Cash Management Solutions

1. Cash Management Solutions adelante.

2. 1. Cash Concentration • Iberian Cash Concentration • Tax Implications • Central Bank Reporting • Advantages and Disadvantages • 2. Electronic Banking Systems • Electronic Banking Systems • Standard Formats • BBVA Netc@sh

3. 1. Cash Concentration

4. 1.- Cash Concentration • Iberian Cash Concentration SINGLECASHPOSITION SPANISH ACCOUNT BBVA ZBA PORTUGUESE ACCOUNT BBVA

5. Master Account Spain Allocation of interest Account D Spain Account E Spain Account C Spain Zero balance No interest allocation Zero balance No interest allocation Zero balance No interest allocation Account A Portugal Account B Portugal Zero balance No interest allocation Zero balance No interest allocation 1.- Cash Concentration • Iberian Cash Concentration The Iberian cash concentration system:

6. 1.- Cash Concentration • Iberian Cash Concentration Basic characteristics of this structure: • Concentration in Euro currency • All balances, either in credit or debit, are daily swept to the central account in Spain • Funds are transferred automatically entry by entry the following business day but without any value date loss • The result is a single cash position with a single allocation of interest • Key issues to take into account: • Tax implications • Central Bank reporting

7. 1.- Cash Concentration • Tax Implications: Spain Spanish law presumes that any inter-company loan is made on a market basis According to the Spanish law there is a 15% withholding tax on interest payments: • Concentration with a Resident Company: If the companies have a Consolidated Tax Treatment intra-group relationships are tax exempt • Concentration with a Non Resident Company: If the company is from the EU, it is free of withholding tax. If it is a non-EU company the specific Double Taxation Treaty should be considered

8. 1.- Cash Concentration • Tax Implications: Portugal Imposto do Selo • It is a 0,04 % tax over the monthly debit balances on loans and overdrafts • It is paid by Resident and Non resident companies • Loans for one year between the subsidiaries and the holding companies (SGPS) are exempt Withholding Tax • According to the Portuguese law there is a 20% withholding tax on interest payment • General rate can be reduced if a Double Taxation Treaty exists (e.g. Spain 15%)

9. 1.- Cash Concentration • Central Bank Reporting Both Spanish and Portuguese Central Banks have to be informed of all the movements above Eur 12.500 between Resident and Non-Resident companies. There are two possible procedures to fulfill this requirement in Spain: Obtaining from the Central Bank the NOF and the Statistical Code. Both BBVA and the client have to send monthly reports with all the transactions. In November 2000, the Central Bank of Spain introduced a new reporting method (42.05.01) for Spanish entities with accounts concentrating their balances into non-resident entity accounts. The client can authorise BBVA to make all the reporting procedures on his behalf. BBVA in Portugal can make all the reporting on behalf of the client if required: COE “066 Transactions between resident accounts in Portugal and other countries”.

10. 1.- Cash Concentration • Advantages and Disadvantages ADVANTAGES DISADVANTAGES • Global and unique position: Cash Concentration matches debit and credit positions • No value date losses • Withholding tax: in the interest paid if there is not a Consolidated Tax Treatment • New account to be controlled and managed

11. 2. Electronic Banking Systems

12. 2.- Electronic Banking Systems Information Services BBVA PORTUGAL Standard Formats: Edifact / Swift BBVA SPAIN SPAIN PORTUGAL Proprietary System: BBVANetC@sh BBVA GROUP Operational Services SWIFT GROUP TREASURY BANK BANK BANK OTHER BANKS

13. 2.- Electronic Banking Systems Standard Formats: Swift INFORMATION: • MT940: previous day information • MT942: same day account information TRANSFER OF FUNDS: • MT101: request for transfer • Agreements signed with many banks

14. 2.- Electronic Banking Systems Standard Formats: EDIFACT The demand for international formats (EDIFACT) is covered by both banks in Spain and Portugal where we have implemented the following messages: PAYMUL (payments) DIRDEB (direct debits) FINSTA (finantial statements) BANSTA (status message) AUTACK(acknowledge message)

15. 2.- Electronic Banking Systems Propietary Solutions: BBVA Netc@sh BBVA NetC@sh is a multilingual web based solution BBVA NetC@sh provides many services regarding Account Information, Collection, Payment Services, Credit Cards... Security features: NetC@sh uses SSL protocol based on a 128 bit key encryption system. This ensures that any information exchanged between your PC and BBVA will not be deciphered by anyone else Verisign™ is the certification authority which ensures that information remains confidential and tamper-proof while in transit across the Internet

16. 2.- Electronic Banking Systems Propietary Solutions: BBVA Netc@sh

17. 2.- Electronic Banking Systems Propietary Solutions: BBVA Netc@sh

18. 2.- Electronic Banking Systems Propietary Solutions: BBVA Netc@sh Some of the available options are: