(Thousands of Euros) OUTSTANDING AMOUNT AT
31/12/2011 31/12/2010
Preference shares 4,937,586 4,947,586
Subordinated debt 8,169,156 8,163,657
Total 13,106,742 13,111,243
Details of preference share issues are as follows:
Preference shares
ISSUE DATE MATURITY NOMINAL
AMOUNT NOMINAL INTEREST RATE BALANCE OUTSTANDING 31/12/2011 31/12/2010 June 2007(*) Perpetual 20,000 3.41% 20,000 20,000 December 2007(*) Perpetual 30,000 4.66% 30,000 30,000 May 2009 Perpetual 1,897,586 4.89% 1,897,586 1,897,586 Issued by CaixaBank 1,947,586 1,947,586 June 1999 Perpetual 1,000,000 2.97% 1,000,000 1,000,000 May 2000 Perpetual 2,000,000 2.97% 2,000,000 2,000,000
Issued by Caixa Preference 3,000,000 3,000,000
Total issued 4,947,586 4,947,586
Treasury shares acquired (10,000)
Treasury shares (10,000)
Acquired by Group companies
Total 4,937,586 4,947,586
In June 1999, Caixa Preference, SAU issued non-voting series A preference shares amounting to €1,000 million, with a variable quarterly dividend equal to the three-month Euribor plus 0.06% per annum, and a guaranteed minimum dividend of 3.94% per annum (4% APR (TAE)) over the first three years following the issue. In July 2009, a guaranteed annual minimum interest rate of 2.97% (3% APR (TAE)) and a ceiling of 7.77% (8% APR (TAE)) were established to 30 September 2014.
In May 2000, Caixa Preference, SAU issued non-voting series B preference shares amounting to €2,000 million, with a variable quarterly dividend equal to the three-month Euribor rate plus 0.06% per annum, and a guaranteed minimum dividend of 4.43% per annum (4.5% APR (TAE)), to an annual ceiling of 6.83% (7% APR (TAE)) over the first ten years following the issue. In June 2010, a guaranteed annual minimum interest rate of 2.97% (3% APR (TAE)) and a ceiling of 7.77% (8% APR (TAE)) were established to September 30, 2015. Caixa Preference, SAU is a wholly owned subsidiary of ”la Caixa” and the aforementioned issues are backed by an irrevocable joint and several guarantee by ”la Caixa”, as indicated in the related prospectuses.
In May 2009, ”la Caixa” issued its first series of I/2009 preference shares, €1,500 million extendable to a maximum of €2,000 million issued at par, of which €1,898 million was subscribed. This issue carried a fixed dividend of 5.87% over the first two years and quarterly variable dividend thereafter equal to three-month Euribor plus 3.5% per annum.
The preference share issues also obtained the required classification by the Bank of Spain to be accounted for fully in the consolidated Group’s core Tier 1 capital. They are perpetual issues wholly purchased by unrelated third parties and can be redeemed in part or full at the company’s discretion subject to authorization by the Bank of Spain once five years have elapsed from payment (see Note 4).
On December 15, 2011 CaixaBank’s Board of Directors accepted the offer to buy back from the holders the Series A and Series B preference shares issued by Caixa Preference Limited (currently Caixa Preference, SAU) and the series I/2009 shares issued by ”la Caixa” (with CaixaBank assuming the position as issuer by virtue of the spin-off by ”la Caixa” in favor of Microbank of the assets and liabilities that made up the financial activity of ”la Caixa” and the subsequent absorption of MicroBank, SA by CaixaBank) (see Note 1, under “Reorganization of the ”la Caixa” Group”).
The term for the holders of the shares to accept the offer ended on January 31, 2012 (see Note 1, “Events after the reporting period”).
Details of subordinated debt issues are as follows:
Subordinated debt
ISSUE DATE MATURITY NOMINALAMOUNT NOMINAL INTERESTRATE
BALANCE OUTSTANDING 31/12/2011 30/12/2010 October 1985 Perpetual 18,031 2.10% 2,860 2,860 November 1985 Perpetual 12,020 2.10% 1,984 1,984 March 1988 Perpetual 45,076 4.00% 17,387 17,387 May-June 1988 Perpetual 204,344 3.68% 49,649 49,649 February 1991 Perpetual 258,435 3.97% 108,314 108,314 April 2002 04/12/2012 357,563 3.93% 357,563 357,563 July 2002 22/07/2012 180,000 3.94% 180,000 180,000 January 2009 28/02/2019 2,500,000 3.94% 2,500,000 2,500,000 March 2010 30/03/2020 3,000,000 3.94% 3,000,000 3,000,000 December 2011 31/01/2017 1,505,499 7.50% 1,505,499
Issued by ”la Caixa” 7,723,256 6,217,757
October 2001 10/10/2011 1,500,000 3.94% 1,500,000 September 2006(*) 21/09/2016 100,000 1.90% 100,000 100,000 November 2006(*) 08/11/2016 50,000 2.33% 50,000 50,000 Issued by CaixaBank 150,000 1,650,000 December 2000 Perpetual 150,000 2.97% 150,000 150,000 December 2004 Perpetual 146,000 3.46% 146,000 146,000 Issued by VidaCaixa 296,000 296,000 Total issued 8,169,256 8,163,757
Treasury shares acquired (100) (100)
Treasury shares Acquired by Group
companies (100) (100)
Total 8,169,156 8,163,657
(*) Issues from the merger with Caixa d’Estalvis de Girona.
In December 2011, ”la Caixa” issued €1,505 million in subordinated debt at an interest rate of 7.50%, maturing in January 2017.
The subordinated debt issues by ”la Caixa” and CaixaBank obtained the required classification by the Bank of Spain to be accounted for as Group Tier 2 capital, subject to the limitations set forth in Bank of Spain Circular 3/2008 (see Note 4).
At December 31, 2011 and 2010, no securities had been pledged. Of the companies in the ”la Caixa” Group, only VidaCaixa, SA de Seguros y Reaseguros acquired subordinated marketable securities, for €100,000. The average effective interest rate on financial liabilities under “Subordinated liabilities” was 4.00% in 2011, and 3.85% in 2010. These rates are the result of interest earned in the year and do not include adjustments to income arising from hedging transactions.
21.5. Other financial liabilities
The detail of the balance of this heading in the accompanying consolidated balance sheet is as follows:
(Thousands of Euros) 2011 2010
Payment obligations 1,632,825 1,939,110
Guarantees received 9,519 12,489
Clearing houses 575,544 57,149
Tax collection accounts 199,968 445,034
Special accounts 756,165 728,548
Other 163,596 123,642
Total 3,337,617 3,305,972
22. Liabilities under insurance contracts
The breakdown of the balance at December 31, 2011 and 2010 of “Liabilities under insurance contracts” in the consolidated balance sheet is as follows:
(Thousands of Euros) 2011 2010
Unearned premiums and unexpired risks 41,931 201,396
Mathematical provisions 21,361,581 18,840,851
Services 295,024 678,683
Bonuses and rebates 46,243 58,183
Total 21,744,779 19,779,113
The Group performs insurance and reinsurance transactions directly through VidaCaixa, SA de Seguros y Reaseguros and Caixa de Barcelona Seguros de Vida, SA de Seguros y Reaseguros, companies that merged at the end of 2011. The Group controls 100% of both entities, for which reason the merger had no impact on the consolidated figures. Until June 2011, the Group controlled SegurCaixa Adeslas, SA, operating in the health and home insurance line of business. As explained in Note 6, the Group sold the 50% stake in this entity to Mutua Madrileña, and hence the entity’s revenues, expenses, assets and liabilities are not included as from that date. At December 31, 2010, allowances covering this type of insurance amounted to €632 million, and were recognized under “Liabilities under insurance contracts”.
The majority of liabilities under insurance contracts at December 31, 2011 basically relate to life-savings products with guaranteed returns valued in accordance with prevailing insurance regulations and the technical specifications of each product.
At December 31, 2011 and 2010, “Other financial liabilities at fair value through profit or loss” only includes the mathematical provisions relating to insurance products where the investment risk is borne by the policyholder, known as unit-linked products, and “Other financial assets at fair value through profit or loss” includes the investments related to these transactions.
23. Provisions
The changes in 2011 and 2010 in this item and the nature of the provisions recognized in the accompanying consolidated balance sheet are as follows: