Securities having the same ranking and same Distribution Rate, redemption terms and other terms as the Preferred Securities except for the price to the public, initial Accrual Date, Closing Date and first Distribution Payment Date. Any such Additional Preferred Securities subsequently issued shall rank equally and ratably with the Preferred Securities in all respects, so that such Additional Preferred Securities shall be consolidated and form a single series with the Preferred Securities under the Indenture. For additional information, see “Description of the Contingent Convertible Preferred Securities of BBVA—Additional Issuances” in the accompanying prospectus.

Subordination

Unless previously converted into Common Shares (as set forth in “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus, as amended hereby and except as provided in the second paragraph under “—Liquidation Distribution”), the payment obligations of BBVA under the Preferred Securities will be direct, unconditional, unsecured and subordinated obligations of BBVA and, upon the insolvency (concurso de acreedores) of BBVA, in accordance with and only to the extent permitted by the Spanish Insolvency Law and any other applicable laws relating to or affecting the enforcement of creditors’ rights in Spain (including, without limitation, Additional Provision 14.3 of Law 11/2015), but subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), for so long as the Preferred Securities constitute an Additional Tier 1 Instrument of BBVA, such Preferred Securities will rank:

 

  (a)

junior to:

 

  (i)

any claim in respect of any unsubordinated obligations of BBVA (including where the relevant claim subsequently becomes subordinated pursuant to Article 281.1.1º of the Spanish Insolvency Law); and

 

  (ii)

any claim in respect of any subordinated obligations of BBVA, present and future, other than under any outstanding Additional Tier 1 Instrument of BBVA (other than, to the extent permitted by law, any Parity Securities, whether so ranking by law or their terms);

 

  (b)

pari passu with each other and with all other claims in respect of contractually subordinated obligations of BBVA under any outstanding Additional Tier 1 Instruments, present and future (and, to the extent permitted by law, pari passu with any other Parity Securities, whether so ranking by law or their terms); and

 

  (c)

senior to the Common Shares and any other subordinated obligations of BBVA which by law rank junior to the Preferred Securities (including, to the extent permitted by law, any contractually subordinated obligations of BBVA expressed by their terms to rank junior to the Preferred Securities),

 

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such that any relevant claim in respect of the Preferred Securities will be satisfied, as appropriate, only to the extent that all claims ranking senior to it have first been satisfied in full, and then pro rata with any claims ranking pari passu with it, in each case as provided herein.

BBVA’s obligations under the Preferred Securities are subject to, and may be limited by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

According to current law, unless previously converted into Common Shares, to the extent the Preferred Securities cease to constitute an Additional Tier 1 Instrument of BBVA and constitute a Tier 2 Instrument of BBVA instead, the payment obligations of BBVA under the Preferred Securities will rank in accordance with Section 3.(2º) of Additional Provision 14 of Law 11/2015 but not otherwise and subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), as if the Preferred Securities were a Tier 2 Instrument.

According to current law, to the extent the Preferred Securities cease to constitute either an Additional Tier 1 Instrument or a Tier 2 Instrument of BBVA, the payment obligations of BBVA under such Preferred Securities will rank, in accordance with Section 3.(1º) of Additional Provision 14 of Law 11/2015 but not otherwise and subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), as if the Preferred Securities were contractually subordinated obligations of BBVA not constituting Additional Tier 1 Capital or Tier 2 Capital of BBVA.

BBVA agrees with respect to any Preferred Securities and each holder and beneficial owner of Preferred Securities, by his or her acquisition of a Preferred Security, will be deemed to have agreed to the above described subordination. To the extent permitted by Spanish law, each such holder and beneficial owner 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 Preferred Security. In addition, each holder and beneficial owner of Preferred Securities by his or her acquisition of the securities, to the extent permitted by Spanish law, authorizes and directs the trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the Preferred Securities as provided in the Indenture and as summarized herein and appoints the trustee his or her attorney-in-fact for any and all such purposes.

Redemption of the Preferred Securities

Subject to the provisions described under “—Redemption Due to a Tax Event”, “—Redemption Due to a Capital Event” and “—Clean-up Call” below, the Preferred Securities will not be redeemable prior to the First Call Date. Any redemption is subject to the conditions described under “Description of the Contingent Convertible Preferred Securities of BBVA—Redemption and Repurchase in the accompanying prospectus (as amended hereby).

Optional Redemption

All, and not only some, of the Preferred Securities may be redeemed at the option of BBVA on any day falling in the period commencing on (and including) the First Call Date and ending on (and including) the First Reset Date, and on any Distribution Payment Date thereafter, at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force.

Redemption Due to a Tax Event

If, on or after the Closing Date, there is a Tax Event, the Preferred Securities may be redeemed, in whole but not in part, at our option at any time at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force.

A “Tax Event” will be deemed to have occurred with respect to the Preferred Securities if, as a result of any change in, or amendment to, the laws or regulations applicable in Spain (except as provided under the third paragraph under “—Substitution of Issuer” herein in the case of a successor entity not established under the laws of, or a tax resident in, Spain), or any change in the application or binding official interpretation or administration of any such laws or regulations which change or amendment, or change in the application or binding official

 

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interpretation or administration, becomes effective on or after the Closing Date (i) we would not be entitled to claim a deduction in computing our taxation liabilities in Spain (or, following any of the transactions described under—Substitution of Issuer”, the successor person’s jurisdiction of incorporation or tax residence) in respect of any Distribution to be made on the next Distribution Payment Date or the value of such deduction to us would be reduced, or (ii) we would be required to pay Additional Amounts pursuant to the Indenture, or (iii) the applicable tax treatment of the Preferred Securities would be materially affected.

If, in accordance with the Indenture, our obligations under the Preferred Securities were to be assumed by another person, references to Spain in the definition of “Tax Event” shall be deemed to refer to the successor entity’s jurisdiction of incorporation or tax residence.

Redemption Due to a Capital Event

If, on or after the Closing Date, there is a Capital Event, the Preferred Securities may be redeemed, in whole but not in part, at our option at any time at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force.

A “Capital Event” will be deemed to have occurred with respect to the Preferred Securities if there is a change (or any pending change which the Regulator considers to be sufficiently certain) in Spanish law or Applicable Banking Regulations that results (or would result) in any of the outstanding aggregate Liquidation Preference of the Preferred Securities ceasing to be included in, or counting towards, the BBVA Group’s or BBVA’s Tier 1 Capital.

Clean-up Call

If, on or after the Closing Date, Preferred Securities representing, in the aggregate, 75% or more of the aggregate Liquidation Preference of the Preferred Securities (including any Preferred Securities issued after the Closing Date and any Preferred Securities which have been cancelled by the trustee in accordance with the Indenture) have been purchased by or on behalf of BBVA or any member of the BBVA Group, the Preferred Securities may be redeemed, in whole but not in part, at our option at any time at the Redemption Price, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations then in force (the “Clean-up Call”).

The Clean-up Call is subject to the conditions described under “Description of the Contingent Convertible Preferred Securities of BBVA—Redemption and Repurchase—Pre-Conditions to Redemptions and Repurchases” in the accompanying prospectus.

Redemption Procedures

The decision to redeem the Preferred Securities must be irrevocably notified by BBVA to holders of the Preferred Securities upon not less than 5 nor more than 30 calendar days’ notice prior to the relevant redemption date (i) through the filing of an “inside information” (información privilegiada) or “other relevant information” (otra información relevante) announcement, as the case may be, with the CNMV and its publication in accordance with the rules and regulations of the stock exchange on which the Preferred Securities are listed or other relevant authority and (ii) in the manner and to the extent required by the provisions described under “Description of the Contingent Convertible Preferred Securities of BBVA—Notices” in the accompanying prospectus (in which case, such notice may be given at BBVA’s request by the trustee in the name and at the expense of BBVA, provided BBVA has requested the trustee to so give notice in writing accompanied by a copy of the form of notice, and the trustee shall give such notice by the fifth Business Day following its receipt of such request).

Failure to give notice in the manner above provided to any holder of Preferred Securities designated for redemption, or any defect in the notice to any such holder, shall not affect the validity of the proceedings for the redemption of any other Preferred Securities.

Any notice of redemption will state: the redemption date; the Redemption Price; that on the redemption date the Redemption Price will, subject to the satisfaction of the conditions set forth in the Indenture become due and payable upon each Preferred Security being redeemed and that Distributions will cease to accrue on or after that

 

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date; the place or places where the Preferred Securities are to be surrendered for payment of the Redemption Price; and the CUSIP, Common Code and/or ISIN number or numbers, if any, with respect to the Preferred Securities being redeemed.

If BBVA gives notice of redemption of the Preferred Securities, then on or prior to the relevant redemption date, BBVA will (except as otherwise provided in “Description of the Contingent Convertible Preferred Securities of BBVA—Redemption and Repurchase in the accompanying prospectus, as amended hereby):

 

  (a)

irrevocably deposit with the Principal Paying Agent funds (in the currency in which the Preferred Securities to be redeemed are payable) sufficient to pay the Redemption Price; and

 

  (b)

give the Principal Paying Agent irrevocable instructions and authority to pay the Redemption Price to the holders thereof.

If the notice of redemption has been given on the Preferred Securities, and the funds deposited and instructions and authority to pay given as required above, then on the date of such deposit:

 

  (a)

distributions on the Preferred Securities shall cease to accrue (unless such deposit is made prior to the redemption date, in which case Distributions on the Preferred Securities shall cease to accrue on the redemption date);

 

  (b)

such Preferred Securities will no longer be considered outstanding (except as otherwise provided in “Description of the Contingent Convertible Preferred Securities of BBVA—Redemption and Repurchase in the accompanying prospectus, as amended hereby, if there is a Trigger Event prior to the redemption date or if the Relevant Spanish Resolution Authority exercises its Spanish Bail-in Power with respect to such Preferred Securities prior to the payment of the Redemption Price to the holders); and

 

  (c)

the holders of Preferred Securities will no longer have any rights as holders except the right to receive the Redemption Price (except as provided in “Description of the Contingent Convertible Preferred Securities of BBVA—Redemption and Repurchase in the accompanying prospectus, as amended hereby, if there is a Trigger Event prior to the redemption date).

Subject to the following paragraph, if in connection with any Preferred Securities BBVA improperly withholds or refuses to pay the Redemption Price of the Preferred Securities, Distributions will continue to accrue, subject as provided in “—DistributionsRestrictions on Payments” and “—Distributions—Distributions Discretionary herein at the rate specified from (and including) the Redemption Date to (but excluding) the date on which the Redemption Price is deposited with the Principal Paying Agent.

BBVA may not give a notice of redemption pursuant to this section “—Redemption Procedures” with respect to the Preferred Securities if a Trigger Event has occurred with respect to the Preferred Securities. If any notice of redemption of the Preferred Securities has been given pursuant to this section “—Redemption Procedures” and a Trigger Event with respect to the Preferred Securities occurs prior to the redemption date, the relevant redemption notice shall be automatically rescinded and shall be of no force and effect, there shall be no redemption of the Preferred Securities on such redemption date and, instead, the Trigger Conversion of the Preferred Securities shall take place as provided under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus (as amended hereby).

If a Capital Reduction Notice has been given with respect to the Preferred Securities, BBVA may not give a notice of redemption under this section “—Redemption Procedures” with respect to the Preferred Securities until the end of the Election Period. If a redemption notice is given by BBVA after the end of the Election Period, unless otherwise provided as contemplated by the Indenture with respect to the Preferred Securities, BBVA may redeem all (but not part) of the aggregate Liquidation Preference of the Preferred Securities which remains outstanding following the Capital Reduction Conversion. If any notice of redemption of the Preferred Securities has been given pursuant to this section “—Redemption Procedures” and a Capital Reduction with respect to such Preferred Securities occurs prior to the redemption date, such Capital Reduction shall be disregarded for all purposes and shall be of no force and effect with respect to such Preferred Securities and there shall be no conversion of such Preferred Securities as provided in “—ConversionConversion Upon Capital Reduction” herein and, instead, the redemption of the Preferred Securities shall take place as provided in “Description of the Contingent Convertible Preferred Securities of BBVA—Redemption and Repurchase in the accompanying prospectus (as amended hereby). Accordingly, the provisions described under “—ConversionConversion Upon Capital Reduction” herein shall not apply to the Preferred Securities with respect to any such Capital Reduction

 

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and holders and beneficial owners of the Preferred Securities shall be deemed to have irrevocably waived their rights under Article 418 of the Spanish Companies Act.

If BBVA has elected to redeem the Preferred Securities but, prior to the payment of the Redemption Price to holders, the Relevant Spanish Resolution Authority exercises its Spanish Bail-in Power with respect to the Preferred Securities, the relevant redemption notice shall be automatically rescinded and shall be of no force and effect, there shall be no redemption and consequently no payment of the Redemption Price (and any other amounts payable in accordance with the terms of the Preferred Securities) will be due and payable.

Conversion

Conversion Upon Trigger Event

If the Trigger Event occurs at any time on or after the Closing Date, then BBVA will:

(a) not pay any Distribution on the Preferred Securities, including any accrued and unpaid Distributions, which shall be deemed to be cancelled by BBVA in accordance with “Description of the Contingent Convertible Preferred Securities of BBVA—Payments—Distributions” in the accompanying prospectus (as amended hereby); and

(b) irrevocably and mandatorily (and without any requirement for the consent or approval of the holders or beneficial owners of Preferred Securities) convert all the Preferred Securities into Common Shares (the “Trigger Conversion”) to be delivered on the relevant Conversion Settlement Date. If the Trigger Event occurs, the Preferred Securities will be converted in whole and not in part.

For the purposes of determining whether the Trigger Event has occurred, BBVA will (A) calculate the CET1 ratio based on information (whether or not published) available to management of BBVA, including information internally reported within BBVA pursuant to its procedures for ensuring effective ongoing monitoring of the capital ratios of BBVA and the BBVA Group and (B) calculate and publish the CET1 ratio on at least a quarterly basis. BBVA’s calculation shall be binding on the trustee and the holders and beneficial owners of the Preferred Securities.

A Trigger Event will not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture or the occurrence of any event related to the insolvency of BBVA or entitle holders to take any action to cause the liquidation, dissolution or winding-up of BBVA.

Conversion Upon Capital Reduction

Except as provided in the penultimate paragraph under “—Redemption of the Preferred Securities—Redemption Procedures” herein, if a Capital Reduction occurs at any time on or after the Closing Date, then BBVA will, subject as provided in the immediately following paragraph, irrevocably and mandatorily (and without any requirement for the consent or approval of the holders or beneficial owners of the Preferred Securities) convert all the Preferred Securities into Common Shares (a “Capital Reduction Conversion”) to be delivered on the relevant Conversion Settlement Date and on such Conversion Settlement Date pay to the holders, as applicable, where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out in, “—Distributions—Restrictions on Payments” and “—Distributions—Distributions Discretionary” herein, an amount equal to the accrued and unpaid Distributions for the then current Distribution Period up to (but excluding) such Conversion Settlement Date.

Notwithstanding the preceding paragraph, if a Capital Reduction occurs at any time on or after the Closing Date, each holder of the Preferred Securities will have the right to elect that all (but not part) of its Preferred Securities shall not be converted in accordance with the preceding paragraph, in which case all Preferred Securities of such holder shall remain outstanding and no payment of any accrued and unpaid Distributions on such Preferred Securities shall be made in respect of such Preferred Securities to that holder on the relevant Conversion Settlement Date pursuant to the preceding paragraph (without prejudice to any payment of such Distributions or any other Distributions that may accrue in respect of those Preferred Securities). To exercise such right, a holder must complete, sign and deposit at the specified office of any Paying and Conversion Agent a duly completed and signed notice of election (an “Election Notice”), in the form indicated in the Capital Reduction Notice, on or before the tenth Business Day immediately following the Capital Reduction Notice Date (the period from (and including) the Capital Reduction Notice Date to (and including) such tenth Business Day, the “Election Period”). In the case of any Preferred Securities represented by a Global Preferred Security held

 

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by or on behalf of a Clearing System, an Election Notice may be delivered within the Election Period by the holder giving notice to any Paying and Conversion Agent of such election in accordance with the applicable procedures of the relevant Clearing System (which may include notice being given on such holder’s instruction by the relevant Clearing System to the Paying and Conversion Agent by electronic means) in a form acceptable to such Clearing System from time to time.

An Election Notice shall be irrevocable. Each Paying and Conversion Agent shall inform the Principal Paying Agent within two Business Days of the end of such Election Period of the Election Notices received during the Election Period and the Principal Paying Agent shall notify BBVA of the details of the relevant holders that have duly submitted an Election Notice within the Election Period (including the aggregate Liquidation Preference of Preferred Securities held by such holders) by no later than the immediately following Business Day.

Any relevant Preferred Securities in respect of which a duly completed and signed Election Notice is not received during the Election Period shall be converted into Common Shares. Any Preferred Securities not converted upon a Capital Reduction as a result of holders delivering a duly completed and signed Election Notice during the Election Period shall remain outstanding and, notwithstanding any of the above, may be the subject of Conversion on the occurrence of a Trigger Event or any further Capital Reduction.

A Capital Reduction will not constitute an Enforcement Event or other default under the terms of the Preferred Securities or the Indenture or the occurrence of any event related to the insolvency of BBVA or entitle holders to take any action to cause the liquidation, dissolution or winding-up of BBVA.

At the annual general shareholders’ meeting of BBVA held on March 17, 2023, BBVA shareholders voted to approve a reduction of BBVA’s share capital, by up to 10% of BBVA’s share capital as of the date of such resolution, through the redemption of own shares purchased for the purpose of being redeemed, delegating to BBVA’s board of directors the implementation of the share capital reduction, totally or partially, on one or more occasions. For the avoidance of doubt, a share capital reduction effected pursuant to this resolution would not constitute a Capital Reduction for purposes of the Preferred Securities.

Upon Conversion

Except as provided below with respect to fractions, the number of Common Shares to be issued on Conversion in respect of each Preferred Security to be converted shall be determined by dividing the Liquidation Preference of such Preferred Security by the relevant Conversion Price in effect on the relevant Conversion Notice Date rounded down to the nearest whole number of Common Shares. Fractions of Common Shares will not be issued on Conversion or pursuant to the provisions described in the fifth paragraph from the end under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion—Conversion Price—Anti-Dilution Adjustment of the Floor Price” in the accompanying prospectus and no cash payment or other adjustment will be made in lieu thereof. Without prejudice to the generality of the foregoing, if one or more Delivery Notices and the related Preferred Securities are received by or on behalf of a Paying and Conversion Agent such that the Common Shares to be delivered by or on behalf of the Conversion Shares Depository are to be registered in the same name or delivered to the same Clearing System participant account, the number of such Common Shares to be delivered in respect thereof shall be calculated on the basis of the aggregate Liquidation Preference of such Preferred Securities being so converted and rounded down to the nearest whole number of Common Shares.

Upon any Trigger Event, holders (and beneficial owners) of the Preferred Securities shall have no claim against BBVA in respect of (i) any Liquidation Preference of such Preferred Securities or (ii) any accrued and unpaid Distributions in respect of Preferred Securities, and the Preferred Securities shall cease to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares).

Upon any Capital Reduction, holders (and beneficial owners) of the Preferred Securities, other than holders of Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities in accordance with the provisions described under “—Conversion Upon Capital Reduction” herein, shall have no claim against BBVA in respect of any Liquidation Preference of such Preferred Securities, and the Preferred Securities, other than Preferred Securities in respect of which holders have elected not to convert such Preferred Securities in accordance with the provisions described under “—Conversion Upon Capital Reduction” herein,

 

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shall cease to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares). Nothing in this paragraph shall affect BBVA’s obligation upon any Capital Reduction Conversion to pay to the holders, as applicable, where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under “—DistributionsRestrictions on Payments” and “—Distributions—Distributions Discretionary herein, and except as set out under “—Conversion Upon Capital Reduction” herein, an amount equal to the accrued and unpaid Distributions for the then current Distribution Period up to (but excluding) the Conversion Settlement Date.

On the Conversion Settlement Date, BBVA shall deliver to the Conversion Shares Depository such number of Common Shares (subject as provided above with respect to fractions) as is required to satisfy in full BBVA’s obligation to deliver Common Shares (i) in respect of a Trigger Conversion, of the aggregate Liquidation Preference of Preferred Securities outstanding on the Trigger Event Notice Date, and (ii) in respect of a Capital Reduction Conversion, of the aggregate Liquidation Preference of Preferred Securities outstanding on the Capital Reduction Notice Date, other than Preferred Securities in respect of which such holders have elected not to convert such Preferred Securities in accordance with the provisions described under “—Conversion Upon Capital Reduction” herein.

The obligation of BBVA to issue and deliver Common Shares to a holder of Preferred Securities on the relevant Conversion Settlement Date shall be satisfied by the delivery of such Common Shares to the Conversion Shares Depository. Receipt of the relevant Common Shares by the Conversion Shares Depository shall discharge BBVA’s obligations in respect of the Preferred Securities converted, other than, in the case of a Capital Reduction, as provided under “—Conversion Upon Capital Reduction” herein with respect to the payment of accrued and unpaid Distributions for the then current Distribution Period up to (but excluding) the Conversion Settlement Date (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—DistributionsRestrictions on Payments” and “—Distributions—Distributions Discretionary herein) except as provided under “—Conversion Upon Capital Reduction” herein and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares.

Except as set forth in the immediately succeeding paragraph with respect to a Capital Reduction, if a Conversion Event occurs, holders shall have recourse to BBVA only for the issue and delivery of the relevant Common Shares to the Conversion Shares Depository (except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares). After such delivery by BBVA of the relevant Common Shares to the Conversion Shares Depository, holders of any Preferred Securities so converted shall have recourse to the Conversion Shares Depository only and exclusively for the purposes of delivery to them of such Common Shares, in the circumstances described under “Description of the Contingent Convertible Preferred Securities of BBVA—ConversionSettlement Procedures” in the accompanying prospectus.

In the case of a Capital Reduction, holders shall also have recourse to BBVA as provided under “—Conversion Upon Capital Reduction” herein with respect to the payment of accrued and unpaid Distributions for the then current Distribution Period up to (but excluding) the Conversion Settlement Date (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—DistributionsRestrictions on Payments” and “—Distributions—Distributions Discretionary herein) except as provided under “—Conversion Upon Capital Reduction” herein.

Agreement and Waiver with Respect to Conversion

The Preferred Securities are not convertible into Common Shares at the option of holders of Preferred Securities at any time and are not redeemable in cash as a result of a Conversion Event. Notwithstanding any other provision of the Indenture or herein, by its acquisition of the Preferred Securities, each holder and beneficial owner shall be deemed to have (i) agreed to all the terms and conditions of the Preferred Securities, including, without limitation, those related to (x) Conversion following a Trigger Event or Capital Reduction, as the case may be, and (y) the appointment of the Conversion Shares Depository, the issuance of the Common Shares to the Conversion Shares Depository, and acknowledged that such events in (x) and (y) may occur without any further action on the part of the holders or beneficial owners of the Preferred Securities or the trustee, (ii) agreed that effective upon, and following, a Conversion Event, no amount shall be due and payable to the holders of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital

 

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Reduction Conversion in accordance with the provisions set forth under “—Conversion Upon Capital Reduction” herein (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—DistributionsRestrictions on Payments” and “—Distributions—Distributions Discretionary herein and except as provided under “—Conversion Upon Capital Reduction” herein) and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares), and BBVA’s liability to pay any amounts (including the Liquidation Preference of, or any Distribution in respect of the Preferred Securities (other than any accrued and unpaid Distributions to be paid upon a Capital Reduction Conversion in accordance with the provisions set forth under —Conversion Upon Capital Reduction” herein (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out under, “—DistributionsRestrictions on Payments” and —Distributions—Distributions Discretionary” herein and except as provided under “—Conversion Upon Capital Reduction” herein) and except as noted in the Indenture with respect to certain Spanish stamp and similar taxes payable by BBVA in respect of the issue and delivery of the Common Shares)), shall be automatically released, and the holders of the Preferred Securities so converted shall not have the right to give a direction to the trustee with respect to the Conversion Event and any related Conversion, (iii) agreed that following a Conversion Event, the Relevant Spanish Resolution Authority may exercise its Spanish Bail-in Power with respect to the Preferred Securities or any Common Shares that may be received following a Conversion, which exercise may result in any of the consequences described in the first paragraph under “—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”, the cancellation of the Conversion and/or the implementation of material changes to the Conversion terms, (iv) waived, to the extent permitted by the Trust Indenture Act, any claim against the trustee arising out of its acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Indenture and in connection with the Preferred Securities so converted or to be converted, including, without limitation, claims related to or arising out of or in connection with a Conversion Event and/or any Conversion and (v) authorized, directed and requested DTC, the European Clearing Systems and any direct participant in DTC, the European Clearing Systems or other intermediary or depositary through which it holds such Preferred Securities to be converted to take any and all necessary action, if required, to implement the Conversion without any further action or direction on the part of such holder or beneficial owner of such Preferred Securities or the trustee.

Delivery of ADSs

In respect of any Common Shares that holders elect to receive in the form of ADSs as specified in the Delivery Notice, the Conversion Shares Depository shall deposit with the custodian for the ADS Depositary the relevant number of Common Shares to be issued upon Conversion of the Preferred Securities, and the ADS Depositary shall issue the corresponding number of ADSs to the DTC Participant account or registered ADS facility account specified by such holders (per the ADS-to-Common Share ratio in effect on the Conversion Settlement Date). However, the issuance of the ADSs by the ADS Depositary may be delayed until the depositary bank or the custodian receives confirmation that all required approvals have been given and that the Common Shares have been duly transferred to the custodian and that all applicable depositary fees and payments have been paid to the ADS Depositary. Holders that elect to receive Common Shares in the form of ADSs must pay any fees that may be payable to the ADS Depositary as a result of the issue and delivery of such ADSs in accordance with the Delivery Notice. For further information on the ADSs or the ADS deposit agreement, see “Description of BBVA American Depositary Shares” in the accompanying prospectus.

Failure to Deliver a Delivery Notice

If a duly completed Delivery Notice and the relevant Preferred Securities are not received by the Paying and Conversion Agent as provided in the Indenture and the Conversion Notice (as defined in the accompanying prospectus) on or before the Notice Cut-off Date, then within ten Business Days following the Conversion Settlement Date, all Common Shares held by the Conversion Shares Depository in respect of which the applicable Preferred Securities and a duly completed Delivery Notice have not been received on or before the Notice Cut-off Date as aforesaid will be sold by or on behalf of a person (which may be BBVA or another member of the BBVA Group or a third party) appointed by BBVA in its sole and absolute discretion (the “Selling Agent”) as soon as reasonably practicable.

Subject to the deduction by or on behalf of the Selling Agent of any amount payable in respect of its liability to taxation and the payment of any capital, stamp, issue, registration and/or transfer taxes and duties (if any) and any fees or costs incurred by or on behalf of the Selling Agent in connection with the issue, allotment and sale of any Common Shares pursuant to the preceding paragraph, and the conversion of any proceeds of such sale into U.S. dollars, the net proceeds of such sale, converted into U.S. dollars at the Prevailing Rate on the Notice

 

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Cut-off Date, if necessary, shall as soon as reasonably practicable be distributed pro rata to the relevant holders in such manner and at such time as BBVA shall determine and notify to the relevant holders. Such payment shall for all purposes discharge the obligations of BBVA, the Conversion Shares Depository, the Paying and Conversion Agent and the Selling Agent to such holders in respect of the relevant Conversion. The Selling Agent will be deemed to be acting on behalf of holders whose Preferred Securities and a duly completed Delivery Notice were not received on or before the Notice Cut-off Date for the purposes set out above and to that effect holders and beneficial owners of the Preferred Securities by virtue of their acquisition of the Preferred Securities will be deemed to be accepting and giving express instructions to the Selling Agent to do so in accordance with these conditions. BBVA, the Conversion Shares Depository, the Paying and Conversion Agent and the Selling Agent shall have no liability in respect of the exercise or non-exercise of any discretion or power pursuant to this section “—Failure to Deliver a Delivery Notice” or in respect of any sale of any Common Shares, whether for the timing of any such sale or the price at or manner in which any such Common Shares are sold or the inability to sell any such Common Shares. Furthermore, BBVA, the Conversion Shares Depository, the Paying and Conversion Agent and the Selling Agent shall have no liability to any holder or beneficial owner of the Preferred Securities for any loss resulting from such holder’s or beneficial owner’s failure to receive any Common Shares or ADSs, or from any delay in the receipt thereof, in each case as a result of such holder or beneficial owner (or custodian, nominee, broker or other representative thereof) failing to duly submit a Delivery Notice and the relevant Preferred Securities on a timely basis or at all.

If the applicable Preferred Securities and Delivery Notice are not received by the Paying and Conversion Agent on or before the Notice Cut-off Date and BBVA does not appoint the Selling Agent by the tenth Business Day after the Conversion Settlement Date, or if any Common Shares are not sold by the Selling Agent in accordance with this section —Failure to Deliver a Delivery Notice”, the Conversion Shares Depository shall continue to hold any Common Shares not sold by the Selling Agent until a duly completed Delivery Notice and the relevant Preferred Securities are so delivered. However, any holder of such Preferred Securities delivering a Delivery Notice after the Notice Cut-off Date will have to provide evidence of its entitlement to the relevant Common Shares, or if the holder so elects, ADSs, satisfactory to the Conversion Shares Depository in its sole and absolute discretion in order to receive delivery of such Common Shares or ADSs (if so elected to be deposited with the ADS Depositary on its behalf).

Substitution and Modification of the Preferred Securities

Notwithstanding any other provision of the Preferred Securities or the Indenture, by its acquisition of the Preferred Securities, each holder and beneficial owner acknowledges, accepts, consents to and agrees that if a Capital Event or a Tax Event, as applicable, occurs and is continuing, we may, except if a Trigger Event occurs or shall have occurred, and except if a Capital Reduction occurs or shall have occurred (other than in respect of Preferred Securities with respect to which a duly completed Election Notice has been received during the Election Period), substitute all (but not less than all) of the Preferred Securities or modify the terms of all (but not less than all) of the Preferred Securities, without any requirement for the consent or approval of the trustee or the holders or beneficial owners of the Preferred Securities, so that such Preferred Securities are substituted for, or their terms are modified to, become again, or remain Qualifying Preferred Securities, subject to (i) having given not less than 5 nor more than 30 days’ notice to the holders of Preferred Securities in accordance with “Description of the Contingent Convertible Preferred Securities of BBVA—Notices” in the accompanying prospectus and to the trustee (which notice shall be irrevocable and shall specify the date for substitution or, as applicable, modification), (ii) the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and (iii) any variation in the terms of the Preferred Securities resulting from such modification or, if the Preferred Securities are substituted, any difference between the terms of the Preferred Securities and those of the Qualifying Preferred Securities for which the Preferred Securities are substituted, not being materially prejudicial to the interests of the holders of the Preferred Securities.

For the purposes of the immediately preceding paragraph, in the case of a modification of the terms and conditions of the Preferred Securities, any variation in the ranking of the Preferred Securities as set out in “—Subordination” herein resulting from any such modification or, in the case of a substitution of the Preferred Securities, any difference between the ranking of the Preferred Securities as set out in “—Subordination” herein and that of the Qualifying Preferred Securities for which the Preferred Securities are substituted, shall be deemed not to be prejudicial to the interests of the holders of Preferred Securities where the ranking of the Preferred Securities or, if the Preferred Securities are substituted, of the Qualifying Preferred Securities for which the Preferred Securities are substituted, following such substitution or modification, as the case may be, is at least the same ranking as was applicable to the Preferred Securities under “—Subordination” herein on the issue date of the Preferred Securities.

 

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For the purposes of the preceding two paragraphs, the notice to be delivered by us shall specify the relevant details of the manner in which the relevant substitution or modification shall take effect and where the holders of Preferred Securities can inspect or obtain copies of the new terms and conditions of the Preferred Securities or, if the Preferred Securities are substituted, of the Qualifying Preferred Securities for which the Preferred Securities are substituted. Such substitution or modification will be effected without any cost or charge to such holders.

If the Preferred Securities are substituted in accordance with this section “—Substitution and Modification of the Preferred Securities”, Distributions on the Preferred Securities shall cease to accrue from (and including) the date of substitution thereof.

By its acquisition of any Preferred Security, each holder and beneficial owner acknowledges, accepts, consents to and agrees to be bound by any substitution of or modification to the Preferred Securities as set forth in this section “—Substitution and Modification of the Preferred Securities” and to grant to us and the trustee full power and authority to take any action and/or to execute and deliver any document in the name and/or on behalf of such holder or beneficial owner, as the case may be, which is necessary or convenient to complete the substitution or modification of the terms of the Preferred Securities, as applicable, pursuant to this section “—Substitution and Modification of the Preferred Securities”.

Each holder and beneficial owner of the Preferred Securities, by virtue of its acquisition of the Preferred Securities or any beneficial interest therein, to the extent permitted by the Trust Indenture Act, waives any and all claims, in law and/or in equity, against the trustee and/or BBVA for, agrees not to initiate a suit against the trustee or BBVA in respect of, and agrees that neither the trustee nor BBVA shall be liable for, any action that the trustee or BBVA takes, or abstains from taking, in either case in connection with the substitution or modification of the terms of the Preferred Securities upon the occurrence of a Capital Event or a Tax Event.

Modification and Waiver

Without prejudice to “—Substitution and Modification of the Preferred Securities” above, BBVA and the trustee may make certain modifications and amendments to the Indenture and any applicable supplemental indenture with respect to the Preferred Securities without the consent of the holders of the Preferred Securities for any of the following purposes:

 

  ·  

to evidence the succession of another person to BBVA and the assumption by any such successor of the covenants of BBVA in the Indenture and in the Preferred Securities;

 

  ·  

to add to the covenants of BBVA for the benefit of the holders of Preferred Securities or to surrender any right or power conferred upon BBVA by the Indenture;

 

  ·  

to add any additional Enforcement Events;

 

  ·  

to make changes to procedures relating to Conversion, delivery of the Common Shares, or ADSs, as applicable, provided, however, that, unless such changes are made as a result of any change in, or amendment to, any relevant laws or regulations, no such change shall adversely affect the interests of the holders of Preferred Securities in any material respect;

 

  ·  

to add to, change or eliminate any of the provisions of the Indenture, or any supplemental indenture, provided, however, that any such addition, change or elimination shall become effective only when there is no outstanding Preferred Securities created prior to the execution of such supplemental indenture effecting such addition, change or elimination which would be adversely affected by such addition, change or elimination and in respect of which such supplemental indenture would apply;

 

  ·  

to establish the form or terms of Preferred Securities as permitted by the Indenture;

 

  ·  

to change any place of payment, so long as any required place of payment is maintained;

 

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to cure any ambiguity or to correct or supplement any provision of the Indenture which may be defective or inconsistent with any other provision of the Indenture or in any supplemental indenture;

 

  ·  

to vary, substitute or change specified terms of the Preferred Securities subject to the conditions set forth in the Indenture, provided such action shall not adversely affect the interests of the holders of Preferred Securities in any material respect;

 

  ·  

to evidence and provide for the acceptance of appointment under the Indenture by a successor trustee with respect to the Preferred Securities and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts under the Indenture by more than one trustee, pursuant to the requirements of the Indenture;

 

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  ·  

to change or eliminate any provision of the Indenture so as to conform with the current provisions or any future provisions of the Trust Indenture Act;

 

  ·  

to name a different trustee for the Preferred Securities and to provide for the appropriate changes related to such appointment for the Preferred Securities;

 

  ·  

to delete, amend or supplement any provision contained in the Indenture or in any supplemental indenture as a result of, and to the extent required by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority;

 

  ·  

to delete, amend or supplement any provision contained in the Indenture or in any supplemental indenture as a result of, and to the extent required by, Applicable Banking Regulations;

 

  ·  

with respect to any Preferred Security (including a Global Preferred Security) issued on or after the date hereof, to amend any such Preferred Security to conform to the description of the terms of the Preferred Securities in the prospectus, this prospectus supplement, product supplement, pricing supplement or any other similar offering document related to the offering of the Preferred Securities;

 

  ·  

to delete, amend or supplement any provision contained in the Indenture or in any supplemental indenture as a result of, and to the extent necessary to effect, the substitution or modification of the Preferred Securities pursuant to “—Substitution and Modification of the Preferred Securities” herein; or

 

  ·  

to change or modify any provision of the Indenture as necessary to ensure that the Preferred Securities shall be convertible into ordinary shares of Newco in the event of a Newco Scheme (each as defined in the accompanying prospectus).

Other modifications and amendments may be made to the Indenture and any applicable supplemental indenture with the consent of the holders of not less than a majority in aggregate Liquidation Preference of the outstanding Preferred Securities, voting as one class. However, no modifications or amendments may be made without the consent of the holder of the Preferred Securities affected that would:

 

  ·  

change the terms of the Preferred Securities to reduce the Liquidation Preference payable upon the redemption of, or the Distributions payable on the Preferred Securities (without prejudice to the provisions described in the accompanying prospectus and herein, including “Description of the Contingent Convertible Preferred Securities of BBVA—Payments—Distributions” in the accompanying prospectus (as amended hereby)), or change the obligation of BBVA (or its successor) to pay Additional Amounts (except as contemplated under “—Substitution of Issuer” herein) on the Preferred Securities, or the currency in which payments under the Preferred Securities are to be made, or impair the right to institute suit for the enforcement of any such payment when due and payable on or with respect to the Preferred Securities, or modify the calculation of and any adjustment to, the Conversion Price;

 

  ·  

reduce the percentage in aggregate Liquidation Preference of the Preferred Securities, the consent of whose holders is required for any such supplemental indenture, or the consent of whose holders is required for any waiver (of compliance with certain provisions of the Indenture or of certain defaults thereunder and their consequences) provided for in the Indenture or reduce the requirements for a quorum or voting;

 

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change in any manner adverse to the interests of the holders of the Preferred Securities the subordination provisions of the Preferred Securities or the terms and conditions of the obligations of BBVA in respect of the due and punctual payment of any amounts due and payable on the Preferred Securities; or

 

  ·  

modify the requirements applicable to the modifications and amendments referred to above or to the waiver of past Enforcement Events, except to increase any required percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the holder of each Preferred Security affected thereby,

except in each case with respect to any modification or amendment of the Indenture pursuant to a supplemental indenture which is entered into as a result of, and to the extent required by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, Applicable Banking Regulations or the substitution or modification of the Preferred Securities pursuant to “—Substitution and Modification of the Preferred Securities” herein, as the case may be (in which cases neither the consent nor the affirmative vote of any holder of an outstanding Preferred Security affected shall be required).

 

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Substitution of Issuer

BBVA may, without the consent of holders of the Preferred Securities, consolidate or amalgamate with or merge into any other person or persons (whether or not affiliated with BBVA) or sell, convey or transfer or lease its properties and assets as an entirety or substantially as an entirety to any person (whether or not affiliated with BBVA), provided that (a) any person formed by any consolidation, amalgamation or merger, or any transferee or lessee of BBVA’s assets shall expressly assume, by a supplemental indenture, executed and delivered to the trustee, in form satisfactory to the trustee, all obligations of BBVA under the Indenture; (b) immediately after giving effect to such consolidation, amalgamation, merger, conveyance, transfer or lease, no Enforcement Event and no event which, after notice or lapse of time or both, would become an Enforcement Event, shall have occurred and be continuing; (c) BBVA shall have delivered to the trustee an officer’s certificate and an opinion of counsel, each stating that such consolidation, amalgamation, merger, conveyance, transfer or lease and such supplemental indenture comply with this section and that all conditions precedent herein provided for relating to such transaction have been complied with; and (d) except where the successor entity is a holding company of BBVA or a wholly-owned subsidiary of BBVA, immediately prior to such assumption, the successor entity shall have ratings for long-term senior debt assigned by Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. (or their respective successors) which are the same as, or higher than, the credit rating for long-term senior debt of BBVA (or, if applicable, the previous successor entity) assigned by Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. (or their respective successors).

In addition, any holding company of BBVA or any wholly-owned subsidiary of BBVA may without the consent of the holders of the Preferred Securities, assume the obligations of BBVA (or of any person which shall have previously assumed the obligations of BBVA) under the Preferred Securities, provided that (a) the successor entity shall expressly assume such obligations by an amendment to the Indenture in form satisfactory to the trustee; (b) immediately after giving effect to such assumption of obligations, no Enforcement Event and no event which, after notice or lapse of time or both, would become an Enforcement Event, shall have occurred and be continuing; and (c) BBVA shall have delivered to the trustee an officer’s certificate and an opinion of counsel in such forms as are required in the Indenture.

Following any of the events described in the preceding two paragraphs, the successor entity shall succeed to, and be substituted for, and may exercise every right and power of, BBVA under the Indenture with respect to any Preferred Securities with the same effect as if such successor entity had been named as BBVA in the Indenture, and BBVA will be released from all its obligations under the Preferred Securities and Indenture and any relevant supplemental indentures. In addition, Additional Amounts under the Preferred Securities will be payable in respect of taxes imposed by the jurisdiction of incorporation or tax residence of the successor entity (subject to exceptions equivalent to those that apply to the obligation to pay Additional Amounts for taxes imposed in Spain) rather than taxes imposed by Spain. Additional Amounts with respect to payments of Distributions due prior to the date of such assumption will be payable only in respect of taxes imposed by Spain. In addition, the successor entity will also be entitled to redeem the Preferred Securities in the circumstances described under “—Redemption of the Preferred Securities—Redemption Due to a Tax Event” above, and to substitute or modify the terms of the Preferred Securities in the circumstances described in, and in accordance with, —Substitution and Modification of the Preferred Securities” above, except that if such successor entity is not incorporated or tax resident in Spain (a) references to Spain in the definition of “Tax Event” shall be deemed to refer to the successor entity’s jurisdiction of incorporation or tax residence, and (b) the change in, or amendment to, the laws or regulations of such jurisdiction of incorporation or tax residence or of any political subdivision thereof or any authority or agency therein or thereof having power to tax, or the change in the application or binding official interpretation or administration of any such laws or regulations giving rise to a Tax Event shall become effective subsequent to the date of the relevant merger, consolidation, amalgamation, conveyance, transfer, lease or assumption, as the case may be.

An assumption of the obligations of BBVA under any the Preferred Securities might be considered for U.S. federal income tax purposes to be an exchange by the holders of the Preferred Securities for new contingent convertible preferred securities, 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.

Additional Amounts

All payments of Distributions payable in respect of Preferred Securities by BBVA will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties,

 

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assessments or governmental charges (collectively “Taxes”) of whatever nature imposed or levied by or on behalf of Spain or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, BBVA shall (to the extent such payment can be made out of Distributable Items of BBVA on the same basis as for payment of any Distribution) pay, in respect of any withholding or deduction imposed on payments of Distributions only (and not Liquidation Preference or other amount), such additional amounts (“Additional Amounts”) as will result in holders of Preferred Securities receiving such amounts as they would have received in respect of such Distributions had no such withholding or deduction been required.

BBVA shall not be required to pay any Additional Amounts in relation to any payment in respect of any Preferred Security:

(i) to, or to a third party on behalf of, a holder of Preferred Securities if the holder or the beneficial owner of such Preferred Securities is liable for such Taxes in respect of such Preferred Security by reason of his having some connection with Spain other than the mere holding of such Preferred Security; or

(ii) to, or to a third party on behalf of, a holder of Preferred Securities if the holder or the beneficial owner has not provided such information as may be necessary to comply with any certification, identification or other requirements concerning the nationality, residence, identity or connection with the taxing jurisdiction of such holder or beneficial owner, if such claim or compliance is required by statute, regulation or administrative practice of Spain as a condition to relief or exemption from such taxes; or

(iii) to, or to a third party on behalf of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish tax authorities determine that the Preferred Securities 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, and require a withholding to be made; or

(iv) to, or to a third party on behalf of, a holder of Preferred Securities in respect of a withholding tax imposed on payments made to individuals with tax residence in Spain following the criteria held by the Spanish tax authorities under which the withholding regime set out in Royal Decree 439/2007 of March 30 prevails over that set out in RD 1065/2007; or

(v) to, or to a third party on behalf of, a holder if BBVA does not receive the relevant information as may be required by Spanish tax law, regulation or binding ruling, including a duly executed and completed Payment Statement from the Paying Agent; or

(vi) where the withholding or deduction is required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (“FATCA”), any regulations or agreements thereunder, any official interpretations thereof, any intergovernmental agreements with respect thereto (including the intergovernmental agreement between the United States and Spain on the implementation of FATCA), or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement relating thereto.

In addition, Additional Amounts will not be payable with respect to any Taxes that are imposed in respect of any combination of the items listed in (i) through (vi) set forth above.

Additional Amounts will also not be paid with respect to any payment to a holder who is a fiduciary, a partnership, a limited liability company or person 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 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 holder.

Except where the context requires otherwise, any reference in this prospectus supplement to Distributions in respect of the Preferred Securities shall be deemed to include any Additional Amounts payable with respect thereto.

The payment of any Additional Amounts in respect of the Preferred Securities pursuant to the Indenture is also subject to the same conditions and limitations as the payment of any Distribution, including the conditions and limitations described under “—Distributions—Distributions Discretionary”.

 

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Undertakings

So long as any Preferred Security remains outstanding, BBVA shall, unless approved by a majority in aggregate Liquidation Preference of the Preferred Securities:

(a) not make any issue, grant or distribution or take or omit to take any other action if the effect thereof would be that, on Conversion, Common Shares could not, under any applicable law then in effect, be legally issued as fully paid;

(b) if any offer is to be made to all (or as nearly as may be practicable all) Shareholders (or all (or as nearly as may be practicable all) such Shareholders other than the offeror and/or any associates of the offeror) to acquire all or a majority of the issued Common Shares, or if a scheme is proposed with regard to such acquisition (other than a Newco Scheme), give notice of such offer or scheme to the holders at the same time as any notice thereof is sent to the Shareholders (or as soon as practicable thereafter) that details concerning such offer or scheme may be obtained from the specified offices of the Paying and Conversion Agent or, if BBVA is designated as the Paying and Conversion Agent, from the specified offices or the website of BBVA and, where such an offer or scheme has been recommended by the board of directors of BBVA, or where such an offer has become or been declared unconditional in all respects or such scheme has become effective, use all commercially reasonable endeavors to procure that a like offer or scheme is extended to the holders of any Common Shares issued during the period of the offer or scheme arising out of any Conversion and/or to the holders;

(c) in the event of a Newco Scheme, take (or shall procure that there is taken) all necessary action to ensure that such amendments are made to the Indenture immediately after completion of the Scheme of Arrangement as are necessary to ensure that the Preferred Securities may be converted into or exchanged for ordinary shares in Newco (or depositary or other receipts or certificates representing ordinary shares of Newco) mutatis mutandis in accordance with and subject to the Indenture and the ordinary shares of Newco are:

(i) admitted to the Relevant Stock Exchange; or

(ii) listed and/or admitted to trading on another Recognized Stock Exchange,

and the holders of the Preferred Securities (which, for this purpose, includes holders of a beneficial interest in the Preferred Securities) irrevocably authorize BBVA to make such amendments to the Indenture without the need for any further authorization from the holders of the Preferred Securities;

(d) issue, allot and deliver Common Shares upon Conversion subject to and as provided under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus (as amended hereby);

(e) use all reasonable endeavors to ensure that its issued and outstanding Common Shares and any Common Shares issued upon Conversion will be admitted to listing and trading on the Relevant Stock Exchange or will be listed and/or admitted to trading on another Recognized Stock Exchange;

(f) at all times keep in force the relevant resolutions needed for issue, free from pre-emptive rights, sufficient authorized but unissued Common Shares to enable Conversion of the Preferred Securities, and all rights of subscription and exchange for Common Shares, to be satisfied in full; and

(g) where the provisions described under “Description of the Contingent Convertible Preferred Securities of BBVA—Conversion” in the accompanying prospectus (as amended hereby) require or provide for a determination by an Independent Financial Adviser or a role to be performed by a Conversion Shares Depository or a Paying and Conversion Agent, use all reasonable endeavors promptly to appoint such persons for such purposes.

Governing Law

The Preferred Securities and the Indenture (except as set forth therein) shall be governed by and construed in accordance with 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 BBVA of the Indenture, the authorization, issuance and execution by BBVA of the Preferred Securities and provisions thereof relating to the subordination of the Preferred Securities (described under “—Subordination”), the waiver of the right of set-off (described under “Description of the Contingent Convertible Preferred Securities of BBVA—Waiver of Right of Set-off” in the accompanying prospectus) and the agreements and acknowledgments by holders of

 

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Preferred Securities and the trustee, respectively, with respect to the exercise and effects of the Spanish Bail-in Power (described under “—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”) shall be governed by and construed in accordance with the common laws of Spain.

Submission to Jurisdiction

Except as provided in the immediately succeeding paragraph, BBVA will submit (for the purposes of any suit or proceeding arising out of or relating to the Preferred Securities or the Indenture) to the jurisdiction of any U.S. Federal or State court in the Borough of Manhattan, The City of New York, New York, in which any such suit or proceeding is so instituted, and will waive, to the extent it may effectively do so, any objection it may have now or hereafter to the laying of the venue of any such suit or proceeding.

Notwithstanding anything to the contrary in the Preferred Securities or in the Indenture, the Spanish courts shall have exclusive jurisdiction in respect of any suit or proceeding arising out of or relating to the Preferred Securities or the Indenture arising out of, relating to or in connection with the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority (a “Bail-in Dispute”) and accordingly each of BBVA, the trustee, each holder and beneficial owner of any Preferred Security and each agent will submit, to the extent it may effectively do so, to the exclusive jurisdiction of the Spanish courts in relation to any Bail-in Dispute. Each of BBVA, the trustee, each holder and beneficial owner of any Preferred Securities and each agent will further irrevocably waive, to the extent it may effectively do so, any objection to the Spanish courts on the grounds that they are an inconvenient or inappropriate forum in respect of any Bail-in Dispute.

Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power

Notwithstanding anything to the contrary in the Preferred Securities, the Indenture or any other agreements, arrangements, or understandings between BBVA and any holder of the Preferred Securities, by its acquisition of any Preferred Securities, each holder (which, for the purposes of this section, includes each holder of a beneficial interest in the Preferred Securities) acknowledges, accepts, consents to and agrees to be bound by: (i) the exercise and effects of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may be imposed with or without any prior notice with respect to the Preferred Securities, and may include and result in any of the following, or some combination thereof: (a) the reduction or cancellation of all, or a portion, of the Amounts Due on the Preferred Securities; (b) the conversion of all, or a portion, of the Amounts Due on the Preferred Securities into shares, other securities or other obligations of BBVA or another person (and the issue to or conferral on the holder of any such shares, securities or obligations), including by means of an amendment, modification or variation of the terms of the Preferred Securities; (c) the cancellation of the Preferred Securities; (d) the inclusion of a maturity date for the Preferred Securities or the amendment or alteration thereof, or the amendment of the Liquidation Preference or Distributions payable on the Preferred Securities, or the date on which Distributions become payable, including by suspending payment for a temporary period; and (ii) the variation of the terms of the Preferred Securities, or the rights of the holders thereunder or under the Indenture, as deemed necessary by the Relevant Spanish Resolution Authority, to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

By its acquisition of any Preferred Securities, each holder thereof acknowledges and agrees that neither a reduction or cancellation, in part or in full, of the Amounts Due on the Preferred Securities, or the conversion thereof into another security or obligation of BBVA or another person, in each case as a result of the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to BBVA, nor the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the Preferred Securities, shall: (i) give rise to a default or event of default for purposes of Section 315(b) (Notice of Defaults) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act or (ii) be a default or an Enforcement Event with respect to the Preferred Securities or under the Indenture. By its acquisition of any Preferred Securities, each holder of Preferred Securities further acknowledges and agrees that no repayment or payment of Amounts Due on the Preferred Securities will become due and payable or be paid after the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority if, and to the extent that, such amounts have been reduced, converted, cancelled, amended or altered as a result of such exercise.

By its acquisition of any Preferred Securities, each holder of Preferred Securities, to the extent permitted by the Trust Indenture Act, waives any and all claims, in law and/or in equity, against the trustee for, agrees not to initiate a suit against the trustee in respect of, and agrees that the trustee will not be liable for, any action that the trustee takes, or abstains from taking, in either case in accordance with the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the Preferred Securities. Additionally, by its

 

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acquisition of any Preferred Securities, each holder of Preferred Securities acknowledges and agrees that, upon the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the Preferred Securities: (i) the trustee will not be required to take any further directions from the holders of Preferred Securities with respect to any portion of the Preferred Securities that is written down, converted to equity and/or cancelled under the Indenture; and (ii) the Indenture will not impose any duties upon the trustee whatsoever with respect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority; provided, however, that notwithstanding the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the Preferred Securities, so long as any Preferred Securities remain outstanding, there will at all times be a trustee for the Preferred Securities in accordance with the Indenture, and the resignation and/or removal of the trustee and the appointment of a successor trustee will continue to be governed by the Indenture, including to the extent no additional supplemental indenture or amendment is agreed upon in the event the Preferred Securities remain outstanding following the completion of the exercise of the Spanish Bail-in Power.

By its acquisition of any Preferred Securities, each holder of Preferred Securities further agrees to be deemed to have authorized, directed and requested DTC, the European Clearing Systems and any direct participant in DTC, the European Clearing Systems or other intermediary or depositary through which it holds such Preferred Securities to take any and all necessary actions, if required, to implement the exercise of the Spanish Bail-in Power with respect to the Preferred Securities as it may be imposed, without any further action or direction on the part of such holder of Preferred Securities.

Upon the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the Preferred Securities, BBVA or the Relevant Spanish Resolution Authority (as the case may be) will provide a written notice to DTC as soon as practicable regarding such exercise of the Spanish Bail-in Power for purposes of notifying the holders of the Preferred Securities. BBVA will also deliver a copy of such notice to the trustee for information purposes. No failure or delay by BBVA to deliver a notice shall affect the validity or enforceability of the exercise of the Spanish Bail-in Power.

By its acquisition of any Preferred Security, each holder acknowledges, accepts, consents to and agrees to be bound by (i) the exercise and effect of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may be imposed with or without any prior notice, with respect to any Common Shares that may be delivered to it upon the Conversion (if any) of the Preferred Securities; and (ii) the variation of the terms of such Common Shares to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

Holders of any Preferred Securities that acquire such Preferred Securities in the secondary market or otherwise shall be deemed to acknowledge and agree to be bound by and consent to the same provisions specified herein and in the Indenture to the same extent as the holders that acquire such Preferred Securities upon their initial issuance, including, without limitation, with respect to Conversion and the acknowledgment and agreement to be bound by and consent to the terms of the Preferred Securities related to the exercise and effects of the Spanish Bail-in Power set forth under “—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”.

The Indenture provides that the foregoing agreement and acknowledgment regarding the Spanish Bail-in Power is governed by Spanish law and that any Bail-in Dispute is subject to the exclusive jurisdiction of the Spanish courts.

See “Risk Factors—Risks Relating to the Preferred Securities—The Preferred Securities may be subject to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. This and other powers contained in Law 11/2015 and the SRM Regulation could materially affect your rights under, and the value of your investment in, the Preferred Securities”.

Purchases of the Preferred Securities

BBVA or any member of the BBVA Group or any other legal entity acting on behalf of BBVA may purchase or otherwise acquire any of the outstanding Preferred Securities at any price in the open market or otherwise, subject to the prior consent of the Regulator, if required pursuant to Applicable Banking Regulations, and otherwise in accordance with Articles 77 and 78 of CRR and/or any other Applicable Banking Regulations in force at the relevant time. Upon their acquisition, such Preferred Securities will immediately cease to be deemed “outstanding” under the Indenture and must be surrendered to the trustee for their cancellation.

 

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Notwithstanding any other provision of the Indenture and subject to compliance with the provisions of any applicable law (including the Spanish Companies Act and the Applicable Banking Regulations), we or any member of the BBVA Group may exercise such rights as we or it may from time to time possess to purchase or redeem or buy back any of our shares (including Common Shares) or any depositary or other receipts or certificates representing the same without the consent of the holders.

Listing

We intend to apply to list the Preferred Securities on the New York Stock Exchange and, if approved, trading is expected to commence within 30 days after the initial delivery of the Preferred Securities. If such listing is approved, we will endeavor to maintain such listing as long as the Preferred Securities remain outstanding. Notwithstanding the above, if listing on the New York Stock Exchange is not approved or if such listing is approved and the Preferred Securities are subsequently removed from listing, we will endeavor to list the Preferred Securities on another organized market in an OECD country as soon as practicable and to maintain such listing.

Maintenance of Tax Procedures

The Indenture provides for the timely provision by the Paying Agent of a duly executed and completed Payment Statement in connection with each payment of income under the Preferred Securities, and set forth certain procedures agreed by BBVA and the Paying Agent which aim to facilitate such process, along with a form of the Payment Statement to be used by the Paying Agent. For these purposes, “income” means, with respect to a Distribution Payment Date, the aggregate Distribution paid on a Distribution Payment Date or, with respect to a redemption date, the amount of the difference, if any, between the aggregate Redemption Price paid upon the redemption of the Preferred Securities (or a portion thereof) and the aggregate Liquidation Preference of such Preferred Securities, provided that such difference corresponds to a Distribution paid by BBVA.

If the Paying Agent fails to deliver a duly executed and completed Payment Statement on a timely basis, in respect of a Distribution Payment Date or in connection with a redemption date, then the related payment will be subject to Spanish withholding tax, currently at the rate of 19%. If this were to occur, BBVA would not pay Additional Amounts and owners of a beneficial interest in the Preferred Securities would have to follow the procedures set forth under “Spanish Tax Considerations—Spanish Direct Refund from Spanish Tax Authorities” herein in order to apply directly to the Spanish tax authorities for any refund to which they may be entitled.

Notices

All notices to holders of Preferred Securities shall be validly given if in writing and mailed first-class postage prepaid to them at their respective addresses in the register maintained by the security registrar. While the Preferred Securities are in global form, any notice given to the holder of a Preferred Security shall be sufficiently given if such notice is given to such holder through DTC, in accordance with DTC’s applicable procedures from time to time.

 

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SPANISH TAX CONSIDERATIONS

The following summary refers solely to certain Spanish tax consequences of the acquisition, ownership and disposition of the Preferred Securities and Common Shares. It does not purport to be a complete analysis of all tax consequences relating to the Preferred Securities and Common Shares and does not purport to deal with the tax consequences applicable to all categories of investors, some of which might be subject to special rules. Prospective investors should consult their own tax advisers as to the consequences under the tax laws of the country of which they are resident for tax purposes and the tax laws of Spain of acquiring, holding and disposing of Preferred Securities and Common Shares and receiving any payments under the Preferred Securities and Common Shares. This summary is based upon the law as in effect on the date of this prospectus supplement and is subject to any change in law that may take effect after such date. References in this section to “Holders” include the beneficial owners of the Preferred Securities and Common Shares, where applicable.

Acquisition of the Preferred Securities and Common Shares

The issue of, subscription for, transfer and acquisition of the Preferred Securities and Common Shares is exempt from Transfer and Stamp Tax (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados) and Value Added Tax (Impuesto sobre el Valor Añadido).

Taxation on the income and transfer of the Preferred Securities and Common Shares

The tax treatment of the acquisition, holding and subsequent transfer of the Preferred Securities and Common Shares is summarized below and is based on the tax regime applicable pursuant to:

(a) for individuals resident for tax purposes in Spain which are subject to the PIT (Impuesto sobre la Renta de las Personas Físicas), Law 35/2006 of November 28, on the PIT and on the Partial Amendment of the Corporate Income Tax Law, the Non-Residents Income Tax Law and the Net Wealth Tax Law, and Royal Decree 439/2007, of March 30 enacting the PIT Regulations, along with Law 19/1991 of June 6 approving the Wealth Tax Law (Impuesto sobre el Patrimonio), Law 29/1987, of December 18 on Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) and Law 38/2022, for the establishment of temporary levies on energy and on financial credit institutions and introducing a temporary solidarity tax on large fortunes, as amended;

(b) for legal entities resident for tax purposes in Spain which are subject to the Corporate Income Tax (“CIT or the “Corporate Income Tax Law”) (Impuesto sobre Sociedades), Law 27/2014 of November 27 and Royal Decree 634/2015, of July 10 enacting the CIT Regulations; and

(c) for individuals and entities who are not resident for tax purposes in Spain which are subject to Non-Resident Income Tax (“NRIT”) (Impuesto sobre la Renta de los no Residentes), Royal Legislative Decree 5/2004 of March 5 approving the consolidated text of the Non-Resident Income Tax Law, as amended (the “Non-Resident Income Tax Law”), Royal Decree 1776/2004 of July 30 approving the Non-Resident Income Tax Regulations as amended, Law 19/1991 of June 6 approving the Wealth Tax Law, Law 29/1987 of December 18 approving the Inheritance and Gift Tax Law and Law 38/2022, for the establishment of temporary levies on energy and on financial credit institutions and introducing a temporary solidarity tax on large fortunes, as amended.

Consideration has also been given to Spanish legislation on the issuance of the Preferred Securities and debt securities (Law 10/2014) and RD 1065/2007.

Preferred Securities

Individuals with Tax Residency in Spain

Personal Income Tax

Income obtained by Holders who are PIT taxpayers, both as interest and income obtained in connection with the transfer, redemption or repayment of the Preferred Securities, shall be considered income on investments obtained from the assignment of an individual’s capital to third parties, as defined in Section 25.2 of the PIT Law, and therefore will be taxed as savings income at the applicable rate (currently varying from 19% to 28%).

Pursuant to Article 44.5 of RD 1065/2007, if the Preferred Securities are registered with a clearing system outside of Spain, any income derived from the Preferred Securities will be paid by the Issuer free of Spanish

 

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withholding tax provided that the relevant information about the Preferred Securities is submitted in the manner detailed in “—Tax Reporting Obligations of the Issuer”. In addition, income obtained upon transfer, redemption or repayment of the Preferred Securities may also be paid free of Spanish withholding tax in certain circumstances.

Notwithstanding the above, withholding tax at the applicable rate of 19% may have to be deducted by other entities (such as depositaries, institutions, or financial entities), provided that such entities are resident for tax purposes in Spain or have a permanent establishment in Spanish territory.

In any event, individual Holders may credit the withholding against their Personal Income Tax liability for the relevant fiscal year and may be refundable pursuant to Section 103 of the Personal Income Tax Law.

Wealth Tax

Individuals with tax residency in Spain are currently subject to Wealth Tax to the extent that their net worth exceeds €700,000, without prejudice to any exemption which may apply and the laws and regulations in force in each autonomous region (Comunidad Autónoma), at the applicable rates, ranging between 0.2% and 3.5%, on the value of the Preferred Securities which they hold as at the end of the relevant fiscal year.

As complementary to Wealth Tax there is a temporary solidarity Tax on Major fortunes that applies to Wealth of individuals in excess of €3,000,000 with rates from 1.7 to 3.5%. The amount of this tax can be deducted out of the quote of the Wealth Tax and would apply for years 2023 and 2024.

Inheritance and Gift Tax

Individuals resident in Spain for tax purposes who acquire ownership or other rights over the Preferred Securities by inheritance, gift or legacy will be subject to Spanish Inheritance and Gift Tax in accordance with the applicable Spanish regional and state rules. The effective tax rates currently range between 0% and 81.6%, depending on relevant factors.

Legal Entities with Tax Residency in Spain

Corporate Income Tax

Both interest periodically received and income derived from the transfer, redemption or repayment of the Preferred Securities are subject to CIT (at the current general tax rate of 25%) in accordance with the rules for this tax.

Pursuant to Article 44.5 of RD 1065/2007, any income derived from the Preferred Securities will be paid by the Issuer to Spanish CIT taxpayers (which for the sake of clarity, include Spanish tax resident investment funds and Spanish tax resident pension funds) free of Spanish withholding tax provided that the relevant information about the Preferred Securities is submitted in the manner detailed under “—Tax Reporting Obligations of the Issuer”.

In the case of Preferred Securities held by Spanish resident entities and deposited with a Spanish resident entity acting as a depositary or custodian, income deriving from the transfer, redemption or repayment may be subject to withholding tax, currently at a rate of 19% withholding that will be made the depositary or custodian, unless the Preferred Securities comply with the exemption requirements specified in letter s) of Article 61 of the CIT Regulations, as interpreted by the ruling No. 1500/2004 issued by the Spanish General Directorate for Taxes (Dirección General de Tributos) dated July 27, 2004, which requires that (i) the Preferred Securities are placed outside of Spain, in other OECD jurisdiction, and (ii) the Preferred Securities are admitted to trading in an organized market of a OECD jurisdiction other than Spain.

Amounts withheld, if any, may be credited by the relevant investors against their final CIT liability.

Wealth Tax

Legal entities are not subject to Wealth Tax.

 

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Inheritance and Gift Tax

Legal entities resident in Spain for tax purposes (and NRIT taxpayers acting through a permanent establishment in Spain, as described below) which acquire ownership or other rights over the relevant securities by inheritance, gift or legacy are not subject to Spanish Inheritance and Gift Tax.

Individuals and Legal Entities with no Tax Residency in Spain

Non-Resident Income Tax

Investors with no Tax Residency in Spain, acting through a Permanent Establishment in Spain

If the Preferred Securities form part of the assets affected to a permanent establishment in Spain of a person or legal entity that is not resident in Spain for tax purposes, the tax rules applicable to income deriving from such Preferred Securities are, generally, the same as those set forth above for Spanish CIT taxpayers. See “—Preferred Securities—Legal Entities with Tax Residency in Spain—Corporate Income Tax” above.

Ownership of the Preferred Securities by investors who are not resident in Spain for tax purposes will not in itself create the existence of a permanent establishment in Spain.

Investors with no Tax Residency in Spain not acting through a permanent establishment in Spain

Income obtained by Holders who are not tax resident in Spain acting for these purposes without a permanent establishment within Spain is exempt from NRIT, on the same terms laid down for income from Spanish public debt.

In order for the exemption to apply, it is necessary to comply with certain information obligations relating to the Preferred Securities, in the manner detailed under “—Tax Reporting Obligations of the Issuer” as laid down in Article 44 of RD 1065/2007. If these information obligations are not complied with in the manner indicated, the Issuer will withhold at the rate applicable from time to time (currently 19%) and the Issuer will not pay Additional Amounts.

In any case, please note that non-resident investors acting without a permanent establishment in Spain may benefit from a withholding tax exemption or reduced withholding tax rate pursuant to the NRIT Law or an applicable Double Tax Treaty (“DTT”) signed by Spain, subject to certain requirements.

Wealth Tax

Individuals resident in a country with which Spain has entered into a DTT in relation to Wealth Tax would generally not be subject to such tax. Otherwise, non-Spanish resident individuals whose properties and rights are located in Spain, or that can be exercised within the Spanish territory, exceed €700,000 would be subject to Wealth Tax at the applicable rates, ranging between 0.2 % and 3.5%, without prejudice to any exemption or reductions which may apply. Therefore, such individuals should take into account the value of the Preferred Securities which they hold as of December 31 in each year.

In accordance with Additional Provision 4 of the Wealth Tax Law as amended by Law 11/2021 of July 9, non-resident taxpayers will be entitled to the application of specific regulations approved by the Autonomous Community where the greater value of the assets and rights they own and for which the tax is required is located, can be exercised or must be fulfilled in Spanish territory.

As complementary to Wealth Tax there is a temporary solidarity Tax on Major fortunes that applies to Wealth of individuals in excess of €3,000,000 with rates from 1.7% to 3.5%. The amount of this tax can be deducted out of the quote of the Wealth Tax and would apply for years 2023 and 2024.

Legal entities are not subject to Wealth Tax.

Inheritance and Gift Tax

The transfer of the Preferred Securities to individuals by inheritance, legacy or donation shall be subject to the general rules of Inheritance and Gift Tax in accordance with the applicable Spanish and State rules even if title passes outside Spain and neither the heir nor the beneficiary, as the case may be, is resident in Spain for tax purposes, without prejudice to the provisions of any DTT signed by Spain.

 

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If no DTT is applicable, individuals who do not have tax residency in Spain who acquire ownership or other rights over the Preferred Securities by inheritance, gift or legacy will be subject to Inheritance and Gift Tax in accordance with Spanish legislation, to the extent that rights deriving from the Preferred Securities can be exercised within Spanish territory. According to the Second Additional Provision of Law 29/1987 of December 18 approving the Inheritance and Gift Tax Law, non-Spanish tax resident individuals may be subject to Spanish Inheritance and Gift Tax in accordance with the rules set forth in the relevant autonomous regions in accordance with the law. As such, prospective investors should consult their tax advisers.

The effective tax rate, after applying all relevant factors, ranges between 0% and 81.6%.

In the event that the beneficiary is an entity other than a natural person, the income obtained shall be subject to Non-Resident Income Tax and without prejudice, in the latter event, to the provisions of any DTT that may apply.

Tax Reporting Obligations of the Issuer

According to Article 44 of the regulations approved by RD 1065/2007, income (as defined herein) obtained in respect of the Preferred Securities will not be subject to withholding tax in Spain, provided certain requirements are met, including that the Paying Agent appointed by BBVA provides BBVA, in a timely manner, with a duly executed and completed Payment Statement containing the following information:

 

  (i)

identification of the securities;

 

  (ii)

payment date;

 

  (iii)

total amount of income paid on the relevant date; and

 

  (iv)

total amount of the income corresponding to each clearing house located outside Spain.

The Indenture provides for the timely provision by the Paying Agent of a duly executed and completed Payment Statement in connection with each payment of income under the Preferred Securities. If, however, the Paying Agent fails to deliver a duly executed and completed Payment Statement on a timely basis, in respect of a Distribution Payment Date or in connection with a redemption date, then the related payment will be subject to Spanish withholding tax, currently at the rate of 19%. If this were to occur, BBVA would not pay Additional Amounts and owners of a beneficial interest in the Preferred Securities would have to follow the procedures set forth under “—Spanish Direct Refund from Spanish Tax Authorities” in order to apply directly to the Spanish tax authorities for any refund to which they may be entitled.

Prospective investors should note that BBVA does not accept any responsibility relating to the lack of delivery of a duly executed and completed Payment Statement by the Paying Agent in connection with any payment of income under the Preferred Securities. Accordingly, BBVA will not be liable for any damage or loss suffered by any holder or beneficial owner who would otherwise be entitled to an exemption from Spanish withholding tax but whose payments under the Preferred Securities are nonetheless paid net of Spanish withholding tax because the relevant Payment Statement was not duly delivered to BBVA.

In the event that there are changes to Spanish law, regulations, interpretations or rulings of the Spanish tax authorities, the procedures set forth in the Indenture may become insufficient or obsolete, and BBVA may be required to apply withholding tax on Distributions (or other payments of income) in respect of the Preferred Securities if, for example, the holders do not comply with any new information requirements that may be imposed.

Conversion of the Preferred Securities into Common Shares

Individuals with tax residency in Spain

Personal Income Tax

Income obtained on the conversion of the Preferred Securities into Common Shares, computed as the difference between the market value of the Common Shares received and the acquisition or subscription value of the Preferred Securities delivered in exchange, will be considered as a return on investment obtained from the transfer of own capital to third parties in accordance with the provisions of Section 25.2 of the PIT Law.

The tax treatment will be as described above in relation to the Personal Income Tax treatment in respect of the Preferred Securities.

 

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Corporate Income Tax

Subject to the applicable accounting regulations, income derived from the conversion of the Preferred Securities into Common Shares will be computed as the difference between the market value of the Common Shares received and the book value of the Preferred Securities delivered in exchange. Such income will be subject to CIT at the current general rate of 25%, in accordance with the rules for this tax.

The tax treatment will be as described above in relation to the Corporate Income Tax treatment in respect of the Preferred Securities.

Individuals and Legal Entities with no Tax Residency in Spain

Non-Resident Income Tax

Investors with no Tax Residency in Spain, acting through a Permanent Establishment in Spain

Non-Spanish tax resident investors operating through a permanent establishment in Spain are subject to the same tax treatment that applies to Spanish CIT taxpayers.

Investors with no Tax Residency in Spain not acting through a permanent establishment in Spain

Income obtained by non-Spanish tax resident investors on the conversion of the Preferred Securities into Common Shares will be exempt from such NRIT and from withholding tax on account of NRIT.

The tax treatment applicable to the income obtained will be as described above in relation to the Non-Resident Income Tax treatment in respect of the Preferred Securities.

Common Shares

Investors with no Tax Residency in Spain

Non-Resident Income Tax

Investors with no Tax Residency in Spain not acting through a permanent establishment in Spain

Taxation of dividends

Under Spanish law, dividends paid to a non-Spanish resident Holder in Spain not acting through a permanent establishment in Spain in respect of the Common Shares are subject to the Spanish NRIT, and therefore a 19% withholding tax is currently applied on the gross amount of dividends.

The Order of April 13, 2000 establishes the procedure applicable to dividend payments made to Holders subject to the Spanish Non-Residents Income Tax.

However, when a DTT applies, the non-resident is entitled to the Treaty-reduced rate. To benefit from the Treaty-reduced rate, the non-resident must provide to the Issuer or to the Spanish resident depositary, if any, through which its Common Shares are held, a certificate of tax residence issued by the tax authorities of the country of residence, within the meaning of the relevant DTT.

In addition, pursuant to the provisions set forth under Article 14.1.h) of the Non-Resident Income Tax Law, non-Spanish corporate Holders with residence in the EU who (i) hold at least 5% of the share capital of a Spanish Company, and (ii) who hold the relevant shares for an uninterrupted period of at least one year (which requirement may be fulfilled after the dividend deriving from the relevant shares is received), may benefit from an exemption from NRIT on dividends deriving from the relevant shares, provided that the rest of conditions of Article 14.1.h) NRIT are met.

As from 2021, the aforesaid exemption will only apply when the shareholder has at least a direct or indirect stake of 5% and, therefore, shareholders which have an acquisition value of their participation that exceeds €20,000,000 will not be entitled to the exemption (without prejudice to the application of a grandfathering regime under specific conditions).

The aforesaid exemption will be applicable, subject to the compliance of similar requirements, to dividends distributed by a Spanish subsidiary to its EEA parent company provided that there is an effective exchange of tax information with such EEA parent company’s country.

 

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However, this exemption from NRIT will not apply if the majority of the voting rights in the parent company of the Spanish Company in which the relevant shareholding is acquired are held, directly or indirectly, by natural or legal persons which are non-resident in the EU or in a country of the EEA with an effective exchange information procedure according to Law 36/2006, of November 29 unless it can be demonstrated that the formation and performance of the relevant Spanish Company was and is carried out for valid economic reasons and substantial business reasons.

In addition, the aforesaid exemption will not be applicable if the dividend is obtained through a country or territory that is defined as a tax haven or a non-cooperative jurisdiction (jurisdicción no cooperativa) by Spanish regulations.

Taxation of capital gains

Capital gains realised by non-Spanish resident Holders not acting through a permanent establishment in Spain in respect of the Common Shares will be taxed under the rules provided by the Non-Resident Income Tax Law.

However, capital gains realized by a Holder will be exempt from Spanish Non-Residents Income Tax in the following cases:

(a) If such Holder is a resident of another EU Member State, it will be exempt from Spanish Non-Residents Income Tax on capital gains, provided that (i) the Issuer’s assets do not mainly consist of, directly or indirectly, Spanish real estate, (ii) in the case of individual taxpayers the seller has not maintained a direct or indirect holding of at least 25% of the Common Shares outstanding during the twelve months preceding the disposition of the latter, (iii) in the case of a non-resident entity, the sale falls within the exemption provided for in Article 21 of Law 27/2014 (in general terms and among other requirements, where that entity’s ownership interest is at least 5%), and (iv) the gain is not obtained through a country or territory statutorily defined as a tax haven or a non-cooperative jurisdiction (jurisdicción no cooperativa). This exemption shall also apply to capital gains which have not been obtained through a permanent establishment in Spain by individuals and entities resident for tax purposes in Member States of the EEA (other than Spain), or permanent establishments of these resident in other Member States of the EEA (other than Spain), provided that the requirements set forth in the Non-Resident Income Tax Law are met;

(b) If the transfer of Common Shares in an official Spanish secondary stock market is made by any Holder who is resident in a country that has entered into a DTT with Spain containing an exchange of information clause (including the Treaty), the gain obtained will be exempt from taxation in Spain. This exemption is not applicable to capital gains obtained through a country or territory defined as a tax haven under applicable Spanish regulations; or

(c) If such Holder benefits from a DTT that provides for taxation only in such non-Spanish resident Holder’s country of residence.

In the event that a capital gain derived from the disposition of Common Shares is exempt from Spanish Non-Residents Income Tax, such Holder will be obliged to file with the Spanish tax authorities the corresponding 210 tax Form evidencing its entitlement to the exemption and providing the Spanish tax authorities with a certificate of tax residence issued by the tax authorities of the country of residence, within the meaning of a DTT, if applicable.

Investors with no Tax Residency in Spain, acting through a Permanent Establishment in Spain

Taxation of dividends

If the Common Shares 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, the tax rules applicable to income deriving from such ordinary shares are the same as those for legal entities with tax residency in Spain described below.

Ownership of the Common Shares by investors who are not resident for tax purposes in Spain will not in itself create the existence of a permanent establishment in Spain.

 

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Taxation of capital gains

If the Common Shares 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, the tax rules applicable to capital gains derived from such ordinary shares are the same as those for legal entities with tax residency in Spain described below.

Wealth Tax

Individuals resident in a country with which Spain has entered into a DTT in relation to Wealth Tax would generally not be subject to such tax. Otherwise, non-Spanish resident individuals whose properties and rights located in Spain, or that can be exercised within the Spanish territory, exceed €700,000 would be subject to Wealth Tax at the applicable rates, ranging between 0.2% and 3.5%, without prejudice to any reductions which may apply Therefore, such individuals should take into account the value of the Common Shares which they hold as at December 31 in each year.

In accordance with Additional Provision 4 of the Wealth Tax Law as amended by Law 11/2021 of July 9, non-resident taxpayers will be entitled to the application of specific regulations approved by the Autonomous Community where the greater value of the assets and rights they own and for which the tax is required is located, can be exercised or must be fulfilled in Spanish territory.

As complementary to Wealth Tax there is a temporary solidarity Tax on Major fortunes that applies to Wealth of individuals in excess of €3,000,000 with rates from 1.7% to 3.5%. The amount of this tax can be deducted out of the quote of the Wealth Tax and would apply for years 2023 and 2024.

Inheritance and Gift Tax

The transfer of the Common Shares to individuals by inheritance, legacy or donation shall be subject to the general rules of Inheritance and Gift Tax in accordance with the applicable Spanish rules even if title passes outside Spain and neither the heir nor the beneficiary, as the case may be, is resident in Spain for tax purposes, without prejudice to the provisions of any DTT signed by Spain.

If no DTT is applicable, individuals who do not have tax residency in Spain who acquire ownership or other rights over the Common Shares by inheritance, gift or legacy will be subject to Inheritance and Gift Tax in accordance with Spanish legislation. Non-Spanish tax resident individuals are subject to Spanish Inheritance and Gift Tax according to the rules set forth in the relevant autonomous regions according to the law. As such, prospective shareholders should consult their tax advisers.

The effective tax rate, after applying all relevant factors, ranges between 0% and 81.6%.

In the event that the beneficiary is an entity other than a natural person, the income obtained shall be subject to Corporate Income Tax or Non-Resident Income Tax, as the case may be, and without prejudice, in the latter event, to the provisions of any DTT that may apply.

Individuals with Tax Residency in Spain

Personal Income Tax

Taxation of dividends

According to the PIT Law the following, amongst others, must be treated as gross capital income: income received by a Spanish shareholder in the form of dividends, consideration paid for attendance at shareholders’ meetings, income from the creation or assignment of rights of use or enjoyment of the shares and any other income received in his position as shareholder.

Gross capital income is reduced by any administration and custody expenses (but not by those incurred in individualized portfolio management); the net amount is included in the relevant Spanish shareholder’s savings taxable base at the applicable rate (currently varying from 19% to 28%).

The payment to Spanish shareholders of dividends or any other distribution will be generally subject to a withholding tax at the then-applicable rate (currently set at 19%.). Such withholding tax is creditable from the PIT payable; if the amount of tax withheld is greater than the amount of the net PIT payable, the taxpayer is entitled to a refund of the excess withheld in accordance with the PIT Law.

 

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Taxation of capital gains

Gains or losses recorded by a shareholder subject to PIT as a result of the transfer of ordinary shares qualify for the purposes of the PIT Law as capital gains or losses and are subject to taxation according to the general rules applicable to capital gains. The amount of capital gains or losses is equal to the difference between the shares’ acquisition value (plus any fees or taxes incurred) and the transfer value, which is the listed value of the shares as of the transfer date or, if higher, the agreed transfer price, less any fees or taxes incurred.

Capital gains or losses arising from the transfer of shares held by a Spanish shareholder are included in such Spanish savings taxable base at the applicable rate (currently varying from 19% to 28%).

Capital gains arising from the transfer of shares are not subject to withholding tax on account of PIT. Losses arising from the transfer of ordinary shares admitted to trading on certain official stock exchanges will not be treated as capital losses if ordinary shares of the same kind have been acquired during the period between two months before and two months after the date of the transfer which originated the loss. In these cases, the capital losses are included in the taxable base upon the transfer of the remaining ordinary shares by the taxpayer.

Wealth Tax

Individuals with tax residency in Spain are currently subject to Wealth Tax to the extent that their net worth exceeds €700,000, without prejudice to any exemption which may apply and the laws and regulations in force in each Autonomous Region, at the applicable rates, ranging between 0.2% and 3.5%, on the value of the relevant securities which they hold as at the end of each year.

As complementary to Wealth Tax there is a temporary solidarity Tax on Major fortunes that applies to Wealth of individuals in excess of €3,000,000 euros with rates from 1.7% to 3.5%. The amount of this tax can be deducted out of the quote of the Wealth Tax and would apply for years 2023 and 2024.

Inheritance and Gift Tax

Individuals resident in Spain for tax purposes who acquire ownership or other rights over any relevant securities by inheritance, gift or legacy will be subject to the Spanish Inheritance and Gift Tax in accordance with the applicable Spanish regional and State rules. The effective tax rates currently range between 0% and 81.6%, depending on relevant factors.

Legal Entities with Tax Residency in Spain

Corporate Income Tax

Taxation of dividends

Dividends from BBVA received by corporate Spanish shareholders, less any expenses inherent to holding the Common Shares, must be included in the CIT taxable base. The general CIT tax rate is 25%.

Dividends in respect of the shares obtained by the shareholders that (i) hold, directly or indirectly, at least 5% in the issuer’s stock; and (ii) hold such participation for at least one year prior to the relevant distribution date or commits to hold the participation for the time needed to complete such one-year holding period, may be 95% exempt from CIT on that dividend as a general rule.

As from 2021, the CIT exemption for dividends and interests in profits of a company is reduced from the full exemption (100%) to a 95% exemption in most cases. In practice, this means that dividends and interests in profits of a company obtained by CIT taxpayers will be taxed at an effective 1.25% rate (general 25% CIT rate on the 5% of the registered dividends and interests in profits of a company).

Additionally, as from 2021, the 95% exemption will only apply when the shareholder has at least a direct or indirect stake of 5% and therefore shareholders which have an acquisition value of their participation which exceeds €20,000,000 will not be entitled to the exemption (without prejudice to the application of a grandfathering regime under specific conditions).

In case the conditions to apply this exemption applies to the relevant shareholder, and provided that the minimum one year holding period requirement is complied with on the distribution date in respect of the Common Shares, dividends will not be subject to withholding tax. Otherwise, dividends will be taxed at the

 

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applicable CIT tax rate of the taxpayer and a withholding will apply (currently set at 19%). This CIT withholding will be credited against the taxpayer’s annual CIT due, and if the amount of tax withheld is greater than the amount of the annual CIT due, the taxpayer will be entitled to a refund of the excess withheld.

Taxation of capital gains

Gains or losses arising from the sale of the Common Shares by a shareholder that is a Spanish CIT taxpayer must be included in its taxable base. The general CIT tax rate is 25% Gains arising from the sale of the Common Shares will not be subject to withholding tax on account of CIT.

For CIT payers that (i) hold, directly or indirectly, at least 5% in the issuer’s stock; and (ii) hold such participation for at least one year prior to the relevant transfer, capital gains will be 95% exempt from CIT as a general rule. Otherwise, capital gains will be taxed at the CIT rate applicable to the relevant taxpayer.

As from 2021, the CIT exemption for capital gains is reduced from the full exemption (100%) to a 95% exemption in most cases. In practice, this means that capital gains obtained by CIT taxpayers would be taxed at an effective 1.25% rate (general 25% CIT rate on the 5% of the capital gains).

Additionally, as from 2021, the 95% exemption will only apply when the shareholder has at least a direct or indirect stake of 5% and therefore, shareholders which have an acquisition value of their participation that exceeds €20,000,00 will not be entitled to the exemption (without prejudice to the application of a grandfathering regime under specific conditions).

CIT payers are urged to consult their tax advisers regarding compliance of the requirements for application of the aforesaid participation exemption.

Capital gains deriving from the disposal of the Common Shares will not be subject to withholding tax on account of CIT.

Wealth Tax

Legal entities are not subject to Wealth Tax.

Inheritance and Gift Tax

Legal entities resident in Spain for tax purposes (and NRIT taxpayers acting through a permanent establishment in Spain, as described below) which acquire ownership or other rights over the Common Shares by inheritance, gift or legacy are not subject to the Spanish Inheritance and Gift Tax.

The Spanish Financial Transactions Tax (“Spanish FTT”)

The Spanish law which implements the Spanish FTT was approved on October 7, 2020 (the “FTT Law”) and the FTT Law was published in the Spanish Official Gazette (Boletín Oficial del Estado) on October 16, 2020. The Spanish FTT came into force three months after the publication of the FTT Law in the Spanish Official Gazette (that is, on January 16, 2021).

Spanish FTT charges a 0.2% rate on specific acquisitions of listed shares issued by Spanish companies whose market capitalization exceeds €1 billion on December 1 of the year prior to the acquisition, regardless of the jurisdiction of residence of the parties involved in the transaction.

The list of the Spanish companies with a market capitalization exceeding €1 billion at December 1 of each year will be published on the Spanish tax authorities’ website before December 31 each year. For the purposes of transactions closed during 2023, the Spanish tax authorities issued a list of entities whose market capitalization exceeded €1 billion as of December 1, 2022, that will fall within the scope of the Spanish FTT and the Issuer was included in such list. Therefore, onerous acquisitions of the Issuer’s shares carried out during 2023 would fall within the scope of the Spanish FTT.

According to the criterion of the Spanish tax authorities, the Spanish FTT would not apply in relation to the acquisition of the contingent convertible capital securities. Additionally, the conversion of the contingent convertible capital securities into ordinary shares falls within the Spanish FTT although it may be exempt of such

 

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tax if it consists in a primary market transaction. However, the Spanish FTT would apply (at a fixed rate of 0.2%) to other financial transactions involving the Issuer’s shares, regardless of the jurisdiction of residence of the parties involved in the transaction.

Prospective holders of the Preferred Securities are advised to seek their own professional advice in relation to the FTT.

Spanish Direct Refund from Spanish Tax Authorities

Preferred Securities

In the case of Spanish tax-resident holders of Preferred Securities, the application for repayment of any amounts withheld may be made in such holders’ Spanish income tax return filed in the year immediately following the year in which the relevant income is derived.

Non-Spanish tax-resident holders of Preferred Securities may be entitled to claim repayment of any amounts withheld from the Spanish Treasury within four years following the last day on which the Issuer is obliged to pay any amounts withheld to the Spanish Treasury (which is generally the 20th calendar day of the month immediately following the relevant payment date) by filing with the Spanish tax authorities by February of the year following that in which the amount was withheld (i) the relevant Spanish tax form; (ii) proof of ownership; and (iii) a certificate of residency issued by the tax authorities of the country of tax residence of the relevant holder, among other documents.

For further details, prospective holders should consult their tax advisers.

Common Shares

Beneficial owners entitled to receive income payments in respect of the Common Shares at the reduced withholding tax rate contained in any applicable DTT, but in respect of whom income payments have been made net of Spanish withholding tax at the general withholding tax rate, may apply directly to the Spanish tax authorities for any refund to which they may be entitled.

Beneficial owners may claim any excess amount withheld by the Issuer from the Spanish Treasury following the February 1 of the calendar year following the year in which the relevant payment date takes place, and within the first four years following the last day on which the Issuer may pay any amount so withheld to the Spanish Treasury (which is generally the 20th calendar day of the month immediately following the relevant payment date), by filing with the Spanish tax authorities (i) the relevant Spanish tax form, (ii) proof of beneficial ownership, and (iii) a certificate of residence issued by the tax authorities of the country of tax residence of such beneficial owner, among other documents.

For further details, prospective holders should consult their tax advisers.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

We believe that we were not a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes for our prior taxable year and do not expect to be a PFIC for our current taxable year. In the opinion of Davis Polk & Wardwell LLP, the discussion under the caption “U.S. Tax Considerations” in the accompanying prospectus, to the extent it relates to contingent convertible preferred securities, describes the material U.S. federal income tax consequences of the ownership and disposition of the Preferred Securities to the U.S. Holders described therein. Prospective investors are urged to read that discussion and to consult their tax advisors as to the U.S., Spanish or other tax consequences of the ownership and disposition of the Preferred Securities in their particular circumstances, including the effect of any U.S. state or local tax laws.

 

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UNDERWRITING (CONFLICTS OF INTEREST)

We and the underwriters have entered into an underwriting agreement and a pricing agreement with respect to the Preferred Securities. Subject to the terms and conditions set forth in the underwriting agreement, we have agreed to sell to the underwriters (other than BBVA Securities Inc.), and each underwriter (other than BBVA Securities Inc.) has severally, and not jointly, agreed to purchase from us, the respective Liquidation Preference of the Preferred Securities indicated opposite such underwriter’s name in the following table.

 

Underwriters(1)

   Liquidation Preference of
Preferred Securities
 

Barclays Capital Inc.

   $ 166,800,000  

BBVA Securities Inc.(2)

   $ 166,800,000  

BofA Securities, Inc.

   $ 166,600,000  

HSBC Securities (USA) Inc.

   $ 166,600,000  

Morgan Stanley & Co. LLC

   $ 166,600,000  

SG Americas Securities, LLC

   $ 166,600,000  
  

 

 

 

Total

   $ 1,000,000,000  
  

 

 

 

 

(1)

In addition to the Liquidation Preference of the Preferred Securities set forth above, each underwriter (other than BBVA Securities Inc.) has agreed, severally and not jointly, to purchase from us a pro rata portion of the Liquidation Preference of any Preferred Securities set forth opposite the name of BBVA Securities Inc. above which has not been purchased by the purchasers procured by BBVA Securities Inc.

(2)

BBVA Securities Inc. has agreed to use its reasonable best efforts to procure purchasers for the Liquidation Preference of Preferred Securities set forth opposite its name above.

The underwriters have advised us that they propose initially to offer the Preferred Securities 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.

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 have undertaken to purchase the Preferred Securities, subject to certain 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.

Certain of the underwriters may not be U.S. registered broker-dealers and accordingly will not effect any sales within the United States except in compliance with applicable U.S. laws and regulations, including the rules of FINRA.

Commissions and Discounts

The Preferred Securities sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus supplement and may be offered to certain dealers at such initial public offering price less a selling concession not to exceed 0.25% of the Liquidation Preference of the Preferred Securities. The underwriters may allow, and dealers may re-allow, a concession on sales to other dealers not to exceed 0.15% of the Liquidation Preference of the Preferred Securities. If all the Preferred Securities are not sold at their initial public offering price, the underwriters may change the offering price and the other selling terms.

The expenses of the offering, not including the commissions payable to the underwriters, are estimated at $1,614,623.

New Issue of Preferred Securities

The Preferred Securities 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 Preferred Securities 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

 

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Preferred Securities or that an active public market for the Preferred Securities will develop. If an active public trading market for the Preferred Securities does not develop, the market price and liquidity of the Preferred Securities may be adversely affected. If the Preferred Securities 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.

We intend to apply to list the Preferred Securities on the New York Stock Exchange and, if approved, trading is expected to commence within 30 days after the initial delivery of the Preferred Securities. If such listing is approved, we will endeavor to maintain such listing as long as the Preferred Securities remain outstanding. Notwithstanding the above, if listing on the New York Stock Exchange is not approved or if such listing is approved and the Preferred Securities are subsequently removed from listing, we will endeavor to list the Preferred Securities on another organized market in an OECD country as soon as practicable and to maintain such listing.

Settlement

The underwriters expect to deliver the Preferred Securities to purchasers in registered form through DTC for credit to accounts of direct or indirect participants in DTC, including Clearstream Luxembourg and Euroclear, on or about September 19, 2023, which will be the sixth New York business day following the date of this prospectus supplement (such settlement period being referred to as T+6).

Pursuant to Rule 15c6-1 under the Exchange Act, trades in the secondary market are generally required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Preferred Securities prior to the delivery of the Preferred Securities hereunder may be required to specify alternative settlement arrangements to prevent a failed settlement. Such purchasers should consult their own advisors.

The CUSIP number for the Preferred Securities is 05946K AM3 and the ISIN is US05946KAM36.

No Sales of Similar Securities

We have agreed that we will not, without the prior written consent of the representatives of the underwriters, offer, sell, contract to sell or otherwise dispose of, in the United States, any U.S. dollar-denominated contingent convertible preferred securities issued by BBVA which are substantially similar to the Preferred Securities (other than the Preferred Securities), until the later of (i) the completion of the sale of the Preferred Securities by the underwriters (as determined by the representatives of the underwriters), but not more than 30 calendar days after the date of this prospectus supplement, and (ii) the settlement date of the Preferred Securities.

Short Positions

In connection with the offering, the underwriters may purchase and sell Preferred Securities 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 Preferred Securities than they are required to purchase in the offering. The underwriters must close out any short position by purchasing Preferred Securities 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 Preferred Securities 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 Preferred Securities or preventing or retarding a decline in the market price of the Preferred Securities. As a result, the price of the Preferred Securities may be higher than the price that might otherwise exist in the open market.

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 Preferred Securities. 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. In addition, we have no control over whether the underwriters will engage in these transactions or certain transactions and other actions referred to under “—Other Relationships” below and, if the underwriters engage in

 

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them, we have no control over the direction or magnitude of any effect that any such transaction or action may have on the price of the Preferred Securities.

Other Relationships

Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

In addition, in the ordinary course of their business activities, the underwriters and their 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. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. Certain of the underwriters or their affiliates that have a lending relationship with us routinely hedge their credit exposure to us consistent with their customary risk management policies. Typically, such underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the Preferred Securities offered hereby. Any such short positions could adversely affect future trading prices of the Preferred Securities offered hereby. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

In connection with the offering, the underwriters are not acting for anyone other than us and will not be responsible to anyone other than us for providing the protections afforded to their clients nor for providing advice in relation to the offering.

Conflicts of Interest

BBVA Securities Inc., which is participating in this offering, is a wholly-owned subsidiary of BBVA. Because of the foregoing, a “conflict of interest” is deemed to exist within the meaning of FINRA Rule 5121. Accordingly, this offering will be conducted in accordance with FINRA Rule 5121, which requires, among other things, that BBVA Securities Inc. will not confirm any sales of the Preferred Securities to any account over which it exercises discretionary authority without the specific written approval of the transaction from the account holder.

Selling Restrictions

The Preferred Securities are complex financial instruments with high risk. They are not a suitable or appropriate investment for all investors. In particular, the Preferred Securities are not intended to be sold and should not be sold to retail investors in any jurisdiction, including the United States. In addition to the below, please see “Notice to Investors” and “Risk Factors—The Preferred Securities are not a suitable investment for all investors”.

In the United States, the Preferred Securities are intended to be sold only to institutional investors.

European Economic Area

Prohibition of sales to EEA retail investors. The Preferred Securities shall not be offered, sold or otherwise made available to any retail investor in the EEA.

For the purposes of this provision:

(i) the expression “retail investor” means a person who is one (or more) of the following:

(a) a retail client as defined in point (11) of Article 4(1) of MiFID II; or

(b) a customer within the meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; and

(ii) the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Preferred Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Preferred Securities.

 

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Spain

The Preferred Securities must not be offered, distributed or sold in Spain in the primary market. However, the Preferred Securities may be sold to Spanish resident investors in circumstances that satisfy the requirements set forth in the ruling 1500/04 of the Directorate General for Taxation (Dirección General de Tributos) of July 27, 2004.

Notwithstanding this, the Preferred Securities shall not be offered, sold or otherwise made available at any time to any retail investor (as defined above) in Spain and any sales of the Preferred Securities in Spain according to the previous paragraph shall be made only to professional clients (clientes profesionales) as defined in Article 194 of the LMV or eligible counterparties (contrapartes elegibles) as defined in Article 196 of the LMV and as further limited by the second paragraph of Article 192 of the LMV.

No publicity of any kind as to the Preferred Securities shall be made in Spain.

United Kingdom

Prohibition of sales to UK retail investors. The Preferred Securities shall not be offered, sold or otherwise made available to any UK retail investor in the United Kingdom.

For the purposes of this provision:

(i) the expression “UK retail investor” means a person who is one (or more) of the following:

(a) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law in the United Kingdom by virtue of the EUWA; or

(b) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of UK MiFIR; and

(ii) the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Preferred Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Preferred Securities.

Any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the Preferred Securities may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to BBVA.

All applicable provisions of the FSMA must be complied with in respect to anything done by any person in relation to the Preferred Securities in, from or otherwise involving the United Kingdom.

Singapore

This prospectus supplement and the accompanying prospectus have not been and will not be registered as a prospectus under the SFA by the MAS, and the offer of the Preferred Securities in Singapore will be made pursuant to the exemptions under Sections 274 and 275 of the SFA. 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 Preferred Securities may not be circulated or distributed, nor may the Preferred Securities 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 as defined in Section 4A of the SFA (an “Institutional Investor”) pursuant to Section 274 of the SFA, (ii) to an accredited investor as defined in Section 4A of the SFA (an “Accredited Investor”) or other relevant person as defined in Section 275(2) of the SFA (a “Relevant Person”) and pursuant to Section 275(1) of the SFA, or to any person pursuant to an offer referred to in Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018, or (iii) otherwise pursuant to, and in accordance with, the conditions of any other applicable exemption or provision of the SFA.

It is a condition of the offer that where the Preferred Securities are subscribed for or acquired pursuant to an offer made in reliance on Section 275 of the SFA 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

 

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  (b)

a trust (where the trustee is not an Accredited Investor), the sole purpose of which is to hold investments and each beneficiary of the trust is an individual who is an Accredited Investor, then

the securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation and the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has subscribed for or acquired the Preferred Securities except:

 

  (i)

to an Institutional Investor, an Accredited Investor, a Relevant Person or which arises from an offer referred to in Section 275(1A) of the SFA (in the case of that corporation) or Section 276(4)(c)(ii) of the SFA (in the case of that trust);

 

  (ii)

where no consideration is or will be given for the transfer;

 

  (iii)

where the transfer is by operation of law;

 

  (iv)

as specified in Section 276(7) of the SFA; or

 

  (v)

as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018 of Singapore.

Singapore Securities and Futures Act Product Classification. Solely for the purposes of its obligations pursuant to Section 309B of the SFA and the CMP Regulations 2018, BBVA has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the Preferred Securities are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and “Excluded Investment Products” (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Hong Kong

The Preferred Securities have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“SFO”) and any rules made thereunder, or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“C(WUMP)O”) or which do not constitute an offer to the public within the meaning of the C(WUMP)O; and no advertisement, invitation or document relating to the Preferred Securities has been or will be issued or has been or will 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 securities laws of Hong Kong) other than with respect to Preferred Securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the SFO and any rules made thereunder.

Switzerland

The offering of the Preferred Securities in Switzerland is exempt from requirement to prepare and publish a prospectus under the Swiss Financial Services Act (“FinSA”) because the Preferred Securities have a minimum denomination of CHF 100,000 (or equivalent in another currency) or more and the Preferred Securities will not be admitted to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. The pricing term sheet, this prospectus supplement and the accompanying prospectus do not constitute a prospectus pursuant to the FinSA, and no such prospectus has been or will be prepared for or in connection with the offering of the Preferred Securities.

Canada

The Preferred Securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Preferred Securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

 

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Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Other Jurisdictions outside the United States

No action may be taken in any jurisdiction that would permit a public offering of the Preferred Securities or the possession, circulation or distribution of this prospectus supplement in any jurisdiction where action for that purpose is required. Accordingly, the Preferred Securities may not be offered or sold, directly or indirectly, and neither this prospectus supplement nor any other offering material or advertisements in connection with the Preferred Securities may be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

 

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VALIDITY OF THE SECURITIES

The legality of the Preferred Securities and certain other matters of Spanish law will be passed upon for us by J&A Garrigues S.L.P., our Spanish counsel. Certain matters of U.S. federal and New York State law will be passed upon for us by Davis Polk & Wardwell LLP, our U.S. counsel. Davis Polk & Wardwell LLP will pass upon certain tax matters of U.S. law relating to the Preferred Securities. Certain matters will be passed upon for the underwriters by U.S. counsel for the underwriters, Sidley Austin LLP, and Spanish counsel for the underwriters, Linklaters, S.L.P.

EXPERTS

The consolidated financial statements of Banco Bilbao Vizcaya Argentaria, S.A. appearing in the 2022 Form 20-F and the effectiveness of Banco Bilbao Vizcaya Argentaria, S.A.’s internal control over financial reporting as of December 31, 2022 have been audited by Ernst & Young, S.L., independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. See also “Experts” in the accompanying prospectus.

 

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PROSPECTUS

 

 

LOGO

Banco Bilbao Vizcaya Argentaria, S.A.

Ordinary Shares

American Depositary Shares, each representing one Ordinary Share

Rights to Subscribe for Ordinary Shares

Senior Debt Securities

Senior Non-Preferred Debt Securities

Subordinated Debt Securities

Contingent Convertible Preferred Securities

 

 

Banco Bilbao Vizcaya Argentaria, S.A. (“we” or “BBVA”) may offer from time to time ordinary shares, American Depositary Shares (each representing one ordinary share, commonly referred to as ADSs), rights to subscribe for ordinary shares (including in the form of ADSs), senior debt securities, senior non-preferred debt securities, subordinated debt securities or contingent convertible preferred securities in one or more offerings.

This prospectus describes the general terms of these securities and the general manner in which we will offer these securities. The specific terms of any securities we offer will be included in a supplement to this prospectus. The applicable prospectus supplement will also describe the specific manner in which we will offer the securities. Such supplements may also add to, update, supplement or change 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”). 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. If we 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 securities involves risks. See “Risk Factors” on page 6.

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.

Our senior debt securities, senior non-preferred debt securities, subordinated debt securities and contingent convertible preferred securities may be subject to the exercise of the Spanish Bail-in Power (as defined herein) by the Relevant Spanish Resolution Authority (as defined herein) as described herein and in the applicable prospectus supplement for such senior debt securities, senior non-preferred debt securities, subordinated debt securities or contingent convertible preferred securities, as applicable. See “Description of the Notes of BBVA—Agreement with Respect to the Exercise of the Spanish Bail-in Power” and “Description of the Contingent Convertible Preferred Securities of BBVA—Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power”.

Our ordinary shares (including those represented by ADSs) may also be subject to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. See “Description of BBVA Ordinary Shares—Exercise of Spanish Bail-in Power and Other Resolution Tools” and “Description of BBVA American Depositary Shares—Exercise of Spanish Bail-in Power and Other Resolution Tools”.

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 July 29, 2022.

You should rely only on the information contained in or incorporated by reference in this prospectus. Neither we nor any underwriter has authorized anyone to provide you with different information. Neither we 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

TABLE OF CONTENTS

 

 

 

     Page  

About This Prospectus

     1  

Where You Can Find More Information

     2  

Incorporation of Documents by Reference

     2  

Forward-Looking Statements

     4  

Risk Factors

     6  

The BBVA Group

     7  

Use of Proceeds

     8  

Consolidated Capitalization and Indebtedness of the BBVA Group

     9  

Description of BBVA Ordinary Shares

     10  

Description of BBVA American Depositary Shares

     20  

Description of Rights to Subscribe for Ordinary Shares

     28  

Description of the Notes of BBVA

     29  

Description of the Contingent Convertible Preferred Securities of BBVA

     53  

Spanish Tax Considerations

     93  

U.S. Tax Considerations

     104  

Benefit Plan Investor Considerations

     112  

Plan of Distribution

     113  

Validity of the Securities

     115  

Experts

     115  

Enforcement of Civil Liabilities

     115  


Table of Contents

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form F-3 that we filed with the Securities and Exchange Commission (the “SEC”) utilizing a “shelf” registration process. Under this shelf registration process, we 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 may offer. Each time we sell securities, we will provide a prospectus supplement containing specific information about the terms of that offering. The prospectus supplement may also add to, update, supplement or change information contained in this prospectus, including regarding the terms of the securities offered thereby. 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 following terms will have the meanings set forth below, unless otherwise indicated or the context otherwise requires:

 

  ·  

“ADRs” refers to American Depositary Receipts representing ADSs.

 

  ·  

“ADSs” refers to American Depositary Shares, each representing one ordinary share of BBVA.

 

  ·  

“Amounts Due” means (i) with respect to a series of senior debt securities or subordinated debt securities, the principal amount of or outstanding amount (if applicable), together with any accrued but unpaid interest, additional amounts, premium (if any) and sinking fund payments (if any) due on the securities of such series; (ii) with respect to a series of senior non-preferred debt securities, the principal amount of or outstanding amount (if applicable), together with any accrued but unpaid, additional amounts and premium (if any) due on the securities of such series; and (iii) with respect to a series of contingent convertible preferred securities, the liquidation preference (and premium, if any), together with any accrued but unpaid distributions, and additional amounts, if any, due on the contingent convertible preferred securities of such series. In each case, references to such amounts will include amounts that have become due and payable, but which have not been paid prior to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. References to such amounts will also include monies held in trust by BBVA, any paying agent or the trustee for the payment of the amounts referred to above, but which have not been paid prior to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

 

  ·  

“BBVA Group” or the “Group” refers to Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries.

 

  ·  

“contingent convertible preferred securities” refers to our contingent convertible preferred securities.

 

  ·  

“Early Intervention” means, with respect to any person, that any Relevant Spanish Resolution Authority or the European Central Bank shall have announced or determined that such person has or shall become the subject of an “early intervention” (actuación temprana) as such term is defined in Law 11/2015 (as defined below).

 

  ·  

“Law 11/2015” means Spanish Law 11/2015, of June 18, on the recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended, replaced or supplemented from time to time.

 

  ·  

“notes” refers to our senior notes (as defined below), our senior non-preferred notes (as defined below) and our subordinated notes (as defined below), collectively.

 

  ·  

“RD 1012/2015” means Spanish Royal Decree 1012/2015 of November 6, by virtue of which Law 11/2015 is developed and Royal Decree 2606/1996 of December 20 on credit entities’ deposit guarantee fund is amended, as amended, replaced or supplemented from time to time.

 

  ·  

“Relevant Spanish Resolution Authority” means (i) with respect to a series of senior notes, subordinated notes or contingent convertible preferred securities, the Spanish Fund for the Orderly Restructuring of Banks (Fondo de Restructuración Ordenada Bancaria), the European Single Resolution Mechanism and, as the case may be, according to Law 11/2015, the Bank of Spain and the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores or “CNMV”), and any other entity with the authority to exercise the Spanish Bail-in Power (as defined below) from time to time, and (ii) with respect to other securities, the Spanish Fund for the Orderly Restructuring of Banks (Fondo de Restructuración Ordenada Bancaria), the European Single Resolution Mechanism and, as the case may be, according to Law 11/2015, RD 1012/2015 and the SRM Regulation (as defined below), the Bank of Spain and the CNMV or any other entity with the authority to exercise the Spanish Bail-in Power from time to time.

 

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  ·  

“Resolution” means, with respect to any person, that any Relevant Spanish Resolution Authority shall have announced or determined that such person has or shall become the subject of a “resolution” (resolución) as such term is defined in Law 11/2015 and, when used with respect to the senior non-preferred notes of any series, the SRM Regulation.

 

  ·  

“rights” refers to the rights to subscribe for our ordinary shares (including in the form of ADSs).

 

  ·  

“securities” refers to the shares, the ADSs, the rights, the notes and the contingent convertible preferred securities, collectively.

 

  ·  

“senior non-preferred notes” refers to our senior non-preferred debt securities described herein.

 

  ·  

“senior notes” refers to our senior debt securities described herein.

 

  ·  

“shares” or “ordinary shares” refers to our ordinary shares, par value €0.49 per share.

 

  ·  

“Spain” refers to the Kingdom of Spain.

 

  ·  

“Spanish Bail-in Power” means any write-down, conversion, transfer, modification, suspension and, when used with respect to the senior non-preferred notes of any series, cancellation power existing from time to time under: (i) any law, regulation, rule or requirement applicable from time to time in Spain, relating to the transposition or development of Directive 2014/59/EU of the European Parliament and the Council of the European Union of May 15, 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms, as amended, replaced or supplemented from time to time or, when used with respect to the senior non-preferred notes or the contingent convertible preferred notes of any series, the BRRD (as defined herein), including, but not limited to (a) Law 11/2015, (b) RD 1012/2015, (c) Directive (EU) 2019/879 of the European Parliament and of the Council of May 20, 2019, and (d) the SRM Regulation; or (ii) any other law, regulation, rule or requirement applicable from time to time in Spain pursuant to which (a) obligations or liabilities of banks, investment firms or other financial institutions or their affiliates can be reduced, cancelled, modified, transferred or converted into shares, other securities, or other obligations of such persons or any other person (or suspended for a temporary period or permanently) or (b) any right in a contract governing such obligations may be deemed to have been exercised.

 

  ·  

“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and the Council of July 15 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended, replaced or supplemented from time to time (including as amended by Regulation 2019/877 of the European Parliament and the Council of May 20, 2019).

 

  ·  

“subordinated notes” refers to our subordinated debt securities described herein.

 

  ·  

“we”, “us”, “our”, “Bank” and “BBVA” refer to Banco Bilbao Vizcaya Argentaria, S.A. unless the context otherwise requires.

 

  ·  

“$”, “U.S. dollars” and “dollars” refer to United States dollars.

 

  ·  

“€” and “euro” refer to euro.

WHERE YOU CAN FIND MORE INFORMATION

Ongoing Reporting

We file annual reports on Form 20-F with, and furnish other reports and information on Form 6-K to, the SEC. The SEC 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. In addition, the securities may specify that certain documents are available for inspection at the office of the trustee, a paying agent or the ADS depositary, as the case may be. The BBVA Group maintains a website at https://shareholdersandinvestors.bbva.com. The information contained on our website or that can be accessed through our website neither constitutes part of this prospectus nor is incorporated by reference herein.

INCORPORATION OF DOCUMENTS BY REFERENCE

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

 

  ·  

incorporated documents are considered part of this prospectus;

 

  ·  

we can disclose important information to you by referring you to those documents; and

 

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  ·  

information that we file with, or furnish to, the SEC in the future and incorporate by reference in this prospectus will automatically update and supersede information in this prospectus and information previously incorporated by reference in this prospectus.

We incorporate by reference the following documents:

 

  ·  

our annual report on Form 20-F for the fiscal year ended December 31, 2021 (the “2021 Form 20-F”) filed with the SEC on March 4, 2022;

 

  ·  

our report on Form 6-K containing certain information on our financial results as of and for the six months ended June 30, 2022 and certain other updates, furnished to the SEC on July 29, 2022 (Accession No. 0000842180-22-000018) (the “June 30, 2022 Form 6-K”); and

 

  ·  

any filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as any report on Form 6-K furnished to the SEC to the extent the Form 6-K expressly states that it is being incorporated by reference herein, on or after the date of this prospectus and prior to the termination of the relevant offering under this prospectus.

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

 

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FORWARD-LOOKING STATEMENTS

Some of the statements included in this prospectus are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Exchange Act, and the safe harbor provisions 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”, “future” 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, are not guarantees of future performance 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 or guidance regarding or relating but not limited to the Group’s and BBVA’s future financial position, results of operations, impairment charges, provisions, capital, leverage and other regulatory ratios, capital distributions, management objectives and/or strategic initiatives, any commitments and targets (including, without limitation, environmental, social and governance commitments and targets), the outcome of certain legal and regulatory actions and proceedings and risk management, including our potential exposure to various types of risk such as market risk, interest rate risk, currency risk and equity risk, and other statements that are not historical fact. 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 2021 Form 20-F and in “Risk Factors” in this prospectus. Other factors could also adversely affect our results or the accuracy of forward-looking statements in this prospectus, and you should not consider the factors discussed here or in the sections in our 2021 Form 20-F and the prospectus 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 deterioration of economic conditions or the alteration of the institutional environment of the countries in which we operate, especially Spain, Mexico and Turkey, including any adverse developments, or the perception that such developments may occur, regarding credit quality, public debt sustainability and sovereign ratings, particularly Spain’s, among other factors;

 

  ·  

the intensity of geopolitical and economic risks in recent years as a result of, among other factors, US-China trade tensions, Brexit, the rise of populism and, more recently, Russia’s invasion of Ukraine, which has led to significant disruption, instability and volatility in global markets, as well as higher inflation (including by contributing to further increases in the prices of energy, oil and other commodities and further disrupting supply chains) and lower or negative growth;

 

  ·  

the impact of the coronavirus (COVID-19) pandemic, new waves of contagion, the emergence of new strains, and the measures adopted by governments and the private sector in connection therewith on our business and the economy;

 

  ·  

changes or volatility in interest rates, foreign exchange rates, asset prices, equity markets, commodity prices, inflation or deflation and, in particular, as of the date of this prospectus, the depreciation of the currencies of the non-euro geographies in which we operate, increased inflation, stagflation due to more intense or prolonged supply crises, interest rate cuts in Turkey (which may affect our margins) and interest rate increases in other geographies (which may impact default rates);

 

  ·  

our ability to comply with various legal and regulatory regimes and the impact of changes in applicable laws and regulations, including increased capital, resolution, liquidity and provision requirements and taxation;

 

  ·  

the monetary, interest rate and other policies of central banks, and the trade, economic and other policies of governments, in the EU, Spain, Mexico, Turkey, the United States and elsewhere;

 

  ·  

adverse developments in emerging economies, in particular Latin America and Turkey, including unfavorable political and economic developments, social instability and changes in governmental policies, including expropriation, nationalization, exchange controls or other limitations on the distribution or repatriation of dividends, international ownership legislation, interest rate caps, fee caps and tax policies;

 

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  ·  

the success of our acquisitions and investments (including our acquisition in May 2022 of an additional 36.12% stake in Türkiye Garanti Bankasi A.Ş. (“Garanti BBVA”), which has resulted in BBVA’s stake in Garanti BBVA increasing to 85.97%), divestitures (including the sale in June 2021 of BBVA USA as well as other companies of the BBVA Group in the United States with activities related to the banking business), mergers, joint ventures and strategic alliances;

 

  ·  

adjustments in the real estate markets in the geographies in which we operate, in particular in Spain, Mexico and Turkey;

 

  ·  

the effects of competition in the markets in which we operate, which may be influenced by regulation or deregulation affecting us or our competitors, and our ability to implement technological advances;

 

  ·  

changes in consumer spending and savings habits, including changes in government policies which may influence spending, saving and investment decisions;

 

  ·  

our ability to continue to access sources of liquidity and funding, including public sources of liquidity such as the funding provided by the European Central Bank (“ECB”) under its programs, and our ability to receive dividends and other funds from our subsidiaries;

 

  ·  

our ability to hedge certain risks economically;

 

  ·  

downgrades in our credit ratings or in sovereign credit ratings, particularly Spain’s credit ratings;

 

  ·  

our ability to address physical, regulatory, reputational, transition and business risks associated with climate change and emerging and developing environmental, social and governance standards;

 

  ·  

our ability to make payments on certain substantial unfunded amounts relating to commitments with personnel;

 

  ·  

the performance of our international operations and our ability to manage such operations;

 

  ·  

weaknesses or failures in our Group’s internal or outsourced processes, systems (including information technology systems) and security;

 

  ·  

weaknesses or failures of our anti-money laundering or anti-terrorism programs, or of our internal policies, procedures, systems and other mitigating measures designed to ensure compliance with applicable anti-corruption laws and sanctions regulations;

 

  ·  

security breaches, including cyber-attacks and identity theft;

 

  ·  

the outcome of legal and regulatory actions and proceedings, both those to which the Group is currently exposed and any others which may arise in the future, including actions and proceedings related to former subsidiaries of the Group or in respect of which the Group may have indemnification obligations;

 

  ·  

actions that are incompatible with our ethics and compliance standards, and our failure to timely detect or remedy any such actions;

 

  ·  

uncertainty surrounding the integrity and continued existence of reference rates and the transition away from the Euro Interbank Offered Rate (EURIBOR), Euro OverNight Index Average (EONIA) and London Inter-bank Offered Rate (LIBOR) to new reference rates;

 

  ·  

our success in managing the risks involved in the foregoing, which depends, among other things, on our ability to anticipate events that are not captured by the statistical models we use; and

 

  ·  

force majeure and other events beyond our control.

Readers are cautioned not to place undue reliance on forward-looking statements. In addition, the forward-looking statements made in this prospectus speak only as of the date of this prospectus. We do not 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, strategy or expectations, including as a result of the occurrence of unanticipated events, and we 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.

 

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RISK FACTORS

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 risk factors in “Item 3. Key Information—Risk Factors” in our 2021 Form 20-F, in addition to the risk factor set forth below, when deciding whether to invest in the securities being offered pursuant to this prospectus. Investing in the securities involves risks. Any of the risks described herein, in the applicable prospectus supplement or in any other documents incorporated by reference into this prospectus, including our 2021 Form 20-F, if they actually occur, could materially and adversely affect our business, results of operations, prospects and financial condition and the value of your investments.

Each potential investor of any security offered hereunder must determine the suitability (either alone or with the help of a financial adviser) of that investment in light of its own circumstances. In particular, each potential investor should understand thoroughly the terms of such securities and be familiar with the behavior of any relevant indices and financial markets, including the possibility that any security offered hereunder may become subject to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority.

Risks relating to the political, economic and social conditions in Turkey.

In May 2022, the Group increased its shareholding stake in Garanti BBVA (Turkey) from 49.85% to 85.97% following the completion of a voluntary tender offer.

Turkey has, from time to time, experienced volatile political, economic and social conditions. As of the date of this prospectus, Turkey is facing an economic crisis characterized by strong depreciation of the Turkish lira, high inflation (the Turkish National Statistics Institute (TUIK) established the inflation rate at 42.35% for the six months ended June 30, 2022), a soaring trade deficit, depletion of the central bank’s foreign reserves and rising external financing costs. Continuing unfavorable economic conditions in Turkey, such as the accelerated inflation and devaluation of the Turkish lira, may result in a potential deterioration in the purchasing power and creditworthiness of our clients (both individual and corporate).

Additionally, ongoing geopolitical and domestic political factors may pose further strain on the country’s economy. Threats to the Turkish economy include the continuing war between Russia and Ukraine, continuing regional conflicts (such as in Syria, Armenia/Azerbaijan), rising global inflation and commodity, energy and food prices, sanctions against Russia and possibly its allies, protectionism and new variants of COVID-19.

There can be no assurance that these and other factors will not have an impact on Turkey and will not cause further deterioration of the Turkish economy, which may have a material adverse effect on the Turkish banking sector and the Group’s business, financial condition and results of operations in Turkey.

 

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THE BBVA GROUP

The BBVA Group is a diversified global financial services group, with strengths in the traditional banking businesses of retail banking, asset management and wholesale banking. The BBVA Group operates in Spain, Mexico, Turkey, and over 25 other countries, mainly in Europe, South America, the United States and Asia. BBVA has a solid leadership position in the Spanish market, it is the largest financial institution in Mexico in terms of assets, it has leading franchises in South America and it is the largest shareholder in Garanti BBVA, Turkey’s largest bank in terms of market capitalization. The BBVA Group had consolidated assets of €715,294 million at June 30, 2022 and profit attributable to parent company of €3,001 million for the six months ended June 30, 2022.

BBVA’s principal executive offices are located at Calle Azul 4, 28050 Madrid, Spain, and its telephone number at that location is +34-91-537-7000 or +34-91-374-6000.

Additional information about BBVA and its subsidiaries is included in the 2021 Form 20-F and the June 30, 2022 Form 6-K, which are incorporated by reference in this document.

 

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USE OF PROCEEDS

The net proceeds from each issue of securities will be used for the BBVA Group’s general corporate purposes, unless otherwise stated in the applicable prospectus supplement.

 

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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 IAS 34 (as issued by the International Accounting Standards Board) as of June 30, 2022.

 

     As of June 30,
2022
 
     (millions of euros)  

Outstanding indebtedness(1)

  

Short-term indebtedness(2)

     1,911  

Long-term indebtedness

     55,728  

Of which: Preferred securities(3)

     9,422  
  

 

 

 

Total indebtedness(4)

     57,639  

Stockholders’ equity

  

Ordinary shares

     3,129  

Ordinary shares held by consolidated companies

     (1,049

Reserves

     59,814  

Dividends

     —    

Accumulated other comprehensive income

     (16,452
  

 

 

 

Total shareholders’ equity

     45,442  

Preferred shares

  

Non-controlling interest

     3,351  
  

 

 

 

Total capitalization and indebtedness

     106,432  
  

 

 

 

 

(1)

No third party has guaranteed any of the debt of the BBVA Group.

(2)

Includes all outstanding promissory notes and bonds, debentures and subordinated debt (including preferred securities) with a remaining maturity of up to one year as of June 30, 2022.

(3)

In accordance with IAS 34, preferred securities are accounted for as subordinated debt. Nonetheless, for Bank of Spain regulatory capital purposes, such preferred securities are treated as Tier 1 capital instruments.

(4)

Approximately 49% of the BBVA Group’s indebtedness was secured as of June 30, 2022.

The following is the principal transaction affecting the capitalization of the BBVA Group after June 30, 2022:

 

  ·  

On July 11, 2022, BBVA issued senior preferred notes due July 2024 in a principal amount of €400,000,000 under its €40,000,000,000 Global Medium Term Note Program.

 

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DESCRIPTION OF BBVA ORDINARY SHARES

The following summary describes the material considerations concerning the capital stock of BBVA and briefly describes the material provisions of BBVA’s bylaws (estatutos) and relevant Spanish law. This summary does not include all the provisions of our bylaws and is qualified in its entirety by reference to the detailed provisions thereof. A copy of BBVA’s bylaws has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part and will be furnished to investors upon request.

General

All rights and obligations of BBVA’s shareholders are contained in BBVA’s bylaws and in Spanish law. Pursuant to Royal Decree 84/2015 of February 13, implementing Law 10/2014 (as defined herein), amendments of the bylaws of a bank are subject to notice to or prior authorization of the Bank of Spain. Other requirements applicable to the amendment of our bylaws are discussed under “—Attendance and Voting at Shareholders’ Meetings”.

As of July 29, 2022, BBVA’s paid in share capital was €3,129,467,256.30, represented by a single class of 6,386,667,870 ordinary shares, each with par value of €0.49 per share and all having the same rights. As of June 30, 2022, BBVA’s paid in share capital was the same.

Non-residents of Spain may hold and vote ordinary shares subject to the general restrictions set forth below. See “—Exchange Controls and Restrictions on Foreign Investments” and “—Restrictions on Acquisitions of Ordinary Shares”.

Attendance and Voting at Shareholders’ Meetings

Each ordinary share entitles the shareholder to one vote. Ordinary shares that are not paid up in full are not entitled to vote, or to receive distributions of dividends or preemptive subscription rights. As of the date of this prospectus, all ordinary shares were fully paid up.

Any ordinary share may be voted by proxy. Any shareholder who is entitled to attend a general shareholders’ meeting may be represented at such general shareholders’ meeting by another person, who need not necessarily be a shareholder. Proxies are valid for ordinary (also referred to as “annual”) general shareholders’ meetings and extraordinary general shareholders’ meetings and, except with respect to general powers of attorney, must be granted specifically with respect to each general shareholders’ meeting. A single shareholder may not be represented at a general shareholders’ meeting by more than one person, except under the circumstances provided in the law for brokering institutions.

Shareholders’ Meetings

Pursuant to BBVA’s bylaws and to the Spanish Companies Act (Ley de Sociedades de Capital), approved by Royal Legislative Decree 1/2010 of July 2, as amended (the “Spanish Companies Act”), general meetings of shareholders of BBVA may be ordinary or extraordinary.

Pursuant to the Spanish Companies Act, ordinary general shareholders’ meetings shall necessarily be held within the first six months of each fiscal year, at which shareholders are requested to approve the annual accounts of the previous fiscal year, the corporate management 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 or are allowed by law. 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 will call extraordinary general shareholders’ meetings when (i) it believes such meetings to be necessary or advisable for BBVA’s interests; (ii) required by law or BBVA’s bylaws; or (iii) requested by shareholders representing at least 3% of BBVA’s share capital.

Shareholders representing at least 3% of the share capital of BBVA have the right to request the publication of a supplemental notice including one or more additional agenda items to the ordinary general shareholders’ meeting and to add new resolution proposals to the agenda of any general shareholders’ meeting, within the first five days following the publication of 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.

 

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Convening Notice

According to BBVA’s bylaws and the Spanish Companies Act, notices of all BBVA general shareholders’ meetings must be published (i) in the Official Gazette of the Commercial Registry (Boletín Oficial del Registro Mercantil) or in a widely circulated newspaper in Spain; (ii) on BBVA’s webpage; and (iii) on the webpage of the CNMV, at least one month prior to the date of the meeting or with the minimum prior notice period required by the Spanish Companies Act from time to time. The notice must indicate the date, time and place 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 Companies Act. The notice may also include the date on which the meeting should be held on the second convening. At least twenty-four hours must elapse between the meeting on the first convening and the meeting on the second convening.

Place of Meeting

General shareholders’ meetings must be held in Bilbao, Spain, where BBVA has its registered office, on the date indicated in the convening notice. Notwithstanding the foregoing, a universal shareholders’ meeting, at which 100% of the share capital is present or duly represented, may take place anywhere in the world.

Right of Attendance

The owners of 500 or more ordinary shares which are duly registered in the book-entry record for ordinary shares at least five days prior to the date of the general shareholders’ meeting and continue to hold such shares until the date of the meeting are entitled to attend. The holders of fewer than 500 ordinary shares may aggregate their shares by proxy to represent at least 500 ordinary shares and appoint a representative for the meeting.

Quorums

Under BBVA’s bylaws and the Spanish Companies Act, except as set forth below, general shareholders’ meetings will be duly constituted on the first convening if BBVA shareholders holding at least 25% of the voting 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, according to the Spanish Companies Act certain special events require a quorum of shareholders, present or represented by proxy, holding at least 50% of the voting share capital on first convening of the general shareholders’ meeting and no less than 25% of the voting share capital on the second convening of the general shareholders’ meeting. Those special events include the adoption of resolutions concerning the following: (i) increases or decreases in capital; (ii) in general, any modification of the bylaws; (iii) issuances of bonds (not applicable to BBVA except with respect to convertible bonds); (iv) limitations or suppression of the preemptive rights to subscribe for new shares; (v) transformations, mergers, spin-offs and assignments of assets and liabilities; and (vi) the transfer of the registered office abroad.

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

Under Spanish law, the rights of shareholders may only be changed by an amendment to the bylaws that complies with the requirements described herein and under “—Attendance and Voting at Shareholders’ Meetings”.

Adoption of Resolutions and Majorities

Subject to the higher vote requirements described in the following paragraphs, the adoption of resolutions requires a simple majority vote at the general shareholders’ meeting, i.e., a resolution is adopted when the favorable votes exceed the votes against the adoption of the resolution.

The adoption of resolutions concerning the following: (i) increases or decreases in capital; (ii) in general, any modification of the bylaws; (iii) issuances of bonds (not applicable to BBVA except with respect to convertible bonds); (iv) limitations or suppression of the preemptive rights to subscribe for new shares; (v) transformations, mergers, spin-offs and assignments of assets and liabilities; and (vi) the transfer of the registered office abroad, shall require the favorable vote of (a) a majority of the share capital present or represented at the meeting if such share capital present or represented exceeds 50% of the total share capital, or (b) if the share capital present or represented by proxy on the second convening constitutes less than 50% but more than 25% of the total share capital, the approval of two-thirds of the share capital present or represented by proxy at such meeting. In addition, the adoption of resolutions that require special quorums according to our bylaws require a favorable vote of a majority of the share capital present or represented.

 

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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, to the bylaws or to the general shareholders’ meeting regulations, or that are deemed detrimental to BBVA’s interests to the benefit of one or more shareholders or third parties can be contested. Any director, any third party who proves a legitimate interest, and any shareholder who acquired such status before the resolution was adopted, as long as they represent at least 0.1% of the share capital of BBVA, may contest corporate resolutions. If the resolution is contrary to public order, it can be contested by any director, third party or any shareholder, even if he/she acquired such status after the resolution was adopted.

Appointment of Directors

Pursuant to our bylaws, our board of directors includes a minimum of five and a maximum of 15 directors who are elected by the general shareholders’ meeting (other than as described in the following paragraph regarding co-opted directors). Directors are appointed for a term of three years, and may be re-elected one or more times for successive terms not exceeding three years.

Under the Spanish Companies Act, in the event of a vacancy on the BBVA Board of Directors, a shareholder or group of shareholders that owns an aggregate number of 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 downwards to the nearest whole number) to the Board of Directors. Shareholders who exercise the right to appoint directors in accordance with the above may not vote on the appointment of other directors to the BBVA Board of Directors. Under the Spanish Companies Act, the BBVA Board of Directors may also designate directors by interim appointment to fill vacancies (co-option). If a director has been co-opted, such director will have a term of office ending on the first general shareholders’ meeting held following such co-option. The general shareholders’ meeting may then ratify such director’s appointment for the term of office remaining of the director whose vacancy has been covered through co-option, or appoint such director for the term of office established under our bylaws (currently, three years).

Under Spanish law, any new directors shall comply with the suitability criteria set forth in, among other applicable legislation, Law 10/2014, of June 26, on organization, supervision and solvency of credit institutions (Ley 10/2014, de 26 de junio, de ordenación, supervisión y solvencia de entidades de crédito), as amended, replaced or supplemented from time to time (“Law 10/2014”), Royal Decree 84/2015, of February 13 and Bank of Spain Circular 2/2016, of February 2.

Preemptive Rights

Pursuant to the Spanish Companies Act, shareholders have preemptive rights to subscribe for (i) new ordinary shares issued in the context of a capital increase involving cash contributions (except where the capital increase is due to the conversion of convertible securities into BBVA ordinary shares, the absorption of another company, or the absorption of all or part of the assets of another company by means of a spin-off of such company) and (ii) securities which are convertible into BBVA ordinary shares. These preemptive rights may be completely or partially excluded in certain circumstances in accordance with the Spanish Companies Act, following a resolution passed at the general shareholders’ meeting (which may, for example, authorize the Board of Directors to exclude preemptive rights). BBVA reserves the right to propose to the general shareholders’ meeting that such preemptive rights be completely or partially excluded in any future issuance of new ordinary shares or securities which are convertible into BBVA ordinary shares.

Dividends and Distributions

Shareholders have the right to participate in the distribution of corporate earnings. Pursuant to our bylaws, dividends may be paid in cash or in kind.

Once the requirements under Spanish law and our bylaws are satisfied, dividends may be distributed and charged to the year’s profit or unrestricted reserves, provided that the value of BBVA’s total net assets is not, or as a result of such dividend would not be, less than BBVA’s share capital. In addition, BBVA must take into account any applicable capital adequacy requirements and any recommendations on payment of dividends, and any other required authorization or restriction that may be applicable. Capital adequacy requirements are applied on both a consolidated and individual basis. See “Item 4. Information on the Company—Business Overview—Supervision and Regulation—Capital Requirements, MREL and Resolution” and “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital” of our 2021 Form 20-F.

 

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Final dividends for a year are proposed by the Board of Directors to be approved by the annual general shareholders’ meeting following the end of the year to which they relate. Additionally, the Board of Directors may approve the payment of interim dividends on account of the year’s end profit following the fulfilment of certain requirements under Spanish law, which payment is endorsed by the annual general shareholders’ meeting. Interim and final dividends are payable to shareholders of record on the record date for the dividend payment. Any unclaimed cash dividends revert to BBVA five years after declaration.

On November 18, 2021, BBVA communicated that its Board of Directors had agreed to modify the Group’s shareholder distribution policy, establishing a new policy consisting of an annual distribution of between 40% and 50% of the consolidated ordinary profit of each year, compared to the previous policy of distributing between 35% and 40%. This policy will be implemented through the distribution of an interim dividend for the year and a final dividend, with the possibility of combining cash distributions with share buybacks, all subject to the relevant authorizations and approvals applicable at any given time. For additional information, see “Item 4. Information on the Company—Business Overview—Supervision and Regulation—Dividends” and “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Dividends” of our 2021 Form 20-F.

Furthermore, on October 26, 2021, BBVA received the required authorization from the ECB to repurchase up to 10% of its share capital in an amount of up to €3.5 billion, in one or more tranches and for a maximum period of 12 months. BBVA is implementing the related share buyback framework program in two tranches. The implementation of the first tranche began on November 22, 2021, was completed on March 3, 2022 and resulted in the acquisition of 281,218,710 shares, representing, approximately, 4.22% of BBVA’s share capital as of March 3, 2022. BBVA subsequently cancelled such shares. The second tranche is being implemented through two sub-tranches. The implementation of the first sub-tranche began on March 16, 2022, was completed on May 16, 2022 and resulted in the acquisition of 206,554,498 shares, representing, approximately, 3.1% of BBVA’s share capital as of May 16, 2022. The implementation of the second sub-tranche, for a maximum amount of €1.0 billion or 149,996,808 shares, began on July 1, 2022 and will be completed no later than September 29, 2022. As of the date of this prospectus, none of the shares acquired in the second tranche have been cancelled.

In addition, upon a liquidation, shareholders have the right to participate in the distribution of any net assets.

Form and Transfer

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 (solidariamente) liable for all obligations arising from their status as shareholders.

Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A. Unipersonal (“Iberclear”), which manages the clearance and settlement system of the Spanish Stock Exchanges, maintains the central registry of ordinary shares which reflects (i) one or several proprietary accounts which show the balances of the participating entities’ (entidades participantes) proprietary accounts; (ii) one or several general third-party accounts that show the overall balances that the participating entities hold for third parties; (iii) individual accounts opened in the name of the owner, either an individual or legal person; and (iv) individual special accounts of financial intermediaries which use the optional procedure of settlement of orders. Each participating entity, in turn, maintains the detail records of the owners of the shares held in their general third-party accounts.

Transfers of 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 ordinary shares may also be subject to certain fees and expenses.

Reporting Requirements

As our ordinary shares are listed on the Spanish Stock Exchanges, the acquisition or disposition of ordinary shares by shareholders must be reported within four business days of the acquisition or disposition to BBVA and the CNMV where:

 

  ·  

in the case of an acquisition, the acquisition results in that person or group holding 3% (or 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 60%, 70%, 75%, 80% or 90%) of BBVA’s total voting rights; or

 

  ·  

in the case of a disposal, the disposition reduces shares held by a person or group below a threshold of 3% (or 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 60%, 70%, 75%, 80% or 90%) of BBVA’s total voting rights.

The reporting requirements apply not only to the purchase or transfer of shares, but also to those transactions in which, without a purchase or transfer, the proportion of voting rights of an individual or legal entity reaches, exceeds or falls below the threshold that triggers the obligation to report as a consequence of a change in the total number of voting rights of BBVA on the basis of the information reported to the CNMV and disclosed by it.

 

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Regardless of the actual ownership of the shares, any individual or legal entity with a right to acquire, transfer or exercise voting rights granted by the shares, and any individual or legal entity who owns, acquires or transfers, whether directly or indirectly, other securities or financial instruments which grant a right to acquire shares with voting rights, will also have an obligation to notify the company and the CNMV of the holding of a significant stake in accordance with applicable Spanish regulations. In addition, cash settled instruments creating long positions on underlying listed shares (such as BBVA’s) shall be disclosed if the specified shareholding thresholds are reached or exceeded. Cash holdings and holdings derived from financial instruments shall be aggregated for disclosure purposes. A disclosure exemption for shareholding positions held by financial entities in their trading books as a result of the securities administration and custody services rendered by such financial entities is available pursuant to Article 33.2 of the Spanish Royal Decree 1362/2007. In the event that the individual or legal entity entering into the relevant transaction is a non-Spanish resident, notice must also be given to the Spanish Registry of Foreign Investments (Registro de Inversiones Exteriores) of the Ministry of Economic Affairs and Digital Transformation (Ministerio de Asuntos Económicos y Transformación Digital). See “—Exchange Controls and Restrictions on Foreign Investment” for additional information, including on certain temporary measures which have been adopted in connection with foreign direct investments.

In the case of individuals or legal entities resident in jurisdictions designated as tax havens or in countries or territories levying no taxes or with which Spain has no effective exchange of tax information, the threshold that triggers the obligation to disclose the acquisition or disposition of shares is reduced to 1% (and successive multiples of 1%).

Additionally, since BBVA is a credit entity, any person who intends to acquire a significant participation in BBVA’s share capital must comply with certain obligations imposed by the Bank of Spain. See “—Restrictions on Acquisitions of Ordinary Shares”.

Requirements Applicable to Purchases by BBVA and its Directors and Senior Managers

Acquisition of own shares

Article 77.1 of CRR establishes that a credit institution (such as BBVA) shall obtain the prior permission from the competent authority (the ECB in the case of BBVA) in order to repurchase its own shares.

Additionally, BBVA is required to report to the CNMV any acquisition by BBVA or any of its affiliates, of BBVA’s own shares which, together with all other acquisitions since the last notification, reaches or exceeds 1% of BBVA’s share capital (irrespective of whether any own shares have been sold in the same period). In such circumstances, the notification must be made within four stock exchange business days and include the number of shares acquired since the last notification (detailed by transaction), the number of shares sold (detailed by transaction) and the resulting net holding of treasury shares.

On October 26, 2021, BBVA received the required authorization from the ECB to repurchase up to 10% of its share capital in an amount of up to €3.5 billion, in one or more tranches and for a maximum period of 12 months. BBVA is implementing the related share buyback framework program in two tranches. The implementation of the first tranche began on November 22, 2021, was completed on March 3, 2022 and resulted in the acquisition of 281,218,710 shares, representing, approximately, 4.22% of BBVA’s share capital as of March 3, 2022. BBVA subsequently cancelled such shares. The second tranche is being implemented through two sub-tranches. The implementation of the first sub-tranche began on March 16, 2022, was completed on May 16, 2022 and resulted in the acquisition of 206,554,498 shares, representing, approximately, 3.1% of BBVA’s share capital as of May 16, 2022. The implementation of the second sub-tranche, for a maximum amount of €1.0 billion or 149,996,808 shares, began on July 1, 2022 and will be completed no later than September 29, 2022. As of the date of this prospectus, none of the shares acquired in the second tranche have been cancelled.

Acquisition of shares by BBVA directors and senior managers

Each member of the BBVA Board of Directors, as well as persons closely associated to them, shall notify BBVA and the CNMV of every transaction conducted on their own account relating to BBVA shares or debt instruments issued by BBVA or to derivatives or other financial instruments linked thereto, according to Article 19 of Regulation (EU) n.º 596/2014, of the European Parliament and of the Council, of April 16, 2014, on market abuse, within three business days after the date of the transaction.

Senior managers of BBVA, as well as persons closely associated to them, are also subject to the abovementioned reporting rules.

 

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Net Short Positions

In accordance with Regulation (EU) No. 236/2012 of the European Parliament and of the Council of March 14, 2012 on short selling and certain aspects of credit default swaps (as further supplemented by several delegated regulations regulating technical aspects necessary for its effective enforceability and to ensure compliance with its provisions), net short positions on shares listed on the Spanish Stock Exchanges (including BBVA shares) equal to, or in excess of, 0.2% of the relevant entity’s share capital and any increases or reductions thereof by 0.1% are required to be disclosed to the CNMV. If the net short position reaches 0.5%, and also at every 0.1% above that, the CNMV will disclose the net short position to the public.

In response to COVID-19, on March 16, 2020, the European Securities and Markets Authority (“ESMA”) lowered the aforementioned threshold from 0.2% to 0.1%, requiring net short position holders to report positions of 0.1% and above. This measure was renewed on September 18, 2020 and on December 17, 2020 until March 19, 2021. The European Commission adopted the decision to permanently lower the threshold from 0.2% to 0.1% on September 27, 2021, which decision was published in the Official Journal on January 11, 2022. Additionally, in line with other European supervisors, on March 16, 2020, the CNMV banned net short positions in shares admitted to trading to Spanish trading venues for which the CNMV is the competent authority as well as in all related instruments relevant for the calculation of the net short position. The CNMV ban became ineffective on May 18, 2020.

The notification or disclosure mentioned above shall be made not later than at 15:30 (CET) on the trading day following the day when the relevant threshold was reached, exceeded or fallen below.

Notification is mandatory even if the same position has already been notified to the CNMV in compliance with transparency obligations previously in force.

The information to be disclosed is set out in Table 1 of Annex I of Delegated Regulation 826/2012, according to the format approved as Annex II of such Regulation. The information will be published, where appropriate, on a web page operated or supervised by the CNMV.

Moreover, pursuant to Regulation 236/2012, where the CNMV considers that (i) there are adverse events or developments that constitute a serious threat to financial stability or to market confidence (for example, serious financial, monetary or budgetary problems, which may lead to financial instability or unusual volatility causing significant downward spirals in any financial instrument); and (ii) the measure is necessary and will not be disproportionately detrimental to the efficiency of financial markets in view of the advantages sought, it may, following consultation with the ESMA, take any one or more of the following measures:

 

  ·  

impose additional notification obligations by either (a) reducing the thresholds for the notification of net short positions in relation to one or several specific financial instruments; and/or (b) requesting the parties involved in the lending of a specific financial instrument to notify any change in the fees requested for such lending; and

 

  ·  

restrict short selling activity by either prohibiting or imposing conditions on short selling.

In addition, according to Regulation 236/2012, where the price of a financial instrument has fallen significantly during a single day in relation to the closing price on the previous trading day (10.0% or more in the case of a liquid share such as a BBVA share), the CNMV may prohibit or restrict short selling of financial instruments for a period not exceeding the end of the trading day following the trading day on which the fall in price occurs.

Finally, Regulation 236/2012 also vests powers to ESMA in order to take measures similar to the ones described above in exceptional circumstances, when the purpose of these measures is to deal with a threat affecting several European Union member states and the competent authorities of these member states have not taken adequate measures to address it.

Change of Control Provisions and Tender Offers

Certain antitrust regulations may delay, defer or prevent a change of control of BBVA 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 cross-border 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. Royal Legislative Decree 4/2015, of October 23, approving the Consolidated Text of the Securities Market Act and Royal Decree 1066/2007 set forth the Spanish rules governing takeover bids. In particular:

 

  ·  

a bidder must make a tender offer in respect of 100% of the issued share capital of a target company if:

 

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  ·  

it acquires an interest in shares which (taken together with shares in which persons acting in concert with it are interested) carry 30% or more of the voting rights of the target company

if this threshold is reached by an acquiring shareholder due to a variation of the total number of voting rights of a target company which has issued loyalty shares in the terms described in article 527 ter et seq. of the Spanish Companies Act, the acquiring shareholder is entitled not to make such tender offer in case it sells the shares necessary to fall below such 30% threshold in the subsequent three months, such acquiring shareholder waives its loyalty voting rights exceeding such 30% threshold or obtains a waiver issued by the CNMV;

 

  ·  

it acquires an interest in shares which (taken together with shares in which persons acting in concert with it are interested) carry less than 30% of the voting rights but enable the bidder to appoint a majority of the members of the target company’s board of directors; or

 

  ·  

it held 30% or more but less than 50% of the voting rights of the target company on the date the law came into force, and subsequently:

 

   

acquires, within 12 months, an additional interest in shares which carries 5% or more of such voting rights;

 

   

acquires an additional interest in shares so that the bidder’s aggregate interest carries 50% or more of such voting rights; or

 

   

acquires an additional interest in shares which enables the bidder to appoint a majority of the members of the target company’s board of directors;

 

  ·  

if a bidder’s actions do not fall into the categories described above, such acquisition may qualify as an “a priori” or partial tender offer (i.e., in respect of less than 100% of the issued share capital of a target company), in which case such bidder would not be required to make a tender offer in respect of 100% of the issued share capital of a target company;

 

  ·  

the board of directors of a target company is exempt from the rule prohibiting certain board interference with a tender offer (the “passivity rule”), provided that (i) it has been authorized by the general shareholders’ meeting to take action or enter into a transaction which could disrupt the offer, or (ii) it has been released from the passivity rule by the general shareholders’ meeting vis-à-vis bidders that are not domiciled in Spain and whose boards of directors are not subject to an equivalent passivity rule;

 

  ·  

defensive measures included in a listed company’s bylaws and transfer and voting restrictions included in agreements among a listed company’s shareholders will remain in place whenever the company is the target of a tender offer unless the general shareholders’ meeting resolves otherwise (in which case any shareholders whose rights are diluted or otherwise adversely affected may be entitled to compensation); and

 

  ·  

if, as a result of a tender offer in respect of 100% of the issued share capital of a target company, the bidder acquires an interest in shares representing at least 90% of the voting rights of the target company and the offer has been accepted by investors representing at least 90% of the voting rights of the target company (provided such voting rights are distinct from those already held by the bidder), the bidder may force the holders of the remaining share capital of the company to sell their shares. The minority holders shall also have the right to force the bidder to acquire their shares under these same circumstances.

As further described below in “—Restrictions on Acquisitions of Ordinary Shares”, since BBVA is a bank, 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 under Law 10/2014. Also, any agreement that contemplates BBVA’s merger with another credit entity requires the authorization of the Ministry of Economic Affairs and Digital Transformation (Ministerio de Asuntos Económicos y Transformación Digital). This could 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 and Restrictions on Foreign Investments

Exchange Controls

In 1991, Spain adopted the EU standards for free movement of capital and services. As a result, foreign investors may transfer invested capital, capital gains and dividends out of Spain without limitation as to amount, subject to applicable taxes. See “Item 10. Additional Information—Taxation” of the 2021 Form 20-F.

 

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Pursuant to Royal Decree 664/1999, of April 23, on the Applicable Rules to Foreign Investments, foreign investors may freely invest in shares of Spanish companies except if they fall within the scope of article 7 bis of Law 19/2003, enacted in March 2020, Sole Transitional Provision of Royal Decree-Law 34/2020, of November 17, or—only with respect to investments in the defense sector—article 11 of Royal Decree 664/1999, of April 23. For information on certain additional regulation applicable to foreign direct investments, see “—Restrictions on Foreign Investments” below. Likewise, Royal Decree 664/1999, of April 23, and Law 19/2003, on exchange controls and foreign transactions, require notification of all foreign investments in Spain and liquidations of such investments upon completion of such investments to the Investments Registry of the Ministry of Economy Affairs and Digital Transformation for administrative statistical and economical purposes. Shares in listed Spanish companies acquired or held by foreign investors must be reported to the Spanish Registry of Foreign Investments by the depositary bank or relevant Iberclear member. When a foreign investor acquires shares that are subject to the reporting requirements of the CNMV regarding significant stakes, notice must be given directly by the foreign investor to the relevant authorities.

Moreover, investments by foreigners domiciled in enumerated tax haven jurisdictions, under Royal Decree 1080/1991, are subject to special reporting requirements.

Restrictions on Foreign Investments

Exchange controls and foreign investments are regulated under Law 19/2003, of July 4 (“Law 19/2003”), as amended pursuant to Royal Decree-Law 8/2020, of March 17, Royal Decree-Law 11/2020, of March 31 and Royal Decree-Law 34/2020, of November 17. Foreign investments are generally liberalized unless they fall within the scope of article 7 bis of Law 19/2003, enacted in March 2020, Sole Transitional Provision of Royal Decree-Law 34/2020, of November 17, or—only with respect to investments in the defense sector—article 11 of Royal Decree 664/1999, of April 23.

Article 7 bis of Law 19/2003 establishes a screening mechanism for certain investments made by non-EU and non-EFTA residents (“foreign investors”), based on public order, public health and public security reasons (the “Screening Mechanism”). The Screening Mechanism aligns part of the Spanish foreign investment legal framework with Regulation (EU) 2019/452 of March 19, 2019 establishing a framework for the screening of foreign direct investments into the European Union. Certain provisions of Regulation (EU) 2019/452—such as the list of sectors affecting public order and public security or the definition of state-owned enterprises and other similar investors—are mirrored in the regulations establishing the Screening Mechanism.

In addition, and according to Sole Transitional Provision of Royal Decree-Law 34/2020, of November 17 (as amended by article 4 of Royal Decree-Law 27/2021, of November 23), effective November 19, 2020 and until December 31, 2022, the following persons will also be deemed to be foreign investors, provided they invest in listed companies or the investment value exceeds 500 million euros—for investments in private—non listed—companies:

 

  ·  

EU and EFTA residents in countries other than Spain; and

 

  ·  

Spanish residents beneficially owned by EU or EFTA residents in countries other than Spain, that is, those in which a EU or EFTA resident other than in Spain ultimately owns or controls more than 25% of the share capital or voting rights of, or otherwise exercises control over, the Spanish resident.

Foreign direct investments (“FDI”) are:

 

  ·  

investments that result in a foreign investor reaching a stake of at least 10% of the share capital of a Spanish company; and

 

  ·  

any corporate transaction, business action or legal transaction which enables effective participation in the management or control of a Spanish company.

Not all foreign direct investments are subject to the Screening Mechanism. Investments are subject to the Screening Mechanism only if they qualify as FDI and the investment is made in one of the critical sectors mentioned in article 7 bis of Law 19/2003, is made pursuant to what is foreseen in Sole Transitional Provision of Royal Decree-Law 34/2020, of November 17, or—only where the investor is a Non-UE or non-EFTA investor—by investors that meet certain subjective criteria regardless of the business of the target:

 

  ·  

non-EU and non-EFTA investors are also subject to the Screening Mechanism, regardless of the business of the target:

 

  ·  

investors directly or indirectly controlled by a non-EU and non-EFTA government, including state bodies, armed forces or sovereign wealth funds; the possibility of exercising decisive influence as a result of an agreement or through the ownership of shares or interests in another person (directly or indirectly) is deemed to constitute “control” for these purposes;

 

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  ·  

investors that have already made an investment affecting national security, public order or public health in another EU Member State, including an investment in any of the above-mentioned sectors; and

 

  ·  

if there is a serious risk that the investor engages in illegal or criminal activities affecting national security, public order or public health in Spain.

Foreign direct investments described above shall be subject to prior administrative authorization by the relevant Spanish authority.

In addition to the above, pursuant to Council Regulation (EU) 2022/318 of February 25, 2022, it shall be prohibited to sell euro denominated transferable securities issued after April 12, 2022 or units in collective investment undertakings providing exposure to such securities, to any Russian national or natural person residing in Russia or any legal person, entity or body established in Russia. This restriction shall not apply to nationals of a Member State or natural persons having a temporary or permanent residence permit in a Member State.

See also “—Restrictions on Acquisitions of Ordinary Shares” below.

Restrictions on Acquisitions of Ordinary Shares

BBVA’s bylaws do not provide any restrictions on the ownership of 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. See also “—Exchange Controls and Restrictions on Foreign Investments”.

Pursuant to Law 10/2014, 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 16 of Law 10/2014) or to directly or indirectly increase its holding in such way that either 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. For the purpose of Law 10/2014, a significant participation is considered to be 10% of the outstanding share capital or voting rights of a financial institution or a lower percentage if such holding allows for the exercise of a significant influence. Secondary legislation will specify when “significant influence” exists; in any case, according to Royal Decree 84/2015, of February 13, the capacity to appoint or dismiss a Board member will be considered “significant influence”.

The Bank of Spain will be responsible for evaluating the proposed transaction, in accordance with the terms established by Law 10/2014 (as stated in Article 18.1 of Law 10/2014) with a view to guaranteeing the sound and prudent operation of the target financial institution. The Bank of Spain will then submit a proposal to the European Central Bank, which will be in charge of deciding upon the proposed transaction in the term of 60 business days after the date on which the notification was received.

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

 

  ·  

the acquired shares will have no voting rights;

 

  ·  

if considered appropriate, the target bank may be taken over by the relevant regulator or its directors replaced in accordance with Title III of Law 10/2014; and

 

  ·  

a sanction may be imposed under Title IV of Law 10/2014.

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, will lose control of the entity, must give prior notice to the Bank of Spain, indicating the amount it intends to sell and the period in which the transaction is to be executed. Non-compliance with this requirement may result in sanctions.

Furthermore, pursuant to Law 10/2014, any natural or legal person, or such persons acting in concert, who has acquired, directly or indirectly, a holding in a Spanish bank so that the proportion of the voting rights or of the capital held reaches or exceeds 5%, must immediately notify in writing the Bank of Spain and the relevant Spanish bank, indicating the size of the acquired holding.

 

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Shareholders’ Agreements

Royal Legislative Decree 4/2015 of October 23, as amended (the “Spanish Securities Market Act”) and the Spanish Companies Act require parties to disclose certain types of shareholders’ agreements that affect the exercise of voting rights at a general shareholders’ meeting or contain restrictions or conditions on the transferability of shares or bonds that are convertible or exchangeable into shares. If any shareholders enter into such agreements with respect to BBVA’s shares, they must disclose the execution, amendment or extension of such agreements to BBVA and the CNMV and file such agreements with the appropriate Commercial Registry. Failure to comply with these disclosure obligations renders any such shareholders’ agreement unenforceable and constitutes a material infringement of the Spanish Securities Market Act. In particular, a shareholders’ agreement will have no effect with respect to the regulation of the right to vote in general shareholders’ meetings and restrictions or conditions on the free transferability of shares and bonds convertible into shares until such time as the aforementioned disclosure and filing are made.

Upon request by the interested parties, the CNMV may waive the requirement to disclose and file a shareholder’s agreement when making the shareholders’ agreement public could cause harm to the affected company.

Payment of Taxes

Holders of ordinary shares are responsible for any taxes or other governmental charges payable on their 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:

 

  ·  

refuse to effect any registration of transfer of such ordinary shares or any split-up or combination thereof until such payment is made; or

 

  ·  

withhold or deduct from any distributions on such ordinary shares or sell for the account of the holder thereof any part or all of such ordinary shares (after attempting by reasonable means to notify such holder prior to such sale), and apply, after deduction for its reasonable expenses incurred in connection therewith, the net proceeds of any such sale in payment of such tax or other governmental charge, the holder of such ordinary shares remaining liable for any deficiency.

Exercise of Spanish Bail-in Power and Other Resolution Tools

Our ordinary shares (including those represented by ADSs) may be subject to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority, which may include and result in any of the following, or some combination thereof, among others: (i) the cancellation of such securities; (ii) the transfer of such securities to creditors of BBVA; (iii) the conversion of other securities or obligations of BBVA into ordinary shares of BBVA thereby diluting the shareholding of the holders of ordinary shares; and (iv) the variation of the terms of such securities or the rights of the holders thereunder, including to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. The applicable prospectus supplement may describe in further detail the effect that the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority may have on our ordinary shares and the rights of the holders (including the beneficial owners) thereof.

 

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DESCRIPTION OF BBVA AMERICAN DEPOSITARY SHARES

The depositary, The Bank of New York Mellon, registers and delivers BBVA ADSs. Each BBVA ADS represents one ordinary share (or a right to receive one ordinary share). The 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 office at which the BBVA ADSs will be administered and its principal executive office is located at 240 Greenwich 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 (“DRS”), 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. The information provided in this section “Description of BBVA American Depositary Shares” 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 herein. You should consult with your broker or financial institution to find out what those procedures are.

The DRS is a system administered by The Depository Trust Company (“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. The Bank of New York Mellon as depositary will be the holder of the underlying ordinary shares. BBVA ADS holders will have ADS holder rights. The ADS holder rights and the rights and obligations of the depositary are set out in an amended and restated deposit agreement dated as of June 29, 2007 among BBVA, The Bank of New York Mellon, as depositary, and BBVA ADS holders, which is referred to as the deposit agreement. The deposit agreement and the BBVA ADSs are governed by New York law.

The following is a summary of the material provisions 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 deposit agreement and the BBVA ADR. Copies of the deposit agreement and the form of BBVA ADR are available for inspection at the office of the depositary 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 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 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 ADSs 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.

 

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Dividends, Other Distributions and Rights

The depositary has agreed to pay or distribute to holders of BBVA ADSs the cash dividends or other distributions it or the custodian receives on shares or other deposited securities upon payment or deduction of 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 depositary 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. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

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

Ordinary Shares. If a distribution by BBVA consists of a dividend in, or free distribution of, ordinary shares, the depositary 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 ordinary shares received as such dividend or free distribution if BBVA furnishes it with evidence that it is legal to do so. The depositary will only distribute whole BBVA ADSs. It will sell ordinary shares which would require it to deliver fractional BBVA ADSs and distribute the net proceeds thereof in the same way as it does with cash. If the additional BBVA ADSs are not so distributed, each BBVA ADS will represent the additional ordinary shares distributed in respect of the 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 depositary will either:

 

  ·  

make such rights available to holders of BBVA ADSs by means of warrants or otherwise, if the depositary determines that it is lawful and feasible to do so; or

 

  ·  

if making such rights available is determined by the depositary not to be lawful and feasible, or if the rights represented by such warrants or other instruments are not exercised and appear to be about to lapse, sell such rights or warrants or other instruments:

 

  ·  

on a stock exchange on which such rights are listed;

 

  ·  

on an over-the-counter market on which such rights are traded; or

 

  ·  

with the written approval of BBVA, at a private sale,

at such place or places and upon such terms as the depositary 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 depositary will not offer such rights to holders of BBVA ADSs having an address in the United States unless BBVA furnishes to the depositary (i) evidence that a registration statement under the Securities Act is in effect or (ii) an opinion from U.S. counsel for BBVA, in a form satisfactory to the depositary, to the effect that such distribution does not require registration under the provisions of the Securities Act.

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 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 depositary 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 depositary may

 

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adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution. The depositary may sell, publicly or privately, what BBVA distributed and distribute the net proceeds in the same way as it does with cash.

The depositary 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, 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, ordinary shares, rights or anything else to BBVA ADS holders. This means that holders of BBVA ADSs may not receive the distributions 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 depositary may, and upon instruction from BBVA, will:

 

  ·  

refuse to effect any registration of transfer of such receipt or any split-up or combination thereof or any withdrawal of such deposited securities until such payment is made; or

 

  ·  

withhold or deduct from any distributions on such deposited securities or sell for the account of the holder thereof any part or all of such deposited securities (after attempting by reasonable means to notify such holder prior to such sale), and apply, after deduction for its expenses incurred in connection therewith, the net proceeds of any such sale in payment of such tax or other governmental charge, the holder of such receipt remaining liable for any deficiency.

Record Dates

The depositary will fix a record date to establish which holders of BBVA ADSs are entitled to:

 

  ·  

receive a dividend, distributions or rights;

 

  ·  

receive the net proceeds of any sale;

 

  ·  

give instructions for the exercise of voting rights at any such meeting; and

 

  ·  

receive notice or solicitation to act in respect of any matter.

Voting of the Underlying Deposited Securities

BBVA has agreed in the deposit agreement that (i) the depositary or its nominee, whichever is the registered holder of the ordinary shares represented by the BBVA ADSs, will have the same rights as any other registered holder of ordinary shares; and (ii) consistent with BBVA’s bylaws, BBVA will observe the right of the depositary, its nominee or registered holder of the ordinary shares to attend any ordinary or extraordinary general shareholders’ meeting and to vote or cause to be voted by proxy the 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 depositary receives notice in English of any matter affecting holders of 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 depositary 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 depositary to vote the shares underlying their BBVA ADSs. The depositary will try, insofar as practicable, to cause the 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 depositary 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 depositary, 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.

 

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Facilities and Register

The depositary will maintain at its transfer office:

 

  ·  

facilities for the delivery and surrender of ordinary shares;

 

  ·  

facilities for the withdrawal of ordinary shares;

 

  ·  

facilities for the execution and delivery, registration, registration of transfer, combination and split-up of BBVA ADSs and the withdrawal of deposited securities; and

 

  ·  

a register for the registration and transfer of BBVA ADSs which, at all reasonable times, shall be open for inspection by holders of BBVA ADSs.

Reports and Notices

The depositary will, at BBVA’s expense:

 

  ·  

arrange for the custodian to provide the depositary copies in English of any reports and other communications that are generally made available by BBVA to holders of ordinary shares; and

 

  ·  

arrange for the mailing of such copies to all holders of BBVA ADSs.

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

The depositary will, at BBVA’s expense, make available for inspection by BBVA ADS holders at its 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 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 depositary.

Any amendment that would impose or increase any charges (other than transmission and delivery charges incurred at the request of depositors of 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 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 depositary 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 depositary 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 depositary and its agents will perform no further acts under the deposit agreement, other than:

 

  ·  

advise record holders of BBVA ADSs of such termination;

 

  ·  

receive and hold distributions on ordinary shares; and

 

  ·  

deliver ordinary shares and distributions in exchange for BBVA ADSs surrendered to the depositary.

As soon as practicable after the expiration of six months from the date that has been fixed for termination, the depositary will sell 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.

 

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Fees and Expenses

The table below sets forth the fees payable, either directly or indirectly, by a holder of ADSs:

 

Category

  

Depositary Actions

  

Associated Fee / By Whom Paid

(a) Depositing or substituting the underlying shares    Issuance of ADSs    Up to $5.00 for each 100 ADSs (or portion thereof) delivered (charged to person depositing the shares or receiving the ADSs)
(b) Receiving or distributing dividends    Distribution of cash dividends or other cash distributions; distribution of share dividends or other free share distributions; distribution of securities other than ADSs or rights to purchase additional ADSs    Not applicable
(c) Selling or exercising rights    Distribution or sale of securities    Not applicable
(d) Withdrawing an underlying security    Acceptance of ADSs surrendered for withdrawal of deposited securities    Up to $5.00 for each 100 ADSs (or portion thereof) surrendered (charged to person surrendering or to person to whom withdrawn securities are being delivered)
(e) Transferring, splitting or grouping receipts    Transfers, combining or grouping of depositary receipts    Not applicable
(f) General depositary services, particularly those charged on an annual basis    Other services performed by the depositary in administering the ADSs    Not applicable
(g) Expenses of the Depositary   

Expenses incurred on behalf of holders in connection with

 

·   stock transfer or other taxes (including Spanish income taxes) and other governmental charges;

 

·   cable, SWIFT, telex and facsimile transmission and delivery charges incurred at request of holder of ADS or person depositing shares for the issuance of ADSs;

 

·   transfer, brokerage or registration fees for the registration of shares or other deposited securities on the share register and applicable to transfers of shares or other deposited securities to or from the name of the custodian;

 

·   reasonable and customary expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars

   Expenses payable by holders of ADSs or persons depositing shares for the issuance of ADSs; expenses payable in connection with the conversion of foreign currency into U.S. dollars are payable out of such foreign currency

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 collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

From time to time, the depositary may make payments to us to reimburse and/or share revenue from the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the BBVA ADS program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign-currency dealers or other service providers that are affiliates of the depositary and that may earn or share fees, spreads or commissions.

 

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The depositary may convert currency itself or through any of its affiliates, or the custodian or we may convert currency and pay U.S. dollars to the depositary. Where the depositary converts currency itself or through any of its affiliates, the depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositary’s obligation to act without negligence or bad faith. The methodology used to determine exchange rates used in currency conversions made by the depositary is available upon request. Where the custodian converts currency, the custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to ADS holders, and the depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the depositary may receive dividends or other distributions from us in U.S. dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by us and, in such cases, the depositary will not engage in, or be responsible for, any foreign-currency transactions and neither it nor we make any representation that the rate obtained or determined by us is the most favorable rate and neither it nor we will be liable for any direct or indirect losses associated with the rate.

Limitations on Obligations and Liability to BBVA ADS Holders

The deposit agreement expressly limits BBVA’s obligations and the obligations of the depositary, and it limits BBVA’s liability and the liability of the depositary. BBVA and the depositary:

 

  ·  

are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

 

  ·  

are not liable for any action or inaction if either relies upon the advice of, or information from, legal counsel, accountants, any person presenting shares for deposit, any holder, or any other person believed to be competent to give such advice or information;

 

  ·  

are not liable if either is prevented or delayed by law or circumstances beyond their control from performing their obligations under the deposit agreement;

 

  ·  

are not liable if either exercises discretion permitted under the deposit agreement;

 

  ·  

have no obligation to become involved in a lawsuit or other proceeding related to the BBVA ADSs or the deposit agreement on behalf of holders of BBVA ADSs or on behalf of any other party; and

 

  ·  

may rely upon any documents they believe to be genuine and to have been signed or presented by the proper party.

The depositary 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

None of the depositary, its agents, nor BBVA will incur any liability if prevented or delayed in performing its obligations under the deposit agreement by reason of:

 

  ·  

any present or future law;

 

  ·  

any act of God;

 

  ·  

a war;

 

  ·  

the threat of any civil or criminal penalty; or

 

  ·  

any other circumstances beyond their respective control.

The obligations and liabilities of BBVA and its agents and the depositary 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 depositary agree to indemnify each other under certain circumstances.

 

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General

The depositary 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 depositary upon BBVA’s request or with BBVA’s approval.

Any transfer of the BBVA ADSs is registrable on the books of the depositary. However, the depositary 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 ordinary shares or any property represented by the BBVA ADS, the depositary 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 ordinary shares:

 

  ·  

payment of a sum sufficient to pay or reimburse the custodian, the depositary or BBVA for any tax or other governmental charge and any stock transfer or brokerage fee or any charges of the depositary upon delivery of the BBVA ADS or upon surrender of the BBVA ADS, as set out in the deposit agreement;

 

  ·  

the production of proof satisfactory to the depositary or custodian of:

 

  ·  

identity or genuineness of any signature; and

 

  ·  

citizenship, residence, exchange control approval, and legal or beneficial ownership;

 

  ·  

compliance with all applicable laws and regulations including the delivery of any forms required by Spanish law or custom in connection with the execution or delivery of evidence of ownership, with all applicable provisions of or governing the shares or any other deposited securities and with the terms of the deposit agreement; or

 

  ·  

other information deemed necessary or proper.

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 depositary 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:

 

  ·  

when temporary delays arise because the depositary or BBVA has closed its transfer books or the deposit of shares in connection with voting at a shareholders’ meeting or the payment of dividends;

 

  ·  

when BBVA ADS holders owe money to pay fees, taxes and similar charges; or

 

  ·  

when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to BBVA ADSs or to the withdrawal of shares or other deposited securities.

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

The depositary, 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 depositary. 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 depositary.

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.

 

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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 July 26, 2022, there were 210,978,746 BBVA ADSs outstanding.

Exercise of Spanish Bail-in Power and Other Resolution Tools

The ordinary shares of BBVA underlying the ADSs may be subject to the exercise of the Spanish Bail-in Power. See “Description of BBVA Ordinary Shares—Exercise of Spanish Bail-in Power and Other Resolution Tools.”

 

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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, including, where applicable, some or all of the following:

 

  ·  

the title of the subscription rights;

 

  ·  

the exercise price for the subscription rights;

 

  ·  

the aggregate number of subscription rights issued;

 

  ·  

a discussion of the material U.S. federal, Spanish or other income tax considerations, as well as considerations under the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), applicable to the issuance of ordinary shares together with statutory subscription rights or the exercise of the subscription rights;

 

  ·  

any other terms of the subscription rights, including terms, procedures and limitations relating to the exercise of the subscription rights;

 

  ·  

the terms of the ordinary shares corresponding to the subscription rights;

 

  ·  

information regarding the trading of subscription rights, including the stock exchanges, if any, on which the subscription rights will be listed;

 

  ·  

the record date, if any, to determine who is entitled to the subscription rights and the ex-rights date;

 

  ·  

the period during which the subscription rights may be exercised;

 

  ·  

the extent to which the offering includes a contractual over-subscription privilege with respect to unsubscribed securities; and

 

  ·  

the material terms of any standby underwriting arrangement we enter into in connection with the offering.

 

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DESCRIPTION OF THE NOTES OF BBVA

This section describes the general terms and provisions of the indenture dated as of July 28, 2016 (the “senior indenture”) between BBVA as issuer and The Bank of New York Mellon as trustee, which sets forth certain provisions with respect to the senior notes that may be offered by BBVA, the indenture dated as of June 25, 2019 (the “senior non-preferred indenture”) between BBVA as issuer and The Bank of New York Mellon as trustee, which sets forth certain provisions with respect to the senior non-preferred notes that may be offered by BBVA and the indenture dated as of July 28, 2016 (the “subordinated indenture”) between BBVA as issuer and The Bank of New York Mellon as trustee, which sets forth certain provisions with respect to the subordinated notes that may be offered by BBVA. In this section “Description of the Notes of BBVA”, we will refer to the senior notes, the senior non-preferred notes and the subordinated notes as the “notes” and the senior indenture, the senior non-preferred indenture and the subordinated indenture as the “indentures”. In this section, “Description of the Notes of BBVA,” the term “holder” shall mean the person in whose name the notes are registered, unless otherwise indicated herein or in the applicable prospectus supplement. 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.

A prospectus supplement 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. The prospectus supplement may add to, update, supplement or change information contained in this prospectus, including regarding the terms of the securities offered thereby. Therefore, the statements made in this prospectus may not be the terms that apply to the securities you purchase. Investors in a particular series of notes are therefore directed to read the relevant prospectus supplement and supplemental indenture (or, if applicable, the Board resolution creating a particular series of 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 relevant indenture and supplemental indenture (or, if applicable, the Board resolution creating a particular series of notes). Further, in the event of any conflict between the terms and conditions of the relevant indenture and those of the relevant supplemental indenture (or, if applicable, the Board resolution creating a particular series of notes), the terms and conditions of the relevant supplemental indenture (or, if applicable, the Board resolution creating a particular series of notes) shall prevail.

The description contained in this section, as it may be supplemented, updated or superseded by the description included in the applicable prospectus supplement, is only a summary and does not contain the full terms of a particular series of notes, nor all the details found in the full text of the relevant indenture, the notes and the relevant supplemental indenture (or, if applicable, the Board resolution creating a particular series of notes). If you would like additional information, you should read such supplemental documentation.

BBVA may issue future notes under other indentures or documentation which contain provisions different from those included in the indentures described here. BBVA is not prohibited under the notes or indentures from paying any amounts due under any of its obligations at a time when they are in default or have failed to pay any amounts due under the notes or indentures.

The senior notes will be issued under the senior indenture, the senior non-preferred notes will be issued under the senior non-preferred indenture and the subordinated notes will be issued under the subordinated indenture, in each case as each such indenture may be amended or supplemented from time to time. Each of such indentures has been filed with the SEC as an exhibit to the registration statement that includes this prospectus and is qualified under the Trust Indenture Act. Under the provisions of the Trust Indenture Act, if the same institution acts as trustee under more than one indenture of BBVA (such as the senior indenture, the senior non-preferred indenture, the subordinated indenture or the contingent convertible preferred securities indenture), upon a default in any series of securities issued under any such indenture, the trustee may be deemed to have a conflicting interest and may be required to resign under any other indentures and a successor trustee will be appointed thereunder.

General

The indentures do not limit the aggregate principal amount of notes that BBVA may issue under them.

Neither the indentures nor the notes will limit or otherwise restrict the amount of other indebtedness or other securities which BBVA or any of its subsidiaries may incur or issue. BBVA can issue notes from time to time in one or more series, up to any aggregate principal amount that BBVA may authorize. The notes will be direct, unconditional and unsecured debt obligations of BBVA.

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.

 

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BBVA or any of its subsidiaries may at any time purchase senior notes, senior non-preferred notes or subordinated notes at any price in the open market or otherwise in accordance with prevailing Spanish law and the Bank of Spain’s requirements or, in the case of the subordinated notes or senior non-preferred notes, the Applicable Banking Regulations (as defined herein).

Terms of the Notes Specified in the Applicable Prospectus Supplement

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

 

  ·  

the title of the notes and series in which these notes will be included;

 

  ·  

any limit on the aggregate principal amount of the notes;

 

  ·  

with respect to a series of senior notes or subordinated notes, whether the notes may be converted into or exercised or exchanged for debt or equity securities of BBVA or one or more third parties, the terms on which conversion, exercise or exchange may occur, including whether conversion, exercise or exchange is mandatory, at the option of the holder or at BBVA’s option, the period during which conversion, exercise or exchange may occur, the initial conversion, exercise or exchange price or rate and the circumstances or manner in which the amount of securities issuable or deliverable upon conversion, exercise or exchange may be adjusted;

 

  ·  

the price or prices (expressed as a percentage of the aggregate principal amount thereof) at which the notes will be issued;

 

  ·  

if any of the notes are to be issuable in global form, when they are to be issuable in global form and (i) whether beneficial owners of interests in such notes may exchange such interests for notes of the same series and of like tenor and of any authorized form and denomination, and the circumstances under which any such exchanges may occur; (ii) the name of the depository with respect to any global note; and (iii) the form of any legend or legends that must be borne by any such note in addition to or in lieu of that set forth in the relevant indenture;

 

  ·  

the date or dates, or the method or methods, if any, by which such date or dates will be determined, on which the principal of the offered notes is payable and, if other than the full principal amount thereof, the portion payable or the method or methods by which the portion of the principal amount of the notes payable on such date or dates is determined;

 

  ·  

the rate or rates (which may be fixed or variable) at which the offered notes will bear interest, if any, or the method or methods, if any, by which such rate or rates will be determined and the basis upon which interest will be calculated if other than on the basis of a 360-day year of twelve 30-day months;

 

  ·  

the date or dates from which interest on the notes, if any, will accrue or the method or methods, if any, by which such date or dates will be determined;

 

  ·  

the date or dates on which such interest, if any, will be payable, the date or dates on which payment of such interest, if any, will commence and the regular record dates for the interest payment dates, if any;

 

  ·  

whether and under what circumstances additional amounts on the notes must be payable;

 

  ·  

the notice, if any, to holders of the notes regarding the determination of interest on a floating rate note and the manner of giving such notice;

 

  ·  

if certificates representing the notes will be issued in temporary or permanent global form, the manner in which any principal, premium, if any, or interest payable on those global notes will be paid if other than as provided in the indentures;

 

  ·  

each office or agency where, subject to the terms of the indenture, the principal, premium and interest, if any, and additional amounts, if any, on the notes will be payable, where the notes may be presented for registration of transfer or exchange and where notices or demands to or upon BBVA in respect of the notes or the indenture may be served;

 

  ·  

whether any of the notes are to be redeemable at the option of BBVA or, with respect to a series of senior notes or subordinated notes, of the holder thereof (including pursuant to any redemption provisions in addition to those set forth in the prospectus) and, if so, the period or periods within which, the price or prices at which and the other terms and conditions upon which such notes may be redeemed, in whole or in part, at the option of BBVA or, with respect to a series of senior notes or subordinated notes, the holder and the terms and provisions of such redemption;

 

  ·  

with respect to a series of senior notes or subordinated notes, whether BBVA is obligated to redeem or purchase any of such notes pursuant to any sinking fund or analogous provision or at the option of any holder thereof and, if so, the period or periods within which, the price or prices at which and the other terms and conditions upon which such notes must be redeemed or purchased, in whole or in part, pursuant to such obligation, and any provisions for the remarketing of such notes;

 

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  ·  

the denomination in whi