If only securities being registered on this Form
are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant
to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the following box. ☒
If this Form is a post-effective amendment to
a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box. ☒
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. ☐
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the
Securities Act. ☐
† The term “new or revised financial
accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.
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.
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
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.
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.
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.
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.
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.
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.
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: |
| ◦ | 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.
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; |
| • | 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.
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.
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.
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; |
| · | the denomination in which the notes will be issuable; |
| · | whether any of the notes will be issued as original issue discount notes; |
| · | if other than the principal amount thereof, the portion of the principal amount of any of such notes that shall be payable upon declaration
of acceleration of maturity thereof or the method by which such portion is to be determined; |
| · | if other than U.S. dollars, the currencies or currency units or composite currencies in which the principal, premium, if any, interest,
if any, and additional amounts, if any, for the notes will be payable and the manner of determining the equivalent of such currencies
in U.S. dollars; |
| · | whether the notes are senior notes issued pursuant to the senior indenture, senior non-preferred notes issued pursuant to the senior
non-preferred indenture or subordinated notes issued pursuant to the subordinated indenture or whether the relevant prospectus supplement
includes notes of each such type; |
| · | if BBVA or a holder may elect payment of the principal, premium, and interest or additional amounts, if any, on the notes in a currency
or currencies, currency unit or units or composite currency different from the one in which the notes are denominated or stated to be
payable, the period or periods within which and terms and conditions on which such election may be made, as well as the time and manner
of determining the exchange rate; |
| · | whether the amount of payments of principal of, premium and interest, if any, on or any additional amounts on the notes may be determined
with reference to an index, formula or other method or methods which may, but need not be, based on one or more currencies, currency units
or composite currencies, commodities, equity or other indices, and, if so, the terms and conditions upon which and the manner in which
these amounts will be determined; |
| · | any deletions, modifications or additions to the events of default or covenants of BBVA with respect to the notes set forth in the
relevant indenture; |
| · | with respect to a series of senior notes or subordinated notes, the defeasance provisions of the relevant indenture applicable to
such notes and any provisions in modification of, in addition to or in lieu of any of the defeasance provisions of the relevant indenture; |
| · | if any notes are to be issuable upon the exercise of warrants, the time, manner and place for such notes to be authenticated and delivered; |
| · | if any of the notes are to be issuable in global form and are to be issuable in definitive form (whether upon original issue or upon
exchange of a temporary note) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the
form and terms of such certificates, documents or conditions; |
| · | the identity of the trustee(s) and, if other than the applicable trustee, the identity of each security registrar, paying agent and
authenticating agent; |
| · | the “Stated Intervals” and the “Record Date” for purposes of Sections 312(a) (in the case of non-interest
bearing notes) and 316(c), respectively, of the Trust Indenture Act; |
| · | the deed of issuance (escritura de emisión), if required, which shall be in Spanish language, related to the notes; |
| · | any material U.S. federal or Spanish income tax considerations applicable to the notes to the extent not described in this prospectus; |
| · | any deletions from (which may be in its entirety), modifications or additions to the additional amounts payable with respect to the
notes; and |
| · | any other terms of the notes, which shall not be inconsistent with the provisions of the relevant indenture (as amended, if applicable,
by the relevant supplemental indenture). |
BBVA may issue notes as original issue discount
notes. An original issue discount note is a note, including a zero coupon note, offered at a discount from the principal amount of the
note due at its maturity. The applicable prospectus supplement will describe the amount payable in the event of an acceleration and other
special factors applicable to any original issue discount notes.
Payments of Additional Amounts
Unless otherwise specified in the applicable prospectus
supplement, any amounts to be paid with respect to the notes shall be paid without withholding or deduction for or on account of any and
all present or future taxes or duties of whatever nature unless such withholding or deduction is required by law. Except as otherwise
provided herein, in the event any such withholding or deduction is imposed or levied on any payment on senior notes or subordinated notes
or on payment of interest on senior non-preferred notes, by or
on behalf of Spain or any political subdivision or authority thereof
or therein having the power to tax, BBVA will pay to the relevant holder such additional amounts as may be necessary in order that the
net amounts received by the holder, after such withholding or deduction equals, in the case of senior notes and the subordinated notes,
the respective amounts of principal, premium, if any, interest, if any, and sinking fund payments, if any, and in the case of senior non-preferred
notes, the amount of interest, if any, which would otherwise have been receivable in respect of the notes in the absence of such withholding
or deduction; except that no such additional amounts will be payable with respect to any note:
(a) to, or to a third party on behalf of, a holder
who is liable for such taxes or duties by reason of such holder (or the beneficial owner for whose benefit such holder holds such note)
having some connection with Spain other than the mere holding of such note (or such beneficial interest) or the mere crediting of the
note to such holder’s account; or
(b) presented for payment (where presentation
is required) more than 30 days after the Relevant Date (as defined herein) except to the extent that the holder would have been entitled
to additional amounts on presenting the same for payment on such thirtieth day assuming that day to have been a business day in such place
of presentment; or
(c) in respect of any tax, assessment or other
governmental charge that would not have been imposed but for the failure by the holder or beneficial owner of that note to comply with
certification, information or other reporting requirements concerning the nationality, residence or identity of the holder or beneficial
owner of that note, if compliance is required by statute or by regulation of Spain or of any political subdivision or taxing authority
thereof or therein as a precondition to reduction of or relief or exemption from the tax, assessment or other governmental charge; or
(d) presented for payment (where presentation
is required) by or on behalf of a holder who would be able to avoid such withholding or deduction by presenting the relevant note to another
paying agent; or
(e) in the event that such note is redeemed
pursuant to a Redemption for Failure to List (as such term is defined below under “—Redemption—Early Redemption of
Senior Notes, Senior Non-Preferred Notes and Subordinated Notes for Listing Reasons”).
Additional amounts will also not be paid with
respect to any payment to a holder who is a fiduciary, partnership, limited liability company or person other than the sole beneficial
owner of that payment, to the extent such payment would be required by the laws of Spain (or any political subdivision thereof) to be
included in the income, for Spanish tax purposes, of a beneficiary or settlor with respect to such fiduciary, member of such partnership,
interest holder in that limited liability company or a beneficial owner who would not have been entitled to such additional amounts had
it been the holder.
No additional amounts will be paid by BBVA or
any paying agent on account of any deduction or withholding from a payment on, or in respect of, the notes where such deduction or withholding
is imposed pursuant to any agreement with the U.S. Internal Revenue Service in connection with Sections 1471-1474 of the Code (as defined
herein) and the U.S. Treasury regulations thereunder (“FATCA”), any intergovernmental agreement between the United States
and Spain or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted in any jurisdiction
implementing, or relating to, FATCA or any intergovernmental agreement.
As used above, “Relevant Date” means
the date on which any payment first becomes due and payable, except that if the full amount of the moneys payable has not been received
by the paying agent on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received
and being available for payment to the holders and notice to that effect is duly given to the holders in accordance with the provisions
set forth under “—Notices” below.
Any reference to, in the case of senior notes
and the subordinated notes, principal, interest, premium or sinking funds, and, in the case of senior non-preferred notes, interest, shall
be deemed to include additional amounts to the extent payable in respect thereof.
Redemption
The applicable prospectus supplement will indicate,
if applicable, the date or dates on or after which, or the period or periods, if any, during which and the price or prices at which BBVA
or, with respect to a series of senior notes or subordinated notes, the holders of the notes may, pursuant to any redemption provisions
in addition to those set forth below, redeem the notes, and the other terms and provisions of such redemption.
Common Terms
BBVA may, subject to the restrictions described
in this section and, in the case of subordinated notes, to the prior approval of the relevant authority and, in the case of the senior
non-preferred notes, in compliance with Applicable Banking Regulations (as defined below) and, if required, with the prior consent of
the Regulator (as defined below), redeem the notes of any series it has
issued. Subject to such restrictions, BBVA may, at its option, redeem
the notes of any series, in each case at any time with not less than 30 days nor more than 60 days’ notice (90 days’ notice
with respect to the senior non-preferred notes of any series) given in the manner described under “—Notices”
below and in the applicable prospectus supplement and indenture.
Except as otherwise specified below or in the
relevant prospectus supplement, the redemption price will be equal to 100% of the principal amount (or such other redemption amount as
may be specified in the applicable prospectus supplement) plus interest accrued to the date fixed for redemption.
If BBVA or, with respect to a series of senior
notes or subordinated notes, the holders (where applicable) elect to redeem the notes of any series, the applicable redemption price will
become due and payable on such notes or portion thereof to be redeemed and, if applicable, they will cease to accrue interest from the
redemption date, unless BBVA fails to pay the redemption price on such redemption date.
If BBVA or, with respect to a series of senior
notes or subordinated notes, the holders (where applicable) have elected to redeem the notes of any series but prior to the deposit with
the trustee or with a paying agent, as the case may be, of the redemption price with respect to such redemption (or in the case of senior
non-preferred notes, prior to the payment of the redemption price to the holders) the Relevant Spanish Resolution Authority exercises
its Spanish Bail-in Power with respect to such notes, the relevant redemption notice shall be automatically rescinded and shall be of
no force and effect, and no payment of the redemption price (and any accrued interest and additional amounts payable under the relevant
indenture) will be due and payable.
Early Redemption of Senior Notes, Senior Non-Preferred
Notes and Subordinated Notes for Taxation Reasons
Unless otherwise provided in the notes of any
series, all (but not less than all) of the senior notes or subordinated notes of any series, and all or part of the senior non-preferred
notes of any series, may be redeemed at the option of BBVA, if, as a result of any change in or amendment to the laws or regulations of
Spain (including any treaty to which Spain is a party) or any political subdivision or any authority or agency thereof or therein having
power to tax, or any change in the application or official interpretation of such laws or regulations, which change, amendment, application
or interpretation becomes effective on or after the date of the applicable prospectus supplement (or, in the case of senior non-preferred
notes, on or after the issue date), either (i) BBVA would become obligated to pay additional amounts in making any payments under
the notes, as described in the section entitled “—Payments of Additional Amounts” above, with respect to such
payment, or (ii) BBVA would not be entitled to claim a deduction in computing tax liabilities in Spain in respect of any interest
to be paid on the next interest payment date on such notes or the value of such deduction to BBVA would be materially reduced, provided
that in the case of (i) above BBVA is not permitted to give notice to the trustee of the redemption earlier than 60 days (90 days
with respect to the senior non-preferred notes of any series) prior to the earliest date on which BBVA would be obligated to deduct or
withhold tax or pay additional amounts were a payment on the notes then due.
Early Redemption of Senior Notes, Senior Non-Preferred
Notes and Subordinated Notes for Listing Reasons
If any series of notes is not listed on an organized
market in an Organization for Economic Co-operation and Development (“OECD”) country by the date that is 45 days prior to
the initial interest payment date on such series of notes, BBVA may, at its option and having given no less than 15 days’ notice
(which notice will be irrevocable) to the holders of such series of notes (ending on a day which is no later than the business day immediately
preceding such initial interest payment date) in accordance with the terms described below under “—Notices” and
in the applicable prospectus supplement and indenture, redeem all (but not less than all) of the outstanding notes of such series (any
such redemption, a “Redemption for Failure to List”) at the redemption price; provided that from and including the
issue date of the notes of such series to and including such interest payment date, BBVA will use its reasonable efforts to obtain or
maintain such listing, as applicable.
In the event of a Redemption for Failure to List,
if required by the relevant Spanish law and regulation, BBVA will withhold tax and will pay interest in respect of the principal amount
of the notes redeemed net of the Spanish withholding tax applicable to such payments (currently 19%). If this were to occur, BBVA would
not pay additional amounts and beneficial owners would have to follow the procedures set forth in the relevant prospectus supplement in
order to apply directly to the Spanish tax authorities for any refund to which they may be entitled.
Early Redemption of Senior Non-Preferred Notes upon
an Eligible Liabilities Event
BBVA may redeem all (but not less than all) of
the senior non-preferred notes of a series at the redemption price if an Eligible Liabilities Event (as defined below) occurs on or after
the issue date of such senior non-preferred notes.
“Eligible Liabilities Event” means,
when used with respect to the senior non-preferred notes of any series, a change (or any pending change which the Regulator (as defined
below) considers sufficiently certain) in Spanish law or Applicable Banking Regulations (as defined below) on or after the issue date
of such notes or any official a pplication or interpretation thereof, that results
(or is likely to result) in such senior non-preferred notes not being
(or ceasing to be) fully eligible for inclusion in the Eligible Liabilities Amount (as defined below); provided that an Eligible Liabilities
Event shall not occur where such ineligibility for inclusion of such senior non-preferred notes in the Eligible Liabilities Amount is
due to the remaining maturity of such senior non-preferred notes being less than any period prescribed by any applicable eligibility criteria
under the Applicable Banking Regulations (or any other regulations applicable in Spain from time to time) which was effective on the issue
date of such senior non-preferred notes.
“Applicable Banking Regulations” means,
when used with respect to the senior non-preferred notes of any series, 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 (as defined below), the BRRD (as defined below), 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).
“BRRD” means, when used with respect
to the senior non-preferred notes of any series, Directive 2014/59/EU of the European Parliament and the Council of the European Union
of May 15 establishing the 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 (including as amended by Directive 2019/879 of the European Parliament and the Council of May 20, 2019) and including
any other relevant implementing or developing regulatory provisions.
“CRD V” means any or any combination
of the CRD Directive (as defined below), the CRR (as defined below) and any CRD Implementing Measures (as defined below).
“CRD Directive” means, when used with
respect to the senior non-preferred notes of any series, 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, amending
Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended, replaced or supplemented from time to time (including
as amended by Directive 2019/878 of the European Parliament and the Council of May 20, 2019).
“CRD Implementing Measures” means,
when used with respect to the senior non-preferred notes of any series, any regulatory capital 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, when used with respect
to the senior non-preferred notes of any series, 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, as amended, replaced or supplemented from time to time (including
as amended by Regulation 876/2019 of the European Parliament and the Council of May 20, 2019).
“Eligible Liabilities Amount” means
the amount of eligible liabilities of BBVA or the BBVA Group for the purposes of Article 45 of the BRRD or Applicable Banking Regulations
or any other regulations applicable in Spain from time to time.
“Regulator” means, when used with
respect to the senior non-preferred notes of any series, 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 or resolution matters in relation to BBVA and/or the BBVA Group from time to time.
Form, Transfer, Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus
supplement, each series of notes will be issued in registered form only, without coupons. There will not be any service charge for any
transfer or exchange of notes payable to BBVA, but BBVA may require payment to cover any tax or other governmental charge payable and
any other expenses (including the fees and expenses of the trustee) that may be imposed in that regard.
Unless the applicable prospectus supplement provides
otherwise, the principal, premium and interest (and any additional amounts) on the notes of a particular series will be payable, and transfer
or exchange of the notes will be registrable, at the corporate trust office of The Bank of New York Mellon under the applicable indenture.
However, if specified in the applicable prospectus
supplement, BBVA may elect to pay any interest by check mailed to the
address of the entitled person as it appears in the security register at the close of business on the regular record date for the interest
or by transfer to an account maintained by the payee with a bank located in the United States.
Unless the applicable prospectus supplement provides
otherwise, payment of interest on and any additional amounts with respect to a note on any interest payment date will be made to the person
in whose name the note is registered at the close of business on the regular record date for the interest.
Global Certificates
BBVA may issue the notes of a series in whole
or in part in the form of one or more global certificates representing the notes. Unless otherwise stated in the applicable prospectus
supplement, DTC will act as securities depository for the notes. Therefore, BBVA will issue the notes only as registered securities registered
in the name of Cede & Co. (DTC’s nominee) and will deposit with DTC one or more registered certificates representing in
aggregate the total number of such notes.
As long as DTC or its nominee is the registered
holder of a global certificate representing notes, DTC or its nominee, as the case may be, will be considered the sole owner and holder
of the notes represented by that global certificate for all purposes under the applicable indenture and the notes. Except as described
below, owners of beneficial interests in a note represented by a global certificate will not be entitled to have the notes represented
by such global certificate registered in their names, will not receive or be entitled to receive physical delivery of certificated notes
and will not be considered the holders of such notes under the applicable indenture. Accordingly, each person owning a beneficial interest
in a note represented by a global certificate must rely on the procedures of DTC and, if that person is not a participant in DTC, on the
procedures of the participant in DTC through which the person owns its interest, to exercise any rights of a beneficial owner under the
applicable indenture.
Beneficial interests in notes of any series represented
by a global certificate will be exchangeable for notes of such series represented by individual security certificates, or certificated
notes, and registered in the name or names of owners of such beneficial interests as specified in instructions provided by DTC to the
trustee only if: (i) the depository is at any time unwilling, unable or ineligible to continue as depository or has ceased to be
a clearing agency registered under the Exchange Act and, in either case, a successor depository is not appointed by BBVA within 60 days
of the date BBVA is so informed in writing; (ii) BBVA executes and delivers to the trustee a company order to the effect it has elected
to cause the issuance of definitive registered securities; (iii) an event of default has occurred and is continuing with respect
to the securities; or (iv) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been
specified for this purpose as contemplated by the relevant prospectus supplement.
Outstanding Notes
In determining whether the holders of the requisite
principal amount of outstanding notes of a series have given any request, demand, authorization, direction, notice, consent or waiver
under the notes of such series or the relevant indenture, any note owned by BBVA or any other obligor upon the notes or any affiliate
of BBVA or such other obligor (if any such notes are so owned), will be deemed not to be outstanding. In addition, (i) the portion
of the principal amount of an original issue discount note (if any) that will be outstanding will be the amount that would be declared
due and payable as of the date of determination; (ii) the principal amount of a note denominated in a foreign currency will be the dollar
equivalent, determined on the date of original issuance of such note, of the principal amount (or, in the case of an original issue discount
note, the dollar equivalent on the date of original issuance of such note of the amount determined in (i) above) of such note; and (iii)
the principal amount of an indexed note that will be outstanding will be the principal face amount determined on the date of its original
issuance.
Modifications and Waivers
Modification of the Indenture with Consent of Holders
BBVA and the applicable trustee may amend or modify
the applicable indenture, may modify the rights of holders under such indenture and may waive any future compliance with such indenture
by BBVA with the consent, as evidenced in an Act or Acts (as defined in the relevant indenture), of the holders of not less than a majority
in principal amount of the outstanding notes of each series affected thereby voting as a class. However, the modification, amendment or
waiver may not, without the consent or the affirmative vote of the holder of each note affected:
| · | change the stated maturity of the principal of, or any premium or installment of interest on or any additional amounts with respect
to, any note, or reduce the principal amount thereof or the rate of interest thereon (except that holders of not less than 75% in principal
amount of outstanding notes of a series may consent by Act, on behalf of the holders of all of the outstanding notes of such series, to
the postponement of the stated maturity of any installment of interest for a period not exceeding three years from the original stated
maturity of such installment (which original stated maturity shall have been |
fixed, for the avoidance of doubt, prior to any previous
postponements of such installment)) or any additional amounts with respect thereto;
| · | change any premium payable upon the redemption of such notes or otherwise; |
| · | change the obligation of BBVA to pay additional amounts; |
| · | reduce the amount of the principal of an original issue discount note (if any) that would be due and payable upon a declaration of
acceleration of the maturity of the note or the amount thereof provable in bankruptcy; |
| · | change the redemption provisions; |
| · | with respect to the senior notes and subordinated notes, adversely affect the right of repayment at the option of the holder; |
| · | change the place of payment or currency in which the payment of principal, any premium, interest or any additional amounts is payable; |
| · | impair the right to take legal action to enforce the payment when due of principal, any premium, interest or any additional amounts
with respect to the notes; |
| · | reduce the percentage in principal amount of notes outstanding the consent of whose holders is required to modify or amend the indenture
or the terms and conditions of the notes or to waive a default under or compliance with any note or reduce the requirement for a quorum
or voting; |
| · | modify the provisions governing modification of such indenture with the consent of holders or give waivers of past defaults, and the
consequences of such defaults, except to increase the percentage of outstanding notes of such series the consent of whose holders is required
to modify and amend such indenture or to give any such waiver and except to provide that additional provisions of such indenture cannot
be modified or waived without the consent of each holder of notes affected thereby; or |
| · | change in any manner adverse to the interests of the holders of outstanding notes of any series the terms and conditions of the obligations
of BBVA in respect of the due and punctual payment of principal, premium or interest, if any, thereon or, with respect to the senior notes
and subordinated notes, any sinking fund payments, if any, provided in respect thereof; |
except in each case with respect to any modification or amendment of
the applicable 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 or, with respect to the senior non-preferred notes, a substitution or modification of such
notes pursuant to the provisions summarized in “—Substitution and Modification of Senior Non-Preferred Notes”
below (in which case neither the consent nor the affirmative vote of any holder of any note affected will be required).
Subject to payment of the trustee’s fees
and expenses and other amounts due to the trustee, the holders of not less than a majority in principal amount of the outstanding notes
of any series on behalf of the holders of all the notes of such series may, by Act, waive any past default under the indenture and its
consequences with respect to that series, except a default in the payment of the principal of or any premium or interest on or any additional
amounts with respect to, any notes of such series or in respect of a covenant or provision of the relevant indenture that cannot be modified
or amended without the consent of the holder of each outstanding note of such series.
Modification of the Indenture without Consent of Holders
BBVA and the applicable trustee may modify and
amend the applicable indenture without the consent of the holders to:
| · | evidence the succession of another entity to BBVA, and the assumption by any such successor of the covenants of BBVA in such indenture
and in the notes; |
| · | add to the covenants of BBVA for the benefit of the holders of all or any series of notes or to surrender any right or power conferred
upon BBVA, provided that, in the case of a series of senior non-preferred notes, the notes do not cease to be fully eligible for inclusion
in the Eligible Liabilities Amount as a result thereof and subject further to compliance with the Applicable Banking Regulations; |
| · | establish the form or terms of notes of any series; |
| · | evidence and provide for the acceptance and appointment of a successor trustee and to add to or change any of the provisions of such
indenture to provide for or facilitate the administration of trusts under the indenture; |
| · | cure any ambiguity or correct or supplement any defect or inconsistency in such indenture, or make any other provisions with respect
to matters or questions arising under such indenture which do not adversely affect the interests of the holders of notes of any series
in any material respect; |
| · | add to, delete from or revise the conditions, limitations and restrictions on the terms or purposes of issue, authentication and delivery
of notes or, with respect to a series of senior notes or subordinated notes, the authorized amount of the notes; |
| · | supplement any of the provisions of such indenture to such extent as shall be necessary, in the case of a series of senior notes or
subordinated notes, to permit or facilitate the defeasance and discharge of any series of notes and, in the case of a series of senior
non-preferred notes, to permit the discharge of any series of notes, in each case provided such action does not adversely affect the interests
of any holders of notes of such series or any other series in any material respect; |
| · | add any additional events of default for the benefit of the holders of all or any series of notes; |
| · | secure any notes, provided that, in the case of a series of senior non-preferred notes, the notes do not cease to be fully eligible
for inclusion in the Eligible Liabilities Amount as a result thereof and subject further to compliance with the Applicable Banking Regulations; |
| · | delete, amend or supplement any provision of such indenture or any indenture supplement thereto, provided such actions will not materially
adversely affect the interests of the holders of notes then outstanding immediately prior thereto; |
| · | with respect to the senior non-preferred notes, delete, amend or supplement any provision of such indenture or any indenture supplement
thereto as a result of, and to the extent necessary to effect, the substitution or modification of any series of notes pursuant to the
provisions summarized in “—Substitution and Modification of Senior Non-Preferred Notes” below; or |
| · | delete, amend or supplement any provision of such indenture or any indenture supplement thereto as a result of, and to the extent
required by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority. |
Substitution and Modification of Senior Non-Preferred
Notes
Notwithstanding anything set forth in this prospectus
or the senior non-preferred indenture to the contrary, if an Eligible Liabilities Event occurs and is continuing in respect of a series
of senior non-preferred notes, BBVA may substitute all (but not only some) of such senior non-preferred notes or modify the terms of all
(but not only some) of such senior non-preferred notes, without any requirement for the consent or approval of the holders of such senior
non-preferred notes, so that the notes are substituted for, or their terms are modified to, become, or remain, Qualifying Securities (as
defined below), subject to: (i) having given not less than 30 nor more than 90 days’ notice to the holders thereof 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 such senior
non-preferred notes resulting from such modification or, if such senior non-preferred notes are substituted, any difference between the
terms of such senior non-preferred notes and those of the Qualifying Securities for which they are substituted, not being materially prejudicial
to the interests of holders of such senior non-preferred notes, and BBVA having delivered an officer’s certificate to the trustee
to that effect not less than five business days prior to (i) in the case of a substitution of the senior non-preferred notes, the
issue date of the relevant Qualifying Securities for which such senior non-preferred notes are substituted; or (ii) in the case of
a modification of the terms and conditions of the senior non-preferred notes, the date such modification becomes effective.
For the purposes of the immediately preceding
paragraph, in the case of a modification of the terms and conditions of a series of senior non-preferred notes, any variation in the ranking
of such senior non-preferred notes resulting from any such modification or, if such senior non-preferred notes are substituted, any difference
between their ranking and that of the Qualifying Securities for which such senior non-preferred notes are substituted, shall be deemed
not to be prejudicial to the interests of holders where the ranking of the senior non-preferred notes or, if the senior non-preferred
notes are substituted, of the Qualifying Securities for which such senior non-preferred notes are substituted, following such substitution
or modification, as the case may be, is at least the same ranking as was applicable to such senior non-preferred notes on the issue date
of such senior non-preferred notes.
For the purposes of the second immediately preceding
paragraph, the notice to be delivered by BBVA shall specify the relevant details of the manner in which the relevant substitution or modification
shall take effect and where the holders of the series of senior non-preferred notes to be substituted or modified can inspect or obtain
copies of, if such senior non-preferred notes are modified, the new terms and conditions of the senior non-preferred notes of such series
or, if such senior non-preferred notes are substituted, the Qualifying Securities for which they are substituted. Such substitution or
modification will be effected without any cost or charge to such holders.
If the senior non-preferred notes of a series
are substituted in accordance with the provisions described above, such senior non-preferred notes shall cease to bear interest from (and
including) the date of substitution thereof.
Each holder and beneficial owner of the senior
non-preferred notes of any series shall, by virtue of its acquisition of the senior non-preferred notes of any series or any beneficial
interest therein, be deemed to accept the substitution or modification of the terms of the senior non-preferred notes of such series as
set forth above and to grant to BBVA and the trustee full power and authority to take
any action and/or to execute and deliver any document in its name and/or
on its behalf which is necessary or convenient to complete the substitution or modification of the terms of the senior non-preferred notes
of such series, as applicable. By its acquisition of a senior non-preferred note, each holder (which, for these purposes, includes each
beneficial owner), to the extent permitted by the Trust Indenture Act, will be deemed to have waived any and all claims, in law and/or
in equity, against the trustee for, agreed not to initiate a suit against the trustee in respect of, and agreed that the trustee shall
not be liable for, any action that the trustee takes, or abstains from taking, in either case in connection with the substitution or modification
of the terms of the senior non-preferred notes upon the occurrence of an Eligible Liabilities Event.
“Qualifying Securities” means, with
respect to a series of senior non-preferred notes which is subject to any substitution or modification pursuant to the provisions described
above, at any time, any securities issued by BBVA that:
(i) contain terms which comply with the then current
requirements for inclusion in the Eligible Liabilities Amount as provided under Applicable Banking Regulations, as applicable;
(ii) have the same denomination and aggregate
outstanding principal amount, the same currency in which payments shall be payable, the same rate of interest and terms for the determination
of any applicable rate of interest, the same date of maturity and the same dates for payment of interest as such series of senior non-preferred
notes immediately prior to any substitution or modification pursuant to the provisions described under this “—Substitution
and Modification of Senior Non-Preferred Notes”;
(iii) have the same or higher ranking as is applicable
to such series of senior non-preferred notes on the issue date of such series of senior non-preferred notes as described under “—Senior
Non-Preferred Notes—Ranking of Senior Non-Preferred Notes” below;
(iv) preserve any existing rights under the senior
non-preferred notes to any accrued interest which has not been paid in respect of the period from (and including) the interest payment
date last preceding the date of any substitution or modification pursuant to the provisions described under this “—Substitution
and Modification of Senior Non-Preferred Notes”; and
(v) are listed or admitted to trading on any stock
exchange as selected by BBVA, if such series of senior non-preferred notes was listed or admitted to trading on a stock exchange immediately
prior to the relevant substitution or modification pursuant to the provisions described under this “—Substitution and Modification
of Senior Non-Preferred Notes”.
Discharge, Defeasance and Covenant Defeasance of Senior Notes and
Subordinated Notes
BBVA may discharge the relevant indenture with
respect to any series of senior notes or subordinated notes that have not already been delivered to the applicable trustee for cancellation
and that have become due and payable, will become due and payable at their stated maturity within one year or, if redeemable at the option
of BBVA, are to be called for redemption within one year, by (i) depositing or causing to be deposited with the applicable trustee, in
trust, funds in an amount sufficient to pay and discharge the entire indebtedness on such notes, including principal, interest, premium
and any additional amounts to the date of such deposit (if such notes have become due and payable) or to the maturity date of such notes,
as the case may be; (ii) paying or causing to be paid all other sums payable by BBVA with respect to such notes; and (iii) delivering
to the relevant trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent set forth
in the relevant indenture relating to the satisfaction and discharge of such indenture as to such series of notes have been complied with.
BBVA may also elect to have its obligations under
the relevant indenture discharged with respect to the outstanding senior notes or subordinated notes of any series (“legal defeasance”).
Legal defeasance means that BBVA will be deemed to have paid and discharged the entire indebtedness represented by the outstanding senior
notes or subordinated notes of such series under the relevant indenture, except for:
| · | the rights of holders of such notes to receive principal, any premium, interest and any additional amounts when due from the trust
described below; |
| · | the obligations of BBVA to issue temporary notes, register the transfer of notes, replace temporary or mutilated, destroyed, lost
or stolen notes, pay additional amounts, maintain an office or agency for payment and hold money for payments in trust; |
| · | the rights, powers, trusts, duties and immunities of the applicable trustee; and |
| · | the defeasance provisions of the applicable indenture. |
In addition, BBVA may elect to have its obligations
released with respect to certain covenants in the senior indenture and the subordinated indenture (“covenant defeasance”).
Any omission to comply with any obligations so released will not constitute a default or an event of default with respect to the notes
of any series.
In order to exercise either legal defeasance or
covenant defeasance with respect to outstanding senior notes or subordinated notes of or within any series:
| · | BBVA must irrevocably have deposited or caused to be deposited with the applicable trustee, in trust, money, in U.S. dollars or in
the foreign currency in which such notes are payable at stated maturity, or U.S. government obligations or a combination of money and
U.S. government obligations applicable to such notes which through the scheduled payment of principal and interest in accordance with
their terms will provide money in an amount sufficient to pay and discharge when due all of the principal, interest and any premium of
such notes and any mandatory sinking fund or analogous payments thereon; |
| · | the legal defeasance or covenant defeasance must not result in a breach or violation of, or constitute a default under, the applicable
indenture or any other material agreement or instrument to which BBVA is a party or by which it is bound; |
| · | no event of default or event which, with notice or lapse of time, or both, would become an event of default with respect to the outstanding
notes of that series may have occurred and be continuing on the date of the establishment of such a trust, and in the case of legal defeasance,
at any time during the period ending on the 91st day after such date; |
| · | BBVA must have delivered to the applicable trustee an opinion of counsel of recognized standing to the effect that the beneficial
owners of such notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the legal defeasance
or covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as
would have been the case if the legal defeasance or covenant defeasance had not occurred. In the case of legal defeasance only, the opinion
of counsel must refer to and be based upon a letter ruling of the Internal Revenue Service received by BBVA, a Revenue Ruling published
by the Internal Revenue Service or a change in applicable U.S. federal income tax law occurring after the date of the relevant prospectus
supplement; |
| · | BBVA must have delivered to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions
precedent to such defeasance have been complied with; |
| · | the legal defeasance or covenant defeasance must not cause the applicable trustee to have a conflicting interest within the meaning
of the Trust Indenture Act (assuming all relevant notes are in default within the meaning of such Act); |
| · | the legal defeasance or covenant defeasance must not result in the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from
registration thereunder; and |
| · | in the case of the subordinated notes, BBVA shall have delivered to the applicable trustee an opinion of counsel substantially to
the effect that (i) the trust funds deposited to effect the legal defeasance or covenant defeasance will not be subject to any rights
of holders of Senior Indebtedness (as defined below under “—Subordinated Notes—Subordination of Subordinated Notes”),
including those arising under the applicable subordination provisions of the subordinated indenture, and (ii) after the second anniversary
following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors’ rights generally, except that if a court were to rule under any such law in any case or proceeding that
the trust funds remained property of BBVA, no opinion is given as to the effect of such laws on the trust funds except in certain limited
circumstances set forth in the subordinated indenture. |
Unless otherwise provided in the applicable prospectus
supplement, if, after BBVA has deposited funds or U.S. government obligations to effect legal defeasance or covenant defeasance with respect
to senior notes or subordinated notes of any series,
| · | the holder of a note of such series is entitled to elect and does elect to receive payment in a currency other than that in which
such deposit has been made in respect of such note; or |
| · | a “conversion event” (as defined below for purposes of this section) occurs in respect of the foreign currency in which
such deposit has been made; then, |
the indebtedness represented by such note shall be deemed to have been
and will be fully discharged and satisfied through the payment of the principal, any premium, interest and any additional amounts on such
note as it becomes due out of the proceeds yielded by converting the amount or other property so deposited into the currency in which
such note becomes payable as a result of such election or such conversion event based on the applicable market exchange rate for such
currency in effect on the second business day prior to such payment date, except, with respect to a conversion event, for such foreign
currency in effect at the time of the conversion event.
In this section “Description of the Notes
of BBVA”, a “conversion event” means the cessation of use of (i) a foreign currency both by the government
of the country which issued such currency and for the settlement of transactions by a central bank or other public institutions of or
within the international banking community, or (ii) the euro both within the European monetary system and for the settlement of transactions
by public institutions of or within the European Union.
In the event BBVA effects covenant defeasance
with respect to any senior notes or subordinated notes and such notes are declared due and payable because of the occurrence of any event
of default, the amount in money and U.S. government obligations deposited in trust will be sufficient to pay amounts due on such notes
at the time of their stated maturity. They may not, however, be sufficient to pay amounts due on such notes at the time of the acceleration
resulting from such event of default. In this case, BBVA will remain liable to make payment of such amounts due at the time of acceleration.
The applicable prospectus supplement may further
describe the provisions permitting legal defeasance or covenant defeasance, including any modifications to the provisions described above,
with respect to the senior notes or subordinated notes of a particular series.
In addition, upon the exercise of the Spanish
Bail-in Power with respect to a series of senior notes or subordinated notes which results in the redemption, cancellation, or the conversion
into other securities, of all the Amounts Due on the notes of such series or such notes otherwise ceasing to be outstanding, the applicable
indenture (and any relevant supplemental indenture) shall be deemed to be satisfied and discharged as to such series and such notes shall
thereafter be deemed to be not “outstanding”.
Satisfaction and Discharge of Senior Non-Preferred Notes
Subject to compliance with the Applicable Banking
Regulations and, if required, the prior consent of the Regulator, BBVA may discharge the senior non-preferred indenture with respect to
any senior non-preferred notes of a series that have not already been delivered to the trustee for cancellation and that have become due
and payable, by (i) depositing or causing to be deposited with the trustee, in trust, funds in an amount sufficient to pay and discharge
the entire indebtedness on such senior non-preferred notes, including principal, interest, premium and any additional amounts to the date
of such deposit; (ii) paying or causing to be paid all other sums payable by BBVA with respect to such notes; and (iii) delivering to
the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent set forth in the senior
non-preferred indenture relating to the satisfaction and discharge of such indenture as to such series of notes have been complied with.
In addition, upon the exercise of the Spanish
Bail-in Power with respect to a series of senior non-preferred notes resulting in the redemption, cancellation, or the conversion into
other securities, of all the Amounts Due on such senior non-preferred notes or such senior non-preferred notes otherwise ceasing to be
outstanding, the senior non-preferred indenture shall be deemed to be satisfied and discharged as to such series and such senior non-preferred
notes shall thereafter be deemed to be not “outstanding”.
Notices
All notices to holders of registered notes 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 applicable trustee or security registrar. Notwithstanding the foregoing, any notice given to the holder of a global security representing
senior non-preferred notes shall be sufficiently given if such notice is given in accordance with the applicable procedures of the relevant
depository.
The Trustee
The Bank of New York Mellon, the trustee currently
appointed pursuant to the indentures, has its corporate trust office located at 240 Greenwich Street, New York, NY 10286 and the indentures
will be administered by The Bank of New York Mellon acting (except with respect to its role as security registrar) through its London
Branch at One Canada Square, London E14 5AL, United Kingdom or such other location in New York or England as notified by the trustee to
BBVA from time to time. The trustee and any trustee appointed pursuant to the senior indenture, the senior non-preferred indenture or
the subordinated indenture shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act.
By its acquisition of any notes offered hereunder,
each holder thereof, 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 shall 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 notes of such series. Additionally, by its acquisition of any notes of any
series offered hereunder, each holder thereof acknowledges and agrees that, upon the exercise of the Spanish Bail-in Power by the Relevant
Spanish Resolution Authority with respect to such series of notes, (a) the trustee shall not be required to take any further directions
from holders of the notes of such series with respect to any portion of the notes of such series that is written down, converted to equity
and/or cancelled under the provision of the applicable indenture which authorizes holders of a majority in aggregate outstanding principal
amount of the notes of a series to direct certain actions relating to the notes of such series; and (b) the applicable indenture
shall 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 notes of a series, so long as any
notes of such series remain outstanding, there shall at all times be
a trustee for the notes of such series in accordance with the relevant indenture, and the resignation and/or removal of the applicable
trustee and the appointment of a successor trustee shall continue to be governed by the relevant indenture, including to the extent no
additional supplemental indenture or amendment is agreed upon in the event the notes of such series remain outstanding following the completion
of the exercise of the Spanish Bail-in Power.
Subject to the provisions of the Trust Indenture
Act, the applicable trustee is under no obligation to exercise any of the powers vested in it by the applicable indenture at the request
of any holder of notes, unless such holders have offered to the trustee reasonable security or indemnity satisfactory to the trustee against
the costs, expenses and liabilities which might be incurred thereby.
BBVA and some of its subsidiaries maintain deposits
with and conduct other banking transactions with The Bank of New York Mellon in the ordinary course of business.
Successor Trustees
Any trustee in respect of the notes of a series
may resign or be removed by holders of a majority in principal amount of notes of such series at any time, effective upon the acceptance
by a successor trustee of the respective appointment. The indentures provide that any successor trustee will have a combined capital and
surplus of not less than $50,000,000 and shall be a corporation, association, company or business trust organized and doing business under
the laws of the United States or any of its states or territories or the District of Columbia and in good standing. No person shall accept
its appointment as a successor trustee with respect to the notes of a series unless at the time of such acceptance such successor trustee
shall be qualified and eligible under the relevant indenture.
Repayment of Funds
In the case of the senior notes and the subordinated
notes, all monies paid by BBVA to the applicable trustee or a paying agent for payment of principal, premium or interest and any additional
amounts on any notes which remain unclaimed at the end of two years after that payment has been made will be repaid to BBVA, and in the
case of the senior non-preferred notes, all such monies which remain unclaimed at the end of two years after that payment has become due
and payable will be paid to BBVA, in each case on BBVA’s request, and all liability of the applicable trustee or the paying agent
related to it will cease, and, if permitted by law, the holder of the applicable note will look only to BBVA for any payment which such
holder may be entitled to collect.
Prescription
All claims against BBVA for payment of principal,
premium, interest or additional amounts on or in respect of the notes will become void unless made within the earlier of (i) six
years or (ii) any applicable shorter period provided for under New York law, starting from the later of the date on which that payment
first became due and the date on which the full amount was received by the applicable trustee or the paying agent.
Consolidation, Merger and Conveyance of Assets; Assumption
Except as provided by the events of default with
respect to the senior notes, nothing contained in the indentures or in any of the notes shall prevent any consolidation, amalgamation
or merger (and, in the case of the senior non-preferred notes, any reconstruction) of BBVA with or into any other person or persons (whether
or not affiliated with BBVA), or successive consolidations, amalgamations or mergers (and, in the case of the senior non-preferred notes,
any successive reconstructions) in which BBVA or the successor or successors of BBVA shall be a party or parties, or shall prevent any
sale, conveyance or lease (and, in the case of the senior non-preferred notes, any transfer) of the property of BBVA as an entirety or
substantially as an entirety, to any other person (whether or not affiliated with BBVA); provided that the person formed by or
into which BBVA is consolidated, amalgamated or merged (or in the case of senior non-preferred notes, any person formed by any reconstruction,
consolidation, amalgamation or merger, or any transferee or lessee of BBVA’s assets) shall assume the due and punctual payment of
the principal of (and premium, if any), interest and additional amounts, if any, on the notes in accordance with the provisions thereof
and the indentures, and the performance of every covenant of the indentures on the part of BBVA to be performed or observed.
Any holding company or wholly-owned subsidiary
of BBVA may assume BBVA’s obligations under the notes of any series without the consent of any holder, provided that certain conditions
are satisfied, including that the successor entity has ratings for long-term senior debt (in the case of senior notes and senior non-preferred
notes) or long-term subordinated debt (in the case of subordinated notes) assigned by Standard & Poor’s Ratings Services
or Moody’s Investors Service, Inc. which are the same as or higher than the credit rating for long-term senior or subordinated debt,
as the case may be, of BBVA (or, if applicable, the previous successor entity) immediately prior to such assumption.
Upon any such assumption, all of BBVA’s
direct obligations under the notes of the relevant series and, with respect to such notes, all of BBVA’s direct obligations under
the relevant indenture shall immediately be discharged, and 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 such notes with the same effect as if such successor entity had been named as BBVA
in the indenture.
In the event of any merger, consolidation, sale,
conveyance or lease (or, in the case of the senior non-preferred notes, in the event of any reconstruction, consolidation, amalgamation,
merger, sale, transfer, conveyance or lease), or in the case of any assumption of obligations under the notes of any series permitted
by the relevant indenture by a successor, if the acquiring, resulting or successor person is not incorporated or tax resident in Spain,
additional amounts under the notes will be payable for taxes imposed by the jurisdiction of incorporation or tax residence of such person
(subject to exceptions equivalent to those that apply to the obligation to pay additional amounts for taxes imposed by the laws of Spain)
rather than taxes imposed by Spain. In addition, if the acquiring, resulting or successor person is not incorporated or tax resident in
Spain, it will also be entitled to redeem the notes in the circumstances described under “—Redemption—Early Redemption
of Senior Notes, Senior Non-Preferred Notes and Subordinated Notes for Taxation Reasons” for any change or amendment to, or
change in the application or official interpretation of, the laws or regulations of such acquiring, resulting or successor person’s
jurisdiction of incorporation or tax residence, which change or amendment must occur subsequent to the date of the merger, consolidation,
sale, conveyance, lease (or, in the case of the senior non-preferred notes, the date of any reconstruction, consolidation, amalgamation,
merger, sale, transfer, conveyance or lease) or assumption.
An assumption of the obligations of BBVA under
any series of notes may be considered for U.S. federal income tax purposes to be a deemed exchange by the beneficial owners of the notes
of such series for new notes. In that case, U.S. taxpayers could be required to recognize a taxable gain or loss for U.S. federal income
tax purposes and may be subject to certain other adverse U.S. tax consequences. U.S. beneficial owners of notes should consult their tax
advisors regarding the U.S. federal, state and local income tax consequences of an assumption.
Governing Law
The notes and the indentures will 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 indentures and the authorization, issuance
and execution of the notes will be governed by and construed in accordance with Spanish law. In addition, certain provisions of the notes
and the indentures related to the status of the notes and, where applicable, the subordination of the notes, and in the case of the senior
non-preferred notes, the waiver of the right of set-off and the agreement with respect to the exercise of the Spanish Bail-in Power, shall
be governed by and construed in accordance with Spanish law.
Submission to Jurisdiction
Except as provided in the paragraph immediately
below, BBVA will irrevocably submit to the non-exclusive jurisdiction of any U.S. federal or state court in the Borough of Manhattan,
The City of New York, New York in any suit or proceeding arising out of or relating to the indenture or the notes and will irrevocably
waive, to the extent it may effectively do so, any objection which it may have to the laying of the venue of any such suit or proceeding.
Notwithstanding the above, the senior non-preferred
indenture and the senior non-preferred notes provide that the Spanish courts shall have exclusive jurisdiction in respect of any suit
or proceeding arising out of or relating to the senior non-preferred indenture or the senior non-preferred notes arising out of, relating
to or in connection with the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority and accordingly each of
BBVA, the trustee and each holder of any senior non-preferred notes will submit, to the extent it may effectively do so, to the exclusive
jurisdiction of the Spanish courts in relation to any such suit or proceeding. Each of BBVA, the trustee and each holder of any senior
non-preferred notes 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 such suit or proceeding.
Senior Notes
The below description is based on the relevant
provisions of the senior indenture, which was entered into on July 28, 2016. Since the execution of the senior indenture, the provisions
relating to the relative status and ranking of credits in the Insolvency Law have been subject to change, and such provisions may further
change in the future. Accordingly, investors are directed to read the description of the status and ranking of a particular series of
notes in the relevant prospectus supplement and supplemental indenture.
The senior indenture provides that the senior
notes will constitute direct, unconditional, unsubordinated and unsecured indebtedness of BBVA and will rank pari passu among themselves
and with all other present and future unsubordinated and unsecured indebtedness of BBVA, but in the event of insolvency only to the extent
permitted by Spanish Law 22/2003 of July 9 (Ley Concursal), as amended, replaced or supplemented from time to time (the “Insolvency
Law”), regulating insolvency proceedings in Spain, or other laws relating to or affecting the enforcement of creditors’ rights
in Spain.
Events of Default
Except as provided in the second paragraph immediately
below, “event of default”, wherever used with respect to the senior notes of any series, means any one of the following events,
unless, with respect to a particular series of senior notes, such event is specifically deleted or modified in or pursuant to supplemental
indentures or Board resolutions creating such series of senior notes or in the officer’s certificate for such series:
| · | default by BBVA in the payment of the principal of any senior note of such series when due and payable at its maturity and such default
is not remedied within 14 days; |
| · | default by BBVA in the payment of any interest on or any additional amounts payable in respect of any senior note of such series when
such interest becomes or such additional amounts become due and payable, and continuance of such default for a period of 21 days; |
| · | default by BBVA in the payment of any premium or deposit of any sinking fund payment, when and as due by the terms of a senior note
of such series, and such default is not remedied in 30 days; |
| · | default in the performance or breach of certain covenants or warranties of BBVA in the senior indenture or the senior notes, and continuance
of such breach or default for a period of 30 days after there has been given, by registered or certified mail, to BBVA by the trustee
or to BBVA and the trustee by any holder or the holders of any outstanding senior notes of such series a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” under the senior indenture; |
| · | an order is made by any competent court commencing insolvency proceedings (procedimientos concursales) against BBVA or an order
of any competent court or administrative agency is made or a resolution is passed by BBVA for the dissolution or winding up of BBVA, except
in any such case for the purpose of a reconstruction or a merger or amalgamation which has been approved by an Act of the holders of the
senior notes of such series, or where the entity resulting from any such reconstruction or merger or amalgamation is a financial institution
(entidad de crédito according to Article 1 of Law 10/2014) and will have a rating for long-term senior debt assigned by
Standard & Poor’s Ratings Services, Moody’s Investors Service or Fitch Ratings Ltd. equivalent to or higher than
the rating for long-term senior debt of BBVA immediately prior to such reconstruction or merger or amalgamation; |
| · | BBVA is adjudicated or found bankrupt or insolvent by any competent court, or any order of any competent court or administrative agency
is made for, or any resolution is passed by BBVA to apply for, judicial composition proceedings with its creditors for the appointment
of a receiver or trustee or other similar official in insolvency proceedings (procedimientos concursales) in relation to BBVA or
of a substantial part of its assets (unless in the case of an order for a temporary appointment, such appointment is discharged within
30 days); |
| · | BBVA (except for the purpose of an amalgamation, merger or reconstruction approved by an Act of the holders of the senior notes of
such series, or where the entity resulting from any such amalgamation, merger or reconstruction will have a rating for long-term senior
debt assigned by Standard & Poor’s Ratings Services, Moody’s Investors Service or Fitch Ratings Ltd. equivalent to
or higher than the rating for long-term senior debt of BBVA immediately prior to such amalgamation, merger or reconstruction) ceases or
threatens to cease to directly or indirectly carry on the whole or substantially the whole of its business; or |
| · | a holder of a security interest takes possession of the whole or any substantial part of the assets or business of BBVA or an order
of any competent court or administrative agency is made for the appointment of an administrative or other receiver, manager, administrator
or similar official in relation to BBVA or in relation to the whole or any substantial part of the business or assets of BBVA (in each
case, other than in connection with a Resolution or an Early Intervention with respect to BBVA), or a distress or execution is levied
or enforced upon or sued out against any substantial part of the business or assets of BBVA and is not discharged within 30 days. |
For the purpose of the above definition, a report
by the external auditors from time to time of BBVA as to whether any part of the business or assets of BBVA is “substantial”
shall, in the absence of manifest error, be conclusive.
Notwithstanding the above, any Resolution or Early
Intervention with respect to BBVA will not, in and of itself and without regard to any other fact or circumstance, constitute a default
or an event of default under the fifth and sixth bullet points set forth above or any provision of the senior indenture with respect to
the senior notes of any series. In addition, neither (i) a reduction or cancellation, in part or in full, of the Amounts Due on the
senior notes of any series, 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 (ii) the
exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the senior notes of any series, will
constitute an event of default or default under the senior indenture or the senior notes of any series. See “—Agreement
with Respect to the Exercise of the Spanish Bail-in Power”. In addition, no repayment or payment of Amounts Due on the senior
notes of any series 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.
If an event of default with respect to the senior
notes of any series at the time outstanding occurs and is continuing, then the applicable trustee, acting pursuant to an Act of the holders
of the senior notes of the relevant series, with respect to all outstanding senior notes of such series, or the holder of any outstanding
senior note of the relevant series, with respect to such senior note held by such holder, may declare the principal, or such lesser amount
as may be provided for in the senior notes of such series, of such senior notes or senior note, as the case may be, to be due and payable
immediately in accordance with the terms of the senior indenture.
At any time after such a declaration of acceleration
with respect to the senior notes or a senior note, as the case may be, of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the applicable trustee as provided in the senior indenture, the holders of not less than
a majority in principal amount of the outstanding senior notes of such series may, by Act rescind and annul such declaration and its consequences
if:
| (i) | BBVA has paid or deposited with the applicable trustee a sum of money sufficient to pay: |
| (A) | all overdue installments of any interest on and additional amounts with respect to all senior notes of such series; |
| (B) | the principal of and any premium on any senior notes of such series which have become due otherwise than by such declaration of acceleration
and interest thereon and any additional amounts with respect thereto at the rate or rates borne by or provided for in such senior notes; |
| (C) | to the extent that payment of such interest or additional amounts is lawful, interest upon overdue installments of any interest and
additional amounts at the rate or rates borne by or provided for in such senior notes; and |
| (D) | all sums paid or advanced by the applicable trustee and the reasonable compensation, expenses, disbursements and advances of the applicable
trustee, its agents and counsel and all other amounts due to the applicable trustee under the senior indenture; and |
| (ii) | all events of default with respect to senior notes of such series, other than the non-payment of the principal of and any premium
and interest on, and any additional amounts with respect to senior notes of such series which have become due solely by such declaration
of acceleration, shall have been cured or waived as provided in the senior indenture. |
No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Subject to payment of the applicable trustee’s
fees and expenses, the holders of not less than a majority in principal amount of the outstanding senior notes of any series on behalf
of the holders of all the senior notes of such series may, by Act waive any past event of default under the senior indenture with respect
to such series and its consequences, except a default in the payment of the principal of or any premium, or interest on, or any additional
amounts with respect to, any senior note of such series or in respect of a covenant or provision of the senior indenture that cannot be
modified or amended without the consent of each holder of outstanding senior notes of such series.
No holder of any of the senior notes of any series
has the right to institute any proceeding, judicial or otherwise, with respect to the senior indenture, or for the appointment of a receiver
or trustee, or any remedy thereunder, unless (i) such holder has previously given written notice to the applicable trustee of a continuing
event of default with respect to the senior notes of such series; (ii) the holders of not less than 25% in principal amount of the
outstanding senior notes of such series have made written request to the applicable trustee to institute proceedings in respect of such
event of default as trustee under the senior indenture with respect to such series of senior notes and such holder or holders have offered
to the applicable trustee reasonable indemnity satisfactory to the trustee against the costs, expenses and liabilities to be incurred
in compliance with such request; (iii) the applicable trustee has failed to institute any such proceeding within 60 days after its
receipt of such notice, request and offer of indemnity; and (iv) the applicable
trustee has not received any direction inconsistent with such written
request during such 60-day period by the holders of a majority in principal amount of the outstanding senior notes of such series.
Except as set forth in the immediately following
paragraph, notwithstanding any other provision in the senior indenture and the senior notes, the right of each holder is absolute and
unconditional, to receive payment of the principal of, any premium and, subject to certain provisions in the senior indenture with respect
to payment of defaulted interest, interest on, and any additional amounts with respect to, his or her senior note or notes on or after
the respective maturity or maturities therefor specified in such senior notes (or, in the case of redemption, on or after the redemption
date or, in the case of repayment at the option of such holder if provided in or pursuant to the senior indenture, on or after the date
such repayment is due) and to institute suit for the enforcement of any such payment, which cannot be impaired or affected without the
consent of such holder, except that holders of not less than 75% in principal amount of outstanding senior notes of a series may consent
by Act on behalf of the holders of all outstanding senior notes of such series, to the postponement of the maturity of any installment
of interest for a period not exceeding three years from the original maturity of such installment (which original maturity shall have
been fixed, for the avoidance of doubt, prior to any previous postponements of such installment).
The senior notes of any series may be subject
to the exercise of the Spanish Bail-in Power, and no holder of any senior note shall have any claim against BBVA in connection with or
arising out of any such exercise.
Within 90 days after the occurrence of any default
under the senior indenture known to the applicable trustee with respect to the senior notes of any series, such trustee shall transmit
by mail to all holders of senior notes of such series entitled to receive reports, notice of such default, unless such default shall have
been cured or waived. Except in the case of a default in the payment of the principal of (or premium, if any), or interest, if any, on,
or additional amounts with respect to, any senior note of such series, such trustee may withhold such notice if and so long as the board
of directors, the executive committee or a trust committee of directors and/or responsible officers of such trustee in good faith determine
that the withholding of such notice is in the best interest of the holders of senior notes of such series. For the purpose of this paragraph,
the term “default” means any event which is, or after notice or lapse of time or both would become, an event of default with
respect to senior notes of such series.
Senior Non-Preferred Notes
Ranking of Senior Non-Preferred Notes
The below description is based on the relevant
provisions of the senior non-preferred indenture, which was entered into on June 25, 2019. The provisions relating to the relative status
and ranking of credits in the Insolvency Law may be subject to change. Accordingly, investors are directed to read the description of
the status and ranking of a particular series of notes in the relevant prospectus supplement and supplemental indenture.
According to the senior non-preferred indenture,
the senior non-preferred notes shall be direct, unconditional, unsubordinated and unsecured obligations of BBVA and, upon the insolvency
(concurso de acreedores) of BBVA, in accordance with and to the extent permitted by the Insolvency Law and other applicable laws
relating to or affecting the enforcement of creditors’ rights in Spain (including, without limitation, Additional Provision 14.2
of Law 11/2015), the payment obligations of BBVA under the senior non-preferred notes with respect to claims for principal (which claims
will constitute ordinary claims (as defined below)) will rank:
(i) junior to any (a) privileged claims (créditos
privilegiados) (which shall include, among other claims, any claims in respect of deposits for the purposes of Additional Provision
14.1 of Law 11/2015), (b) claims against the insolvency estate (créditos contra la masa) and (c) Senior Preferred Obligations
(as defined below);
(ii) pari passu without any preference
or priority among themselves and with all other Senior Non-Preferred Obligations (as defined below); and
(iii) senior to all subordinated obligations of,
or claims against, BBVA (créditos subordinados), present and future,
such that any claim for principal in respect of the senior non-preferred
notes 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 above.
Claims of holders in respect of interest on the
senior non-preferred notes of any series accrued but unpaid as of the commencement of any insolvency proceeding in respect of BBVA shall
constitute subordinated claims (créditos subordinados) against BBVA ranking in accordance with the provisions of the Insolvency
Law (including, without limitation, junior to claims on account of principal in respect of contractually subordinated obligations of BBVA,
unless otherwise provided by the Insolvency Law or other applicable laws relating to or affecting the enforcement of creditors’
rights in Spain). No further interest on the senior non-preferred notes of any series shall accrue from the date of declaration of the
insolvency of BBVA.
Prior to any voluntary or necessary declaration
of insolvency of BBVA under the Insolvency Law or any voluntary or mandatory liquidation of BBVA or similar procedure, BBVA may be subject
to an Early Intervention or Resolution, or to any other exercise of the Spanish Bail-in Power, and the senior non-preferred notes of any
series may be subject to the exercise of the Spanish Bail-in Power, in which case no holder of any senior non-preferred note shall have
any claim against BBVA in connection with or arising out of any such exercise of the Spanish Bail-in Power.
Each holder and beneficial owner of senior non-preferred
notes by his or her acceptance thereof, to the extent permitted by Spanish law, authorizes and directs the applicable trustee on his or
her behalf to take such action as may be necessary or appropriate to effectuate the ranking of the senior non-preferred notes as provided
in the senior non-preferred indenture and as summarized herein and appoints the applicable trustee his or her attorney-in-fact for any
and all such purposes, including, if required, to grant any private or public documents on such holder’s or beneficial owner’s
behalf.
“ordinary claims” means the class
of claims with respect to unsecured, non-privileged and unsubordinated obligations (créditos ordinarios) of BBVA which,
upon the insolvency (concurso de acreedores) of BBVA and pursuant to the Insolvency Law and other applicable laws relating to or
affecting the enforcement of creditors’ rights in Spain, rank (i) junior to privileged claims (créditos privilegiados)
(which shall include, among other claims, any claims in respect of deposits for the purposes of Additional Provision 14.1 of Law 11/2015
and any secured claims), and claims against the insolvency estate (créditos contra la masa) and (ii) senior to subordinated
claims (créditos subordinados).
“Senior Non-Preferred Obligations”
(créditos ordinarios no preferentes) means the obligations of BBVA with respect to (i) the payment of principal under
the senior non-preferred notes and (ii) all other ordinary claims, present and future, which, upon the insolvency (concurso de
acreedores) of BBVA are expressed to rank within the ordinary claims but junior to Senior Preferred Obligations.
“Senior Preferred Obligations” means
the obligations of BBVA with respect to all ordinary claims, present and future, other than Senior Non-Preferred Obligations.
Waiver of Right of Set-off
Subject to applicable law, neither any holder
or beneficial owner of the senior non-preferred notes of any series nor the trustee acting on behalf of the holders may exercise, claim
or plead any right of set-off, compensation or retention in respect of any amount owed to it by BBVA in respect of, or arising under,
or in connection with, the senior non-preferred notes of such series or the senior non-preferred indenture and each of them 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 senior non-preferred note of any series or any interest therein by BBVA in respect of, or arising under,
the senior non-preferred notes of such series 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 BBVA (or, if any voluntary or involuntary liquidation of BBVA
shall have occurred, the liquidator or administrator of BBVA, 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 BBVA (or the liquidator or administrator of BBVA, as the case
may be) and, accordingly, any such discharge shall be deemed not to have taken place.
Events of Default
“Event of default”, wherever used
with respect to senior non-preferred notes of any series, means (whatever the reason for such event of default and whether it shall be
voluntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) that, except as set forth in the immediately succeeding paragraph, an order shall have been
made by any competent court commencing insolvency proceedings (procedimiento concursal) against BBVA or an order of any competent
court or administrative agency shall have been made or a resolution shall have been passed by BBVA for the dissolution or winding up of
BBVA (except (i) in the case of a reconstruction, consolidation, amalgamation or merger carried out in compliance with the requirements
set forth under “—Consolidation, Merger and Conveyance of Assets; Assumption” with respect to the senior non-preferred
notes (in this case, even without being approved by an Act of the holders of such series of notes) or (ii) in any such case for the purpose
of a reconstruction or a consolidation or an amalgamation or a merger which has been approved by an Act of the holders of the senior non-preferred
notes of such series).
Notwithstanding any other provision of the senior
non-preferred indenture, any Resolution or Early Intervention with respect to BBVA will not, in and of itself and without regard to any
other fact or circumstance, constitute a default or an event of default under the immediately preceding paragraph or any provision of
the senior non-preferred indenture with respect to the senior non-preferred notes of any series. In addition, neither (i) a reduction
or cancellation, in part or in full, of the Amounts Due on the senior non-preferred notes of any series, 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 (ii) the
exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution
Authority with respect to the senior non-preferred notes of any series, will constitute an event of default or default under the senior
non-preferred indenture or the senior non-preferred notes of any series or otherwise constitute non-performance of a contractual obligation,
or entitle the holders of the senior non-preferred notes of any such series to any remedies, which are hereby expressly waived. See “—Agreement
with Respect to the Exercise of the Spanish Bail-in Power”. In addition, no repayment or payment of Amounts Due on the senior
non-preferred notes of any series 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.
If an event of default with respect to the senior
non-preferred notes of any series at the time outstanding occurs and is continuing, then the principal, or such lesser amount as may be
provided for in the senior non-preferred notes of such series (if applicable), of such outstanding senior non-preferred notes or senior
non-preferred note, as the case may be, shall be deemed to have been declared, and shall become, immediately and automatically due and
payable.
For the avoidance of doubt, only an event of default
(rather than any breach or default under the senior non-preferred indenture or the senior non-preferred notes of any series) may give
rise to a declaration of acceleration pursuant to the provisions summarized above.
At any time after such a declaration of acceleration
with respect to the senior non-preferred notes or a senior non-preferred note, as the case may be, of any series has been made and before
a judgment or decree for payment of the money due has been obtained by the applicable trustee as provided in the senior non-preferred
indenture, the holders of not less than a majority in principal amount of the outstanding senior non-preferred notes of such series may,
by Act, rescind and annul such declaration and its consequences if:
| (i) | BBVA has paid or deposited with the applicable trustee a sum of money sufficient to pay: |
| (A) | all overdue installments of any interest on and additional amounts with respect to all senior non-preferred notes of such series; |
| (B) | the principal of and any premium on any senior non-preferred notes of such series which have become due otherwise than by such declaration
of acceleration and interest thereon and any additional amounts with respect thereto at the rate or rates borne by or provided for in
such senior non-preferred notes; |
| (C) | to the extent that payment of such interest or additional amounts is lawful, interest upon overdue installments of any interest and
additional amounts at the rate or rates borne by or provided for in such senior non-preferred notes; and |
| (D) | all sums paid or advanced by the applicable trustee and the reasonable compensation, expenses, disbursements and advances of the applicable
trustee, its agents and counsel and all other amounts due to the applicable trustee under the senior non-preferred indenture; and |
| (ii) | all events of default with respect to senior non-preferred notes of such series shall have been cured or waived as provided in the
senior non-preferred indenture. |
No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Subject to payment of the applicable trustee’s
fees and expenses and other amounts due to the trustee, the holders of not less than a majority in principal amount of the outstanding
senior non-preferred notes of any series on behalf of the holders of all the senior non-preferred notes of such series may, by Act, waive
any past default under the senior non-preferred indenture with respect to such series and its consequences, except a default in the payment
of the principal of or any premium, or interest on, or any additional amounts with respect to, any senior non-preferred note of such series
or in respect of a covenant or provision of the senior non-preferred indenture that cannot be modified or amended without the consent
of the holder of each outstanding senior non-preferred notes of such series.
No holder of any of the senior non-preferred notes
of any series has the right to institute any proceeding, judicial or otherwise, with respect to the senior non-preferred indenture, or
for the appointment of a receiver or trustee, or any other remedy thereunder, unless (i) such holder has previously given written
notice to the applicable trustee of a continuing event of default with respect to the senior non-preferred notes of such series; (ii) the
holders of not less than 25% in principal amount of the outstanding senior non-preferred notes of such series have made written request
to the applicable trustee to institute proceedings in respect of such event of default as trustee under the senior non-preferred indenture
with respect to such series of senior non-preferred notes and such holder or holders have offered to the applicable trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iii) the applicable trustee
has failed to institute any such proceeding within 60 days after its receipt of such notice, request and offer of indemnity; and (iv) the
applicable trustee has not received any direction inconsistent with such written request during such 60-day period by the holders of a
majority in principal amount of the outstanding senior non-preferred notes of such series.
Except as set forth in the immediately following
paragraph, notwithstanding any other provision in the senior non-preferred indenture and the senior non-preferred notes, the right of
each holder is absolute and unconditional, to receive payment of the principal of, any premium and, subject to certain provisions in the
senior non-preferred indenture with respect to payment of defaulted interest, interest on, and any additional amounts with respect to,
his or her senior non-preferred note or notes on or after the respective maturity or maturities therefor specified in such senior non-preferred
notes (or, in the case of redemption, on or after the redemption date) and to institute suit for the enforcement of any such payment,
which cannot be impaired or affected without the consent of such holder, except that holders of not less than 75% in principal amount
of outstanding senior non-preferred notes of a series may consent by Act, on behalf of the holders of all outstanding senior non-preferred
notes of such series, to the postponement of the maturity of any installment of interest for a period not exceeding three years from the
original maturity of such installment (which original maturity shall have been fixed, for the avoidance of doubt, prior to any previous
postponements of such installment).
The senior non-preferred notes of any series may
be subject to the exercise of the Spanish Bail-in Power, and no holder of any senior non-preferred note shall have any claim against BBVA
in connection with or arising out of any such exercise.
Within 90 days after the occurrence of any default
under the senior non-preferred indenture known to the applicable trustee with respect to the senior non-preferred notes of any series,
such trustee shall transmit by mail to all holders of senior non-preferred notes of such series entitled to receive reports, notice of
such default, unless such default shall have been cured or waived; provided, however, that the trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or responsible officers
of such trustee in good faith determine that the withholding of such notice is in the best interest of the holders of senior non-preferred
notes of such series. For the purpose of this paragraph, the term “default” means any event which is, or after notice or lapse
of time or both would become, an event of default with respect to senior non-preferred notes of such series.
Subordinated Notes
Subordination of Subordinated Notes
The below description is based on the relevant
provisions of the subordinated indenture, which was entered into on July 28, 2016. Since the execution of the subordinated indenture,
the provisions relating to the relative status and ranking of credits in the Insolvency Law have been subject to change, and such provisions
may further change in the future. Accordingly, investors are directed to read the description of the status and ranking of a particular
series of notes in the relevant prospectus supplement and supplemental indenture.
BBVA’s obligations under the subordinated
notes, whether on account of principal, interest or otherwise, will constitute direct, unconditional and subordinated obligations. Subject
to mandatory provisions of Spanish law, in the event of insolvency (concurso) of BBVA under the Insolvency Law, the obligations
of BBVA on account of principal of the subordinated notes will fall within the category of subordinated credits (créditos subordinados)
(as defined in the Insolvency Law) and will rank in right of payment after Senior Indebtedness (as defined below) and will at all times
rank pari passu among themselves and pari passu with all other present and future subordinated credits (créditos
subordinados) (as defined in the Insolvency Law) of BBVA, except for certain subordinated obligations expressed, by law or by their
terms, to rank senior or junior to the subordinated notes. Accordingly, no amount shall be payable to the holders of subordinated notes
until the claims with respect to all Senior Indebtedness (other than as aforesaid) admitted in the insolvency (concurso) of BBVA
under the Insolvency Law have been satisfied pursuant to the laws of Spain. Additional detail on the status of the securities may be included
in the applicable prospectus supplement.
Prior to any voluntary or necessary declaration
of insolvency (concurso) of BBVA under the Insolvency Law or any voluntary or mandatory liquidation of BBVA or similar procedure,
BBVA may be subject to an Early Intervention or Resolution and the subordinated notes of any series may be subject to the exercise of
the Spanish Bail-in Power, in which case no holder of any subordinated note shall have any claim against BBVA in connection with or arising
out of any such exercise of the Spanish Bail-in Power.
Except as provided above, nothing contained in
the subordinated indenture or in any of the subordinated notes will affect the obligation of BBVA to make, or prevent BBVA from making,
at any time, payments of principal of (or premium, if any) or interest, if any, on the subordinated notes or on account of the purchase
or other acquisition of subordinated notes or prevent the application by the applicable trustee of any moneys deposited with it under
the subordinated indenture to the payment of or on account of the principal of (or premium, if any) or interest, if any, on the subordinated
notes, unless such trustee shall have received written notice of any event prohibiting the making of such payment.
Any renewal or extension of the time of payment
of any Senior Indebtedness or the exercise by the holders of Senior Indebtedness of any of their rights under any instrument creating
or evidencing Senior Indebtedness, including, without limitation, the waiver of default thereunder, may be made or done all without notice
to or assent from the holders of the subordinated notes or the applicable trustee.
No compromise, alteration, amendment, modification,
extension, renewal or other change of, or waiver, consent or other action in respect of, any liability or obligation under or in respect
of, or of any of the terms, covenants or conditions of any indenture or other instrument under which any Senior Indebtedness is outstanding
or of such Senior Indebtedness, whether or not such release is in accordance with the provisions of any applicable document, will in any
way alter or affect any of the subordination provisions of the subordinated indenture or of the subordinated notes relating to the subordination
thereof.
Each holder of subordinated notes by his or her
acceptance thereof authorizes and directs the applicable trustee on his or her behalf to take such action as may be necessary or appropriate
to effectuate the subordination of the subordinated notes as provided in the subordinated indenture and as summarized herein and appoints
the applicable trustee his attorney-in-fact for any and all such purposes, including, if required, to grant any private or public documents
on such holder’s behalf.
The applicable trustee’s claims under the
subordinated indenture are not subordinated.
“Senior Indebtedness” means, with
respect to BBVA, all rights and claims, whether outstanding on the date of the subordinated indenture or thereafter created, incurred,
assumed or guaranteed, and all amendments, renewals, extensions, modifications and refundings of indebtedness or obligations represented
by such rights and claims, (i) of privileged creditors (acreedores privilegiados), unsecured and unsubordinated creditors
(acreedores comunes), those subordinated creditors referred to in art. 92.1 of the Insolvency Law and insolvency estate creditors
(acreedores contra la masa) of BBVA, in each case as determined in accordance with the Insolvency Law; or (ii) if such Insolvency
Law is no longer in effect, all of such rights and claims of all creditors of BBVA, unless in any such case the instrument by which the
indebtedness or obligations represented by such rights and claims are created, incurred, assumed or guaranteed by BBVA, or are evidenced,
provides that they are subordinate, or are not superior, in right of payment to the subordinated notes.
Events of Default
“Event of default”, wherever used
with respect to subordinated notes of any series, means any one of the following events, unless, with respect to a particular series of
subordinated notes, such event is specifically deleted or modified in or pursuant to supplemental indentures or Board resolutions creating
such series of subordinated notes or in the officer’s certificate for such series:
| · | an order is made by any competent court commencing insolvency proceedings (procedimientos concursales) against BBVA or an order
of any competent court or administrative agency is made or a resolution is passed by BBVA for the dissolution or winding up of BBVA, except
in any such case for the purpose of a reconstruction or a merger or amalgamation which has been approved by an Act of the holders relating
to such series, or where the entity resulting from any such reconstruction or merger or amalgamation is a financial institution (entidad
de crédito according to Article 1 of Law 10/2014) and will have a rating for long-term senior debt assigned by Standard &
Poor’s Ratings Services, Moody’s Investors Service or Fitch Ratings Ltd. equivalent to or higher than the rating for long-term
senior debt of BBVA immediately prior to such reconstruction or merger or amalgamation; or |
| · | any other event of default that may be specified pursuant to the subordinated indenture. |
Notwithstanding the above, any Resolution or Early
Intervention with respect to BBVA will not, in and of itself and without regard to any other fact or circumstance, constitute a default
or an event of default under the first bullet point set forth above or any provision of the subordinated indenture with respect to the
subordinated notes of any series. In addition, neither (i) a reduction or cancellation, in part or in full, of the Amounts Due on
the subordinated notes of any series, 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 (ii) the
exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the subordinated notes of any series,
will constitute an event of default or default under the subordinated indenture or the subordinated notes of any series. See “—Agreement
with Respect to the Exercise of the Spanish Bail-in Power”. In addition, no repayment or payment of Amounts Due on the subordinated
notes of any series 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.
If an event of default with respect to the subordinated
notes of any series at the time outstanding occurs and is continuing, then the applicable trustee, acting pursuant to an Act of the holders
of the subordinated notes of the relevant series, with respect to all outstanding subordinated notes of such series, or the holder of
any outstanding subordinated note of the relevant series, with respect to such subordinated note held by such holder, may declare the
principal, or such lesser amount as may be provided for in the subordinated notes of such series (if applicable), of such subordinated
notes or subordinated note, as the case may be, to be due and payable immediately in accordance with the terms of the subordinated indenture.
At any time after such a declaration of acceleration
with respect to the subordinated notes or a subordinated note, as the case may be, of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the
applicable trustee as provided in the subordinated indenture, the holders
of not less than a majority in principal amount of the outstanding subordinated notes of such series may, by Act, rescind and annul such
declaration and its consequences if:
| (i) | BBVA has paid or deposited with the applicable trustee a sum of money sufficient to pay: |
| (A) | all overdue installments of any interest on and additional amounts with respect to all subordinated notes of such series; |
| (B) | the principal of and any premium on any subordinated notes of such series which have become due otherwise than by such declaration
of acceleration and interest thereon and any additional amounts with respect thereto at the rate or rates borne by or provided for in
such subordinated notes; |
| (C) | to the extent that payment of such interest or additional amounts is lawful, interest upon overdue installments of any interest and
additional amounts at the rate or rates borne by or provided for in such subordinated notes; and |
| (D) | all sums paid or advanced by the applicable trustee and the reasonable compensation, expenses, disbursements and advances of the applicable
trustee, its agents and counsel and all other amounts due to the applicable trustee under the subordinated indenture; and |
| (ii) | all events of default with respect to subordinated notes of such series, other than the non-payment of the principal of and any premium
and interest on, and any additional amounts with respect to subordinated notes of such series which have become due solely by such declaration
of acceleration, shall have been cured or waived as provided in the subordinated indenture. |
No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Subject to payment of the applicable trustee’s
fees and expenses, the holders of not less than a majority in principal amount of the outstanding subordinated notes of any series on
behalf of the holders of all the subordinated notes of such series may, by Act, waive any past event of default under the subordinated
indenture with respect to such series and its consequences, except a default in the payment of the principal of or any premium, or interest
on, or any additional amounts with respect to, any subordinated note of such series or in respect of a covenant or provision of the subordinated
indenture that cannot be modified or amended without the consent of each holder of outstanding subordinated notes of such series.
No holder of any of the subordinated notes of
any series has the right to institute any proceeding, judicial or otherwise, with respect to the subordinated indenture, or for the appointment
of a receiver or trustee, or any remedy thereunder, unless (i) such holder has previously given written notice to the applicable
trustee of a continuing event of default with respect to the subordinated notes of such series; (ii) the holders of not less than
25% in principal amount of the outstanding subordinated notes of such series have made written request to the applicable trustee to institute
proceedings in respect of such event of default as trustee under the subordinated indenture with respect to such series of subordinated
notes and such holder or holders have offered to the applicable trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request; (iii) the applicable trustee has failed to institute any such proceeding within 60
days after its receipt of such notice, request and offer of indemnity; and (iv) the applicable trustee has not received any direction
inconsistent with such written request during such 60-day period by the holders of a majority in principal amount of the outstanding subordinated
notes of such series.
Except as set forth in the immediately following
paragraph, notwithstanding any other provision in the subordinated indenture and the subordinated notes, the right of each holder is absolute
and unconditional, to receive payment of the principal of, any premium and, subject to certain provisions in the subordinated indenture
with respect to payment of defaulted interest, interest on, and any additional amounts with respect to, his or her subordinated note or
notes on or after the respective maturity or maturities therefor specified in such subordinated notes (or, in the case of redemption,
on or after the redemption date or, in the case of repayment at the option of such holder if provided in or pursuant to the subordinated
indenture, on or after the date such repayment is due) and to institute suit for the enforcement of any such payment, which cannot be
impaired or affected without the consent of such holder, except that holders of not less than 75% in principal amount of outstanding subordinated
notes of a series may consent by Act, on behalf of the holders of all outstanding subordinated notes of such series, to the postponement
of the maturity of any installment of interest for a period not exceeding three years from the original maturity of such installment (which
original maturity shall have been fixed, for the avoidance of doubt, prior to any previous postponements of such installment).
The subordinated notes of any series may be subject
to the exercise of the Spanish Bail-in Power, and no holder of any subordinated note shall have any claim against BBVA in connection with
or arising out of any such exercise.
Within 90 days after the occurrence of any default
under the subordinated indenture known to the applicable trustee with respect to the subordinated notes of any series, such trustee shall
transmit by mail to all holders of subordinated notes of such series entitled to receive reports, notice of such default, unless such
default shall have been cured or waived. Except in the case of a default in the payment of the principal of (or premium, if any), or interest,
if any, on, or additional amounts with respect to, any subordinated note of
such series, such trustee may withhold such notice if and so long as
the board of directors, the executive committee or a trust committee of directors and/or responsible officers of such trustee in good
faith determine that the withholding of such notice is in the best interest of the holders of subordinated notes of such series. For the
purpose of this paragraph, the term “default” means any event which is, or after notice or lapse of time or both would become,
an event of default with respect to subordinated notes of such series.
Perpetual Subordinated Debt
BBVA may not issue subordinated notes under the
subordinated indenture that do not have a stated maturity or which are otherwise treated as equity for U.S. federal income tax purposes.
Agreement with Respect to the Exercise of the Spanish Bail-in Power
Notwithstanding any other term of the notes of
any series, the indentures or any other agreements, arrangements, or understandings between BBVA and any holder, by its acquisition of
any notes offered hereunder, each holder (which, for the purposes of this section, includes each holder of a beneficial interest in the
notes) 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 notes of any series,
and may include and result in any of the following, or some combination thereof: (1) the reduction or cancellation of all, or a portion,
of the Amounts Due on the notes of any series; (2) the conversion of all, or a portion, of the Amounts Due on the notes of any series
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 notes; (3) the
cancellation of the notes of any series; (4) the amendment or alteration of the maturity of the notes of any series or amendment
of the amount of interest payable on the notes of any series, or the date on which the interest becomes payable, including by suspending
payment for a temporary period; and (ii) the variation of the terms of the notes of any series or the rights of the holders thereunder
or under the relevant indenture, if necessary, to give effect to the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution
Authority.
By its acquisition of any notes offered hereunder,
each holder thereof acknowledges and agrees that neither a reduction or cancellation, in part or in full, of the Amounts Due on the notes
of any series 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 notes of a series 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 event of default with respect to the notes or under the relevant indenture.
By its acquisition of any notes offered hereunder, each holder further acknowledges and agrees that no repayment or payment of Amounts
Due on the notes of any series 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 notes offered hereunder,
each holder thereof, 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 shall 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 notes of such series. Additionally, by its acquisition of any notes of any
series offered hereunder, each holder thereof acknowledges and agrees that, upon the exercise of the Spanish Bail-in Power by the Relevant
Spanish Resolution Authority with respect to such series of notes, (i) the trustee shall not be required to take any further directions
from holders of the notes of such series with respect to any portion of the notes of such series that is written down, converted to equity
and/or cancelled under the provision of the applicable indenture which authorizes holders of a majority in aggregate outstanding principal
amount of the notes of a series to direct certain actions relating to the notes of such series; and (ii) the applicable indenture
shall 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 a series of notes, so long as any notes of such series remain outstanding, there shall at all times be a trustee
for the notes of such series, and the resignation and/or removal of the applicable trustee and the appointment of a successor trustee
shall continue to be governed by the relevant indenture, including to the extent no additional supplemental indenture or amendment is
agreed upon in the event the notes of such series remain outstanding following the completion of the exercise of the Spanish Bail-in Power.
By its acquisition of any notes offered hereunder,
each holder further agrees to be deemed to have authorized, directed and requested the relevant depository (including, if applicable,
DTC) and any direct participant therein or other intermediary through which it holds such notes to take any and all necessary action,
if required, to implement the exercise of the Spanish Bail-in Power with respect to the notes as it may be imposed, without any further
action or direction on the part of such holder.
Upon the exercise of the Spanish Bail-in Power
by the Relevant Spanish Resolution Authority with respect to the notes of a series, BBVA or the Relevant Spanish Resolution Authority
(as the case may be) will provide a written notice to the depository as soon as practicable regarding such exercise of the Spanish Bail-in
Power for purposes of notifying the holders of the notes of such series. BBVA will also deliver a copy of such notice to the trustee for
information purposes.
If BBVA or, with respect to a series of senior
notes or subordinated notes, the holders (where applicable) have elected to redeem the notes of any series but prior to (with respect
to a series of senior notes or subordinated notes) the deposit with the trustee or with a paying agent, as the case may be, or (with respect
to a series of senior non-preferred notes), prior to the payment to holders, of the redemption price with respect to such redemption the
Relevant Spanish Resolution Authority exercises its Spanish Bail-in Power with respect to such notes, the relevant redemption notice shall
be automatically rescinded and shall be of no force and effect, and no payment of the redemption price (and any accrued interest and additional
amounts payable under the relevant indenture) will be due and payable.
Upon the exercise of the Spanish Bail-in Power
with respect to a series of notes which results in the redemption, cancellation, or the conversion into other securities, of all the Amounts
Due on the notes of such series or such notes otherwise ceasing to be outstanding, the applicable indenture shall be deemed satisfied
and discharged as to such series and such notes shall thereafter be deemed to be not “outstanding”.
Subsequent Holders’ Agreement
Holders (which, for the purposes of this section,
includes each holder of a beneficial interest in the notes) of any notes offered hereunder that acquire such notes in the secondary market
or otherwise shall be deemed to acknowledge, agree to be bound by and consent to the same provisions specified herein to the same extent
as the holders of any notes offered hereunder that acquire such notes upon their initial issuance, including, without limitation, with
respect to the acknowledgement and agreement to be bound by and consent to the terms of the notes related to the exercise of the Spanish
Bail-in Power set forth under “—Agreement with Respect to the Exercise of the Spanish Bail-in Power”.
Description
of the Contingent Convertible Preferred Securities of BBVA
This section describes the general terms and provisions
of the indenture dated as of September 25, 2017 (the “contingent convertible preferred securities indenture”) between
BBVA, as issuer, and The Bank of New York Mellon, as trustee, which sets forth certain provisions with respect to the contingent convertible
preferred securities that may be offered by BBVA. A prospectus supplement will describe the specific terms of a particular series of contingent
convertible preferred securities and any general terms outlined in this section that will not apply to those contingent convertible preferred
securities. In this section, “Description of the Contingent Convertible Preferred Securities 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.
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 contingent convertible preferred securities indenture or the supplemental indenture
or Board resolution creating a particular series of contingent convertible preferred securities.
Material information about the contingent convertible
preferred securities and the contingent convertible preferred securities indenture is summarized below and in the applicable prospectus
supplement. Because this is only a summary, however, it does not contain all the details found in the full text of the contingent convertible
preferred securities indenture and the contingent convertible preferred securities. If you would like additional information, you should
read the contingent convertible preferred securities indenture and the contingent convertible preferred securities as well as the supplemental
indenture or Board resolution creating a particular series of contingent convertible preferred securities or the officer’s certificate
for such series. Whenever we refer to specific provisions of or terms defined in the contingent convertible preferred securities indenture
in this prospectus we incorporate by reference into this prospectus such specific provisions of or terms defined in the contingent convertible
preferred securities indenture.
BBVA may issue future contingent convertible preferred
securities under other indentures or documentation which contain provisions different from those included in the contingent convertible
preferred securities indenture described here. BBVA is not prohibited under the contingent convertible preferred securities or the contingent
convertible preferred securities indenture from paying any amounts due under any of its obligations at a time when an Enforcement Event
(as defined below) has occurred or when they have failed to pay any amounts due under the contingent convertible preferred securities
or the contingent convertible preferred securities indenture.
The contingent convertible preferred securities
indenture has been filed with the SEC as an exhibit to the registration statement that includes this prospectus. The contingent convertible
preferred securities indenture will be qualified under the Trust Indenture Act. Under the provisions of the Trust Indenture Act, if the
same institution acts as trustee under the contingent convertible preferred securities indenture and under another indenture of BBVA (such
as the senior indenture or the subordinated indenture), upon a default in any series of securities issued under any such other indenture,
the trustee may be deemed to have a conflicting interest and may be required to resign under the contingent convertible preferred securities
indenture and a successor trustee will be appointed.
General
The contingent convertible preferred securities
indenture does not limit the aggregate liquidation preference of contingent convertible preferred securities that BBVA may issue under
it.
Neither the contingent convertible preferred securities
indenture nor the contingent convertible preferred securities will limit or otherwise restrict the amount of other indebtedness or other
securities which BBVA or any of its subsidiaries may incur or issue, including the issuance of further contingent convertible preferred
securities. BBVA can issue contingent convertible preferred securities from time to time in one or more series, up to any aggregate liquidation
preference that BBVA may authorize. Unless previously converted into Common Shares, the contingent convertible preferred securities will
constitute direct, unconditional and unsecured obligations of BBVA.
The contingent convertible preferred securities
indenture provides that there may be more than one trustee under such indenture, each with respect to one or more series of notes. Any
trustee may resign or be removed with respect to any series of contingent convertible preferred securities issued under the contingent
convertible preferred securities indenture and a successor trustee may be appointed.
BBVA or any of its subsidiaries may purchase contingent
convertible preferred securities at any price in the open market or otherwise, in accordance with Articles 77 and 78 of CRR, Article 29
of the Commission Delegated Regulation (EU) No 241/2014 and/or any other Applicable Banking Regulations in force at the relevant time.
Such contingent convertible preferred securities purchased may be held, reissued, resold or surrendered to the relevant Paying Agent (as
defined below) and/or the relevant registrar for cancellation, except that contingent convertible preferred securities purchased by BBVA
must be surrendered to the relevant Paying Agent and/or the relevant registrar for cancellation in accordance with Applicable Banking
Regulations.
The holders of any series of contingent convertible
preferred securities are not entitled to receive notice of or to attend any extraordinary or ordinary meetings of Shareholders of BBVA
and will have no voting rights with respect thereto.
The contingent convertible preferred securities
are BBVA’s subordinated non-step-up non-cumulative convertible preferred securities convertible into BBVA’s ordinary shares
only upon the occurrence of certain events. The contingent convertible preferred securities are not deposits and are not insured or guaranteed
by the U.S. Federal Deposit Insurance Corporation or any other government agency of the United States or Spain.
BBVA may issue contingent convertible preferred
securities in one or more series. The relevant prospectus supplement for any particular series of contingent convertible preferred securities
will describe the terms of the offered contingent convertible preferred securities, including, but not limited to, some or all of the
following terms, to the extent such terms differ from or are in addition to those set forth in this prospectus:
| · | the specific designation and Liquidation Preference (as defined below) of the contingent convertible preferred securities; |
| · | how to calculate Distributions (as defined below), if any, and the terms or circumstances under which any such Distributions may be
cancelled in whole or in part, if any; |
| · | the date or dates from which Distributions, if any, will accrue or the method or methods, if any, by which such date or dates will
be determined; |
| · | the price or prices at which they will be issued; |
| · | the terms on which the contingent convertible preferred securities may or are required to convert into ordinary shares of BBVA and
any specific terms relating to the conversion or exchange feature, including upon the occurrence of certain events relating to our financial
condition; |
| · | whether payments are subject to certain conditions that relate to our financial condition, including our capital ratios; |
| · | the times and places at which any Distributions are payable; |
| · | the terms and conditions of any mandatory redemption; |
| · | the terms and conditions, if any, under which BBVA may elect to substitute or vary the terms of the contingent convertible preferred
securities; |
| · | the currency or currencies in which Liquidation Preference and Distributions are denominated and in which BBVA will make any payments; |
| · | any index used to determine the amount of any payments on the contingent convertible preferred securities; |
| · | any restrictions that apply to the offer, sale and delivery of the contingent convertible preferred securities; |
| · | whether and under what circumstances, if other than those described in this prospectus, BBVA will pay additional amounts on the contingent
convertible preferred securities following certain developments with respect to withholding tax or information reporting laws and whether,
and on what terms, if other than those described in this prospectus, BBVA may redeem the contingent convertible preferred securities following
those developments; |
| · | the clearing system or systems on which the contingent convertible preferred securities will be cleared and settled; and |
| · | any listing on a securities exchange. |
Holders of contingent convertible preferred securities
shall have no voting rights except those described under the heading “—Modification and Waiver” below, unless
and until such contingent convertible preferred securities are converted into BBVA’s ordinary shares, in which case holders will
have the voting rights described under “Description of BBVA Ordinary Shares”.
Certain Defined Terms
In this “Description of the Contingent
Convertible Preferred Securities of BBVA”, the following terms have the following meanings:
“Accounting Currency” means euro or
such other primary currency used in the presentation of the BBVA Group’s accounts from time to time;
“Additional Amounts” has the meaning
set forth under “—Additional Amounts”;
“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 contractually subordinated obligation of BBVA constituting an Additional Tier 1 instrument (instrumento de capital de nivel 1 adicional)
in accordance with Applicable Banking Regulations;
“ADS Depositary” means The Bank of
New York Mellon, as the depositary under BBVA’s deposit agreement (see “Description of BBVA American Depositary Shares”)
or any successor ADS depositary;
“Agents” means the agents appointed
in accordance with the contingent convertible preferred securities indenture or any applicable supplemental indenture and shall include
any Paying Agent, contingent convertible preferred security registrar, Paying and Conversion Agent, Calculation Agent and Authenticating
Agent;
“Applicable Banking Regulations” means,
when used with respect to the contingent convertible preferred securities of any series, 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 IV, the BRRD 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);
“Authenticating Agent” means, when
used with respect to the contingent convertible preferred securities of any series, any person authorized by the trustee pursuant to the
contingent convertible preferred securities indenture to act on behalf of the trustee to authenticate contingent convertible preferred
securities of such series. Initially, and unless otherwise specified, The Bank of New York Mellon, acting through its principal corporate
trust office in New York will act as Authenticating Agent;
“BRRD” means 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 implemented into Spanish law, as amended or supplemented from time to time, or any such
other directive as may come into effect in place thereof, and including any other relevant implementing regulatory provisions;
“Business Day” means, unless otherwise
provided in the applicable prospectus supplement, 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,
Madrid or any other place or places where the Liquidation Preference (and premium, if any) of, or any Distributions on, or any Additional
Amounts with respect to the contingent convertible preferred securities of that series are payable;
“Calculation Agent” means, when used
with respect to the contingent convertible preferred securities of any series, any person authorized by BBVA as the party responsible
for calculating the Distribution Rate and/or such other amount(s) from time to time in relation to such series of contingent convertible
preferred securities;
“Capital Event” means, when used with
respect to the contingent convertible preferred securities of any series, 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 contingent convertible preferred securities of such series ceasing to be included in, or counting
towards, the BBVA Group’s or BBVA’s Tier 1 Capital;
“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 contingent convertible
preferred securities indenture;
“Capital Reduction Conversion” has
the meaning specified in “—Conversion—Conversion Upon Capital Reduction” below;
“Capital Reduction Notice” has the
meaning specified in “—Conversion—Conversion Procedures” below, which notice shall specify the Election
Period and the procedures for holders to deliver an Election Notice;
“Capital Reduction Notice Date” means
the date on which a Capital Reduction Notice is deemed to be given;
“Cash Dividend” means (i) any
Dividend which is to be paid or made in cash (in whatever currency), but other than falling within paragraph (b) of the definition
of “Spin-Off” and (ii) any Dividend determined to be a Cash Dividend pursuant to paragraph
(a) of the definition of “Dividend”, but a Dividend
falling within paragraph (c) or (d) of the definition of “Dividend” shall be treated as being a Non-Cash Dividend;
“CET1 Capital” means, at any time,
the common equity tier 1 capital of BBVA or the BBVA Group, respectively, as calculated by BBVA in accordance with Chapter 2 (Common Equity
Tier 1 Capital) of Title I (Elements of Own Funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations at such time,
including any applicable transitional, phasing in or similar provisions;
“CET1 ratio” means, at any time, with
respect to BBVA 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 the CET1 Capital of BBVA or the BBVA Group, respectively, at such time divided by the Risk Weighted Assets Amount
of BBVA or the BBVA Group, respectively, at such time, all as calculated by BBVA;
“Clearing System” means DTC or any
of the European Clearing Systems, as applicable;
“Closing Price” means, in respect
of a Common Share and in relation to any dealing day, the price per Common Share quoted by the Relevant Stock Exchange as the closing
price or closing auction price of a Common Share on such dealing day;
“Common Shares” means 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;
“Conversion” means a Trigger Conversion
or a Capital Reduction Conversion, as the case may be;
“Conversion Event” means a Trigger
Event or a Capital Reduction, as the case may be;
“Conversion Notice” means a Trigger
Event Notice or a Capital Reduction Notice, as the case may be;
“Conversion Notice Date” means the
Trigger Event Notice Date or the Capital Reduction Notice Date, as the case may be;
“Conversion Price” has the meaning
specified under “—Conversion—Conversion Price”;
“Conversion Settlement Date” means
the date on which the relevant Common Shares are to be delivered following 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;
“Conversion Shares Depository” means,
when used with respect to the contingent convertible preferred securities of any series, a reputable independent financial institution,
trust company or similar entity 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 who will hold Common Shares in Iberclear or any of its participating entities
in a designated trust or custody account for the benefit of the holders of the contingent convertible preferred securities of such series
and otherwise on terms consistent with the terms of the contingent convertible preferred securities of such series and the contingent
convertible preferred securities indenture;
“CRD IV” means any or any combination
of the CRD IV Directive, the CRR and any CRD IV Implementing Measures;
“CRD IV Directive” means, when used
with respect to the contingent convertible preferred securities of any series, 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, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended or supplemented from time
to time, or such other directive as may come into effect in place thereof;
“CRD IV Implementing Measures” means,
when used with respect to the contingent convertible preferred securities of any series, any regulatory capital rules implementing the
CRD IV 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;
“CRR” means, when used with respect
to the contingent convertible preferred securities of any series, 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 or supplemented from time to time, or such other regulation as may come into effect in place thereof;
“Current Market Price” means, in respect
of a Common Share at a particular date, the average of the daily Volume Weighted Average Price of a Common Share on each of the five consecutive
dealing days ending on the dealing day immediately preceding such date (the “Relevant Period”) (rounded if necessary to the
nearest cent with 0.5 cents being rounded upwards); provided that if at any time during the Relevant Period the Volume Weighted Average
Price shall have been based on a price ex-Dividend (or ex-any other entitlement) and during some other part of that period the Volume
Weighted Average Price shall have been based on a price cum-Dividend (or cum-any other entitlement), then:
| · | if the Common Shares to be issued and delivered are not entitled to receive the Dividend (or entitlement) in question, the Volume
Weighted Average Price on the dates on which the Common Shares shall have been based on a price cum-Dividend (or cum-any other entitlement)
shall for the purposes of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any
such Dividend or entitlement per Common Share as at the date of the first public announcement relating to such Dividend or entitlement,
in any such case, determined on a gross basis and disregarding any withholding or deduction required to be made for or on account of tax,
and disregarding any associated tax credit; or |
| · | if the Common Shares to be issued and delivered are entitled to receive the Dividend (or entitlement) in question, the Volume Weighted
Average Price on the dates on which the Common Shares shall have been based on a price ex-Dividend (or ex-any other entitlement) shall
for the purposes of this definition be deemed to be the amount thereof increased by an amount equal to the Fair Market Value of any such
Dividend or entitlement per Common Share as at the date of the first public announcement relating to such Dividend or entitlement, in
any such case, determined on a gross basis and disregarding any withholding or deduction required to be made for or on account of tax,
and disregarding any associated tax credit, |
and provided further that:
| (i) | if on each of the dealing days in the Relevant Period the Volume Weighted Average Price shall have been based on a price cum-Dividend
(or cum-any other entitlement) in respect of a Dividend (or other entitlement) which has been declared or announced but the Common Shares
to be issued and delivered are not entitled to receive that Dividend (or other entitlement) the Volume Weighted Average Price on each
of such dates shall for the purposes of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market
Value of any such Dividend or entitlement per Common Share as at the date of first public announcement relating to such Dividend or entitlement;
and |
| (ii) | if the Volume Weighted Average Price of a Common Share is not available on one or more of the dealing days in the Relevant Period
(disregarding for this purpose the proviso to the definition of Volume Weighted Average Price), then the average of such Volume Weighted
Average Prices which are available in the Relevant Period shall be used (subject to a minimum of two such prices) and if only one, or
no, such Volume Weighted Average Price is available in the Relevant Period the Current Market Price shall be determined in good faith
by an Independent Financial Adviser. |
In making any calculation or determination of
Current Market Price or Volume Weighted Average Price, such adjustments (if any) shall be made as an Independent Financial Adviser determines
in good faith appropriate to reflect any consolidation or sub-division of the Common Shares or any issue of Common Shares by way of capitalization
of profits or reserves, or any like or similar event;
“dealing day” means a day on which
the Relevant Stock Exchange or relevant stock exchange or securities market is open for business and on which Common Shares, Securities,
Spin-Off Securities, options, warrants or other rights (as the case may be) may be dealt in (other than a day on which the Relevant Stock
Exchange or relevant stock exchange or securities market is scheduled to or does close prior to its regular weekday closing time);
“Delivery Notice” means a notice in
the form for the time being currently available from the specified office of any Paying and Conversion Agent which contains the relevant
account and related details for the delivery of any Common Shares (or ADSs) and such other information as is required in accordance with
the contingent convertible preferred securities indenture, and which is required to be delivered in connection with a conversion of the
contingent convertible preferred securities and the delivery of the Common Shares (or ADSs);
“Distributable Items” shall have the
meaning given to such term in CRD IV, as interpreted and applied in accordance with Applicable Banking Regulations;
“Distribution” means the non-cumulative
cash distribution, if any, in respect of a series of contingent convertible preferred securities in a Distribution Period;
“Distribution Payment Date” shall
have the meaning as determined in the relevant prospectus supplement;
“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;
“Distribution Rate” means the rate
at which the contingent convertible preferred securities of a series accrue Distributions in accordance with “—Payments—Distributions”
below;
“Dividend” means any dividend or distribution
to Shareholders in respect of the Common Shares (including a Spin-Off) whether of cash, assets or other property (and for these purposes
a distribution of assets includes without limitation an issue of Common Shares or other Securities credited as fully or partly paid up
by way of capitalization of profits or reserves), and however described and whether payable out of share premium account, profits, retained
earnings or any other capital or revenue reserve or account, and including a distribution or payment to Shareholders upon or in connection
with a reduction of capital, provided that:
| (i) | a Dividend in cash is announced which is to be, or may at the election of a Shareholder or Shareholders be, satisfied by the issue
or delivery of Common Shares or other property or assets, or where a capitalization of profits or reserves is announced which is to be,
or may at the election of a Shareholder or Shareholders be, satisfied by the payment of cash, then the Dividend in question shall be treated
as a Cash Dividend of an amount equal to the greater of (A) the Fair Market Value of such cash amount and (B) the Current Market
Price of such Common Shares as at the first date on which the Common Shares are traded ex-the relevant Dividend on the Relevant Stock
Exchange or, as the case may be, the record date or other due date for establishment of entitlement in respect of the relevant capitalization
or, as the case may be, the Fair Market Value of such other property or assets as at the date of the first public announcement of such
Dividend or capitalization or, in any such case, if later, the date on which the number of Common Shares (or amount of such other property
or assets, as the case may be) which may be issued and delivered is determined; or |
| (ii) | there shall be any issue of Common Shares by way of capitalization of profits or reserves (including any share premium account or
capital redemption reserve) where such issue is, or is expressed to be, in lieu of a Dividend (whether or not a Cash Dividend equivalent
or amount is announced or would otherwise be payable to Shareholders, whether at their election or otherwise), the Dividend in question
shall be treated as a Cash Dividend of an amount equal to the Current Market Price of such Common Shares as at the first date on which
the Common Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange or, as the case may be, the record date or other
due date for establishment of entitlement in respect of the relevant capitalization or, in any such case, if later, the date on which
the number of Common Shares to be issued and delivered is determined; |
| (b) | any issue of Common Shares falling within subparagraphs (a) and (b) of “—Conversion—Conversion Price—Anti-Dilution
Adjustment of the Floor Price” below shall be disregarded; |
| (c) | a purchase or redemption or buy back of share capital of BBVA by or on behalf of BBVA in accordance with any general authority for
such purchases or buy backs approved by a general meeting of Shareholders and otherwise in accordance with the limitations prescribed
under the Spanish Companies Act for dealings generally by a company in its own shares shall not constitute a Dividend and any other purchase
or redemption or buy back of share capital of BBVA by or on behalf of BBVA or any member of the BBVA Group shall not constitute a Dividend
unless, in the case of a purchase or redemption or buy back of Common Shares by or on behalf of BBVA or any member of the BBVA Group,
the weighted average price per Common Share (before expenses) on any one day (a “Specified Share Day”) in respect of such
purchases or redemptions or buy backs (translated, if not in the Share Currency, into the Share Currency at the Prevailing Rate on such
day) exceeds by more than 5% the average of the daily Volume Weighted Average Price of a Common Share on the five dealing days immediately
preceding the Specified Share Day or, where an announcement (excluding, for the avoidance of doubt for these purposes, any general authority
for such purchases, redemptions or buy backs approved by a general meeting of Shareholders or any notice convening such a meeting of Shareholders)
has been made of the intention to purchase, redeem or buy back Common Shares at some future date at a specified price or where a tender
offer is made, on the five dealing days immediately preceding the date of such announcement or the date of first public announcement of
such tender offer (and regardless of whether or not a price per Common Share, a minimum price per Common Share or a price range or a formula
for the determination thereof is or is not announced at such time), as the case may be, in which case such purchase, redemption or buy
back shall be deemed to constitute a Dividend in the Share Currency in an amount equal to the amount by which the aggregate price paid
(before expenses) in respect of such Common Shares purchased, redeemed or bought back by BBVA or, as the case may be, any member of the
BBVA Group (translated where appropriate into the Share Currency as provided above) exceeds the product of (i) 105% of the daily Volume
Weighted Average Price of a Common Share determined as aforesaid and (ii) the number of Common Shares so purchased, redeemed or bought
back; |
| (d) | if BBVA or any member of the BBVA Group shall purchase, redeem or buy back any depositary or other receipts or certificates representing
Common Shares, the provisions of paragraph (c) above shall be applied in respect thereof in such manner and with such modifications
(if any) as shall be determined in good faith by an Independent Financial Adviser; and |
| (e) | where a dividend or distribution is paid or made to Shareholders pursuant to any plan implemented by BBVA for the purpose of enabling
Shareholders to elect, or which may require Shareholders, to receive dividends or distributions in respect of the Common Shares held by
them from a person other than (or in addition to) BBVA, such dividend or distribution shall for the purposes of these contingent convertible
preferred securities of any series be treated as a dividend or distribution made or paid to Shareholders by BBVA, and the provisions of
the contingent convertible preferred securities and the contingent convertible preferred securities indenture, including references to
BBVA paying or making a dividend, shall be construed accordingly; |
“Election Notice” has the meaning
specified in “—Conversion—Conversion Upon Capital Reduction” below;
“Election Period” has the meaning
specified in “—Conversion—Conversion Upon Capital Reduction” below;
“equity share capital” means, in relation
to any entity, its issued share capital excluding any part of that capital which, in respect of dividends and capital, does not carry
any right to participate beyond a specific amount in a distribution;
“Enforcement Event” has the meaning
specified under “—Enforcement Events and Remedies—Enforcement Events” below;
“European Clearing System” means Euroclear
Bank S.A./N.V. (“Euroclear Bank”), as operator of the Euroclear System (“Euroclear”) and/or Clearstream Banking,
société anonyme (“Clearstream Luxembourg”);
“Existing Shareholders” has the meaning
specified in the definition of “Newco Scheme”;
“Fair Market Value” means, with respect
to any property on any date, the fair market value of that property as determined by an Independent Financial Adviser in good faith provided
that (a) the Fair Market Value of a Cash Dividend shall be the amount of such Cash Dividend; (b) the Fair Market Value of any
other cash amount shall be the amount of such cash; (c) where Securities, Spin-Off Securities, options, warrants or other rights
are publicly traded on a stock exchange or securities market of adequate liquidity (as determined by an Independent Financial Adviser
in good faith), the Fair Market Value (i) of such Securities or Spin-Off Securities shall equal the arithmetic mean of the daily
Volume Weighted Average Prices of such Securities or Spin-Off Securities and (ii) of such options, warrants or other rights shall
equal the arithmetic mean of the daily closing prices of such options, warrants or other rights, in the case of both (i) and (ii)
above during the period of five dealing days on the relevant stock exchange or securities market commencing on such date (or, if later,
the first such dealing day such Securities, Spin-Off Securities, options, warrants or other rights are publicly traded) or such shorter
period as such Securities, Spin-Off Securities, options, warrants or other rights are publicly traded; and (d) where Securities,
Spin-Off Securities, options, warrants or other rights are not publicly traded on a stock exchange or securities market of adequate liquidity
(as aforesaid), the Fair Market Value of such Securities, Spin-Off Securities, options, warrants or other rights shall be determined by
an Independent Financial Adviser in good faith, on the basis of a commonly accepted market valuation method and taking account of such
factors as it considers appropriate, including the market price per Common Share, the dividend yield of a Common Share, the volatility
of such market price, prevailing interest rates and the terms of such Securities, Spin-Off Securities, options, warrants or other rights,
including as to the expiry date and exercise price (if any) thereof. Such amounts shall, in the case of (a) above, be translated
into the Share Currency (if such Cash Dividend is declared or paid or payable in a currency other than the Share Currency) at the rate
of exchange used to determine the amount payable to Shareholders who were paid or are to be paid or are entitled to be paid the Cash Dividend
in the Share Currency; and in any other case, shall be translated into the Share Currency (if expressed in a currency other than the Share
Currency) at the Prevailing Rate on that date. In addition, in the case of (a) and (b) above, the Fair Market Value shall be determined
on a gross basis and disregarding any withholding or deduction required to be made for or on account of tax, and disregarding any associated
tax credit;
“Floor Price” means the price determined
in the relevant prospectus supplement, subject to adjustment in accordance with “—Conversion—Conversion Price—Anti-Dilution
Adjustment of the Floor Price” below;
“further contingent convertible preferred
securities” means any instruments or securities which are similar to the contingent convertible preferred securities and are contingently
convertible into Common Shares other than at the option of the holders thereof;
“Iberclear” means the Spanish clearing
and settlement system (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores,
S.A.U.);
“Independent Financial Adviser” means
an independent financial institution or financial adviser of international repute appointed by BBVA at its own expense;
“Liquidation Distribution” means the
Liquidation Preference per contingent convertible preferred security plus, if applicable, where not cancelled or deemed cancelled pursuant
to, or otherwise subject to the limitations on payment set out in, “—Payments—Distributions”, an amount
equal to accrued and unpaid Distributions for the then current Distribution Period to (but excluding) the date of payment of the Liquidation
Distribution;
“Liquidation Event” has the meaning
set forth under “—Payments—Liquidation Distribution”;
“Liquidation Preference” shall have
the meaning set forth in the relevant prospectus supplement;
“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 IV Directive and/or (b) Applicable Banking Regulations;
“Newco Scheme” means a scheme of arrangement
or analogous proceeding (“Scheme of Arrangement”) which effects the interposition of a limited liability company (“Newco”)
between the Shareholders of BBVA immediately prior to the Scheme of Arrangement (the “Existing Shareholders”) and BBVA, provided
that:
| (a) | only ordinary shares of Newco or depositary or other receipts or certificates representing ordinary shares of Newco are issued to
Existing Shareholders; |
| (b) | immediately after completion of the Scheme of Arrangement the only shareholders of Newco or, as the case may be, the only holders
of depositary or other receipts or certificates representing ordinary shares of Newco, are Existing Shareholders and the Voting Rights
in respect of Newco are held by Existing Shareholders in the same proportions as their respective holdings of such Voting Rights immediately
prior to the Scheme of Arrangement; |
| (c) | immediately after completion of the Scheme of Arrangement, Newco is (or one or more wholly-owned Subsidiaries of Newco are) the only
ordinary shareholder (or shareholders) of BBVA; |
| (d) | all Subsidiaries of BBVA immediately prior to the Scheme of Arrangement (other than Newco, if Newco is then a Subsidiary) are Subsidiaries
of BBVA (or of Newco) immediately after completion of the Scheme of Arrangement; and |
| (e) | immediately after completion of the Scheme of Arrangement, BBVA (or Newco) holds, directly or indirectly, the same percentage of the
ordinary share capital and equity share capital of those Subsidiaries as was held by BBVA immediately prior to the Scheme of Arrangement; |
“Non-Cash Dividend” means any Dividend
which is not a Cash Dividend, and shall include a Spin-Off;
“Notice Cut-off Date” shall have the
meaning set forth under “—Conversion—Conversion Procedures”;
“Parity Securities” means any instrument
issued or guaranteed by BBVA (including the guarantee thereof), which instrument or guarantee ranks pari passu with the contingent
convertible preferred securities;
“Paying Agent”, when used with respect
to the contingent convertible preferred securities of any series, means any person (which may include BBVA) authorized by BBVA to pay
the Liquidation Preference (and premium, if any) of, or Distributions on, or any Additional Amounts with respect to, the contingent convertible
preferred securities of such series on behalf of BBVA, which expression shall include the Principal Paying Agent. Except as otherwise
specified in the relevant prospectus supplement, The Bank of New York Mellon, acting through its London Branch (or a successor thereof)
will act as Paying Agent in respect of the contingent convertible preferred securities of any series;
“Paying and Conversion Agent” means,
when used with respect to the contingent convertible preferred securities of any series, the Principal Paying Agent and any other paying
and conversion agent appointed in accordance with the contingent convertible preferred securities indenture or any supplemental indenture
with respect to such series and includes any successors thereto appointed from time to time in accordance with the contingent convertible
preferred securities indenture or any such supplemental indenture;
“Payment Business Day” means (i) a
day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign
exchange and foreign currency deposits) in New York City and London and (ii) in the case of contingent convertible preferred securities
in definitive form only, a day on which commercial banks and foreign exchange markets settle payments and are open for general business
(including dealing in foreign exchange and foreign currency deposits) in the relevant place of payment;
“Performance Obligation” has the meaning
specified in “—Enforcement Events—Enforcement Events and Remedies”;
“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;
“Principal Paying Agent”, when used
with respect to the contingent convertible preferred securities of any series, means The Bank of New York Mellon, acting through its London
branch (or a successor thereof) except as otherwise specified in the relevant prospectus supplement;
“Recognized Stock Exchange” means
an organized regularly operating, recognized stock exchange or securities market in a country that is a member of the Organization for
Economic Co-operation and Development;
“Redemption Price” means, per contingent
convertible preferred security, the Liquidation Preference plus, if applicable, where not cancelled or deemed cancelled pursuant to, or
otherwise subject to the limitations on payment set out in “—Payments—Distributions”, an amount equal to
any accrued and unpaid Distributions for the then current Distribution Period to (but excluding) the date fixed for the redemption of
the contingent convertible preferred securities of the relevant series;
“Reference Date” means, in relation
to a Retroactive Adjustment, the date as of which the relevant Retroactive Adjustment takes effect or, if that date is not a dealing day,
the succeeding dealing day;
“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;
“Regulator” means, when used with
respect to the contingent convertible preferred securities of any series, the European Central Bank or the Bank of Spain (Banco de
España), as applicable, or such other or successor authority having primary bank supervisory authority, in each case with respect
to prudential matters in relation to BBVA and/or the BBVA Group from time to time;
“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;
“Retroactive Adjustment” has the meaning
specified in “—Conversion—Conversion Price—Anti-Dilution Adjustment of the Floor Price” below;
“Risk Weighted Assets Amount” means
at any time, with respect to BBVA 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;
“Scheme of Arrangement” has the meaning
specified in the definition of “Newco Scheme”;
“Securities” means any securities
including, without limitation, shares in the capital of BBVA, or options, warrants or other rights to subscribe for or purchase or acquire
shares in the capital of BBVA;
“Selling Agent” has the meaning specified
in “—Conversion—Failure to Deliver a Delivery Notice” below;
“Share Currency” means euro or such
other currency in which the Common Shares are quoted or dealt in on the Relevant Stock Exchange at the relevant time or for the purposes
of the relevant calculation or determination;
“Shareholders” means the holders of
Common Shares;
“Spanish Companies Act” means the
Royal Legislative Decree 1/2010, of July 2, approving the consolidated text of the Spanish Companies Act (Ley de Sociedades de
Capital), as amended, replaced or supplemented from time to time;
“Spanish Insolvency Law” means Law
22/2003 (Ley Concursal) of July 9, regulating insolvency proceedings in Spain, as amended or supplemented from time to time, or an
equivalent legal provision which replaces it in the future.
“Spin-Off” means:
| (a) | a distribution of Spin-Off Securities by BBVA to Shareholders as a class; or |
| (b) | any issue, transfer or delivery of any property or assets (including cash or shares or other securities of or in or issued or allotted
by any entity) by any entity (other than BBVA) to Shareholders as a class or, in the case of or in connection with a Newco Scheme, Existing
Shareholders as a class (but excluding the issue and allotment of ordinary shares (or depositary or other receipts or certificates representing
such ordinary shares) by Newco to Existing Shareholders as a class), pursuant in each case to any arrangements with BBVA or any member
of the BBVA Group; |
“Spin-Off Securities” means equity
share capital of an entity other than BBVA or options, warrants or other rights to subscribe for or purchase equity share capital of an
entity other than BBVA;
“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;
“Subsidiary” means any entity over
which BBVA may have, directly or indirectly, control in accordance with Article 42 of the Spanish Commercial Code (Código de
Comercio) and/or Applicable Banking Regulations;
“Tax Event” in respect of any series
of contingent convertible preferred securities, means that as a result of any change in, or amendment to, the laws or regulations applicable
in Spain (except as provided in “—Substitution of Issuer”), 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 date of issue of the contingent convertible preferred securities of
such series (a) BBVA would not be entitled to claim a deduction in computing its taxation liabilities in Spain (except as provided
in “—Substitution of Issuer”) in respect of any Distribution to be made on the next Distribution Payment Date
or the value of such deduction to BBVA would be materially reduced, or (b) BBVA would be required to pay Additional Amounts, or (c) the
applicable tax treatment of the contingent convertible preferred securities of such series would be materially affected;
“Tier 1 Capital” means at any time,
with respect to BBVA or the BBVA Group, as the case may be, the Tier 1 capital of BBVA or the BBVA Group, respectively, as calculated
by BBVA in accordance with Chapters 1, 2 and 3 (Tier 1 capital, Common Equity Tier 1 capital and Additional Tier 1 capital) of Title I
(Elements of own funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations at such time, including any applicable
transitional, phasing in or similar provisions;
“Tier 2 Capital” means Tier 2 capital
(capital de nivel 2) as provided under Applicable Banking Regulations;
“Tier 2 Instrument” means any contractually
subordinated obligation of BBVA constituting a Tier 2 instrument (instrumento de capital de nivel 2) in accordance with Applicable
Banking Regulations;
“Trigger Conversion” has the meaning
specified in “—Conversion—Conversion Procedures” below;
“Trigger Event” in respect of any
series of contingent convertible preferred securities, means if, at any time, as determined by BBVA, the CET1 ratio of BBVA or the BBVA
Group is less than 5.125%;
“Trigger Event Notice” has the meaning
specified in “—Conversion—Conversion Procedures” below;
“Trigger Event Notice Date” means
the date on which a Trigger Event Notice is deemed to be given;
“Volume Weighted Average Price” means,
in respect of a Common Share, Security or, as the case may be, a Spin-Off Security on any dealing day, the order book volume-weighted
average price of a Common Share, Security or, as the case may be, a Spin-Off Security published by or derived (in the case of a Common
Share) from the Reference Page or (in the case of a Security (other than Common Shares) or Spin-Off Security) from the principal stock
exchange or securities market on which such Securities or Spin-Off Securities are then listed or quoted or dealt in, if any or, in any
such case, such other source as shall be determined in good faith to be appropriate by an Independent Financial Adviser on such dealing
day, provided that if on any such dealing day such price is not available or cannot otherwise be determined as provided above, the Volume
Weighted Average Price of a Common Share, Security or a Spin-Off Security, as the case may be, in respect of such dealing day shall be
the Volume Weighted Average Price, determined as provided above, on the immediately preceding dealing day on which the same can be so
determined or as an Independent Financial Adviser might otherwise determine in good faith to be appropriate.
In making any calculation or determination of
Current Market Price or Volume Weighted Average Price, such adjustments (if any) shall be made as an Independent Financial Adviser determines
in good faith appropriate to reflect any consolidation or sub-
division of the Common Shares or any issue of Common Shares by way
of capitalization of profits or reserves, or any like or similar event; and
“Voting Rights” means the right generally
to vote at a general meeting of Shareholders of BBVA (irrespective of whether or not, at the time, stock of any other class or classes
shall have, or might have, voting power by reason of the happening of any contingency).
References to any act or statute or any provision
of any act or statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument,
order or regulation made in accordance therewith or under such modification or re-enactment.
References to any issue or offer or grant to Shareholders
or Existing Shareholders “as a class” or “by way of rights” shall be taken to be references to an issue or offer
or grant to all or substantially all Shareholders or Existing Shareholders, as the case may be, other than Shareholders or Existing Shareholders,
as the case may be, to whom, by reason of the laws of any territory or requirements of any recognized regulatory body or any other stock
exchange or securities market in any territory or in connection with fractional entitlements, it is determined not to make such issue
or offer or grant.
Payments
All payments in respect of the contingent convertible
preferred securities of any series will be subject in all cases to any fiscal or other laws and regulations applicable thereto (including
FATCA, any regulations or agreements thereunder, any official interpretation thereof, any intergovernmental agreements with respect thereto,
or any law implementing an intergovernmental agreement or any regulations or official interpretations relating thereto), but without prejudice
to the provisions of “—Additional Amounts” below.
Distributions
Prior to conversion, the contingent convertible
preferred securities of any series will accrue Distributions as may be specified in, or determined in accordance with the provisions of,
the relevant prospectus supplement.
Distributions Discretionary
BBVA may elect, in its sole and absolute discretion,
to cancel the payment of any Distribution on any particular series of contingent convertible preferred securities in whole or in part
at any time and for any reason.
Distributions on the contingent convertible preferred
securities will be non-cumulative. Accordingly, if any Distribution (or any part thereof) is not paid in respect of the contingent convertible
preferred securities of any series as a result of any election of BBVA to cancel such Distribution in accordance with this section “—Distributions
Discretionary” or the limitations on payment set out in “—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 BBVA 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 contingent convertible preferred securities of such series 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 in “—Restrictions on Payments”
below will constitute an event of default, an Enforcement Event or the occurrence of any event related to the insolvency of BBVA 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 BBVA from making any distribution or equivalent payment in connection with any instrument ranking junior
to the contingent convertible preferred securities of such series (including, without limitation, any CET1 Capital of BBVA or the BBVA
Group) or in respect of any Parity Security or other security, except to the extent Applicable Banking Regulations otherwise provide.
Restrictions on Payments
Payments of Distributions on the contingent convertible
preferred securities of a series 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 contingent convertible preferred securities of such series 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 contingent convertible preferred
securities of such series at any time, make partial or, as the case may be, no payment of the relevant Distribution on the contingent
convertible preferred securities of such series.
No payments will be made on the contingent convertible
preferred securities of any series (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 applicable to BBVA and/or the BBVA Group).
Agreement to Distribution Cancellation
By acquiring contingent convertible preferred
securities of any series, holders (which, for the purposes of this section includes holders of a beneficial interest in the contingent
convertible 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 contingent convertible
preferred securities indenture and the contingent convertible preferred securities shall not constitute an Enforcement Event or other
default under the terms of the contingent convertible preferred securities or the contingent convertible preferred securities 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 ranking junior to the contingent convertible preferred securities of such series (including,
without limitation, any CET1 Capital of BBVA or 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 under “—Distributions”, “—Liquidation Distribution” and “—Conversion”.
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.
Notice of Distribution Cancellation
If practicable, BBVA will provide notice of any
cancellation or deemed cancellation of Distributions on any particular series of contingent convertible preferred securities (in each
case, in whole or in part) to the holders of the contingent convertible preferred securities of such series through the relevant depositary
(or, if the contingent convertible preferred securities are held in definitive form, to the holders of the contingent convertible preferred
securities directly at their addresses shown on the register for the contingent convertible preferred securities) 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 with respect to such series of contingent convertible preferred securities, or
give the holders or beneficial owners of the contingent convertible preferred securities of such series any rights as a result of such
failure.
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 contingent
convertible preferred securities of any series (unless previously converted into Common Shares in accordance with “—Conversion”
below) shall be entitled to receive out of the assets of BBVA available for distribution to holders of such series, 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 contingent convertible preferred securities of such series.
If, before the occurrence of a Liquidation Event,
a Conversion Event occurs but the relevant conversion of the contingent convertible preferred securities of such series into Common Shares
is still to take place, holders of the contingent convertible preferred securities of such series will be entitled to receive out of the
relevant assets of BBVA a monetary amount equal to that which holders of such contingent convertible preferred securities of such series
would have received on any distribution of the assets of BBVA if such conversion had taken place immediately prior to such Liquidation
Event.
After payment of the relevant entitlement in respect
of a contingent convertible preferred security as described in this section, such contingent convertible preferred security will confer
no further right or claim to any of the remaining assets of BBVA.
Subordination
The below description is based on the relevant
provisions of the contingent convertible preferred securities indenture, which was entered into on September 25, 2017. Since the execution
of the contingent convertible preferred securities indenture, the provisions relating to the relative status and ranking of credits in
the Insolvency Law have been subject to change, and such provisions may further change in the future. Accordingly, investors are directed
to read the description of the status and ranking of a particular series of notes in the relevant prospectus supplement and supplemental
indenture.
Unless previously converted into Common Shares
(as set forth in “—Conversion”), the obligations of BBVA under the contingent convertible preferred securities
of any series will constitute direct, unconditional, unsecured and subordinated obligations of BBVA and, in case of insolvency (concurso
de acreedores) of BBVA, in accordance with Additional Provision 14.3 of Law 11/2015 and the Spanish Insolvency Law 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 (or otherwise), for so long
as the obligations of BBVA in respect of the contingent convertible preferred securities of such series constitute an Additional Tier
1 Instrument of BBVA, such contingent convertible preferred securities will rank with respect to claims for any Liquidation Preference
of such contingent convertible preferred securities:
| (i) | any unsubordinated obligations of BBVA (including where those obligations subsequently become subordinated pursuant to Article 92.1º
of the Spanish Insolvency Law); and |
| (ii) | any claim for principal in respect of any other contractually subordinated obligations of BBVA, present and future, not constituting
Additional Tier 1 Capital of BBVA for the purposes of Section 3.(a) of Additional Provision 14 of Law 11/2015 (other than, to the
extent permitted by law, any Parity Securities, whether so ranking by law or their terms); |
| (i) | each other claim for any Liquidation Preference of contingent convertible preferred securities; |
| (ii) | all other claims in respect of any liquidation preference or otherwise for principal in respect of contractually subordinated obligations
of BBVA under any outstanding Additional Tier 1 Instruments, present and future; and |
| (iii) | any other Parity Securities (whether so ranking by law or their terms), to the extent permitted by law; and |
| (c) | senior to the Common Shares or any other subordinated obligations of BBVA which by law rank junior to the contingent convertible preferred
securities (including, to the extent permitted by law, any contractually subordinated obligations of BBVA expressed by their terms to
rank junior to the contingent convertible preferred securities). |
Unless previously converted into Common Shares,
to the extent the obligations of BBVA in respect of the contingent convertible preferred securities of any series cease to constitute
an Additional Tier 1 Instrument of BBVA but constitute a Tier 2 Instrument of BBVA, the payment obligations of BBVA under the contingent
convertible preferred securities will rank, in accordance with Section 3.(b) 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 contingent convertible
preferred securities were a Tier 2 Instrument.
To the extent the obligations of BBVA in respect
of any outstanding contingent convertible 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 contingent convertible preferred securities will rank, in accordance with
Section 3.(a) 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 contingent convertible preferred securities were contractually subordinated
obligations of BBVA not constituting Additional Tier 1 Capital or Tier 2 Capital of BBVA.
The obligations of BBVA under the contingent convertible
preferred securities are subject to, and may be limited by, the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution
Authority.
BBVA agrees with respect to any series of contingent
convertible preferred securities and each holder and beneficial owner of contingent convertible preferred securities of any series, by
his or her acquisition of a contingent convertible 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 contingent convertible preferred security. In addition, each holder and beneficial owner of contingent convertible preferred
securities of any series by his or her acquisition of the securities, to the extent permitted by Spanish law, authorizes and directs the
applicable trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the
relevant contingent convertible preferred securities as provided in the contingent convertible preferred securities indenture and as summarized
herein and appoints the applicable trustee his attorney-in-fact for any and all such purposes.
Redemption and Repurchase
Unless otherwise provided in the applicable prospectus
supplement, the contingent convertible preferred securities of any series are perpetual securities in respect of which there is no fixed
redemption date or maturity date. Holders of the contingent convertible preferred securities of any series may not require any redemption
of the contingent convertible preferred securities of such series at any time.
Unless otherwise provided in the applicable prospectus
supplement, the contingent convertible preferred securities are only redeemable in accordance with the following provisions of the contingent
convertible preferred securities indenture described in this section “—Redemption and Repurchase”.
Pre-Conditions to Redemptions and Repurchases
As of the date of this prospectus, Article 78(1)
of the CRR provides that the Regulator will give its consent to redemption of the contingent convertible preferred securities provided
that either of the following conditions is met:
(a) on or before such redemption of the contingent
convertible preferred securities, BBVA replaces the contingent convertible preferred securities with instruments qualifying as equal or
higher quality on terms that are sustainable for the income capacity of BBVA; or
(b) BBVA has demonstrated to the satisfaction
of the Regulator that its own funds and eligible liabilities would, following such redemption, exceed the requirements for own funds and
eligible liabilities set forth in CRR, CRD IV Directive and BRRD by a margin that the Regulator may consider necessary.
No vote of the outstanding holders of the contingent
convertible preferred securities of any series will be required for BBVA to redeem and cancel the contingent convertible preferred securities
of such series.
Optional Redemption
Except as provided below under “—Redemption
Due to a Capital Event” or “—Redemption Due to a Tax Event” and in the relevant prospectus supplement,
any series of contingent convertible preferred securities shall not be redeemable prior to the fifth anniversary of the date of issuance
of the relevant contingent convertible preferred securities (or such other period as Applicable Banking Regulations may require). All,
and not only some, of the contingent convertible preferred securities of any series may be redeemed at the option of BBVA at any time
on or after the fifth anniversary of the date of issuance of such contingent convertible preferred securities at the Redemption Price,
in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No 241/2014 and/or any other Applicable
Banking Regulations then in force.
Redemption Due to a Capital Event
Unless otherwise provided in the applicable prospectus
supplement, if, on or after the issue date of the contingent convertible preferred securities of any series, there is a Capital Event,
the contingent convertible preferred securities of such series may be redeemed, in whole but not in part, at the option of BBVA at any
time at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No
241/2014 and/or any other Applicable Banking Regulations then in force.
As of the date of this prospectus, Article 78(4)
provides that the Regulator may only permit BBVA to redeem any series contingent convertible preferred securities before the fifth anniversary
of the date of issuance of contingent convertible preferred securities of such series in the case of a Capital Event if, in addition to
meeting one of the conditions referred to in paragraphs (a) or (b) of article 78(1) (as described above), there is a change in the
regulatory classification of the contingent convertible preferred
securities of such series that would be likely to result in their exclusion
from own funds or reclassification as a lower quality form of own funds, the Regulator considers such change to be sufficiently certain
and BBVA demonstrates to the satisfaction of the Regulator that the regulatory classification was not reasonably foreseeable at the date
of issuance of contingent convertible preferred securities of such series.
Redemption Due to a Tax Event
Unless otherwise provided in the applicable prospectus
supplement, if, on or after the date of issuance of any series of contingent convertible preferred securities, there is a Tax Event, the
contingent convertible preferred securities of such series may be redeemed, in whole but not in part, at the option of BBVA at any time
at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No 241/2014
and/or any other Applicable Banking Regulations then in force.
Prior to any notice of redemption of such contingent
convertible preferred securities pursuant to the contingent convertible preferred securities indenture, BBVA shall provide the trustee
with (i) an officer’s certificate of BBVA stating that BBVA is entitled to effect such redemption and setting forth in reasonable
detail a statement of circumstances showing that a Tax Event has occurred; and (ii) an opinion of counsel to the effect that a Tax
Event has occurred.
Article 78(4) provides that the Regulator may
only permit BBVA to redeem the contingent convertible preferred securities of any series before the fifth anniversary of the date of issuance
of contingent convertible preferred securities of such series in the case of a Tax Event if, in addition to meeting one of the conditions
referred to in paragraphs (a) or (b) of article 78(1) (as described above), there is a change in the applicable tax treatment of
the contingent convertible preferred securities of such series and BBVA demonstrates to the satisfaction of the Regulator that such change
is material and was not reasonably foreseeable at the date of issuance of contingent convertible preferred securities of such series.
Redemption Procedures
The decision to redeem the contingent convertible
preferred securities of a series must be irrevocably notified by BBVA to holders of the contingent convertible preferred securities of
such series upon not less than 30 nor more than 60 calendar days’ notice prior to the relevant redemption date (unless a shorter
period is specified in the contingent convertible preferred securities to be redeemed) (i) through the filing of a relevant information
(información relevante) announcement with the CNMV and its publication in accordance with the rules and regulations of any
applicable stock exchange or other relevant authority and (ii) in the manner and to the extent required by the provisions described
under “—Notices” below (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 the holder of any contingent convertible 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 contingent convertible 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 contingent convertible preferred securities indenture become due and payable upon each contingent convertible preferred security
being redeemed and that Distributions will cease to accrue on or after that date; the place or places where the contingent convertible
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 contingent convertible preferred securities being redeemed.
If BBVA gives notice of redemption of the contingent
convertible preferred securities of any series, then on or prior to the relevant redemption date, BBVA will (except as otherwise provided
in this section “—Redemption and Repurchase”):
(a) irrevocably deposit with the Principal Paying
Agent funds (in the currency in which the contingent convertible 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
any series of contingent convertible 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 contingent convertible
preferred securities of such series shall cease to accrue (unless such deposit is made prior to the redemption date, in which case Distributions
on the contingent convertible preferred securities of such series shall cease to accrue on the redemption date);
(b) such contingent convertible preferred securities
of such series will no longer be considered outstanding (except as otherwise provided in this section “—Redemption and
Repurchase”, 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 contingent convertible preferred securities prior to the payment of the Redemption Price
to the holders); and
(c) the holders of contingent convertible preferred
securities of such series will no longer have any rights as holders except the right to receive the Redemption Price (except as otherwise
provided in this section “—Redemption and Repurchase” if there is a Trigger Event prior to the redemption date).
Subject to the following paragraph, if in connection
with any series of contingent convertible preferred securities BBVA improperly withholds or refuses to pay the Redemption Price of the
contingent convertible preferred securities of such series, Distributions will continue to accrue, subject as provided in “—Distributions
Discretionary” or “—Restrictions on Payments”, 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 with
respect to the contingent convertible preferred securities of a series if a Trigger Event Notice has been given with respect to such series.
If any notice of redemption of any series of contingent convertible preferred securities has been given and a Trigger Event with respect
to such series 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 contingent convertible preferred securities on such redemption date and,
instead, the Trigger Conversion of the contingent convertible preferred securities shall take place as provided under “—Conversion
Upon Trigger Event”.
If a Capital Reduction Notice has been given with
respect to the contingent convertible preferred securities of a series, BBVA may not give a notice of redemption with respect to such
series 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 in the relevant prospectus supplement, BBVA may redeem all (but not part) of the aggregate Liquidation Preference of contingent
convertible preferred securities of such series which remains outstanding following the Capital Reduction Conversion. If any notice of
redemption of any series of contingent convertible preferred securities has been given and a Capital Reduction with respect to such series
occurs prior to the redemption date, the Capital Reduction will be disregarded for all purposes of the contingent convertible preferred
securities indenture with respect to such series of contingent convertible preferred securities and there shall be no conversion of such
series of contingent convertible preferred securities as provided in “Conversion—Conversion Upon Capital Reduction”
and, instead, the redemption of the relevant contingent convertible preferred securities shall take place as provided in this section.
If BBVA has elected to redeem the contingent convertible
preferred securities of any series 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 such series of contingent convertible 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 such contingent convertible preferred securities)
will be due and payable.
Non-payment of Redemption Price
If in connection with any series of contingent
convertible preferred securities BBVA improperly withholds or refuses to pay the Redemption Price of the contingent convertible preferred
securities of such series, Distributions will continue to accrue, subject as provided in “—Distributions” above,
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.
Purchases of Contingent Convertible Preferred Securities
Unless otherwise provided in the relevant prospectus
supplement, BBVA or any member of the BBVA Group, may purchase or otherwise acquire any of the outstanding contingent convertible preferred
securities of any series at any price in the open market or otherwise in accordance with Articles 77 and 78 of CRR, Article 29 of the
Commission Delegated Regulation (EU) No 241/2014 and/or any other Applicable Banking Regulations in force at the relevant time.
Under the current Applicable Banking Regulations,
an institution requires the prior permission of the Regulator to effect the repurchase of Additional Tier 1 Instruments (article 77(b)
of CRR) and, subject to certain limited exceptions (article 78(4) of CRR), these may not be repurchased before five years after the date
of issuance (article 52.1(i) of CRR).
Notwithstanding any other provision of the contingent
convertible preferred securities indenture and subject to compliance with the provisions of any applicable law (including the Spanish
Companies Act and the Applicable Banking Regulations), BBVA or any member of the BBVA Group may exercise such rights as it may from time
to time enjoy to purchase or redeem or buy back any shares of BBVA (including Common Shares) or any depositary or other receipts or certificates
representing the same without the consent of the holders.
Conversion
Conversion Upon Trigger Event
If the Trigger Event occurs at any time on or
after the issue date of any series of contingent convertible preferred securities, then BBVA will:
(a) not pay any Distribution on the contingent
convertible preferred securities of such series, including any accrued and unpaid Distributions, which shall be deemed to be cancelled
by BBVA in accordance with “—Distributions” above; and
(b) irrevocably and mandatorily (and without any
requirement for the consent or approval of the holders or beneficial owners of contingent convertible preferred securities of such series)
convert all the contingent convertible preferred securities of such series into Common Shares (the “Trigger Conversion”) to
be delivered on the relevant Conversion Settlement Date. If the Trigger Event occurs, the contingent convertible preferred securities
of any series 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 relevant series of contingent convertible preferred
securities.
A Trigger Event will not constitute an event of
default, an Enforcement Event 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 and Repurchase—Redemption Procedures”, if a Capital Reduction occurs at any time on
or after the issue date of any series of contingent convertible preferred securities, then BBVA will, subject as provided below, irrevocably
and mandatorily (and without any requirement for the consent or approval of the holders or beneficial owners of contingent convertible
preferred securities of such series) convert all the contingent convertible preferred securities of such series 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, “—Payments—Distributions”, 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, if a Capital Reduction
occurs at any time on or after the issue date of any series of contingent convertible preferred securities, each holder of the contingent
convertible preferred securities of such series will have the right to elect that all (but not part) of its contingent convertible preferred
securities shall not be converted, in which case all contingent convertible preferred securities of such holder shall remain outstanding
and no payment of any accrued and unpaid Distributions on such contingent convertible preferred securities shall be made in respect of
such contingent convertible preferred securities to that holder on the relevant Conversion Settlement Date (without prejudice to any payment
of such Distributions or any other Distributions that may accrue in respect of those contingent convertible 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 then obtainable from the specified office of such Paying
and Conversion Agent 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 contingent convertible preferred securities represented by a Global Security held by or on behalf of a Clearing System, an Election
Notice may be delivered within the Election Period by the holder giving notice to the Principal Paying Agent of such election in accordance
with the standard procedures of the relevant Clearing System (which may include notice being given on such holder’s instruction
by the relevant Clearing System to the Principal Paying 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 contingent convertible
preferred securities held by such holders) by no later than the immediately following Business Day.
Any relevant contingent convertible 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 contingent convertible 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.
A Capital Reduction will not constitute an event
of default, an Enforcement Event 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.
Upon Conversion
Except as provided below with respect to fractions,
the number of Common Shares to be issued on Conversion in respect of each contingent convertible preferred security of any series to be
converted shall be determined by dividing the Liquidation Preference of such contingent convertible 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 bottom under
“—Anti-Dilution Adjustment of the Floor Price” 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 contingent convertible 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 contingent convertible preferred securities being so converted and rounded down to the nearest whole number of Common Shares.
Upon any Trigger Conversion of any series of contingent
convertible preferred securities, holders (and beneficial owners) of any contingent convertible preferred security shall have no claim
against BBVA in respect of (i) any Liquidation Preference (and premium, if any) of such series of contingent convertible preferred
securities converted into Common Shares or (ii) any accrued and unpaid Distributions cancelled or otherwise unpaid in respect of
contingent convertible preferred securities of such series, and the contingent convertible preferred securities of such series shall cease
to represent any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository.
Upon any Capital Reduction Conversion of any series
of contingent convertible preferred securities, holders (and beneficial owners) of any contingent convertible preferred securities, other
than holders of contingent convertible preferred securities in respect of which such holders have elected not to convert such contingent
convertible preferred securities in accordance with the provisions described under “—Conversion Upon Capital Reduction”,
shall have no claim against BBVA in respect of any Liquidation Preference (and premium, if any) of such series of contingent convertible
preferred securities, and the contingent convertible preferred securities of such series converted into Common Shares, other than contingent
convertible preferred securities in respect of which holders have elected not to convert such contingent convertible preferred securities
in accordance with the provisions described under “—Conversion Upon Capital Reduction”, shall cease to represent
any right other than the right to receive Common Shares from or on behalf of the Conversion Shares Depository. 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 in, “—Payments—Distributions”,
and except as set out under “—Conversion Upon Capital Reduction”, an amount equal to the accrued and unpaid Distributions
for the then current Distribution Period up to (but excluding) the Conversion Settlement Date.
On or prior to 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 contingent convertible preferred securities of such series outstanding on the Trigger Event Notice
Date, and (ii) in respect of a Capital Reduction Conversion, of the aggregate Liquidation Preference of contingent convertible preferred
securities of such series outstanding on the Capital Reduction Notice Date, other than contingent convertible preferred securities in
respect of which such holders have elected not to convert such contingent convertible preferred securities in accordance with the provisions
described under “—Conversion Upon Capital Reduction”.
The obligation of BBVA to issue and deliver Common
Shares to a holder of contingent convertible preferred securities of any series 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 contingent convertible preferred securities converted, other
than, in the case of a Capital Reduction, as provided under “—Conversion Upon Capital Reduction” 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 in, “—Payments—Distributions”,
and except as set out under “—Conversion Upon Capital Reduction”.
Except as set forth in the immediately preceding
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. After such delivery by BBVA of the relevant Common Shares
to the Conversion Shares Depository, holders of any series of contingent convertible preferred securities so converted shall have recourse
to the Conversion Shares Depository only for the delivery to them of such Common Shares, in the circumstances described under “—Settlement
Procedures” below.
Conversion Price
“Conversion Price” means, in respect
of a Conversion Notice Date, if the Common Shares are:
| (a) | then admitted to trading on a Relevant Stock Exchange, the higher of: |
| (i) | the Reference Market Price of a Common Share (translated into U.S. dollars at the Prevailing Rate, if applicable); |
| (ii) | the Floor Price (translated into U.S. dollars at the Prevailing Rate, if applicable); and |
| (iii) | the nominal value of a Common Share (translated into U.S. dollars at the Prevailing Rate, if applicable); or |
| (b) | not then admitted to trading on a Relevant Stock Exchange, the higher of (ii) and (iii) above. |
Anti-Dilution Adjustment of the Floor Price
For the purposes of this section “—Anti-Dilution
Adjustment of the Floor Price” only (a) references to the “issue” of Common Shares or Common Shares being issued
shall, if not otherwise expressly specified in this “Description of the Contingent Convertible Preferred Securities of BBVA”,
include the transfer and/or delivery of Common Shares, whether newly issued and allotted or previously existing or held by or on behalf
of BBVA or any member of the BBVA Group, and (b) Common Shares held by or on behalf of BBVA or any member of the BBVA Group (and
which, in the case of sub-paragraphs (d) and (f) below, are not entitled to receive the relevant right or other entitlement) shall
not be considered as or treated as in issue or issued or entitled to receive any Dividend, right or other entitlement.
References to any issue or offer or grant to Shareholders
or Existing Shareholders “as a class” or “by way of rights” shall be taken to be references to an issue or offer
or grant to all or substantially all Shareholders or Existing Shareholders, as the case may be, other than Shareholders or Existing Shareholders,
as the case may be, to whom, by reason of the laws of any territory or requirements of any recognized regulatory body or any other stock
exchange or securities market in any territory or in connection with fractional entitlements, it is determined not to make such issue
or offer or grant.
Upon the happening of any of the events described
below and unless otherwise provided in the relevant prospectus supplement, the Floor Price of any series of contingent convertible preferred
securities shall be adjusted from time to time as follows:
(a) If and whenever there shall be a consolidation,
reclassification, redesignation or subdivision affecting the number of Common Shares, the Floor Price shall be adjusted by multiplying
the Floor Price in force immediately prior to such consolidation, reclassification, redesignation or subdivision by the following fraction:
where:
A is the aggregate number of Common
Shares in issue immediately before such consolidation, reclassification, redesignation or subdivision, as the case may be; and
B is the aggregate number of Common
Shares in issue immediately after, and as a result of, such consolidation, reclassification, redesignation or subdivision, as the case
may be.
Such adjustment shall become effective on the
date the consolidation, reclassification, redesignation or subdivision, as the case may be, takes effect.
(b) If and whenever BBVA shall issue 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) other than (i) where any such Common Shares are or are to be issued instead of the whole or part of a
Dividend in cash which Shareholders would or could otherwise have elected to receive; (ii) where Shareholders may elect to receive
a Dividend in cash in lieu of such Common Shares; or (iii) where any such Common Shares are or are expressed to be issued in lieu
of a Dividend (whether or not a cash Dividend equivalent or amount is announced or would otherwise be payable to Shareholders, whether
at their election or otherwise), the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to such issue
by the following fraction:
where:
A is the aggregate number of Common
Shares in issue immediately before such issue; and
B is the aggregate number of Common
Shares in issue immediately after such issue.
Such adjustment shall become effective on the
date of issue of such Common Shares.
(c) (i) If and whenever BBVA shall pay any Extraordinary
Dividend to its Shareholders, the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective
Date by the following fraction:
where:
A is the Current Market Price of one
Common Share on the Effective Date; and
B is the portion of the Fair Market
Value of the aggregate Extraordinary Dividend attributable to one Common Share, with such portion being determined by dividing the Fair
Market Value of the aggregate Extraordinary Dividend by the number of Common Shares entitled to receive the relevant Dividend.
Such adjustment shall become effective
on the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Extraordinary Dividend can be determined.
“Effective Date” means,
in respect of this sub-paragraph (c)(i), the first date on which the Common Shares are traded ex-the relevant Cash Dividend on the Relevant
Stock Exchange.
“Extraordinary Dividend”
means, in respect of this sub-paragraph (c)(i), any Cash Dividend which is expressly declared by BBVA to be a capital distribution, extraordinary
dividend, extraordinary distribution, special dividend, special distribution or return of value to its Shareholders or any analogous or
similar term (including any distribution made as a result of any Capital Reduction), in which case the Extraordinary Dividend shall be
such Cash Dividend.
(ii) If and whenever BBVA shall pay
or make any Non-Cash Dividend to Shareholders, the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior
to the Effective Date by the following fraction:
where:
A is the Current Market Price of one
Common Share on the Effective Date; and
B is the portion of the Fair Market
Value of the aggregate Non-Cash Dividend attributable to one Common Share, with such portion being determined by dividing the Fair Market
Value of the aggregate Non-Cash Dividend by the number of Common Shares entitled to receive the relevant Non-Cash Dividend (or, in the
case of a purchase, redemption or buy back of Common Shares or any depositary or other receipts or certificates representing Common Shares
by or on behalf of BBVA or any member of the BBVA Group, by the number of Common Shares in issue immediately following such purchase,
redemption or buy back, and treating as not being in issue any Common Shares, or any Common Shares represented by depositary or other
receipts or certificates, purchased, redeemed or bought back).
Such adjustment shall become effective
on the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Non-Cash Dividend is capable of being
determined as provided herein.
“Effective Date” means,
in respect of this sub-paragraph (c)(ii), the first date on which the Common Shares are traded ex-the relevant Dividend on the Relevant
Stock Exchange or, in the case of a purchase, redemption or buy back of Common Shares or any depositary or other receipts or certificates
representing Common Shares by or on behalf of BBVA or any member of the BBVA Group, the date on which such purchase, redemption or buy
back is made (or, in any such case if later, the first date upon which the Fair Market Value of the relevant Dividend is capable of being
determined as provided herein) or in the case of a Spin-Off, the first date on which the Common Shares are traded ex-the relevant Spin-Off
on the Relevant Stock Exchange.
(iii) For the purposes of this sub-paragraph
(c), Fair Market Value shall (subject as provided in paragraph (a) of the definition of “Dividend” and in the definition
of “Fair Market Value”) be determined as at the Effective Date.
(iv) In making any calculations for
the purposes of this sub-paragraph (c), such adjustments (if any) shall be made as an Independent Financial Adviser may determine in good
faith to be appropriate to reflect (A) any consolidation or sub-division of any Common Shares or (B) the issue of Common Shares
by way of capitalization of profits or reserves (or any like or similar event) or (C) any increase in the number of Common Shares
in issue in BBVA’s financial year in question.
(d) If and whenever BBVA shall issue Common Shares
to its Shareholders as a class by way of rights, or BBVA or any member of the BBVA Group or (at the direction or request or pursuant to
any arrangements with BBVA or any member of the BBVA Group) any other company, person or entity shall issue or grant to the Shareholders
as a class by way of rights, any options, warrants or other rights to subscribe for or purchase or otherwise acquire any Common Shares,
or any Securities which by their terms of issue carry (directly or indirectly) rights of conversion into, or exchange or subscription
for, or the right to acquire, any Common Shares (or shall grant any such rights in respect of existing Securities so issued), in each
case at a price per Common Share which is less than 95% of the Current Market Price per Common Share on the Effective Date, the Floor
Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the following fraction:
where:
A is the number of Common Shares in
issue on the Effective Date;
B is the number of Common Shares which
the aggregate consideration (if any) receivable for the Common Shares issued by way of rights, or for the Securities issued by way of
rights, or for the options or warrants or other rights issued or granted by way of rights and for the total number of Common Shares deliverable
on the exercise thereof, would purchase at such Current Market Price per Common Share; and
C is the number of Common Shares to
be issued or, as the case may be, the maximum number of Common Shares which may be issued upon exercise of such options, warrants or rights
calculated as at the date of issue of such options, warrants or rights or upon conversion or exchange or exercise of rights of subscription
or purchase or other rights of acquisition in respect thereof at the initial conversion, exchange, subscription, purchase or acquisition
price or rate,
provided that if at the Effective Date such number of Common
Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some
subsequent time, then for the purposes of this sub-paragraph (d), “C” shall be determined by the application of such formula
or variable feature or as if the relevant event occurs or had occurred as at the Effective Date and as if such conversion, exchange, subscription,
purchase or acquisition had taken place on the Effective Date.
Such adjustment shall become effective on the
Effective Date.
“Effective Date” means, in respect
of this sub-paragraph (d), the first date on which the Common Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock
Exchange.
(e) If and whenever BBVA or any member of the
BBVA Group or (at the direction or request or pursuant to any arrangements with BBVA or any member of the BBVA Group) any other company,
person or entity shall issue any Securities (other than Common Shares or options, warrants or other rights to subscribe for or purchase
or otherwise acquire any Common Shares or Securities which by their terms carry (directly or indirectly) rights of conversion into, or
exchange or subscription for, or rights to otherwise acquire, Common Shares) to the Shareholders as a class by way of rights or grant
to the Shareholders as a class by way of rights any options, warrants or other rights to subscribe for or purchase or otherwise acquire
any Securities (other than Common Shares or options, warrants or other rights to subscribe for or purchase or otherwise acquire Common
Shares or Securities which by their term carry (directly or indirectly) rights of conversion into, or exchange or subscription for, rights
to otherwise acquire, Common Shares), the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the
Effective Date by the following fraction:
where:
A is the Current Market Price of one
Common Share on the Effective Date; and
B is the Fair Market Value on the
Effective Date of the portion of the rights attributable to one Common Share.
Such adjustment shall become effective on the
Effective Date.
“Effective Date” means, in respect
of this sub-paragraph (e), the first date on which the Common Shares are traded ex-the relevant Securities or ex-rights, ex-option or
ex-warrants on the Relevant Stock Exchange.
(f) If and whenever BBVA shall issue (otherwise
than as mentioned in sub-paragraph (d) above) wholly for cash or for no consideration any Common Shares (other than Common Shares
issued on conversion of any series of contingent convertible preferred securities or on the exercise of any rights of conversion into,
or exchange or subscription for or purchase of, or right to otherwise acquire Common Shares) or if and whenever BBVA or any member of
the BBVA Group or (at the direction or request or pursuance to any arrangements with BBVA or any member of the BBVA Group) any other company,
person or entity shall issue or grant (otherwise than as mentioned in sub-paragraph (d) above) wholly for cash or for no consideration
any options, warrants or other rights to subscribe for or purchase or otherwise acquire any Common Shares (other than the contingent convertible
preferred securities of any series, which term shall for this purpose include any further contingent convertible preferred securities),
in each case at a price per Common Share which is less than 95% of the Current Market Price per Common Share on the date of the first
public announcement of the terms of such issue or grant, the Floor Price shall be adjusted by multiplying the Floor Price in force immediately
prior to the Effective Date by the following fraction:
where:
A is the number of Common Shares in
issue immediately before the issue of such Common Shares or the grant of such options, warrants or rights;
B is the number of Common Shares which
the aggregate consideration (if any) receivable for the issue of such Common Shares or, as the case may be, for the Common Shares to be
issued or otherwise made available upon the exercise of any such options, warrants or rights, would purchase at such Current Market Price
per Common Share on the Effective Date; and
C is the number of Common Shares to
be issued pursuant to such issue of such Common Shares or, as the case may be, the maximum number of Common Shares which may be issued
upon exercise of such options, warrants or rights calculated as at the date of issue of such options, warrants or rights,
provided that if at the Effective Date, such number of Common Shares
is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent
time, then for the purposes of this sub-paragraph (f), “C” shall be determined by the application of such formula or variable
feature or as if the relevant event occurs or had occurred as at the Effective Date and as if such conversion, exchange, subscription,
purchase or acquisition had taken place on the Effective Date.
Such adjustment shall become effective on the
Effective Date.
“Effective Date” means, in respect
of this sub-paragraph (f), the date of issue of such Common Shares or, as the case may be, the grant of such options, warrants or rights.
(g) If and whenever BBVA or any member of the
BBVA Group or (at the direction or request of or pursuant to any arrangements with BBVA or any member of the BBVA Group) any other company,
person or entity (otherwise than as mentioned in sub-paragraphs (d), (e) or (f) above) shall issue wholly for cash or for no consideration
any Securities (other than contingent convertible preferred securities of any series, which term shall for this purpose include any further
contingent convertible preferred securities) which by their terms of issue carry (directly or indirectly) rights of conversion into, or
exchange or subscription for, purchase of, or rights to otherwise acquire, Common Shares (or shall grant any such rights in respect of
existing Securities so issued) or Securities which by their terms might be reclassified/redesignated as Common Shares, and the consideration
per Common Share receivable upon conversion, exchange, subscription, purchase, acquisition or redesignation is less than 95% of the Current
Market Price per Common Share on the date of the first public announcement of the terms of issue of such Securities (or the terms of such
grant), the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the following
fraction:
where:
A is the number of Common Shares in
issue immediately before such issue or grant (but where the relevant Securities carry rights of conversion into or rights of exchange
or subscription for, purchase of, or rights to otherwise acquire Common Shares which have been issued, purchased or acquired by BBVA or
any member of the BBVA Group (or at the direction or request or pursuant to any arrangements with BBVA or any member of the BBVA Group)
for the purposes of or in connection with such issue, less the number of such Common Shares so issued, purchased or acquired);
B is the number of Common Shares which
the aggregate consideration (if any) receivable for the Common Shares to be issued or otherwise made available upon conversion or exchange
or upon exercise of the right of subscription, purchase or acquisition attached to such Securities or, as the case may be, for the Common
Shares to be issued or to arise from any such reclassification/ redesignation would purchase at such Current Market Price per Common Share;
and
C is the maximum number of Common
Shares to be issued or otherwise made available upon conversion or exchange of such Securities or upon the exercise of such right of subscription
attached thereto at the initial conversion, exchange, subscription, purchase or acquisition price or rate or, as the case may be, the
maximum number of Common Shares which may be issued or arise from any such reclassification/ redesignation;
provided that if at the Effective Date such number of Common
Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some
subsequent time (which may be when such Securities are converted or exchanged or rights of subscription, purchase or acquisition are exercised
or, as the case may be, such Securities are reclassified/redesignated or at such other time as may be provided), then for the purposes
of this sub-paragraph (g), “C” shall be determined by the application of such formula or variable feature or as if the relevant
event occurs or had occurred as at the Effective Date and as if such conversion, exchange, subscription, purchase or acquisition or, as
the case may be, reclassification, redesignation had taken place on the Effective Date.
Such adjustment shall become effective on the
Effective Date.
“Effective Date” means, in respect
of this sub-paragraph (g), the date of issue of such Securities or, as the case may be, the grant of such rights.
(h) If and whenever there shall be any modification
of the rights of conversion, exchange, subscription, purchase or acquisition attaching to any Securities (other than the contingent convertible
preferred securities of any series, which term for this purpose shall include any further contingent convertible preferred securities)
pursuant to sub-paragraph (g) above (other than in accordance with the terms (including terms as to adjustment) applicable to such
Securities upon issue) so that following such modification the consideration per Common Share receivable has been reduced and is less
than 95% of the Current Market Price per Common Share on the date of the first public announcement of the proposals for such modification,
the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the following fraction:
where:
A is the number of Common Shares in
issue immediately before such modification (but where the relevant Securities carry rights of conversion into or rights of exchange or
subscription for, or purchase or acquisition of, Common Shares which have been issued, purchased or acquired by BBVA or any member of
the BBVA Group (or at the direction or request or pursuant to any arrangements with BBVA or any member of the BBVA Group) for the purposes
of or in connection with such Securities, less the number of such Common Shares so issued, purchased or acquired);
B is the number of Common Shares which
the aggregate consideration (if any) receivable for the Common Shares to be issued or otherwise made available upon conversion or exchange
or upon exercise of the right of subscription, purchase or acquisition attached to the Securities so modified would purchase at such Current
Market Price per Common Share or, if lower, the existing conversion, exchange, subscription, purchase or acquisition price or rate of
such Securities; and
C is the maximum number of Common
Shares which may be issued or otherwise made available upon conversion or exchange of such Securities or upon the exercise of such rights
of subscription, purchase or acquisition attached thereto at the modified conversion, exchange, subscription, purchase or acquisition
price or rate but giving credit in such manner as an Independent Financial Adviser in good faith shall consider appropriate for any previous
adjustment under this sub-paragraph (h) or sub-paragraph (g) above;
provided that if at the Effective Date such number of Common
Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some
subsequent time (which may be when such Securities are converted or exchanged or rights of subscription, purchase or acquisition are exercised
or at such other time as may be provided) then for the purposes of this sub-paragraph (h), “C” shall be determined by the
application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Effective Date and as if
such conversion, exchange, subscription, purchase or acquisition had taken place on the Effective Date.
Such adjustment shall become effective on the
Effective Date.
“Effective Date” means, in respect
of this sub-paragraph (h), the date of modification of the rights of conversion, exchange, subscription, purchase or acquisition attaching
to such Securities.
(i) If and whenever BBVA or any member of the
BBVA Group or (at the direction or request of or pursuant to any arrangements with BBVA or any member of the BBVA Group) any other company,
person or entity shall offer any Securities in connection with which the Shareholders as a class are entitled to participate in arrangements
whereby such Securities may be acquired by them (except where the Floor Price falls to be adjusted under sub-paragraphs (b), (c), (d),
(e) or (f) above or sub-paragraph (j) below (or would fall to be so adjusted if the relevant issue or grant was at less than
95% of the Current Market Price per Common Share on the relevant dealing day under sub-paragraph (e) above)) the Floor Price shall
be adjusted by multiplying the Floor Price in force immediately before the Effective Date by the following fraction:
where:
A is the Current Market Price of one
Common Share on the Effective Date; and
B is the Fair Market Value on the
Effective Date of the portion of the relevant offer attributable to one Common Share.
Such adjustment shall become effective on the
Effective Date.
“Effective Date” means, in respect
of this sub-paragraph (i), the first date on which the Common Shares are traded ex-rights on the Relevant Stock Exchange.
(j) If BBVA determines that a reduction to the
Floor Price should be made for whatever reason, the Floor Price will be reduced (either generally or for a specified period as notified
to holders of the contingent convertible preferred securities of such relevant series) in such manner and with effect from such date as
BBVA shall determine and notify to the holders of the relevant series of contingent convertible preferred securities.
Notwithstanding the foregoing provisions in this
section “Anti-Dilution Adjustment of the Floor Price”:
| · | where the events or circumstances giving rise to any adjustment of the Floor Price have already resulted or will result in an adjustment
to the Floor Price or where the events or circumstances giving rise to any adjustment arise by virtue of any other events or circumstances
which have already given or will give rise to an adjustment to the Floor Price or where more than one event which gives rise to an adjustment
to the Floor Price occurs within such a short period of time that, in the opinion of BBVA, a modification to the operation of the adjustment
provisions is required to give the intended result, such modification shall be made to the operation of the adjustment provisions as may
be determined in good faith by an Independent Financial Adviser to be in its opinion appropriate to give the intended result; and |
| · | such modification shall be made to the operation of the anti-dilution adjustment terms described in this section “Anti-Dilution
Adjustment of the Floor Price” as may be determined in good faith by an Independent Financial Adviser to be in its opinion appropriate
(A) to ensure that an adjustment to the Floor Price or the economic effect thereof shall not be taken into account more than once
and (B) to ensure that the economic effect of a Dividend is not taken into account more than once; |
and in each case, any such modification shall be conclusive
and binding on all parties (including the holders and beneficial owners of any contingent convertible preferred security) save in the
case of manifest error.
For the purpose of any calculation of the consideration
receivable or price pursuant to sub-paragraphs (d), (f), (g) and (h) above, the following provisions shall apply:
| · | the aggregate consideration receivable or price for Common Shares issued for cash shall be the amount of such cash; |
| · | (A) the aggregate consideration receivable or price for Common Shares to be issued or otherwise made available upon the conversion
or exchange of any Securities shall be deemed to be the consideration or price received or receivable for any such Securities and (B) the
aggregate consideration receivable or price for Common Shares to be issued or otherwise made available upon the exercise of rights of
subscription attached to any Securities or upon the exercise of any options, warrants or rights shall be deemed to be that part (which
may be the whole) of the consideration or price received or receivable for such Securities or, as the case may be, for such options, warrants
or rights which are attributed by BBVA to such rights of subscription or, as the case may be, such options, warrants or rights or, if
no part of such consideration or price is so attributed, the Fair Market Value of such rights of subscription or, as the case may be,
such options, warrants or rights as at the relevant Effective Date as referred to in sub-paragraphs (d), (f), (g) or (h) above, as
the case may be, plus in the case of each of (A) and (B) above, the additional minimum consideration receivable or price (if any)
upon the conversion or exchange of such Securities, or upon the exercise of such rights of subscription attached thereto or, as the case
may be, upon exercise of such options, warrants or rights and (C) the consideration receivable or price per Common Share upon the
conversion or exchange of, or upon the exercise of such rights of subscription attached to, such Securities or, as the case may be, upon
the exercise of such options, warrants or rights shall be the aggregate consideration or price referred to in (A) or (B) above (as
the case may be) divided by the number of Common Shares to be issued upon such conversion or exchange or exercise at the initial conversion,
exchange or subscription price or rate; |
| · | if the consideration or price determined pursuant to the two provisions immediately above (or any component thereof) shall be expressed
in a currency other than the Share Currency, it shall be converted into the Share Currency at the Prevailing Rate on the relevant Effective
Date (in the case of the second provision immediately above) or the relevant date of first public announcement (in the case of the first
provision immediately above); |
| · | in determining the consideration or price pursuant to the above, no deduction shall be made for any commissions or fees (howsoever
described) or any expenses paid or incurred for any underwriting, placing or management of the issue of the relevant Common Shares or
Securities or options, warrants or rights, or otherwise in connection therewith; and |
| · | the consideration or price shall be determined as provided above on the basis of the consideration or price received, receivable,
paid or payable regardless of whether all or part thereof is received, receivable, paid or payable by or to BBVA or another entity. |
If the Conversion Settlement Date in relation
to the Conversion of any contingent convertible preferred security of any series shall be after the record date in respect of any consolidation,
reclassification, redesignation or sub-division as is mentioned in sub-paragraph (a) above, or after the record date or other due
date for the establishment of entitlement for any such issue, distribution, grant or offer (as the case may be) as is mentioned in sub-paragraphs
(b), (c), (d), (e) or (i) above, or after the date of the first public announcement of the terms of any such issue or grant as is
mentioned in sub-paragraphs (f) or (g) above or of the terms of any such modification as is mentioned in sub-paragraph (h) above,
but before the relevant adjustment to the Floor Price (if applicable) becomes effective pursuant to the provisions described in this section
“—Anti-Dilution Adjustment of the Floor Price” (such adjustment, a “Retroactive Adjustment”), then
BBVA shall (conditional upon the relevant adjustment becoming effective) procure that there shall be delivered to the Conversion Shares
Depository, for onward delivery to the holders of the relevant contingent convertible preferred securities, in accordance with the instructions
contained in the Delivery Notices received by the Conversion Shares Depository, such additional number of Common Shares (if any) (the
“Additional Common Shares”) as, together with the Common Shares issued on Conversion of the contingent convertible preferred
securities (together with any fraction of a Common Share not so delivered to any relevant holder), is equal to the number of Common Shares
which would have been required to be issued and delivered on such Conversion if the relevant adjustment to the Floor Price had been made
and become effective immediately prior to the relevant Conversion Notice Date (subject as provided above with respect to fractions), provided
that, where applicable, if the Conversion Shares Depository and/or the holders, as the case may be, shall be entitled to receive the relevant
Dividend in respect of the Common Shares to be issued or delivered to them, then no such Retroactive Adjustment shall be made in relation
to such Dividend and Additional Common Shares shall not be issued and delivered to the Conversion Shares Depository and holders in relation
thereto. If Additional Common Shares are required under the contingent convertible preferred securities indenture, all references to the
issue and/or delivery of Common Shares in the contingent convertible preferred securities indenture shall be construed accordingly.
If any doubt shall arise as to whether an adjustment
is required to be made to the Floor Price or as to the appropriate adjustment to the Floor Price, BBVA may at its discretion appoint an
Independent Financial Adviser and, following consultation between BBVA and such Independent Financial Adviser, a written determination
of such Independent Financial Adviser in respect thereof shall be conclusive and binding on all parties (including the holders and beneficial
owners of any contingent convertible preferred security), save in the case of manifest error.
No adjustment will be made to the Floor Price
where Common Shares or other Securities (including rights, warrants and options) are issued, offered, exercised, allotted, purchased,
appropriated, modified or granted to, or for the benefit of, employees or former employees (including directors holding or formerly holding
executive or non-executive office or the personal service company of any such person) or their spouses or relatives, in each case, of
BBVA or any member of the BBVA Group or any associated
company or to a trustee or trustees or intermediary to be held for
the benefit of any such person, in any such case pursuant to any share or option or similar scheme.
On any adjustment, if the resultant Floor Price
has more decimal places than the initial Floor Price, it shall be rounded down to the same number of decimal places as the initial Floor
Price. No adjustment shall be made to the Floor Price where such adjustment (rounded down if applicable) would be less than 1% of the
Floor Price then in effect. Any adjustment not required to be made pursuant to the above, and/or any amount by which the Floor Price has
been rounded down, shall be carried forward and taken into account in any subsequent adjustment, and such subsequent adjustment shall
be made on the basis that the adjustment not required to be made had been made at the relevant time and/or, as the case may be, that the
relevant rounding down had not been made.
Notice of any adjustments to the Floor Price shall
be given by BBVA to holders of the contingent convertible preferred securities of any series through the filing of a relevant information
(información relevante) announcement with the CNMV and its publication in accordance with the rules and regulations of any
applicable stock exchange or other relevant authority and in accordance with “—Notices” below promptly after
the determination thereof.
Conversion Procedures
If a Trigger Event occurs at any time on or after
the issue date of any series of contingent convertible preferred securities, then BBVA will notify the Regulator and the holders of such
series of contingent convertible preferred securities immediately upon BBVA’s determination that a Trigger Event has occurred (i) through
the filing of a relevant information (información relevante) announcement with the CNMV and its publication in accordance
with the rules and regulations of any applicable stock exchange or other relevant authority and (ii) in accordance with “—Notices”
below (together, the “Trigger Event Notice”). Any failure by BBVA to give a Trigger Event Notice or otherwise notify the holders
of a Trigger Event will have no impact on the effectiveness of, or otherwise invalidate, any Trigger Conversion, will not constitute an
Enforcement Event with respect to such series of contingent convertible preferred securities, or give the holders or beneficial owners
of the contingent convertible preferred securities of such series any rights as a result of such failure.
If a Capital Reduction occurs at any time on or
after the issue date of any series of contingent convertible preferred securities, then BBVA will notify the Regulator and the holders
of such series of contingent convertible preferred securities immediately (i) through the filing of a relevant information (información
relevante) announcement with the CNMV and its publication in accordance with the rules and regulations of any applicable stock exchange
or other relevant authority and (ii) in accordance with “—Notices” below (together, the “Capital Reduction
Notice”). Any failure by BBVA to give a Capital Reduction Notice or otherwise notify the holders of a Capital Reduction, will have
no impact on the effectiveness of, or otherwise invalidate, any Capital Reduction, will not constitute an Enforcement Event with respect
to such series of contingent convertible preferred securities, or give the holders or beneficial owners of the contingent convertible
preferred securities of such series any rights as a result of such failure.
A Conversion Notice shall be a written notice
specifying the following:
| · | that a Trigger Event or a Capital Reduction has occurred, as the case may be; |
| · | in the case of a Capital Reduction Notice, the Conversion Price; |
| · | in the case of a Capital Reduction Notice, the Election Period and the procedures holders must follow with respect to timely submission
of Election Notices; |
| · | in the case of a Capital Reduction Notice, the expected 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; |
| · | the contact details of the Conversion Shares Depository and Paying and Conversion Agent and the procedures holders of the contingent
convertible preferred securities must follow to obtain delivery of the Common Shares; |
| · | that the contingent convertible preferred securities (other than, in the case of a Capital Reduction, contingent convertible preferred
securities which holders elect not to convert in accordance with the provisions described under “—Conversion Upon Capital
Reduction”) shall remain in existence for the sole purposes of evidencing the holder’s right to receive Common Shares
from or on behalf of the Conversion Shares Depository and, in the case of a Capital Reduction, of evidencing the holder’s right
to receive payment of accrued and unpaid Distributions for the then current Distribution Period up to (but excluding) the Conversion Settlement
Date as provided under “—Conversion Upon Capital Reduction”, where not cancelled or deemed cancelled pursuant
to, or otherwise subject to the limitations on payment set out in, “—Payments—Distributions”; and |
| · | a request that holders and beneficial owners (or the custodian, broker, nominee or other representative thereof) of such contingent
convertible preferred securities complete a Delivery Notice to be delivered, together with the relevant contingent convertible preferred
securities held by them (other than, in the case of a Capital Reduction, contingent |
convertible preferred securities which holders elect not
to convert in accordance with the provisions described under “—Conversion Upon Capital Reduction”), to the specified
office of the Paying and Conversion Agent, with a copy of such Delivery Notice to the trustee, no later than five Business Days (in the
relevant place of delivery) prior to the relevant Conversion Settlement Date (the “Notice Cut-off Date”).
In the case of a Trigger Event, BBVA shall further
notify the holders of the relevant series of contingent convertible preferred securities of the expected Conversion Settlement Date and
of the Conversion Price within ten (10) Business Days of the Conversion Notice Date in accordance with “—Notices”
below.
The Conversion Notice Date shall be deemed to
be the date on which the Trigger Event Notice or the Capital Reduction Notice, as the case may be, is communicated through the filing
of a relevant information (información relevante) announcement with the CNMV and is published in accordance with the rules
and regulations of any applicable stock exchange or other relevant authority.
Upon BBVA’s determination that a Trigger
Event has occurred or upon BBVA’s adoption of a Capital Reduction measure, it shall, prior to giving a Conversion Notice, deliver
to the trustee a certificate stating that a Conversion Event has occurred, which the trustee shall accept without any further enquiry
as sufficient evidence of such matters, and such certificate will be conclusive and binding on the trustee, the holders and beneficial
owners of the contingent convertible preferred securities of such series. BBVA shall provide a copy of the Conversion Notice to the trustee
as soon as it is available.
Within two (2) Business Days after its receipt
of the Conversion Notice, the trustee shall transmit the Conversion Notice to the depositary and BBVA expects that, promptly following
its receipt of the Conversion Notice, pursuant to the relevant procedures then in effect, the depositary shall post the Conversion Notice
to, if DTC is acting as depositary, its Reorganization Inquiry for Participants System (or in the case of any other depositary, its equivalent).
If a Trigger Event occurs, the contingent convertible
preferred securities of any series will be converted in whole and not in part, and if a Capital Reduction occurs, the contingent convertible
preferred securities of any series will be converted in whole and not in part except for contingent convertible preferred securities in
respect of which such holders have elected not to convert such contingent convertible preferred securities in accordance with the provisions
described under “—Conversion Upon Capital Reduction”.
Notwithstanding anything set forth in this prospectus
to the contrary, except in the case of a Capital Reduction with respect to any contingent convertible preferred securities in respect
of which the holders have elected not to convert such contingent convertible preferred securities in accordance with the provisions described
under “—Conversion Upon Capital Reduction” (as the case may be), upon a Conversion, (i) subject to the right
of holders of the contingent convertible preferred securities relating to a breach of the Performance Obligation (as defined below) in
the event of a failure by BBVA to issue and deliver any Common Shares to the Conversion Shares Depository on the Conversion Settlement
Date and, in the case of a Capital Reduction, the right of holders to receive payment of accrued and unpaid Distributions for the then
current Distribution Period up to (but excluding) the Conversion Settlement Date as provided under “—Conversion Upon Capital
Reduction” (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out
in, “—Payments—Distributions” and except as provided under “—Conversion Upon Capital Reduction”),
the contingent convertible preferred securities indenture shall impose no duties upon the trustee whatsoever with regard to a Conversion
(except the limited duties set forth in the contingent convertible preferred securities indenture in respect of a global security which
is surrendered for conversion in part upon a Capital Reduction), and the holders of the contingent convertible preferred securities converted
or to be converted shall have no rights whatsoever under the contingent convertible preferred securities indenture or such contingent
convertible preferred securities to instruct the trustee to take any action whatsoever; and (ii) as of the Conversion Notice Date,
except for any indemnity and/or security provided by any holders of such contingent convertible preferred securities in such direction
or related to such direction, any direction previously given to the trustee by any holders of such contingent convertible preferred securities
shall cease automatically and shall be null and void and of no further effect.
BBVA’s obligations to indemnify the trustee
in accordance with the contingent convertible preferred securities indenture shall survive any Conversion.
Agreement and Waiver with Respect to Conversion
The contingent convertible preferred securities
of any series are not convertible into Common Shares at the option of holders of contingent convertible preferred securities of any series
at any time and are not redeemable in cash as a result of a Conversion Event. Notwithstanding any other provision herein, by its acquisition
of the contingent convertible preferred securities of any series, each holder and beneficial owner shall be deemed to have (i) agreed
to all the terms and conditions of the contingent convertible preferred securities of such series, 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 (or to the relevant recipient in accordance
with the terms of the contingent convertible preferred securities of such series or the Conversion Notice), 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 contingent
convertible preferred securities of such series or the trustee; (ii) agreed that effective upon, and following, the Conversion, no
amount shall be due and payable to the holders of the contingent convertible preferred securities so converted (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” (where not cancelled or deemed cancelled pursuant to, or otherwise subject to the limitations on payment
set out in, “—Payments—Distributions”, and except as provided under “—Conversion Upon Capital
Reduction”)), and BBVA’s liability to pay any such amounts (including the Liquidation Preference (and premium, if any)
of, or any Distribution in respect of (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” (where not cancelled or
deemed cancelled pursuant to, or otherwise subject to the limitations on payment set out in, “—Payments—Distributions”,
and except as provided under “—Conversion Upon Capital Reduction”)), except as noted below under “—Settlement
Procedures” with respect to certain stamp and similar taxes, shall be automatically released, and the holders of the contingent
convertible 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) 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 contingent
convertible preferred securities indenture and in connection with the contingent convertible 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 (iv) 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 contingent convertible 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 contingent convertible preferred securities or the trustee.
Settlement Procedures
Delivery of the Common Shares to the holders of
converted contingent convertible preferred securities upon a Conversion Event shall be made in accordance with the following procedures.
BBVA may make changes to these procedures to the extent such changes are reasonably necessary, in the opinion of BBVA, including to reflect
changes in clearing system practices.
Holders of any series of contingent convertible
preferred securities cleared and settled through DTC may elect to have their Common Shares delivered in the form of Common Shares or ADSs
in accordance with the procedures described below. 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. For
further information on the ADSs and BBVA’s current ADS deposit agreement, see “Description of BBVA American Depositary
Shares”.
In order to obtain delivery of the relevant Common
Shares, or, if indicated in the relevant Delivery Notice, ADSs, upon any Conversion from the Conversion Shares Depository, the relevant
holder or beneficial owner (or the custodian, broker, nominee or other representative thereof) must deliver its contingent convertible
preferred securities (other than, in the case of a Capital Reduction, contingent convertible preferred securities which holders elect
not to convert in accordance with “—Conversion Upon Capital Reduction”) and a duly completed Delivery Notice to the
specified office of the Paying and Conversion Agent, with a copy of such Delivery Notice to the trustee, on or before the Notice Cut-off
Date. The Delivery Notice shall contain: (i) the name of the holder or beneficial owner (or the custodian, broker, nominee or other
representative thereof) of the contingent convertible preferred securities to be converted; (ii) the aggregate Liquidation Preference
held by such holder or beneficial owner (or the custodian, broker, nominee or other representative thereof) of such converted contingent
convertible preferred securities on the date of such notice; (iii) the name in which the Common Shares or ADSs, as applicable, are
to be registered, if applicable; (iv) whether Common Shares or ADSs are to be delivered to the holder or beneficial owner of such
contingent convertible preferred securities; (v) the details of the DTC, Iberclear or other clearing system account (subject to the
limitations set out below) to which the Common Shares or ADSs are to be credited (or, if the Common Shares are not a participating security
in Iberclear or another clearing system, the address to which the Common Shares should be delivered; and, as the case may be, details
of the registered account in BBVA’s ADS facility if direct registration ADSs are to be issued); (vi) any relevant certifications
and/or representations as may be required by applicable law and regulations; and (vii) such other details as may be required by the
Paying and Conversion Agent or any relevant Clearing System.
If the contingent convertible preferred securities
are held through DTC, the Delivery Notice must be given and the contingent convertible preferred securities delivered in accordance with
the applicable procedures of DTC (which may include the notice being given to the Paying and Conversion Agent by electronic means) and
in a form acceptable to DTC and the Paying and Conversion Agent. With respect to any contingent convertible preferred securities held
in definitive form, the Delivery Notice must be delivered to the specified office of the Paying and Conversion Agent together with the
relevant contingent convertible preferred securities, except as otherwise indicated in the relevant Conversion Notice.
Subject as provided in this section “Settlement
Procedures” and provided that the relevant contingent convertible preferred securities and a duly completed Delivery Notice
have been delivered not later than the Notice Cut-off Date, the Paying and
Conversion Agent shall give instructions to the Conversion Shares Depository
that the Conversion Shares Depository shall deliver the relevant Common Shares (rounded down to the nearest whole number of Common Shares)
to, or shall deposit part or all of such Common Shares with the ADS Depositary on behalf of, the holder or beneficial owner (or the custodian,
broker, nominee or other representative thereof) of the relevant contingent convertible preferred securities completing such Delivery
Notice or its nominee in accordance with the instructions given in such Delivery Notice on the applicable Conversion Settlement Date.
Any Delivery Notice shall be irrevocable. Failure
properly to complete and deliver a Delivery Notice and deliver the relevant contingent convertible preferred securities may result in
such Delivery Notice being treated as null and void and BBVA shall be entitled to procure the sale of any applicable Common Shares to
which the relevant holder may be entitled in accordance with the provisions described in “—Failure to Deliver a Delivery
Notice” below. Any determination as to whether any Delivery Notice has been properly completed and delivered as provided in
this section “—Settlement Procedures” shall be made by BBVA in its sole discretion, acting in good faith, and
shall, in the absence of manifest error, be conclusive and binding on the relevant holders and beneficial owners (and any custodian, broker,
nominee or other representative thereof).
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 relevant contingent convertible 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. For further information on the ADSs or the ADS deposit agreement, see “Description of BBVA
American Depositary Shares”.
Failure to Deliver a Delivery Notice
If a duly completed Delivery Notice and the relevant
contingent convertible preferred securities are not delivered to the Paying and Conversion Agent as provided in the contingent convertible
preferred securities indenture and in the relevant Conversion Notice on or before the Notice Cut-off Date, then at any time following
the Notice Cut-off Date and prior to the 10th Business Day after the Conversion Settlement Date, BBVA may in its sole and absolute discretion
(and the relevant holders and beneficial owners of such contingent convertible preferred securities shall be deemed to agree thereto),
elect to appoint a person (the “Selling Agent”) to procure that all Common Shares held by the Conversion Shares Depository
in respect of which the applicable contingent convertible preferred securities and duly completed Delivery Notice have not been delivered
on or before the Notice Cut-off Date as aforesaid be sold by or on behalf of 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 Cut-off Date, if necessary, shall
as soon as reasonably practicable be distributed ratably 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.
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 contingent convertible 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 contingent convertible preferred securities on a timely basis or at all.
If the applicable contingent convertible preferred
securities and Delivery Notice are not delivered to the Paying and Conversion Agent on or before the Notice Cut-off Date and BBVA does
not appoint the Selling Agent by the 10th 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 contingent
convertible preferred securities are so delivered. However, any holder or beneficial owner (or custodian, broker, nominee or other representative
thereof) of such contingent convertible 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).
Certain Taxes and Other Costs
A holder of the contingent convertible preferred
securities of any series or Selling Agent must pay (in the case of the Selling Agent by means of deduction from the net proceeds of sale
referred to in “—Failure to Deliver a Delivery Notice”) any taxes and capital, stamp, issue, registration and
transfer taxes or duties arising on Conversion (other than any capital, stamp, issue, registration and transfer taxes or duties payable
in Spain by BBVA in respect of the issue and delivery of the Common Shares in accordance with a Delivery Notice delivered pursuant to
the contingent convertible preferred securities indenture which shall be paid by BBVA) and such holder or the Selling Agent (as the case
may be) must pay (in the case of the Selling Agent, by way of deduction from the net proceeds of sale as aforesaid) all, if any, taxes
or duties arising by reference to any disposal or deemed disposal of a contingent convertible preferred security or interest therein.
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
(or, if such deduction is not possible, paid to the Conversion Shares Depository, by the relevant holder) prior to the delivery of such
Common Shares and/or payment of such amount to the relevant holder.
If BBVA shall fail to pay any capital, stamp,
issue, registration and transfer taxes or duties for which it is responsible as provided above, the holder or Selling Agent, as the case
may be, shall be entitled (but shall not be obliged) to tender and pay the same and BBVA as a separate and independent obligation, undertakes
to reimburse and indemnify each holder or Selling Agent, as the case may be, in respect of any payment thereof and any penalties payable
in respect thereof.
Status of the Common Shares
The Common Shares issued on Conversion will be
fully paid and will in all respects rank pari passu with the fully paid Common Shares in issue on the relevant Conversion Notice
Date, except in any such case for any right excluded by mandatory provisions of applicable law and except that such Common Shares will
not rank for (or, as the case may be, the relevant holder shall not be entitled to receive) any rights, distributions or payments the
record date or other due date for the establishment of entitlement for which falls prior to the Conversion Settlement Date.
Additional Amounts
Unless otherwise specified in the relevant prospectus
supplement, all payments of Distributions payable in respect of contingent convertible 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, 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 (and premium, if any) or other amount), such additional amounts (“Additional
Amounts”) as will result in holders of any series of outstanding contingent convertible 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 contingent convertible preferred security:
(a) to, or to a third party on behalf of, a holder
if the holder or the beneficial owner of contingent convertible preferred securities of any series is liable for such Taxes in respect
of such contingent convertible preferred security by reason of his having some connection with Spain other than the mere holding of such
contingent convertible preferred security; or
(b) to, or to a third party on behalf of, a holder
if the holder or the beneficial owner of contingent convertible preferred securities fails to provide BBVA or the trustee or Paying Agent
(as BBVA may determine in connection with each series of contingent convertible preferred securities) acting on behalf of BBVA the information
concerning such holder or beneficial owner as may be
required in order to comply with any procedures that may be implemented
to comply with any interpretation of Royal Decree 1065/2007, as amended, made by the Spanish Tax Authorities; or
(c) to, or to a third party on behalf of, a holder
if the holder or the beneficial owner of contingent convertible preferred securities of any series failed to make any necessary claim
or 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 the taxing jurisdiction of BBVA as a condition to relief or exemption from such taxes; or
(d) presented for payment (where presentation
is required) more than 30 days after the Relevant Date, except to the extent that the relevant holder would have been entitled to such
Additional Amounts on presenting the same for payment on the expiry of such period of 30 days; or
(e) to, or to a third party on behalf of, individuals
resident for tax purposes in Spain; or
(f) 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 contingent convertible preferred securities
of any series 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.
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 (a) through (f) 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.
No Additional Amounts will be paid by BBVA or
any paying agent on account of any deduction or withholding from a payment on, or in respect of, the Distributions 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 implementing an intergovernmental agreement or any regulations or official interpretations relating
thereto.
For the purposes of this section:
“Relevant Date” means, in respect
of any payment, the date on which such payment first becomes due and payable, except that, if the full amount of the moneys payable has
not been duly received by the Principal Paying Agent on or prior to such due date, it means the date on which, the full amount of such
moneys having been so received and being available for payment to holders, notice to that effect is duly given to the holders in accordance
with “—Notices” below.
Except where the context requires otherwise, any
reference in this prospectus and, if applicable, the relevant prospectus supplement to Distributions in respect of the contingent convertible
preferred securities shall be deemed to include any Additional Amounts payable with respect thereto.
Undertakings
So long as any contingent convertible preferred
security of a series remains outstanding, BBVA shall, unless approved by a majority in aggregate Liquidation Preference of such series:
(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 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 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 contingent convertible preferred securities
indenture immediately after completion of the Scheme of Arrangement as are necessary to ensure that the contingent convertible 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 contingent convertible preferred securities 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 contingent convertible preferred securities
of the relevant series (which, for this purpose, includes holders of a beneficial interest in the Contingent Convertible Preferred Securities
of such series) irrevocably authorize BBVA to make such amendments to the contingent convertible preferred securities indenture without
the need for any further authorization from the holders of the contingent convertible preferred securities of such series;
(d) issue, allot and deliver Common Shares upon
Conversion subject to and as provided in “—Conversion” above;
(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 contingent
convertible preferred securities, and all rights of subscription and exchange for Common Shares, to be satisfied in full; and
(g) where the provisions of “—Conversion”
above 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, BBVA shall use all reasonable endeavors promptly to appoint such persons for such purposes.
Modification and Waiver
BBVA and the trustee may make certain modifications
and amendments to the contingent convertible preferred securities indenture and any applicable supplemental indenture with respect to
any series of contingent convertible preferred securities without the consent of the holders of such contingent convertible 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 contingent
convertible preferred securities indenture and in the contingent convertible preferred securities of any series; |
| · | to add to the covenants of BBVA for the benefit of the holders of all or any series of contingent convertible preferred securities
(and, if such covenants are to be for the benefit of less than all series of contingent convertible preferred securities, stating that
such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power conferred upon BBVA
by the contingent convertible preferred securities 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 contingent convertible preferred securities of any series in any material respect; |
| · | to add to, change or eliminate any of the provisions of the contingent convertible preferred securities indenture, or any supplemental
indenture, provided, however, that any such addition, change or elimination shall become effective only when there is no outstanding contingent
convertible preferred security of any series 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 contingent convertible preferred securities of any series as permitted by the contingent convertible
preferred securities indenture; |
| · | to change any place of payment, so long as any required place of payment is maintained; |
| · | to cure any ambiguity or to correct or supplement any provision of the contingent convertible preferred securities indenture which
may be defective or inconsistent with any other provision of the contingent convertible preferred securities indenture or in any supplemental
indenture; |
| · | to vary, substitute or change specified terms of any series of contingent convertible preferred securities subject to the conditions
set forth in the contingent convertible preferred securities indenture, provided such action shall not adversely affect the interests
of the holders of contingent convertible preferred securities of any series in any material respect; |
| · | to evidence and provide for the acceptance of appointment under the contingent convertible preferred securities indenture by a successor
trustee with respect to the contingent convertible preferred securities of one or more series and to add to or change any of the provisions
of the contingent convertible preferred securities indenture as shall be necessary to provide for or facilitate the administration of
the trusts under the contingent convertible preferred securities indenture by more than one trustee, pursuant to the requirements of the
contingent convertible preferred securities indenture; |
| · | to change or eliminate any provision of the contingent convertible preferred securities indenture so as to conform with the current
provisions or any future provisions of the Trust Indenture Act; |
| · | to name a different trustee for a particular series of contingent convertible preferred securities; |
| · | to delete, amend or supplement any provision contained in the contingent convertible preferred securities 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 contingent convertible preferred securities indenture or in any supplemental
indenture as a result of, and to the extent required by, Applicable Banking Regulations; |
| · | with respect to any contingent convertible preferred security (including a global security), to amend any such contingent convertible
preferred security to conform to the description of the terms of such contingent convertible preferred security in the prospectus, prospectus
supplement, product supplement, pricing supplement or any other similar offering document related to the offering of such contingent convertible
preferred security; and |
| · | to change or modify any provision of the contingent convertible preferred securities indenture as necessary to ensure that the contingent
convertible preferred securities of any series shall be convertible into ordinary shares of Newco in the event of a Newco Scheme. |
Other modifications and amendments may be made
to the contingent convertible preferred securities 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 contingent convertible preferred securities of each
series affected by the modification or amendment, voting as one class. However, no modifications or amendments may be made without the
consent of the holder of each contingent convertible preferred security affected that would:
| · | change the terms of any contingent convertible preferred security to reduce the Liquidation Preference (or premium, if any) payable
upon the redemption of, or the Distributions payable on any contingent convertible preferred security (without prejudice to the provisions
described herein, including under “—Payments—Distributions” and “—Agreement to Distribution
Cancelation”), or change the obligation of BBVA (or its successor) to pay Additional Amounts (except as contemplated below under
“—Substitution of Issuer”) on the contingent convertible preferred securities, or the currency in which payments
under the contingent convertible 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 any contingent convertible preferred security, or modify the calculation of and
any adjustment to, the Conversion Price; |
| · | reduce the percentage in aggregate Liquidation Preference of the outstanding contingent convertible preferred securities of any series,
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 contingent convertible preferred securities indenture or of certain defaults thereunder
and their consequences) provided for in the contingent convertible preferred securities indenture or reduce the requirements for a quorum
or voting; |
| · | change in any manner adverse to the interests of the holders of any contingent convertible preferred securities the subordination
provisions of the contingent convertible 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 contingent convertible 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 |
contingent convertible preferred securities indenture cannot
be modified or waived without the consent of the holder of each outstanding contingent convertible preferred security affected thereby;
except in each case with respect to any modification or amendment of
the contingent convertible preferred securities 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 or Applicable Banking
Regulations, as the case may be (in which case neither the consent nor the affirmative vote of any holder of an outstanding contingent
convertible preferred security affected shall be required).
Additional Issuances
BBVA may, from time to time, without the consent
of the holders of the contingent convertible preferred securities of any series, issue additional contingent convertible preferred securities
of one or more of the series of contingent convertible preferred securities issued under the contingent convertible preferred securities
indenture having the same ranking and same Distribution Rate, redemption terms and other terms as the contingent convertible preferred
securities of such series except for the price to the public, original Distribution accrual date, issue date and first Distribution Payment
Date. Any such additional contingent convertible preferred securities, together with the contingent convertible preferred securities of
the relevant series, will constitute a single series of contingent convertible preferred securities under the contingent convertible preferred
securities indenture and shall be included in the definition of “contingent convertible preferred securities” in the contingent
convertible preferred securities indenture where the context so requires. There is no limitation on the amount of contingent convertible
preferred securities that BBVA may issue under the contingent convertible preferred securities indenture.
BBVA may, from time to time, without the consent
or sanction of the holders of contingent convertible preferred securities of any series: (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 contingent convertible
preferred securities of any such series, as to the participation in the profits and/or assets of BBVA, 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 or securities mandatorily
convertible into Common Shares of BBVA ranking junior or senior to the contingent convertible preferred securities of any such series,
as to the participation in the profits and/or assets of BBVA.
By acquiring a contingent convertible preferred
security of any series, each holder and beneficial owner of contingent convertible preferred securities agrees 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 BBVA from time to time.
The contingent convertible preferred securities
of any series do not grant the holders of the contingent convertible preferred securities of such series pre-emption rights in respect
of any possible future issues of Parity Securities or any other securities by BBVA or any Subsidiary.
Substitution of Issuer
BBVA may, without the consent of holders of any
contingent convertible preferred securities of any series outstanding, 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 in form satisfactory
to the trustee, all obligations of BBVA under the contingent convertible preferred securities 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 in such forms as are required in the contingent convertible preferred
securities indenture; and (d) 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 contingent convertible preferred securities of any series,
assume the obligations of BBVA (or of any person which shall have previously assumed the obligations of BBVA) under the contingent convertible
preferred securities of such series, provided that (a) the successor entity shall expressly assume such obligations by an amendment
to the contingent convertible preferred securities 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 contingent convertible preferred securities
indenture.
Following any of the events described in the preceding
two paragraphs, BBVA will be released from all its obligations under the applicable contingent convertible preferred securities and contingent
convertible preferred securities indenture and any supplemental indentures. In addition, Additional Amounts under the contingent convertible
preferred securities of the relevant series 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. In addition, the successor entity will also be entitled to redeem the contingent convertible
preferred securities in the circumstances described above under the section “—Redemption Due to a Tax Event”,
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 series of contingent convertible preferred securities might be considered for U.S. federal income tax purposes to be an exchange by
the holders of the contingent convertible preferred securities of such series 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.
Governing Law
The contingent convertible preferred securities
of any series, the contingent convertible preferred securities indenture and any supplemental indentures (except as set forth herein and
therein) will 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 contingent convertible
preferred securities indenture, the authorization, issuance and execution by BBVA of the contingent convertible preferred securities and
the contingent convertible preferred securities indenture related to the subordination of the contingent convertible preferred securities
shall be governed by and construed in accordance with the laws of Spain.
Waiver of Right of Set-off
Subject to applicable law, neither any holder
or beneficial owner of the contingent convertible preferred securities of any series nor the trustee acting on behalf of the holders of
the contingent convertible preferred securities of such series may exercise, claim or plead any right of set-off, compensation or retention
in respect of any amount owed to it by BBVA in respect of, or arising under, or in connection with, the contingent convertible preferred
securities of such series or the contingent convertible preferred securities indenture and each holder and beneficial owner of the contingent
convertible preferred securities of such series, by virtue of its holding of any contingent convertible preferred securities of such series
or any interest therein, and the trustee acting on behalf of the holders of the contingent convertible preferred securities of such series,
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 contingent convertible preferred security of any series or any interest therein by BBVA
in respect of, or arising under, the contingent convertible preferred securities of such series 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 BBVA (or, if
a Liquidation Event shall have occurred, the liquidator or administrator of BBVA, 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 BBVA (or the liquidator or administrator
of BBVA, as the case may be) and, accordingly, any such discharge shall be deemed not to have taken place.
Trustee and Agents
Unless stated otherwise in the relevant prospectus
supplement, the trustee for the contingent convertible preferred securities of any series will be The Bank of New York Mellon acting (except
for its role as contingent convertible preferred security registrar) through its London Branch. The trustee makes no representations,
and shall not be liable with respect to, the information set forth in the registration statement of which this prospectus is a part.
Unless stated otherwise in the relevant prospectus
supplement, The Bank of New York Mellon acting through its London Branch will initially act as Principal Paying Agent for the contingent
convertible preferred securities of any series. BBVA may appoint additional or successor agents (together, the “Agents”).
BBVA will procure that there will be, at all times
at which contingent convertible preferred securities of any series are outstanding, a Principal Paying Agent and a Calculation Agent.
BBVA may change the Principal Paying Agent and Calculation Agent without prior notice to the holders of the contingent convertible preferred
securities of any series. Furthermore, BBVA is entitled to terminate the appointment of any Agent. In the event of such termination or
such Agent being unable or unwilling to continue to act as Agent in the relevant capacity, BBVA will appoint another agent in accordance
with the provisions of the contingent convertible preferred securities indenture.
Agreement and Acknowledgment with Respect to the Exercise of the
Spanish Bail-in Power
Notwithstanding any other term of the contingent
convertible preferred securities of any series, the contingent convertible preferred securities indenture or any other agreements, arrangements,
or understandings between BBVA and any holder of the contingent convertible preferred securities of any series, by its acquisition of
the contingent convertible preferred securities of any series, each holder (which, for the purposes of this section, includes each holder
of a beneficial interest in the contingent convertible preferred securities of any series) 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 the contingent convertible preferred securities of any series, 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 contingent convertible preferred securities of any series; (B) the conversion of all, or a portion, of the Amounts Due
on the contingent convertible preferred securities of any series 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 contingent convertible preferred securities; (C) the cancellation of the contingent
convertible preferred securities of any series; (D) the amendment or alteration of the maturity, if any, of the contingent convertible
preferred securities of any series or amendment of the Liquidation Preference or Distributions payable on the contingent convertible preferred
securities of any series, 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 contingent convertible preferred securities of any series or the rights of the holders thereunder
or under the contingent convertible preferred securities indenture, if necessary, to give effect to the exercise of the Spanish Bail-in
Power by the Relevant Spanish Resolution Authority.
By its acquisition of the contingent convertible
preferred securities of any series, each holder acknowledges and agrees that neither a reduction or cancellation, in part or in full,
of the Amounts Due on the contingent convertible preferred securities of any series 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 contingent convertible preferred securities of a series 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 contingent convertible preferred securities or under the contingent
convertible preferred securities indenture. By its acquisition of the contingent convertible preferred securities of any series, each
holder further acknowledges and agrees that no repayment or payment of Amounts Due on the contingent convertible preferred securities
of any series shall 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 the contingent convertible
preferred securities of any series, each holder, 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
shall 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 contingent convertible preferred securities
of such series. Additionally, by its acquisition of the contingent convertible preferred securities of any series, each holder acknowledges
and agrees that, upon the exercise of the Spanish Bail-in Power by the Relevant Spanish Resolution Authority with respect to the contingent
convertible preferred securities of such series: (i) the trustee shall not be required to take any further directions from the holders
with respect to any portion of the contingent convertible preferred securities of such series that is written down, converted to equity
and/or cancelled under the provision of the contingent convertible preferred securities indenture which authorizes holders of a majority
in aggregate outstanding Liquidation Preference of the contingent convertible preferred securities of a series to direct certain actions
relating to the contingent convertible preferred securities of such series; and (ii) the contingent convertible preferred securities
indenture shall 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 contingent convertible preferred securities of a series, so long as any contingent convertible
preferred securities of such series remain outstanding, there shall at all times be a trustee for the contingent convertible preferred
securities of such series in accordance with the contingent convertible preferred securities indenture, and the resignation and/or removal
of the trustee and the appointment of a successor trustee shall continue to be governed by the contingent convertible preferred securities
indenture, including to the extent no additional
supplemental indenture or amendment is agreed upon in the event the
contingent convertible preferred securities of such series remain outstanding following the completion of the exercise of the Spanish
Bail-in Power.
By its acquisition of the contingent convertible
preferred securities of any series, each holder shall be deemed to have authorized, directed and requested the relevant depositary, Clearing
Systems and any direct participant in any relevant Clearing System or other intermediary through which it holds such contingent convertible
preferred securities to take any and all necessary action, if required, to implement the exercise of the Spanish Bail-in Power with respect
to the contingent convertible preferred securities as it may be imposed, without any further action or direction on the part of such holder.
Upon the exercise of the Spanish Bail-in Power
by the Relevant Spanish Resolution Authority with respect to the contingent convertible preferred securities of any series, BBVA or the
Relevant Spanish Resolution Authority (as the case may be) shall provide a written notice to the relevant depositary as soon as practicable
regarding such exercise of the Spanish Bail-in Power for purposes of notifying the holders of such contingent convertible preferred securities.
BBVA shall also deliver a copy of such notice to the trustee for information purposes.
If BBVA has elected to redeem the contingent convertible
preferred securities of any series 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 such series of contingent convertible 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 under the contingent convertible preferred securities indenture) will be due and
payable.
By its acquisition of the contingent convertible
preferred securities of any series, 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 contingent convertible preferred securities
of any series, 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.
Enforcement Events and Remedies
There are no events of default under any series
of contingent convertible preferred securities. In addition, under the terms of the contingent convertible preferred securities indenture
none of the following will be an Enforcement Event or give rise to a default for the 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: (i) the cancellation or the deemed
cancellation of any Distribution (in each case, in whole or in part) or the failure by BBVA to provide notice of any such cancellation
or deemed cancellation; (ii) a Trigger Event or the failure by BBVA to provide notice of any such Trigger Event; (iii) a Capital
Reduction or the failure by BBVA to provide notice of any such Capital Reduction; and (iv) the exercise of the Spanish Bail-in Power,
the exercise of any other resolution tool by the Relevant Spanish Resolution Authority or any action in compliance therewith.
Enforcement Events
Each of the following events described in clauses
(i) and (ii) is an “Enforcement Event” with respect to the contingent convertible preferred securities of any series:
(i) the breach of any term, obligation or condition
binding on BBVA under the contingent convertible preferred securities of such series (other than any of BBVA’s payment obligations
under or arising from the contingent convertible preferred securities of such series, including payment of any Liquidation Preference
(and premium, if any), 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 a Liquidation Event.
Neither the exercise of the Spanish Bail-in Power
nor the exercise of any other resolution tool by the Relevant Spanish Resolution Authority or any action in compliance therewith shall
constitute an Enforcement Event or other default under the terms of the contingent convertible preferred securities or the contingent
convertible preferred securities indenture.
Remedies
The sole remedies of the holders of the contingent
convertible preferred securities of a series and the trustee under the contingent convertible preferred securities of such series or the
contingent convertible preferred securities indenture upon the occurrence of an Enforcement Event shall be (1) with respect to the
first Enforcement Event listed above, to seek enforcement of the
relevant Performance Obligation, and (2) with respect to the second
Enforcement Event listed above, to enforce the entitlement set forth under “—Liquidation Distribution”.
For the avoidance of doubt, the breach by BBVA
of any Performance Obligation shall not give the trustee and/or the holders of the contingent convertible preferred securities of any
series a claim for damages, and, in such circumstances, the sole and exclusive remedy that the trustee and/or the holders of the contingent
convertible preferred securities of such series may seek under the contingent convertible preferred securities of such series and the
contingent convertible preferred securities indenture is specific performance under New York law. By its acquisition of the contingent
convertible preferred securities of any series, each holder and beneficial owner of the contingent convertible preferred securities of
such series will acknowledge and agree that such holder and beneficial owner will not seek, and will not direct the trustee to seek, a
claim for damages against BBVA in respect of a breach by BBVA of a Performance Obligation and that the sole and exclusive remedy that
such holder, beneficial owner and the trustee may seek under the contingent convertible preferred securities of such series and the contingent
convertible preferred securities indenture for a breach by BBVA of a Performance Obligation is specific performance.
No Other Remedies
Other than the limited remedies specified above,
no remedy against BBVA shall be available to the trustee (acting on behalf of the holders of the contingent convertible preferred securities
of any series) or to the holders of the contingent convertible preferred securities of any series, whether for the recovery of amounts
owing in respect of such contingent convertible preferred securities or under the contingent convertible preferred securities indenture,
or in respect of any breach by BBVA of any of BBVA’s obligations under or in respect of the terms of such contingent convertible
preferred securities or under the contingent convertible preferred securities indenture in relation thereto.
Notwithstanding the limitations set forth in this
section, (1) the trustee shall have such powers as are required to be authorized to it under the Trust Indenture Act in respect of
the rights of the holders under the provisions of the contingent convertible preferred securities indenture and (2) nothing shall
impair the rights of a holder of the contingent convertible preferred securities under the Trust Indenture Act, absent such holder’s
consent, to sue for any payment due but unpaid with respect to the contingent convertible preferred securities, provided that, in the
case of (1) and (2), any payments in respect of, or arising from, the contingent convertible preferred securities of such series
including any payments or amounts resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of
the contingent convertible preferred securities shall be subject to the subordination provisions of the contingent convertible preferred
securities indenture. For the avoidance of doubt, such limitations shall not apply to BBVA’s obligations to pay the fees and expenses
of, and to indemnify, the trustee.
Trustee’s Duties
If an Enforcement Event has occurred and is continuing,
the trustee shall exercise such of the rights and powers vested in it by the contingent convertible preferred securities indenture, and
use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs. Holders of not less than a majority in aggregate Liquidation Preference of the outstanding contingent convertible
preferred securities of any series may on behalf of the holders of all contingent convertible preferred securities of such series waive
any past Enforcement Event that results from a breach by BBVA of a Performance Obligation. Holders of a majority of the aggregate Liquidation
Preference of the outstanding contingent convertible preferred securities of any series may not waive any past Enforcement Event that
results from a Liquidation Event or any Enforcement Event in respect of a covenant or provision of the contingent convertible preferred
securities indenture which cannot be modified or amended without the consent of the holder of each outstanding contingent convertible
preferred security of such series affected.
The holders of a majority in aggregate Liquidation
Preference of the outstanding contingent convertible preferred securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee
with respect to the contingent convertible preferred securities of such series. However, this direction (a) must not be in conflict
with any rule of law, the contingent convertible preferred securities indenture or the contingent convertible preferred securities of
any series and (b) the trustee shall not determine that the action so directed would be unjustly prejudicial to the holders of any
contingent convertible preferred securities of any series not taking part in the direction. The trustee may also take any other action,
not inconsistent with such direction, that it deems proper.
Limitation on Suits
No holder or beneficial owner of contingent convertible
preferred securities shall have any right to institute any proceeding, judicial or otherwise, with respect to such contingent convertible
preferred securities, the contingent convertible preferred securities indenture, or for the appointment of a receiver or trustee, or for
any other remedy, except as described below.
Before a holder of the contingent convertible
preferred securities may bypass the trustee and bring its own lawsuit or other formal legal action or take other steps to enforce its
rights or protect its interests relating to the contingent convertible securities, the following must occur:
| · | the holder must have given the trustee written notice that a continuing Enforcement Event has occurred and remains uncured; |
| · | the holders of not less than 25% in aggregate Liquidation Preference of the outstanding contingent convertible preferred securities
of the relevant series must have made a written request to the trustee to institute proceedings in respect of the Enforcement Event in
its own name, as trustee; |
| · | such holder has offered to the trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance
with such request; |
| · | the trustee must have failed to institute any proceeding for 60 days after receipt of the above notice, request and offer of indemnity,
and |
| · | the trustee must not have received an inconsistent direction from the majority in Liquidation Preference of all outstanding contingent
convertible preferred securities of the relevant series during such 60-day period, |
it being understood and intended that no one or more holders of contingent
convertible preferred securities of a particular series shall have any right in any manner whatever by virtue of, or by availing of, any
provision of the contingent convertible preferred securities indenture or any contingent convertible preferred security to affect, disturb
or prejudice the rights of any other such holder or holders of any contingent convertible preferred security, or to obtain or to seek
to obtain priority or preference over any other such holder or holders or to enforce any right under the contingent convertible preferred
securities indenture, except in the manner herein provided and for the equal and ratable benefit of all holders of contingent convertible
preferred securities of such series or holders of any other contingent convertible preferred security.
Notices
All notices to holders of registered contingent
convertible 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 trustee, not later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. Notwithstanding the foregoing, any notice given to the holder of a global security shall be sufficiently
given if such notice is given in accordance with the applicable procedures of the relevant depositary.
Any request, demand, authorization, direction,
notice, consent, waiver or record of an act of holders or other document provided or permitted by the contingent convertible preferred
securities indenture to be made upon, given or furnished to, or filed with, the trustee by any holder, or any request, demand, authorization,
direction, notice, consent or waiver by BBVA, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing
to or with the trustee at its corporate trust office.
No Obligations to Beneficial Owners
None of BBVA, the trustee, any Paying Agent or
the contingent convertible preferred security registrar shall have any responsibility or obligation to any beneficial owner in a global
security, any agent member (including, for purposes of this section, any participant in the depositary) or other person with respect to
the accuracy of the records of the depositary or its nominee or of any agent member, with respect to any ownership interest in the contingent
convertible preferred securities or with respect to the delivery to any agent member, beneficial owner or other person (other than the
depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such contingent
convertible preferred securities. All notices and communications to be given to the holders and all payments to be made to holders under
the contingent convertible preferred securities and the contingent convertible preferred securities indenture shall be given or made only
to or upon the order of the holders (which shall be the depositary or its nominee in the case of the global security). The rights of beneficial
owners in the global security shall be exercised only through the depositary subject to the applicable procedures. BBVA, the trustee,
each Paying Agent and the contingent convertible preferred security registrar shall be entitled to rely and shall be fully protected in
relying upon information furnished by the depositary with respect to its members and any beneficial owners. BBVA, the trustee, each Paying
Agent and the contingent convertible preferred security registrar shall be entitled to deal with the depositary, and any nominee thereof,
that is the registered holder of any global security for all purposes of the contingent convertible preferred securities indenture relating
to such global security (including the payment of Liquidation Preference and Distributions and Additional Amounts, if any, and the giving
of instructions or directions by or to the owner or holder of a beneficial ownership interest in such global security) as the sole holder
of such global security and shall have no obligations to the beneficial owners thereof. None of BBVA, the trustee, any Paying Agent or
the contingent convertible preferred security registrar shall have any responsibility or liability for any acts or omissions of the depositary
with respect to such global security, for the records of any such depositary, including records in respect of beneficial
ownership interests in respect of any such global security, for any
transactions between the depositary and any agent member or between or among the depositary, any such agent member and/or any holder or
owner of a beneficial interest in such global security, or for any transfers of beneficial interests in any such global security.
Notwithstanding the foregoing, with respect to
any global security, nothing herein shall prevent BBVA, the trustee, or any agent of BBVA or the trustee from giving effect to any written
certification, proxy or other authorization furnished by any depositary (or its nominee), as a holder, with respect to such global security
or shall impair, as between such depositary and owners of beneficial interests in such global security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as holder of such global security.
Subsequent Holders’ Agreement
Holders and beneficial owners of any contingent
convertible preferred securities of any series that acquire the contingent convertible preferred securities of such series or beneficial
interests therein in the secondary market shall be deemed to acknowledge and agree to be bound by and consent to the same provisions specified
herein and in the contingent convertible preferred securities to the same extent as the holders and beneficial owners of the contingent
convertible preferred securities of such series that acquire the contingent convertible preferred securities of such series upon their
initial issuance, including, without limitation, with respect to the acknowledgment and agreement to be bound by and consent to the terms
of the contingent convertible preferred securities of such series, including, without limitation, in relation to Distribution cancellation,
the Conversion, the Spanish Bail-in Power (see “—Agreement and Acknowledgment with Respect to the Exercise of the Spanish
Bail-in Power”) and the limitations on remedies specified in “—Enforcement Events and Remedies” above.
The Trustee
The Bank of New York Mellon acting (except with
respect to its role as contingent convertible preferred security registrar) through its London Branch, One Canada Square, London E14 5AL,
is the trustee under the indenture with respect to the contingent convertible preferred securities. The trustee shall have and be subject
to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act. Subject to the provisions
of the Trust Indenture Act, the trustee is under no obligation to exercise any of the powers vested in it by the contingent convertible
preferred securities indenture at the request of any holder of contingent convertible preferred securities, unless offered indemnity satisfactory
to the trustee in its sole discretion by the holder against the costs, expense and liabilities which might be incurred thereby. BBVA and
certain of its subsidiaries may maintain deposit accounts and conduct other banking transactions with The Bank of New York Mellon in the
ordinary course of its business. The Bank of New York Mellon is also the book-entry depositary and Principal Paying Agent with respect
to BBVA’s contingent convertible preferred securities. The Bank of New York Mellon is the depositary with respect to the American
Depositary Shares representing certain of BBVA’s preference shares and BBVA’s ordinary shares.
Consent to Service of Process
Under the contingent convertible preferred securities
indenture, BBVA irrevocably designates BBVA, S.A., New York Branch, as its authorized agent for service of process in any legal action
or proceeding arising out of or relating to the contingent convertible preferred securities indenture or any supplemental indentures or
any contingent convertible preferred securities brought in any federal or state court in The City of New York, New York and we irrevocably
submit to the jurisdiction of those courts.
Spanish
Tax Considerations
The following is a summary of the material
Spanish tax consequences of the acquisition, ownership and disposition of ordinary shares, ADSs, senior notes, senior non-preferred notes,
subordinated notes and contingent convertible preferred securities. This summary is not a complete analysis or listing of all the possible
tax consequences of such transactions and does not address all tax considerations that may be relevant to all categories of potential
purchasers, some of whom may be subject to special rules. In particular, this tax section does not address the Spanish tax consequences
applicable to “look-through” entities (such as trusts or estates) that may be subject to the tax regime applicable to such
non-Spanish entities under the Spanish Non-Resident Income Tax Law or the tax treatment of the notes following any exercise of the Spanish
Bail-in Power with respect to such securities.
Accordingly, prospective investors should consult
their own tax advisors as to the tax consequences of their purchase, ownership and disposition of ordinary shares or ADSs, senior notes,
senior non-preferred notes, subordinated notes and contingent convertible preferred securities including the effect of tax laws of any
other jurisdiction, based on their particular circumstances.
This information has been prepared in accordance
with the following Spanish tax legislation in force at the date of this prospectus and is subject to amendment in subsequent prospectus
supplements:
| (i) | of general application, First Additional Provision of Law 10/2014. Consideration has also been given to Royal Decree 1065/2007, of
July 27 (“RD 1065/2007”); |
| (ii) | for individuals resident for tax purposes in Spain which are subject to the Individual Income Tax (“IIT”), Law 35/2006
of November 28, on the IIT 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 promulgating the IIT Regulations, along with Law 29/1987, of December 18
on Inheritance and Gift Tax; |
| (iii) | for legal entities resident for tax purposes in Spain which are subject to the Corporate Income Tax (“CIT”), Law 27/2014
of November 27 promulgating the CIT Law, and Royal Decree 634/2015, of July 10 promulgating the CIT Regulations; and |
| (iv) | for individuals and entities who are not resident for tax purposes in Spain which are subject to Non-Residents Income Tax (“NRIT”),
Royal Legislative Decree 5/2004 of March 5 promulgating the Consolidated Text of the NRIT Law and Royal Decree 1776/2004, of July 30
promulgating the NRIT Regulations, along with Law 29/1987, of December 18 on Inheritance and Gift Tax. |
As used herein, the following terms have the following
meanings:
| (i) | The “Treaty” means the Convention between the United States and Spain for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, together with the related Protocol, both signed February 22, 1990, as amended
by the Protocol and its Memorandum of Understanding, signed in Madrid on January 14, 2013. |
| (ii) | A “U.S. Resident” means a U.S. Holder (as defined below under “U.S. Tax Considerations”) that is a resident
of the United States for purposes of the Treaty and entitled to the benefits of the Treaty and whose holding is not effectively connected
with a permanent establishment (as defined by the Treaty) in Spain through which such holder carries on or has carried on business or
with a fixed base in Spain from which such holder performs or has performed independent personal services. |
For purposes of Spanish law and the Treaty, an
owner of BBVA ADSs will generally be treated as the owner of the ordinary shares underlying the ADSs. Holders of ordinary shares, or ADSs
who are not U.S. Residents should consult their own tax advisors, particularly as to the applicability of any Double Tax Treaty referred
to as a “DTT”.
The statements regarding Spanish tax laws set
out below are based on interpretations of those laws as in force on the date of this document and are subject to any change in such law
that may take effect after such date. Such statements also assume that each obligation in the deposit agreement and any related agreement
will be performed in full accordance with their terms.
Ordinary Shares or ADSs
Individuals and Legal Entities with no Tax Residency in Spain
Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes)
1. Investors with no Tax Residency in Spain not acting
through a permanent establishment in Spain
Taxation of dividends
Under Spanish law, dividends paid by a Spanish
resident company to a non-Spanish resident holder of ordinary shares or ADSs are subject to the Spanish NRIT and therefore a 19% withholding
tax is currently applied on the gross amount of dividends.
However, under the Treaty, a U.S. Resident is
entitled to the Treaty-reduced rate of 15%, as a general rule, 5% if the U.S. Resident is a corporation which owns more than 10% of the
voting rights of the ordinary shares of BBVA, or 0% if received by a U.S. Resident which is either a pension fund (provided that such
dividends are not derived from the carrying on of a trade or business by the pension fund or through an associated enterprise) or a company
that has owned at least 80% of the voting stock in BBVA for a period of 12 months prior to the date on which the right to receive the
dividends arises, and that is not adversely affected by the new limitation on benefits (“LOB”) clause. In any case, to be
able to apply those withholding rates, the recipient of the dividends must be their beneficial owner.
In practice, on any dividend payment date, U.S.
Residents will be subject to a withholding of 19% of the gross amount of dividends. However, U.S. Residents will be entitled to a refund
of the amount withheld in excess of the Treaty-reduced rate, according to the procedure set forth by the Spanish legislation. To benefit
from the Treaty reduced rate, a U.S. Resident must provide to BBVA or to the Spanish resident depositary, if any, through which its ordinary
shares are held, a certificate from the U.S. Internal Revenue Service (“IRS”) on Form 6166 stating that, to its best knowledge,
such holder is a U.S. Resident within the meaning of the Treaty. The IRS certificate of residence is valid for a period of one year from
the date of issuance. The issuance of Form 6166 by the IRS may be subject to substantial delay.
Quick Refund Process. Under the standard
procedure agreed to between The Bank of New York Mellon and its Spanish resident depositary, unless otherwise indicated in the applicable
prospectus supplement, holders of BBVA ADSs claiming tax relief through the “Quick Refund” process must submit their valid
IRS certificate of residence by the last day of the month in which the record date for receipt of the relevant dividend occurs.
The IRS certificate of residence will then be
provided to the Spanish depositary before the fifth day following the end of the month in which the dividend record date occurs. Otherwise,
the U.S. Resident may afterwards obtain a refund of the amount withheld in excess of the Treaty-reduced rate, directly from the Spanish
tax authorities, following the standard refund procedure established by Spanish regulations. See “—Spanish Refund Procedure”
below.
Spanish Refund Procedure. According to
Spanish regulations on the NRIT, approved by Royal Decree 1776/2004, dated July 30, 2004 (“NRIT Regulations”), a refund
for the amount withheld in excess of the Treaty-reduced rate can be obtained from the relevant Spanish tax authorities. To pursue the
refund claim, the U.S. Resident is required to file:
| · | The relevant Spanish tax form (currently, Form 210); |
| · | The IRS certificate of residence (IRS Form 6166 for U.S. Residents); and |
| · | A certificate evidencing Spanish NRIT withheld regarding the dividends, which may generally be obtained from the U.S. resident’s
broker. |
Taxation of capital gains
As a general rule, capital gains realized by U.S.
Residents from the disposition of ordinary shares or ADSs will not be taxed in Spain. Only in the case of alienation of stock or participations
which confer on the owner the right to enjoy real property situated in Spain may the capital gains arising on that alienation be taxed
in Spain.
Additionally, capital gains derived from the transfer
of ordinary shares in an official Spanish secondary stock market 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), will be exempt from taxation in Spain. This exemption
is not applicable to capital gains obtained by a U.S. Resident through a country or territory defined as a tax haven under applicable
Spanish regulations.
Non Spanish holders must submit a Spanish Tax
Form (currently Form 210) within the time periods set out in the applicable Spanish regulations and to pay the corresponding tax or establish
an exemption. In particular, where any of the exemptions mentioned above applies, the seller will be obliged to file with the Spanish
tax authorities the relevant Spanish tax form (currently, Form 210)
together with the certificate of tax residence issued by the tax authorities
of the country of residence (IRS Form 6166 for U.S. residents) evidencing its entitlement to the exemption.
2. Investors with no Tax Residency in Spain acting
through a permanent establishment in Spain
Taxation of dividends
If the ordinary 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 in “—Legal
Entities with Tax Residency in Spain—Corporate Income Tax (Impuesto sobre Sociedades)—Taxation of dividends” below.
Ownership of the ordinary 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.
Taxation of capital gains
If the ordinary 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 in “—Legal
Entities with Tax Residency in Spain—Corporate Income Tax (Impuesto sobre Sociedades)—Taxation of capital gains”
below.
Spanish Wealth Tax (Impuesto sobre el Patrimonio)
Individuals resident in a country with which Spain
has entered into a DTT in relation to Wealth Tax (and the United States and Spain have not entered into such a DTT) would generally not
be subject to such tax. Otherwise, non-Spanish resident individuals with properties and rights located in Spain, or that can be exercised
within the Spanish territory, in excess of €700,000 would be subject to Wealth Tax at the applicable rates, ranging between 0.2%
and 3.5%, without prejudice to any exemption which may apply, on the value of the ordinary shares or ADSs which they hold as at the end
of the relevant fiscal year.
Legal entities are not subject to Wealth Tax.
Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)
Unless otherwise provided under an applicable
DTT (and the United States and Spain have not entered into such a DTT), transfers of ordinary shares upon death or by gift to individuals
not resident in Spain are subject to Spanish Inheritance and Gift Tax (Law 29/1987), if the ordinary shares or ADSs are located in Spain
or the rights attached to such ordinary shares or ADSs are exercisable in Spain, regardless of the residence of the heir or the beneficiary.
In this regard, the Spanish tax authorities may argue that all ordinary shares and all ADSs are located in Spain for Spanish tax purposes.
If such a view were to prevail, non-resident holders in Spain who inherit or receive a gift of ordinary shares or ADSs would be subject
to tax at an effective tax rate that depends on all relevant factors and that ranges between 0% and 81.6% for individuals. Gifts granted
to non-Spanish resident corporations will be generally subject to Spanish NRIT as capital gains, subject to the exemptions referred to
above under section “—Taxation of capital gains”.
Individuals with Tax Residency in Spain
Individual Income Tax (Impuesto sobre la Renta de las Personas Físicas)
Taxation of dividends
According to the IIT 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 by such shareholder in his condition 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 26%).
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 IIT payable; if the amount of tax withheld is
greater than the amount of the net IIT payable, the taxpayer is entitled
to a refund of the excess withheld in accordance with the IIT Law.
Taxation of capital gains
Gains or losses recorded by a shareholder subject
to IIT as a result of the transfer of ordinary shares qualify for the purposes of the IIT 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 26%).
Capital gains arising from the transfer of shares
are not subject to withholding tax on account of IIT. 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.
Net Wealth Tax (Impuesto sobre el Patrimonio)
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 the relevant fiscal year.
Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)
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 (Impuesto sobre Sociedades)
Taxation of dividends
Dividends from BBVA received by corporate Spanish
shareholders, less any expenses inherent to holding the ordinary shares, must be included in the CIT taxable base. The general CIT tax
rate is 25%.
With respect to shareholders that (i) hold,
directly or indirectly, at least 5% in BBVA’s stock; and (ii) hold such participation for at least one year prior to the relevant
distribution date or commit to hold such participation for the time needed to complete such one-year holding period, dividends may be
95% exempt from CIT as a general rule.
If the relevant requirements of this exemption
are met with respect to a particular shareholder, and provided that the minimum one year holding period requirement is complied with on
the distribution date in respect of the ordinary shares, dividends will not be subject to withholding tax. Otherwise, dividends will be
taxed at the 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 ordinary
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 ordinary 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 BBVA’s stock; and (ii) hold such participation for at least one year prior to the relevant transfer,
capital gains may be 95% exempt from CIT as a general rule. Otherwise, capital gains will be taxed at the CIT rate applicable to the relevant
taxpayer.
In the case where more than 70% of the company’s
revenues derive from dividends and capital gains arising from the transfer of shares, the application of the participation exemption is
subject to particularly complex restrictions, substantially requiring that the shareholder holds an indirect participation of at least
5% in the share capital of the company’s subsidiaries. CIT payers are urged to consult their tax advisors regarding compliance of
the requirements for application of the aforesaid participation exemption.
Capital gains deriving from the disposal of ordinary
shares will not be subject to withholding tax on account of CIT.
Net Wealth Tax (Impuesto sobre el Patrimonio)
Legal entities are not subject to Wealth Tax.
Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)
Legal entities resident in Spain for tax purposes
(and NRIT taxpayers acting through a permanent establishment in Spain, as described above) which acquire ownership or other rights over
the ordinary shares by inheritance, gift or legacy are not subject to the Spanish Inheritance and Gift Tax.
Spanish Transfer Tax
Transfers of ordinary shares or ADSs will be exempt
from Spanish Transfer Tax or Value Added Tax. Additionally, no Spanish Stamp Duty will be levied on the subscription for, acquisition
of or transfer of ordinary shares or ADSs.
BBVA Rights to Subscribe for Ordinary Shares
The material Spanish tax consequences of the acquisition,
ownership and disposition of rights to subscribe for BBVA shares will be described in the applicable prospectus supplement.
Senior Notes, Senior Non-Preferred Notes and Subordinated Notes
References in this section to holders of senior
notes, senior non-preferred notes or subordinated notes, as the case may be (hereinafter, the relevant securities) are to the owners of
a beneficial interest in the relevant securities, or beneficial owners, of the relevant securities. The statements regarding Spanish law
and practice set forth below assume that the relevant securities will be issued, and transfers thereof will be made, in accordance with
the Spanish law.
Whatever the nature and residence of the holders
of relevant securities, the acquisition and transfer of the relevant securities will be exempt from indirect taxes in Spain, i.e.,
exempt from Transfer Tax and Stamp Duty, in accordance with the Consolidated Text of such tax promulgated by Royal Legislative Decree
1/1993, of September 24 and exempt from Value Added Tax, in accordance with Law 37/1992, of December 28 regulating such tax.
Tax Rules for Senior Notes, Senior Non-Preferred Notes and Subordinated
Notes Listed on a Regulated Market, a Multilateral Trading Facility or an Organized Market
The following summary assumes that the relevant
securities will be listed on a Regulated Market, a Multilateral Trading Facility or an Organized Market.
Individuals with Tax Residency in Spain
Individual Income Tax (Impuesto sobre la Renta de las
Personas Físicas)
Income obtained by holders who are IIT taxpayers,
both as interest and income obtained in connection with the transfer, redemption or repayment of the relevant 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 IIT Law, and therefore will be taxed as savings income at the applicable rate (currently varying from 19% to 26%).
The above mentioned income will be subject to
the corresponding IIT withholding at the applicable tax rate (currently 19%). Under RD 1065/2007, income obtained in respect of the notes
will not be subject to withholding tax in Spain, provided certain requirements are met, including that the relevant paying agent provides
BBVA, in a timely manner, with certain information. See “—Tax Reporting and Withholding Obligations of the Issuer”.
Nevertheless, withholding tax at the applicable
rate (currently 19%) may have to be deducted by other entities (such as depositaries or financial entities), provided that such entities
are resident for tax purposes in Spain or have a permanent establishment in Spanish territory.
Net Wealth Tax (Impuesto sobre el Patrimonio)
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 the relevant fiscal year.
Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
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 (Impuesto sobre Sociedades)
Both distributions periodically received and income
derived from the transfer, redemption or repayment of the relevant securities are subject to CIT (at the current general tax rate of 25%)
in accordance with the rules for this tax.
Pursuant to Section 44.5 of RD 1065/2007,
there is no obligation to withhold on income payable to CIT taxpayers (which for the sake of clarity, include Spanish tax resident investment
funds and Spanish tax resident pension funds). Consequently, BBVA will not withhold tax on interest payments to Spanish CIT taxpayers
or on income derived from the transfer, redemption or repayment of the relevant securities provided that the relevant formalities described
in “—Tax Reporting and Withholding Obligations of the Issuer” are complied with.
However, in the case of notes held by a Spanish
resident entity and deposited with a Spanish resident entity acting as depositary or custodian, payments of interest under the notes or
income obtained upon the transfer, redemption or repayment of the notes may be subject to withholding tax at the current rate of 19%.
Such withholding will be made by the depository or custodian, if the notes do not comply with the exemption requirements specified in
the ruling issued by the Directorate General for Taxation (Dirección General de Tributos) on July 27, 2004, which requires
that the relevant securities be placed outside Spain in another OECD country and traded on an organized market in an OECD country.
For information on withholdings on payments of
interest on the relevant securities see “—Tax Reporting and Withholding Obligations of the Issuer”.
Net Wealth Tax (Impuesto sobre el Patrimonio)
Legal entities are not subject to Wealth Tax.
Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
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 the Spanish Inheritance and Gift Tax.
Individuals and Legal Entities with no Tax Residency in Spain
Non-Resident Income Tax (Impuesto sobre la Renta de
no Residentes)
| (a) | Investors with no Tax Residency in Spain acting through a permanent establishment in Spain |
If the relevant securities 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 securities are, generally, the same as those previously set out for Spanish CIT taxpayers. See “—Legal
Entities with Tax Residency in Spain—Corporate Income Tax (Impuesto sobre Sociedades)”. Ownership of the senior
notes, senior non-preferred notes or subordinated notes by investors who are not resident for tax purposes in Spain will not in itself
create the existence of a permanent establishment in Spain.
| (b) | 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, provided certain requirements are
met, including that the relevant paying agent provides BBVA, in a timely manner, with certain information. See “—Tax Reporting
and Withholding Obligations of the Issuer”.
Net Wealth Tax (Impuesto sobre el Patrimonio)
Individuals resident in a country with which Spain
has entered into a DTT in relation to Wealth Tax (and the United States and Spain have not entered into such a DTT) would generally not
be subject to such tax. Otherwise, non-Spanish resident individuals with properties and rights located in Spain, or that can be exercised
within the Spanish territory, in excess of €700,000 would be subject to Wealth Tax at the applicable rates, ranging between 0.2%
and 3.5%, without prejudice to any exemption which may apply, on the value of the relevant securities which they hold as at the end of
the relevant fiscal 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 Region in which the greater value of the assets and rights they own are located and for which the tax is required
to be paid as a result of the assets or rights being located, exercisable or required to be fulfilled in Spanish territory.
Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
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.
Individuals not resident in Spain for tax purposes
who acquire ownership or other rights over senior notes, senior non-preferred notes or subordinated notes 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, unless they
reside in a country for tax purposes with which Spain has entered into a DTT in relation to Inheritance Tax. In such case, the provisions
of the relevant DTT will apply. The United States and Spain have not entered into a DTT in relation to Inheritance Tax.
According to the Second Additional Provision of
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. Legal entities resident in Spain for tax purposes (and NRIT taxpayers acting through a permanent establishment in
Spain) which acquire ownership or other rights over the relevant securities by inheritance, gift or legacy are not subject to the Spanish
Inheritance and Gift Tax.
Non-Spanish resident legal entities which acquire
ownership or other rights over the relevant securities by inheritance, gift or legacy are not subject to the Spanish Inheritance and Gift
Tax. Such acquisitions will be subject to NRIT (as described above), subject to the provisions of any applicable DTT entered into by Spain.
In general, DTTs provide for the taxation of this type of income in the country of residence of the beneficiary.
Tax Reporting and Withholding Obligations of the Issuer
In accordance with Section 44 of RD 1065/2007
(“Section 44”), income obtained from debt securities which are originally listed on an organized market in an OECD country,
will be paid free of Spanish withholding tax provided that the relevant paying agent provides BBVA with a statement containing the following
information:
| (i) | identification of the securities; |
| (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. |
In accordance with Section 44.5, the relevant
paying agent should provide BBVA with the statement referred to above on the business day immediately prior to the relevant payment of
income. If the paying agent fails to deliver such statement on a timely basis, the related payment will be subject to Spanish withholding
tax (currently at the general rate of 19%).
If, before the tenth day of the month following
the month in which interest is paid, the obliged entity provides the statement, BBVA will reimburse the amounts withheld.
In the event that the currently applicable procedures
are modified, amended or supplemented by, among other things, any Spanish law, regulation, interpretation or ruling of the Spanish tax
authorities, BBVA will notify the relevant holders of such information procedures and their implications, as BBVA may be required to apply
withholding tax on interest payments in respect of the securities if the relevant holders do not comply with such information procedures.
Tax Rules for Senior Notes, Senior Non-Preferred Notes and Subordinated
Notes not Listed on a Regulated Market, a Multilateral Trading Facility or an Organized Market
Withholding on Account of IIT, CIT and NRIT
If the senior notes, senior non-preferred notes
or subordinated notes are not listed on a regulated market, a multilateral trading facility or an organized market and originally registered
with the entities that manage clearing systems located outside Spain recognized by Spanish law or by the law of another OECD country,
interest payments to beneficial owners in respect of such securities will be subject to withholding tax, currently at a rate of 19%, except
if an exemption from Spanish tax or a reduced withholding tax rate is provided by an applicable convention for the avoidance of double
taxation entered into between Spain and the country of residence of the relevant beneficial owner. The treaty generally provides for a
withholding rate of 0% for U.S. Residents if the recipient of the interest is the beneficial owner.
Net Wealth Tax (Impuesto sobre el Patrimonio)
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 the relevant fiscal year.
Individuals resident in a country with which Spain
has entered into a DTT in relation to Wealth Tax (and the United States and Spain have not entered into such a DTT) would generally not
be subject to such tax. Otherwise, non-Spanish resident individuals with properties and rights located in Spain, or that can be exercised
within the Spanish territory, in excess of €700,000 would be subject to Wealth Tax at the applicable rates, ranging between 0.2%
and 3.5%, without prejudice to any exemption which may apply, on the value of the relevant securities which they hold as at the end of
the relevant fiscal 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 Region in which the greater value of the assets and rights they own are located and for which the tax is required
to be paid as a result of the assets or rights being located, exercisable or required to be fulfilled in Spanish territory.
Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)
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.
Individuals not resident in Spain for tax purposes
who acquire ownership or other rights over senior notes, senior non-preferred notes or subordinated notes 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, unless they
reside in a country for tax purposes with which Spain has entered into a DTT in relation to Inheritance Tax. In such case, the provisions
of the relevant DTT will apply. The United States and Spain have not entered into a DTT in relation to Inheritance Tax.
According to the Second Additional Provision of
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. Legal entities resident in Spain for tax purposes (and NRIT taxpayers acting through a permanent establishment in
Spain) which acquire ownership or other rights over the relevant securities by inheritance, gift or legacy are not subject to the Spanish
Inheritance and Gift Tax.
Non-Spanish resident legal entities which acquire
ownership or other rights over the relevant securities by inheritance, gift or legacy are not subject to the Spanish Inheritance and Gift
Tax. Such acquisitions will be subject to NRIT (as described above), subject to the provisions of any applicable DTT entered into by Spain.
In general, DTTs provide for the taxation of this type of income in the country of residence of the beneficiary.
Contingent Convertible Preferred Securities and Ordinary Shares
Acquisition of the Contingent Convertible Preferred Securities
and Ordinary Shares
The issue of, subscription for, transfer and acquisition
of the contingent convertible preferred securities and ordinary shares is exempt from Transfer Tax and Stamp Duty and Value Added Tax.
Contingent Convertible Preferred Securities
Individuals with Tax Residency in Spain
Individual Income Tax (Impuesto sobre la Renta de las
Personas Físicas)
Income obtained by holders who are IIT taxpayers,
both as interest and income obtained in connection with the transfer, redemption or repayment of the contingent convertible 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 IIT Law, and therefore will be taxed as savings income at the applicable rate (currently varying from
19% to 26%).
The above mentioned income will be subject to
the corresponding IIT withholding at the applicable tax rate (currently 19%). Under RD 1065/2007, income obtained in respect of the contingent
convertible preferred securities will not be subject to withholding tax in Spain, provided certain requirements are met, including that
the relevant paying agent provides BBVA, in a timely manner, with certain information (see “—Tax Reporting and Withholding
Obligations of the Issuer”).
Nevertheless, withholding tax at the applicable
rate (currently 19%) may have to be deducted by other entities (such as depositaries or financial entities), provided that such entities
are resident for tax purposes in Spain or have a permanent establishment in Spanish territory.
Net Wealth Tax (Impuesto sobre el Patrimonio)
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 the relevant fiscal year.
Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
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 (Impuesto sobre Sociedades)
Both Distributions periodically received and income
derived from the transfer, redemption or repayment of the contingent convertible preferred securities are subject to CIT (at the current
general tax rate of 25%) in accordance with the rules for this tax.
Pursuant to Section 44.5 of RD 1065/2007,
there is no obligation to withhold on income payable to CIT taxpayers (which for the sake of clarity, include Spanish tax resident investment
funds and Spanish tax resident pension funds). Consequently, BBVA will not withhold tax on interest payments to Spanish CIT taxpayers
or on income derived from the transfer, redemption or repayment of the relevant securities provided that the relevant formalities described
in “—Tax Reporting and Withholding Obligations of the Issuer” are complied with.
However, in the case of securities held by a Spanish
resident entity and deposited with a Spanish resident entity acting as depositary or custodian, payments of interest under the contingent
convertible preferred securities or income derived from the transfer, redemption or repayment of the contingent convertible preferred
securities may be subject to withholding tax at the current rate of 19%. Such withholding will be made by the depository or custodian,
if the contingent convertible preferred securities do not comply
with the exemption requirements specified in the ruling issued by the
Directorate General for Taxation (Dirección General de Tributos) on July 27, 2004, which requires that the relevant securities
be placed outside Spain in another OECD country and traded on an organized market in an OECD country.
For information on withholdings on Distribution
payments on the relevant securities see “—Tax Reporting and Withholding Obligations of the Issuer”.
Net Wealth Tax (Impuesto sobre el Patrimonio)
Legal entities are not subject to Wealth Tax.
Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
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 the Spanish Inheritance and Gift Tax.
Individuals and Legal Entities with no Tax Residency in Spain
Non-Resident Income Tax (Impuesto sobre la Renta de
no Residentes)
| (a) | Investors with no Tax Residency in Spain acting through a permanent establishment in Spain |
If the contingent convertible preferred securities 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 securities are, generally, the same as those previously set out for Spanish CIT taxpayers.
See “2. Contingent convertible preferred securities—2(b) Legal Entities with Tax Residency in Spain—Corporate Income
Tax (Impuesto sobre Sociedades)”. Ownership of the contingent convertible preferred securities by investors who are not resident
for tax purposes in Spain will not in itself create the existence of a permanent establishment in Spain.
| (b) | 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, provided certain requirements are
met, including that the relevant paying agent provides BBVA, in a timely manner, with certain information (see “—Tax Reporting
and Withholding Obligations of the Issuer”).
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 (Spain and the United States have not entered
into such DTT). 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
contingent convertible preferred securities which they hold as at the end of the relevant fiscal year.
Legal entities are not subject to Wealth Tax.
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 Region in which the greater value of the assets and rights they own and for which the tax is required are located,
can be exercised or must be fulfilled in Spanish territory.
Inheritance and Gift Tax
The transfer of the contingent convertible 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. The United States and Spain
have not entered into a DTT in relation to Inheritance Tax.
The effective tax rate, after applying all relevant
factors, ranges between 0% and 81.6%.
According to the Second Additional Provision of
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. In the event that the beneficiary is an entity other than a natural person, the income obtained shall be subject to
NRIT and without prejudice, in the latter event, to the provisions of any DTT that may apply.
Tax Reporting and Withholding Obligations of the Issuer
In accordance with Section 44 of RD 1065/2007,
income obtained from debt securities which are originally listed on an organized market in an OECD country, will be paid free of Spanish
withholding tax provided that the relevant paying agent provides BBVA with a statement containing the following information:
| (i) | identification of the securities; |
| (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. |
In accordance with Section 44.5, the relevant
paying agent should provide BBVA with the statement referred to above on the business day immediately prior to the relevant payment of
income. If the paying agent fails to deliver such statement on a timely basis, the related payment will be subject to Spanish withholding
tax (currently at the general rate of 19%).
If, before the tenth day of the month following
the month in which interest is paid, the obliged entity provides the statement, BBVA will reimburse the amounts withheld.
In the event that the currently applicable procedures
are modified, amended or supplemented by, among other things, any Spanish law, regulation, interpretation or ruling of the Spanish tax
authorities, BBVA will notify the relevant holders of such information procedures and their implications, as BBVA may be required to apply
withholding tax on interest payments in respect of the securities if the relevant holders do not comply with such information procedures.
Ordinary Shares
The material Spanish tax consequences of the acquisition,
ownership and disposition of ordinary shares into which the contingent convertible preferred securities are convertible upon the occurrence
of certain events are described under “—Ordinary Shares or ADSs”.
U.S.
Tax Considerations
The following discussion describes material U.S.
federal income tax consequences of the ownership and disposition of BBVA ADSs, ordinary shares, contingent convertible preferred securities,
senior notes, senior non-preferred notes and subordinated notes. The material U.S. federal income tax consequences of the acquisition,
ownership and disposition of rights to acquire ordinary shares issued by BBVA will be described in the applicable prospectus supplement.
This discussion applies only to U.S. Holders described below that hold ordinary shares, ADSs, contingent convertible preferred securities,
senior notes, senior non-preferred notes or subordinated notes as capital assets for U.S. federal income tax purposes. Further,
this discussion applies only to U.S. Holders that purchase the ordinary shares, ADSs, contingent convertible preferred securities, senior
notes, senior non-preferred notes or subordinated notes in their initial offering and in the case of senior notes, senior non-preferred
notes or subordinated notes at the “issue price”, which will equal the first price to the public (not including bond houses,
brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) at which a substantial
amount of the notes of the relevant series is sold for money. This summary does not address all of the tax consequences that may be relevant
to a particular investor, including the special tax accounting rules under Section 451(b) of the Internal Revenue Code of 1986, as amended
(the “Code”) (which may require accrual method U.S. taxpayers to conform the timing of their income accruals to their financial
statements), the provisions of the Code known as the Medicare Contribution tax, any alternative minimum tax considerations and tax consequences
that may apply to persons subject to special rules, such as:
| · | certain financial institutions; |
| · | dealers and certain traders in securities or foreign currencies; |
| · | persons holding ADSs, ordinary shares, contingent convertible preferred securities, senior notes, senior non-preferred notes or subordinated
notes as part of a hedge, straddle, constructive sale, conversion transaction or integrated transaction; |
| · | persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar; |
| · | tax-exempt organizations, “individual retirement accounts” or “Roth IRAs”; |
| · | partnerships or other entities classified as partnerships for U.S. federal income tax purposes; |
| · | persons who own or are deemed to own 10% or more of our shares by vote or value; and |
| · | persons holding ADSs, ordinary shares, contingent convertible preferred securities, senior notes, senior non-preferred notes or subordinated
notes in connection with a trade or business conducted outside the United States. |
This summary does not address the tax treatment
of the ADS, ordinary shares, contingent convertible preferred securities, senior notes, senior non-preferred notes or subordinated notes
on or following any exercise of the Spanish Bail-in Power with respect to such securities.
A “U.S. Holder” is a person that for
U.S. federal income tax purposes is a beneficial owner of ordinary shares, ADSs, contingent convertible preferred securities, senior notes,
senior non-preferred notes or subordinated notes, as applicable, and is:
| · | a citizen or individual resident of the United States; |
| · | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state
therein or the District of Columbia; or |
| · | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
Treasury regulations that apply to taxable years
beginning on or after December 28, 2021, or the Foreign Tax Credit Regulations, may in some circumstances prohibit a U.S. person from
claiming a foreign tax credit with respect to certain non-U.S. taxes that are not creditable under applicable income tax treaties. Accordingly,
U.S. investors that are not eligible for Treaty benefits should consult their tax advisers regarding the creditability or deductibility
of any Spanish taxes imposed on dividends or interest on the ADS, ordinary shares, contingent convertible preferred securities, senior
notes, senior non-preferred notes or subordinated notes. The discussions below regarding the creditability or deductibility of Spanish
taxes on this income do not apply to these investors.
If a partnership holds ordinary shares, ADSs,
contingent convertible preferred securities, senior notes, senior non-preferred notes or subordinated notes, the U.S. federal income tax
treatment of a partner will generally depend on the status of the partner and the tax
treatment of the partnership. Partnerships holding
ordinary shares, ADSs, contingent convertible preferred securities, senior notes, senior non-preferred notes or subordinated notes and
partners in such partnerships should consult their tax advisers with regard to the U.S. federal income tax treatment of their investment
in such securities.
The summary is based upon the tax laws of the
United States including the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations,
as well as the Treaty, all as of the date hereof. These laws are subject to change, possibly with retroactive effect. In addition, in
the case of ADSs this summary is based in part on representations of the depositary and assumes that each obligation provided for in or
otherwise contemplated by BBVA’s deposit agreement or any other related document will be performed in accordance with its terms.
This discussion does not address the effects of any state, local or non-U.S. tax laws, or any U.S. federal taxes other than income taxes
(such as U.S. federal estate or gift tax consequences). Prospective purchasers of the ADSs, ordinary shares, contingent convertible
preferred securities, senior notes, senior non-preferred notes or subordinated notes are urged to consult their tax advisers as to the
U.S., Spanish or other tax consequences of the purchase, ownership and disposition of such securities in their particular circumstances,
including the effect of any U.S. state or local tax laws.
This discussion is subject to any additional discussion
regarding U.S. federal income taxation contained in the applicable prospectus supplement. Accordingly, U.S. Holders should also consult
the applicable prospectus supplement for any additional discussion regarding U.S. federal income taxation with respect to the specific
securities offered thereunder.
Except as specifically described below under “—Passive
Foreign Investment Company Rules” this discussion assumes that BBVA is not, and will not become, a passive foreign investment company
(“PFIC”) for U.S. federal income tax purposes.
BBVA ADSs or Ordinary Shares
For U.S. federal income tax purposes, U.S. Holders
of ADSs will generally be treated as the owners of the underlying ordinary shares represented by those ADSs. Accordingly, no gain or loss
will be recognized if a U.S. Holder exchanges ADSs for the underlying ordinary shares represented by those ADSs and vice-versa.
Taxation of Distributions
The amount of any distributions, before reduction
for any Spanish income tax withheld by BBVA or its paying agent, paid with respect to ADSs or ordinary shares (other than certain pro
rata distributions of BBVA’s capital stock or rights to subscribe for shares of its capital stock) will be includible in the
income of a U.S. Holder as ordinary dividend income, to the extent paid out of BBVA’s current or accumulated earnings and profits
as determined in accordance with U.S. federal income tax principles. Because BBVA does not maintain calculations of its earnings and profits
under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. The
amount of such dividends will be treated as foreign-source dividend income and will not be eligible for the “dividends received
deduction” generally allowed to U.S. corporations under the Code. Subject to applicable limitations, dividends paid to non-corporate
U.S. Holders may be taxable at favorable rates applicable to long-term capital gains. Non-corporate U.S. Holders should consult their
tax advisers to determine the availability of these favorable rates in their particular circumstances.
The amount of a dividend distribution will equal
the U.S. dollar value of the euro received, calculated by reference to the exchange rate in effect on the date such distribution is received
(which, for U.S. Holders of ADSs, will be the date such distribution is received by the depositary), whether or not the distribution is
in fact converted into U.S. dollars at that time. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder
generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. If the dividend is not
converted into U.S. dollars on the date of receipt, a U.S. Holder may have foreign currency gain or loss on the conversion date. In general,
any foreign currency gain or loss will be U.S.-source ordinary gain or loss.
Subject to applicable limitations that vary depending
upon a U.S. Holder’s circumstances, a U.S. Holder will be entitled to a credit against its U.S. federal income tax liability for
any non-refundable Spanish NRIT taxes withheld by BBVA or its paying agent at a rate not in excess of any applicable rate under the Treaty.
Spanish taxes withheld at a rate in excess of an applicable treaty rate or that are otherwise refundable under Spanish law will not be
eligible for credit against a U.S. Holder U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. The rules governing foreign tax credits are complex and, therefore, U.S. Holders
should consult their tax advisers regarding the availability of foreign tax credits in their particular circumstances. In lieu of claiming
a foreign tax credit, U.S. Holders may elect to deduct all creditable non-U.S. taxes paid or accrued in a taxable year (including any
Spanish NRIT withholding tax) in computing their taxable income, subject to generally applicable limitations under U.S. federal income
tax law.
Sale and Other Disposition of ADSs or Ordinary
Shares
Gain or loss realized by a U.S. Holder on the
sale or exchange of ADSs or ordinary shares will be subject to U.S. federal income tax as capital gain or loss in an amount equal to the
difference between the U.S. Holder’s tax basis in the ADSs or ordinary shares and
the amount realized on the disposition, in each case
as determined in U.S. dollars. Such gain or loss will be long-term capital gain or loss if the U.S. Holder has held the ordinary shares
or ADSs for more than one year. Gain or loss, if any, will generally be U.S.-source for foreign tax credit purposes. The deductibility
of capital losses is subject to limitations. If any Spanish taxes are imposed on disposition gains, they will not be creditable against
a U.S. Holder’s U.S. federal income tax liability.
BBVA Contingent Convertible Preferred Securities
Characterization of the Contingent Convertible
Preferred Securities
BBVA believes that the contingent convertible
preferred securities will be treated as equity for U.S. federal income tax purposes and the remainder of this discussion so assumes.
Taxation of Distributions
Distributions made with respect to contingent
convertible preferred securities (including amounts withheld in respect of Spanish taxes, if any, and any additional amounts paid in respect
thereto) will be includible in the income of a U.S. Holder as ordinary dividend income, to the extent paid out of BBVA’s current
or accumulated earnings and profits as determined in accordance with U.S. federal income tax principles. Because BBVA does not maintain
calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be
reported to U.S. Holders as dividends. The amount of such dividends will be treated as foreign-source dividend income and will not be
eligible for the “dividends received deduction” generally allowed to U.S. corporations under the Code. Subject to applicable
limitations, dividends paid to non-corporate U.S. Holders may be taxable at the favorable rate applicable to long-term capital gains.
Non-corporate U.S. Holders should consult their tax advisers to determine the availability of this favorable rate in their particular
circumstances.
The amount of a distribution paid in euro will
equal the U.S. dollar value of the euro received, calculated by reference to the exchange rate in effect on the date such distribution
is received, whether or not the U.S. Holder in fact converts euro received into U.S. dollars at that time. If the dividend is converted
into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in
respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if such dividend is not converted into U.S. dollars
on the date of its receipt. In general, any foreign currency gain or loss will be U.S.-source ordinary gain or loss.
Subject to applicable limitations that vary depending
upon a U.S. Holder’s circumstances, a U.S. Holder may be entitled to a credit against its U.S. federal income tax liability for
any non-refundable Spanish NRIT taxes withheld by BBVA or its paying agent at a rate not in excess of any applicable rate under the Treaty.
Spanish taxes withheld at a rate in excess of an applicable treaty rate or that are otherwise refundable under Spanish law will not be
eligible for credit against a U.S. Holder U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. The rules governing foreign tax credits are complex and, therefore, U.S. Holders
should consult their tax advisers regarding the availability of foreign tax credits in their particular circumstances. In lieu of claiming
a foreign tax credit, U.S. Holders may elect to deduct all creditable non-U.S. taxes paid or accrued in a taxable year (including any
Spanish NRIT withholding tax) in computing their taxable income, subject to generally applicable limitations under U.S. federal income
tax law.
Sale, Redemption and Other Disposition of Contingent
Convertible Preferred Securities
Sale, Redemption and Other Disposition of Contingent Convertible Preferred Securities Gain or loss realized by a U.S. Holder on the sale,
redemption or other disposition of contingent convertible preferred securities (other than the receipt of ordinary shares or ADSs upon
conversion, which will be treated as described below under “—Conversion”) will be subject to U.S. federal income tax
as capital gain or loss (assuming in the case of a redemption that it is not treated as “essentially equivalent to a dividend,”
including in the case that the U.S. Holder does not own, actually or constructively, any of our ADSs or ordinary
shares or other instruments treated as equity for
U.S. federal income tax purposes) in an amount equal to the difference between the U.S. Holder’s tax basis in the contingent convertible
preferred securities and the amount realized on the disposition, in each case as determined in U.S. dollars. Such gain or loss will be
long-term capital gain or loss if the U.S. Holder held the contingent convertible preferred securities for more than one year. Any gain
or loss will generally be U.S.-source for foreign tax credit purposes. The deductibility of capital losses is subject to limitations.
If any Spanish taxes are imposed on disposition gains, they will not be creditable against a U.S. Holder’s U.S. federal income tax
liability.
Conversion
Conversion of contingent convertible preferred
securities into ordinary shares or ADSs will generally be treated as a tax-free recapitalization for U.S. federal income tax purposes. A
U.S. Holder’s tax basis in the ordinary shares or ADSs received will generally be equal to the U.S. Holder’s tax basis in
the contingent convertible preferred securities and the holding period in the ordinary shares or ADSs received will generally include
the holding period of the contingent convertible preferred securities. Ordinary shares or ADSs received upon conversion will otherwise
generally be treated as described under “—BBVA ADSs or Ordinary Shares” above.
Passive Foreign Investment Company Rules
Based upon certain proposed Treasury regulations,
which are proposed to be effective for taxable years beginning after December 31, 1994 (“Proposed Regulations”) and upon which
taxpayers are currently permitted to rely, we believe that we were not a PFIC for U.S. federal income tax purposes for our 2021 taxable
year. However, because there can be no assurance that the Proposed Regulations will be finalized in their current form and because PFIC
status depends upon the composition of a company’s income and assets and the market value of its assets from time to time, there
can be no assurance that we will not be considered a PFIC for any taxable year.
In general, if we were treated as a PFIC for any
taxable year during which a U.S. Holder owned ADSs, ordinary shares or contingent convertible preferred securities, gain recognized by
such U.S. Holder on a sale or other disposition of an ADS, an ordinary share or a contingent convertible preferred security would be allocated
ratably over the U.S. Holder’s holding period for the ADS, the ordinary share or the contingent convertible preferred security.
The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary
income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for ordinary income of taxpayers
of the U.S. Holder’s type for such taxable year, and an interest charge would be imposed on the resulting tax liability for such
taxable year. Similar rules would apply to distributions received by a U.S. Holder in any taxable year in respect of ADSs, ordinary shares
or contingent convertible preferred securities to the extent in excess of 125% of the average of the annual distributions on ADSs, ordinary
shares or contingent convertible preferred securities received by the U.S. Holder during the preceding three years or the U.S. Holder’s
holding period, whichever is shorter. Certain elections may be available (including a mark-to-market election) to U.S. Holders that may
result in alternative treatment.
Additionally, if a U.S. Holder owns ADSs, ordinary
shares or contingent convertible preferred securities during any year in which we are a PFIC, such U.S. Holder would be required to file
annual returns, subject to certain exceptions. Furthermore, if we are a PFIC in any taxable year in which we make a distribution or the
prior taxable year, the favorable tax rates discussed above with respect to dividends paid to certain non-corporate U.S. Holders would
not apply.
BBVA Senior, Senior Non-Preferred or Subordinated Notes
Characterization of the Notes
We believe that the notes should be treated as
debt for U.S. federal income tax purposes and the remainder of this discussion so assumes. However, there is no direct legal
authority as to the proper U.S. federal income tax treatment of instruments such as the notes that are denominated as a debt instrument
and have significant debt features, but are subject to statutory bail-in powers such as the Spanish Bail-in Power. Therefore, prospective
investors should consult their tax advisers as to the proper characterization of the notes for U.S. federal income tax purposes. In addition,
it is expected, and this discussion assumes, that any floating rate note should be treated as a “variable rate debt instrument”
for U.S. federal income tax purposes. If that is not the case, the applicable prospectus supplement will describe the U.S.
federal income tax consequences of owning and disposing of floating rate notes.
Payments of Interest
Interest paid on a note will be taxable to a U.S.
Holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. Holder’s method of accounting
for U.S. federal income tax purposes, provided that the interest is qualified stated interest (as defined below).
The amount of interest taxable as ordinary income
will include amounts withheld in respect of Spanish taxes, and additional amounts paid in respect thereof, if any. Interest income earned
by a U.S. Holder with respect to a note will constitute foreign source income for U.S. federal income tax purposes, which may be relevant
in calculating a U.S. Holder’s foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. Spanish taxes withheld at a rate not exceeding any applicable Treaty rate from
interest income on a note which are not otherwise refundable under Spanish tax law may be eligible for credit against the U.S. Holder’s
U.S. federal income tax liability, subject to generally applicable limitations and conditions. The rules governing foreign tax credits
are complex and, therefore, U.S. Holders should consult their own tax advisers regarding the availability of foreign tax credits in their
particular circumstances. In lieu of claiming a foreign tax credit, U.S. Holders may elect to deduct Spanish taxes withheld, in computing
their taxable income, subject to generally applicable limitations. An election to deduct creditable non-U.S. taxes instead
of claiming foreign tax credits applies to all creditable non-U.S. taxes paid or accrued in the taxable year.
Special rules governing the treatment of interest
paid with respect to original issue discount notes and foreign currency notes are described below.
Original Issue Discount
A note that is issued at an issue price that is
less than the note’s “stated redemption price at maturity” will be considered to have been issued at an original issue
discount for U.S. federal income tax purposes (and will be referred to as an “original issue discount note”) unless the note
satisfies a de minimis threshold (as described below) or is a Short-Term Note (as defined below). The “stated redemption
price at maturity” of a note will equal the sum of all payments required under the note other than payments of “qualified
stated interest”. “Qualified stated interest” is stated interest unconditionally payable (other than in debt instruments
of the issuer) at least annually during the entire term of the note and equal to the outstanding principal balance of the note multiplied
by a single fixed rate or, subject to certain conditions, certain floating rates.
If the difference between a note’s stated
redemption price at maturity and its issue price is less than a prescribed de minimis amount, i.e., generally 1/4 of 1 percent
of the stated redemption price at maturity multiplied by the number of complete years to maturity, then the note will not be considered
to have original issue discount.
A U.S. Holder of original issue discount notes
will be required to include any qualified stated interest payments in income in accordance with the U.S. Holder’s method of accounting
for U.S. federal income tax purposes. In addition, U.S. Holders of original issue discount notes that have a term of more than one year
from their date of issuance will be required to include original issue discount in income for U.S. federal income tax purposes as it accrues,
in accordance with a constant yield method based on a compounding of interest, before the receipt of cash payments attributable to this
income. Under this method, U.S. Holders of original issue discount notes generally will be required to include in income increasingly
greater amounts of original issue discount in successive accrual periods.
A U.S. Holder may make an election to include
in gross income all interest that accrues on any note (including stated interest, original issue discount and de minimis original
issue discount as adjusted by any amortizable bond premium) in accordance with a constant yield method based on the compounding of interest
(a “constant yield election”).
In general, a floating rate note providing for
one or more qualified floating rates of interest, a single fixed rate and one or more qualified floating rates, a single objective rate,
or a single fixed rate and a single objective rate that is a qualified inverse floating rate, as such terms are defined in applicable
Treasury regulations, generally should not be treated as a contingent payment debt instrument, provided that the interest accrues or is
paid at least annually and provided further that the issue price of the note does not exceed the total noncontingent principal payments
due under the note by more than an amount equal to the lesser of (x) 0.015 multiplied by the product of the total noncontingent principal
payments and the number of complete years to maturity from the issue date (or in certain cases, the weighted average maturity) or (y)
15% of the total noncontingent principal payments. A “qualified floating rate” is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency
in which the floating rate notes is denominated. An interest rate that subjects a qualified floating rate to a cap, floor,
governor or similar restriction may also be treated as a qualified floating rate, provided that the cap, floor or governor is fixed throughout
the term of the notes or if certain other conditions are met. An “objective rate” is generally a rate that is determined
using a single fixed formula and that is based on objective financial or economic information. A “qualified inverse floating
rate” is an objective rate that is equal to a fixed rate minus a qualified floating rate if variations in the rate can reasonably
be expected to inversely reflect contemporaneous variations in the qualified floating rate (disregarding for those purposes any cap, floor,
governor or similar restriction).
If a floating rate note provides for two or more
qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the note, the qualified
floating rates together constitute a single qualified floating rate. If interest on a debt instrument is stated at a fixed rate for an
initial period of one year or less followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent
period, and the value of the variable rate on the issue date is intended to approximate the fixed rate, the fixed rate and the variable
rate together constitute a single qualified floating rate or objective rate. Two or more rates will be conclusively presumed to meet the
requirements of the preceding sentences if the values of the applicable rates on the issue date are within 1/4 of one percent of each
other. If a floating rate note provides for stated interest that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually throughout the term thereof, then all stated interest on such note will constitute qualified stated interest
and will therefore not be treated as having been issued with original issue discount, unless the note is issued at a “true”
discount (i.e., at a price below the note’s stated principal amount and the difference equals or exceeds the specified de
minimis amount described in “—Original Issue Discount” above). If floating rate notes are issued with
original issue discount, the U.S. federal income tax treatment of such notes will be more fully described in the applicable prospectus
supplement.
A note that matures one year or less from its
date of issuance (taking into account the last possible date the note could be outstanding in accordance with its terms) (a “Short-Term
Note”) will be treated as being issued at a discount and none of the interest paid on the note will be treated as qualified stated
interest. In general, a cash method U.S. Holder of a Short-Term Note is not required to accrue the discount for U.S. federal income tax
purposes unless it elects to do so (but should include in income any stated interest upon receipt). Accrual method U.S. Holders and cash
method U.S. Holders who so elect are required to include the discount in income as it accrues on a straight-line basis, unless an election
is made to accrue the discount according to a constant yield method based on
daily compounding. In the case of a U.S. Holder who
is not required and does not elect to include the discount in income currently, any gain realized on the sale, exchange or retirement
of the Short-Term Note will be ordinary income to the extent of the discount accrued on a straight-line basis (or, if elected, according
to a constant yield method based on daily compounding) through the date of sale, exchange or retirement. In addition, those U.S. Holders
will be required to defer deductions for any interest paid on indebtedness incurred to purchase or carry Short-Term Notes in an amount
not exceeding the accrued discount until the accrued discount is included in income.
Amortizable Bond Premium
If a U.S. Holder purchases a note for an amount
that is greater than the sum of all amounts payable on the note other than qualified stated interest, the U.S. Holder will be considered
to have purchased the note with amortizable bond premium. In general, amortizable bond premium with respect to any note will be equal
in amount to the excess of the purchase price over the sum of all amounts payable on the note other than qualified stated interest and
the U.S. Holder may elect to amortize this premium, using a constant-yield method, over the remaining term of the note. Special rules
may limit the amount of bond premium that can be amortized during certain accrual periods in the case of notes that are subject to unconditional
optional redemption. A U.S. Holder may generally use the amortizable bond premium allocable to an accrual period to offset qualified stated
interest required to be included in the U.S. Holder’s income with respect to the note in that accrual period. A U.S. Holder who
elects to amortize bond premium must reduce its tax basis in the note by the amount of the premium amortized in any year. An election
to amortize bond premium applies to all taxable debt obligations then owned and thereafter acquired by the U.S. Holder and may be revoked
only with the permission of the Internal Revenue Service.
If a U.S. Holder makes a constant-yield election
(as described under “—Original Issue Discount” above) for a note with amortizable bond premium, such election will result
in a deemed election to amortize bond premium for all of the U.S. Holder’s debt instruments with amortizable bond premium and may
be revoked only with the permission of the Internal Revenue Service with respect to debt instruments acquired after revocation.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a note,
a U.S. Holder will recognize taxable gain or loss equal to the difference between the amount realized on the sale, exchange or retirement
and the U.S. Holder’s adjusted tax basis in the note. Gain or loss, if any, will generally be U.S.-source for purposes of computing
a U.S. Holder’s foreign tax credit limitation. For these purposes, the amount realized does not include any amount attributable
to accrued interest. Amounts attributable to accrued interest are treated as interest as described under “—Payments of Interest”
above. A U.S. Holder’s adjusted tax basis in a note generally will equal such U.S. Holder’s initial investment in the note
increased by any original issue discount included in income and decreased by any bond premium previously amortized and principal payments
previously received. If any Spanish taxes are imposed on disposition gains, they will not be creditable against a U.S. Holder’s
U.S. federal income tax liability.
Except as described below under “—Foreign
Currency Notes”, gain or loss realized on the sale, exchange or retirement of a note will generally be capital gain or loss and
will be long-term capital gain or loss if at the time of sale, exchange or retirement the note has been held for more than one year. Exceptions
to this general rule apply in the case of a Short-Term Note, to the extent of any accrued discount not previously included in the U.S.
Holder’s taxable income. See “—Original Issue Discount” above. The deductibility of capital losses is subject
to limitations.
Foreign Currency Notes
The rules applicable to Notes denominated in,
or the payments on which are determined by reference to, a single currency other than U.S. dollars (referred to in this section as “Foreign
Currency Notes”) could require some or all of the gain or loss on the sale, exchange or retirement of a Foreign Currency Note to
be re-characterized as ordinary income or loss. The rules applicable to foreign currency notes are complex and their application may depend
on the U.S. Holder’s particular U.S. federal income tax situation. For example, various elections are available under these rules,
and whether a U.S. Holder should make any of these elections may depend on the U.S. Holder’s particular U.S. federal income tax
situation. U.S. Holders are urged to consult their own tax advisers regarding the U.S. federal income tax consequences of the acquisition,
ownership and disposition of foreign currency notes.
A U.S. Holder who uses the cash method of accounting
for U.S. federal income tax purposes and who receives a payment of qualified stated interest (or who receives proceeds from a sale, exchange
or other disposition attributable to accrued interest) in a foreign currency with respect to a foreign currency note will be required
to include in income the U.S. dollar value of the foreign currency payment (determined based on a spot rate on the date the payment is
received) regardless of whether the payment is in fact converted into U.S. dollars at that time, and this U.S. dollar value will be the
U.S. Holder’s tax basis in the foreign currency.
A U.S. Holder that uses the accrual method of
accounting for U.S. federal income tax purposes will be required to include in income the U.S. dollar value of the amount of interest
income (including original issue discount, but reduced by amortizable bond premium to the extent applicable) that has accrued and is otherwise
required to be taken into account with respect to a foreign
currency note during an accrual period. Any original
issue discount will be determined in the relevant foreign currency. The U.S. dollar value of the accrued income will be determined by
translating the income at the average rate of exchange for the accrual period or, with respect to an accrual period that spans two taxable
years, at the average rate for the partial period within the taxable year. A U.S. Holder may elect to translate interest income (including
original issue discount) into U.S. dollars at the spot rate on the last day of the interest accrual period (or, in the case of a partial
accrual period, the spot rate on the last day of the taxable year) or, if the date of receipt is within five business days of the last
day of the interest accrual period, the spot rate on the date of receipt. A U.S. Holder that makes this election must apply it consistently
to all debt instruments from year to year and cannot revoke the election without the consent of the Internal Revenue Service. A U.S. Holder
may recognize U.S.-source ordinary income or loss (which will not be treated as interest income or expense) with respect to accrued interest
income on the date the interest payment or proceeds from the sale, exchange or other disposition attributable to accrued interest is actually
received. The amount of ordinary income or loss recognized will equal the difference between the U.S. dollar value of the foreign currency
payment received (determined based on a spot rate on the date the payment is received) in respect of the accrual period and the U.S. dollar
value of interest income that has accrued during the accrual period (as determined above). Rules similar to these rules apply in the case
of cash-method U.S. Holders who are required to currently accrue original issue discount.
If an election to amortize bond premium is made,
amortizable bond premium taken into account on a current basis will reduce interest income in units of the relevant foreign currency.
Exchange gain or loss is realized on amortized bond premium with respect to any period by treating the bond premium amortized in the period
in the same manner as it would have been treated on the sale, exchange or retirement of the foreign currency note, as described below.
Any exchange gain or loss will be U.S.-source ordinary income or loss as described below. If the election to amortize bond premium is
not made, any bond premium will be taken into account in determining the overall gain or loss on the notes and any loss realized on the
sale, exchange or retirement of a foreign currency note will be a capital loss to the extent attributable to the bond premium.
A U.S. Holder who purchases a foreign currency
note with previously owned foreign currency will recognize U.S.-source ordinary income or loss in an amount equal to the difference, if
any, between the U.S. Holder’s tax basis in the foreign currency and the U.S. dollar fair market value of the foreign currency note
on the date of purchase.
A U.S. Holder’s tax basis in a foreign currency
note, and the amount of any subsequent adjustment to the U.S. Holder’s tax basis (including adjustments for original issue discount
included as income and any bond premium previously amortized or principal payments received), will be the U.S. dollar value of the foreign
currency amount paid for such foreign currency note, or of the foreign currency amount of the adjustment, determined on the date of the
purchase or adjustment. The amount realized on a sale, exchange or retirement of a foreign currency note will generally be
the U.S. dollar value of the foreign currency received (except to the extent attributable to accrued interest), determined on the date
of sale, exchange or retirement. However, if a foreign currency note is traded on an “established securities market”
and the U.S. Holder is a cash basis U.S. Holder or an electing accrual method U.S. Holder, the U.S. dollar value of the amount paid for
such note and the amount realized on the disposition will be determined based on the spot rate on the settlement date of the purchase
or disposition. An accrual method U.S. Holder making the election described in the preceding sentence must apply such election
consistently to all debt instruments denominated in foreign currency which are traded on “established securities markets”
and cannot change it without the consent of the Internal Revenue Service.
Gain or loss realized upon the sale, exchange
or retirement of a foreign currency note that is attributable to fluctuations in currency exchange rates will be U.S.-source ordinary
income or loss that will not be treated as interest income or expense. Gain or loss attributable to fluctuations in exchange rates will
equal the difference between (i) the U.S. dollar value of the foreign currency purchase price of the note, determined on the date the
payment is received or the note is disposed of, (or if the note is traded on an established securities market, on the settlement date
if the U.S. Holder is a cash basis U.S. Holder or an electing accrual basis U.S. Holder); and (ii) the U.S. dollar value of the foreign
currency purchase price of the note, determined on the date the U.S. Holder acquired the note. Payments received attributable to accrued
interest will be treated in accordance with the rules applicable to interest income described above. The foreign currency gain or loss
will be recognized only to the extent of the total gain or loss realized by a U.S. Holder on the sale, exchange or retirement of the foreign
currency note. Any gain or loss realized by a U.S. Holder in excess of the foreign currency gain or loss will be capital gain
or loss (except in the case of a Short-Term Note, to the extent of any discount not previously included in the U.S. Holder’s income).
A U.S. Holder may be required to file a reportable
transaction disclosure statement with the U.S. Holder’s U.S. federal income tax return, if such U.S. Holder realizes a loss on the
sale or other disposition of a foreign currency note and such loss is greater than applicable threshold amounts, which differ depending
on the status of the U.S. Holder. A U.S. Holder that claims a deduction with respect to a foreign currency note should consult its tax
adviser regarding the need to file a reportable transaction disclosure statement.
Information Reporting and Backup Withholding
Payments of dividends, distributions or interest
on, and the proceeds from a sale or other disposition of, ADSs, ordinary shares, contingent convertible preferred securities or notes
that are made within the United States or through certain U.S.-related financial
intermediaries generally are subject to information
reporting and backup withholding unless the U.S. Holder is an exempt recipient or, in the case of backup withholding, the U.S. Holder
provides a correct taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. The amount
of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the holder’s U.S. federal income tax
liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the Internal Revenue
Service.
Certain U.S. Holders who are individuals and certain
specified U.S. entities may be required to report information relating to securities issued by a non-U.S. person, subject to certain exceptions
(including an exception for securities held in accounts maintained by financial institutions, which accounts may be reportable if maintained
by non-U.S. financial institutions). U.S. Holders should consult their tax advisers regarding their reporting obligations with
respect to the ADSs, ordinary shares, contingent convertible preferred securities or notes.
Potential FATCA withholding
Certain provisions of the Code and U.S. Treasury
regulations commonly known as FATCA, as well as certain intergovernmental agreements between the United States and certain other countries
(including Spain), together with local country implementing legislation, may impose 30% withholding on certain payments made in respect
of the notes, contingent convertible preferred securities, ADSs and ordinary shares (“FATCA withholding”), to the extent such
payments are considered “foreign passthru payments” (which term is not yet defined). FATCA withholding would apply
only if the payments are made to a recipient (including an intermediary) that is a “foreign financial institution” that has
not entered into an agreement with the U.S. Internal Revenue Service pursuant to FATCA or otherwise established an exemption from FATCA
withholding. FATCA withholding will not apply to notes treated as debt for U.S. federal income tax purposes that are issued
are issued before (and not materially modified after) the date that is six months after the date on which final U.S. Treasury regulations
defining the term “foreign passthru payments” are published. In addition, under proposed Treasury regulations (the preamble
to which specifies that taxpayers may rely on them pending finalization) FATCA withholding will not apply prior to the date that is two
years after the date that is two years after the final U.S. Treasury regulations defining the term “foreign passthru payments”
are published. It is not yet clear whether or to what extent payments on the ADSs, ordinary shares, contingent convertible
preferred securities or notes will be treated as foreign passthru payments.
The United States has entered into intergovernmental
agreements with Spain and many other jurisdictions to implement FATCA. It is not yet certain how the United States and these
jurisdictions will address “foreign passthru payments” or if FATCA withholding will be required at all under such agreements.
If FATCA withholding is required, none of BBVA,
the trustee or any paying agent will pay any additional amounts with respect to any amounts so withheld. Prospective investors
and beneficial owners of notes, contingent convertible capital securities, ADSs and ordinary shares should consult their tax advisers
as to how these rules may apply to payments they receive under the notes, contingent convertible capital securities, ADSs and ordinary
shares and their ability to obtain a refund of any FATCA withholding.
Benefit
Plan Investor Considerations
The Employee Retirement Income Security Act of
1974, as amended (“ERISA”), and Section 4975 of the Code, impose certain requirements on (a) employee benefit plans
subject to Title I of ERISA, (b) individual retirement accounts (“IRAs”), Keogh plans or other arrangements subject to
Section 4975 of the Code, (c) entities whose underlying assets include “plan assets” by reason of any such plan’s
or arrangement’s investment therein (we refer to the foregoing collectively as “Plans”) and (d) persons who are
fiduciaries with respect to Plans. In addition, certain governmental, church and non-U.S. plans (“Non-ERISA Arrangements”)
are not subject to Section 406 of ERISA or Section 4975 of the Code, but may be subject to other laws that are substantially
similar to those provisions (each, a “Similar Law”).
In addition to ERISA’s general fiduciary
standards, Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of a Plan and
persons who have specified relationships to the Plan, i.e., “parties in interest” as defined in ERISA or “disqualified
persons” as defined in Section 4975 of the Code (we refer to the foregoing collectively as “parties in interest”)
unless exemptive relief is available under an exemption issued by the U.S. Department of Labor. Parties in interest that engage in a non-exempt
prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code.
We and the underwriters, agents and dealers through which the securities described in this prospectus may be sold, and our and their current
and future affiliates (collectively, the “Transaction Parties”), may be parties in interest with respect to many Plans. Thus,
a Plan fiduciary considering an investment in the securities described in this prospectus should also consider whether such an investment
might constitute or give rise to a prohibited transaction under ERISA or Section 4975 of the Code. For example, the securities may
be deemed to represent a direct or indirect sale of property, extension of credit or furnishing of services between us and an investing
Plan which would be prohibited if we are a party in interest with respect to the Plan unless exemptive relief were available under an
applicable exemption.
In this regard, each prospective purchaser that
is, or is acting on behalf of, a Plan, and proposes to purchase the securities described in this prospectus, should consider the exemptive
relief available under the following prohibited transaction class exemptions, or PTCEs: (A) the in-house asset manager exemption
(PTCE 96-23), (B) the insurance company general account exemption (PTCE 95-60), (C) the bank collective investment fund exemption (PTCE
91-38), (D) the insurance company pooled separate account exemption (PTCE 90-1) and (E) the qualified professional asset manager
exemption (PTCE 84-14). In addition, ERISA Section 408(b)(17) and Section 4975(d)(20) of the Code may provide a limited exemption
for the purchase and sale of securities and related lending transactions, provided that neither the issuer of the securities nor any of
its affiliates have or exercise any discretionary authority or control or render any investment advice with respect to the assets of the
Plan involved in the transaction and provided further that the Plan pays no more, and receives no less, than adequate consideration in
connection with the transaction (the so-called “service provider exemption”). There can be no assurance that any of these
statutory or class exemptions will be available with respect to transactions involving the securities described in this prospectus.
Each purchaser or holder of a security covered
by this prospectus, and each fiduciary who causes any entity to purchase or hold a security covered by this prospectus, shall be deemed
to have represented and warranted, on each day such purchaser or holder holds such securities, that either (A) it is neither a Plan
nor a Non-ERISA Arrangement and it is not purchasing or holding securities on behalf of or with the assets of any Plan or Non-ERISA arrangement
or (B) its purchase, holding and subsequent disposition of such securities shall not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or violate any provision of Similar Law.
Fiduciaries of any Plans and Non-ERISA Arrangements
should consult their own legal counsel before purchasing the securities described in this prospectus. We also refer you to the portions
of the offering circular addressing restrictions applicable under ERISA, the Code and Similar Law.
Each purchaser of a security covered by this prospectus
will have exclusive responsibility for ensuring that its purchase, holding and subsequent disposition of the security does not violate
the fiduciary or prohibited transaction rules of ERISA, the Code or any Similar Law. Nothing herein shall be construed as a representation
that an investment in the securities described in this prospectus would meet any or all of the relevant legal requirements with respect
to investments by, or is appropriate for, Plans or Non-ERISA Arrangements generally or any particular Plan or Non-ERISA Arrangement.