2010 la Caixa Annual Report Leadership, trust and social commitment

Transcription

1 2010 la Caixa Annual Report Leadership, trust and social commitment

2 la CAixA GROUP HiGHliGHTS Financial information Figures in millions of euros AMOUNT % Balance Sheet Total assets 285, ,873 13, Total Banking Business volume 437, ,825 21, Loans and credits, gross 189, ,026 11, Total customer funds 247, ,799 10, Investee portfolio: Market value of listed companies 18,685 20,118 (1,433) (7.1) Unrealised gains on listed companies 2,709 3,945 (1,236) (31.3) income Statement Net interest income 3,152 3,932 (780) (19.8) Recurring gross income 6,745 7,187 (442) (6.1) Recurring net operating income 3,323 3,622 (299) (8.3) Recurring profit before non-controlling interests 1,822 2,004 (182) (9.0) Recurring profit attributable to the la Caixa Group 1,507 1,710 (203) (11.9) Net extraordinary profit (200) (200) 0 Profit attributable to the la Caixa Group 1,307 1,510 (203) (13.4) Efficiency and Profitability Recurring efficiency ratio (Administrative expenses / Gross income) 43.6% 42.9% 0.7 ROE (Recurring attributable profit / Average own funds) 9.3% 11.3% (2.0) ROA (Net recurring profit / Average total assets) 0.7% 0.8% (0.1) RORWA (Net recurring profit / Risk-weighted assets) 1.4% 1.6% (0.2) Risk Management NPL ratio 3.71% 3.42% 0.29 Provisions for credit losses 5,025 3,914 1,111 NPL coverage ratio 70% 62% 8 NPL coverage ratio including mortgage collateral 140% 127% 13 la Caixa liquidity 19,638 21,208 (1,570) Capital Adequacy - BiS ii Core capital 8.6% 8.7% (0.1) Tier 1 9.9% 10.4% (0.5) Capital ratio (BIS II ratio) 11.8% 11.0% 0.8 Own funds 17,421 16, Eligible capital 19,198 17,251 1, Surplus capital 6,130 4,667 1, Risk-weighted assets (RWA) 163, ,300 6, Commercial activity and resources (number) Employees la Caixa 25,288 24, la Caixa Group 28,651 27,505 1, Branches 5,409 5, Self-service terminals 8,181 7, Cards in circulation la Caixa 10,344,092 10,293,683 50, POS terminals 169, ,993 1, Línea Abierta la Caixa internet channel Total customers 6,620,148 6,020, , Users 3,301,264 2,964, , Corporate Responsibility Direct contribution of la Caixa operations to Spain s GDP 0.49% 0.49% Diversity: % men / women employed 52/48 53/47 Number of projects financed in line with the Equator Principles Number of employees taking part in the Corporate Volunteer programme 3,286 3, Number of microloans granted 36,845 32,008 4, Welfare Projects Budget 2011 Millions of euros % Social programmes Environmental and scientific programmes Cultural programmes Educational and research programmes Total CHANGE

3 2010 la Caixa Annual Report Leadership, trust and social commitment

4 IDENTIFICATION PARTICULARS CAJA DE AHORROS Y PENSIONES DE BARCELONA, LA CAIXA, was established on 27 July 1990 by the merger of Caja de Ahorros y Monte de Piedad de Barcelona, founded in 1844, and Caja de Pensiones para la Vejez y de Ahorros de Cataluña y Baleares, founded in It is registered under number 1 in the Register of Catalan Savings Banks of the Directorate-General of Financial Policy of the Department of Economy and Finance of the Catalonia Autonomous Community Government. On 16 November 1990, it was entered under number 3003 in the Barcelona Mercantile Register, in volume 20,397, page 1, sheet B-5614, first entry. It is registered with code number 2100 in the Bank of Spain s Special Register of General Popular Savings Banks. The Bylaws of la Caixa were approved by the Department of Economy and Finance of the Catalonia Autonomous Community Government and may be examined by that Department, at the Bank of Spain or at the Mercantile Registry. The Board of Directors calls the Annual General Assembly to be held during the first half of the calendar year. The notice of the Assembly is published in the «Boletín Oficial del Estado» (Official State Gazette), in the «Diario Oficial de la Generalitat de Cataluña» (Official Journal of the Catalonia Autonomous Community Government) and in at least one newspaper with a wide circulation in the area of operations of the Institution, in the period and under the terms established in the Bylaws of la Caixa. In addition, an Extraordinary General Assembly may be called whenever deemed fit, as provided in the Bylaws, in the same terms and conditions as those set forth for the Annual General Assembly. la Caixa is a member of the Savings Banks Deposit Guarantee Fund. CAJA DE AHORROS Y PENSIONES DE BARCELONA - LA CAIxA Avenida Diagonal, Barcelona, Spain Telephone: (34) Fax: (34) Telex: CAVEA E and CAIX E Website

5 CONTENTS The la Caixa Group in 2010 la Caixa Annual Report Corporate Governance of la Caixa The la Caixa Group Strategic Keys The la Caixa Group s New Structure 2010 Financial Report of the la Caixa Group 1. High-quality profits in Business growth coupled with good profits and conservative write-downs 1.2. Active management of margins, efficiency and high returns 1.3. Welfare Projects 1.4. Business segment reporting 2. Great commercial capacity: the strength of the banking business 2.1. Sustained and balanced growth in banking activity 2.2. Customer base: the core of the business 2.3. Commercial network and human resources: cornerstones 2.4. Multi-channel management: permanent relationship with customers 2.5. Payment systems: a distinctive offering 2.6. Innovation in customer services 2.7. Quality and customer care: the groundwork for the future 2.8. Supporting the business: la Caixa subsidiaries 3. Investee portfolio 3.1. Criteria CaixaCorp: internationalisation and diversification of revenues 3.2. Active management of the la Caixa Group s investee portfolio 3.3. MicroBank 3.4. Venture capital and financing for entrepreneurs 4. Active risk management 4.1. Comprehensive risk management at the heart of the strategy 4.2. Credit risk 4.3. Managing the risk of balance sheet positions 4.4. Managing liquidity risk 4.5. Managing operational risk 4.6. Regulatory compliance risk management 5. High financial strength 5.1. Excellent liquidity levels 5.2. Excellent capital adequacy levels 5.3. la Caixa Group very good ratings Report on la Caixa Corporate Responsibility With people and their projects Sustainability Excellence in service Commitment to society Annual Report la Caixa Welfare Projects Social Programmes Educational Programmes Science, Research and Environment Programmes Cultural Programmes 2010 Data of la Caixa Welfare Projects la Caixa Annual Report

6 Preserving what is essential In spite of the complex economic and financial situation, the la Caixa Group has successfully completed its Strategic Plan. Our aim to lead Spain s financial market with a differentiated management approach, providing individuals, firms and institutions with a valuable specialised service, has helped us to continue gaining market share, consolidate our financial strengths and reinforce our internationalisation. At the same time we have also reaffirmed our social commitment: more than ever, Welfare Projects has been close to people, offering opportunities to the most disadvantaged in society. This privileged position in the sector is the consequence of applying, day after day, a culture of innovation and teamwork; of a will to improve and a desire for excellence, based on our founding values of leadership, trust and social commitment. With the aim of reinforcing these values, in 2011 we have started to reorganise the la Caixa Group, building a new structure that will allow us to adapt to the new regulatory requirements and to implement the new Strategic Plan which, under the slogan of Making the difference, reaffirms the Institution s mission of growth, leadership and social commitment. We are changing to preserve what is essential. Isidro Fainé Chairman Juan María Nin President and CEO 2010 la Caixa Annual Report 4

7 THE LA CAIxA GROUP IN 2010 Financial bottom line: a year of consolidating financial results and strengths, the outcomes of a year of strong commercial activity and prudent risk management In 2010 the activity of the la Caixa Group was marked by the global macroeconomic environment with clear signs of recovery shown at differing speeds among economies and also marked in Europe by concerns of the fiscal situation in Greece in early 2010, which later spread to other countries in the euro zone. Against this backdrop, Spain s economy showed a slower recovery than the main European economies, marked by a series of structural reforms regarding fiscal austerity and the financial system passed by the government with the aim of improving the confidence of international investors. Furthermore, despite interest rates remaining low, there were signs of high volatility and problems of liquidity in the debt markets which raised the cost of financing for the financial institutions. Against this background, la Caixa once again successfully carried out intense commercial activity with its 10.5 million customers, strengthening its leading position with a rise in market share. The banking business volume managed rose to EUR 437,443 million thanks to the Group s great commercial strength with 28,651 employees, 5,409 branches, 8,181 ATMs and leadership in online banking, mobile banking and payment systems. The sustained capacity to generate recurring income and the considerable reduction in expenses led operating income to reach EUR 3,323 million in 2010, which, after recognition of substantial provisions, enabled the Group to achieve an attributable recurring income of EUR 1,507 million. Following a strategy of utmost prudence, la Caixa allocated in full its net extraordinary gains of EUR 634 million, to extraordinary provisions for risks. Additionally, and with a proactive vision, it recognized an additional provision net of taxes of EUR 200 million for future business management. The total profit attributable to the Group amounted to EUR 1,307 million. The contained NPL ratio of 3.71%, far lower than the 5.81% of the Spanish financial system, and the rise in the high NPL coverage ratio to 70% (140% including mortgage collateral), continued to show the quality of the loan portfolio. Furthermore, the general credit loss allowance remained at the same amount of EUR 1,835 million, as in 2009, which proves the quality of the generated income and provides a high degree of financial soundess against a backdrop of adverse outlooks. Thus, balanced growth and the high quality of profits coupled with conservative risk management policies consolidated high liquidity and capital adequacy levels, the main strengths of la Caixa. As regards solvency, core capital stood at a very good ratio of 8.6%, and the excellent position was maintained in terms of total liquidity, with EUR 19,638 million, 6.9% of the Group s assets. la Caixa successfully completed the development of its Strategic Plan in a highly complicated environment. It has thus strengthened its traditional leadership in this period in individual banking and completed the introduction of a specialised business model for Personal Banking, Private Banking, SME Banking, Business and Corporate Banking which allowed it to continue gaining market shares and 2010 la Caixa Annual Report 5

8 The la Caixa Group in 2010 strengthening its position in these market segments. As part of its international expansion plan, la Caixa has three operational branches abroad and ten representative offices, providing a full range of products and services close to its customers for their international needs. In addition, in 2010 cooperation agreements established in previous years were strengthened with the strategic partners of GF Inbursa, Erste Group Bank, The Bank of East Asia and Banco BPI. Also notably in 2010, as part of restructuring in the sector, the Extraordinary General Assemblies of la Caixa and Caixa d Estalvis de Girona (Caixa Girona) approved a merger, with la Caixa acting as the absorbing institution and Caixa Girona as the absorbed institution. This merger became effective as of 3 November 2010 once the corresponding authorisations were received. This process concluded on 1 January 2011 with the rapid, satisfactory integration, from a technological and operative viewpoint, of Caixa Girona in the information systems and processes of la Caixa. On 27 January 2011, the Boards of Directors at la Caixa and Criteria CaixaCorp agreed to sign a Framework Agreement to reorganise the la Caixa Group, by virtue of which la Caixa, as established by Spain s new Savings Bank Act (LORCA in Spanish), will carry out banking business indirectly through a listed bank (currently Criteria CaixaCorp). This process, which should be completed by July 2011, aims to define a new structure which, while continuing to fulfil the social aims of la Caixa and to develop the Group s current businesses, allows it to adapt to the new domestic and international regulatory requirements, particularly the new requirements of the Basel Committee on Banking Supervisory (Basel III). Through this reorganising, la Caixa will transfer its banking business to Criteria CaixaCorp (which will become a banking group named CaixaBank) in exchange for Criteria CaixaCorp transferring part of its industrial stakes (Abertis, Gas Natural, Fenosa, Aigües de Barcelona, Port Aventura and Mediterránea), together with newly issued shares for a total amount of EUR 2,044 million. CaixaBank, the majority shareholder of which will be la Caixa, will be set up with a leading position in the Spanish market in the financial and insurance sectors, and will also be diversified with other, complemented businesses, such as stakes in international banks and in the companies of Telefónica and Repsol. It will have the best level of asset quality among the main comparable groups in the sector, given its lower NPL ratio, the best coverage and the fact that it has no direct exposure to real estate assets. As regards capital adequacy, and considering an issue of necessarily convertible bonds totalling EUR 1,500 million, it will achieve pro forma core capital of 10.9% (Basel II) in 2010, the highest level within the largest banking groups in Spain, and will boast an excellent liquidity level of EUR 19,638 million. The new structure will also enable the new la Caixa Strategic Plan to be completely rolled out, which with the slogan Making the difference reaffirms the Institution s commitment to growth, leadership and social responsibility. Therefore, consolidating the la Caixa leadership in Spanish retail banking, diversifying the business, becoming more international, maintaining its commitment to the business fabric also through a distinctive investee portfolio and reaffirming its social commitment have been established as strategic objectives. Furthermore, la Caixa will continue to conduct an active and proactive management of capital and liquidity to improve its financial strength. High-quality profits and stronger balance sheet performance with high, conservative provisions Despite pressure exerted on the net interest income basically due to the impact on the revaluation of the loan portfolio as part of the fall in interest rates, the la Caixa Group s great commercial capacity, with an adequate management of margins and services provided to customers in the more traditional banking activities, coupled with the positive trend of its investees income, allowed a high level of total recurring income (gross income) to be generated in 2010, totalling EUR 6,745 million, 6.1% down on a year earlier la Caixa Annual Report 6

9 The la Caixa Group in 2010 The stringent cost-containing and streamlining policy with the aim of continuously improving the Institution s efficiency explains the reduction of 4% in operating expenses which, coupled with the network s great commercial capacity, enabled the efficiency ratio to reach 43.6%, while net operating income totalled EUR 3,323 million, down 8.3%. The high level of profits earned on the Group s recurring activities enabled it to recognize increased provisions, totalling EUR 2,651 million (EUR 1,454 million to recurring profit and EUR 1,197 million to extraordinary profit), and to achieve a recurring net profit of EUR 1,507 million, 11.9% down, with good returns (recurring ROE of 9.3%). The extraordinary capital gains, mainly obtained by the active management of the investee portfolio and the strategic agreement reached with Global Payments to extend their payments services to retail outlets, totalled a net attributable amount of EUR 634 million and this was allocated in full to provisions to improve the strength of the balance sheet. Furthermore, with a proactive view, an additional provision totalling EUR 200 million net of taxes was made for future management of the business. Net attributable profit totalled EUR 1,307 million, down 13.4%. Great commercial capacity with growing business and market shares The la Caixa Group is committed to providing a personalized, high-quality and innovative service adapted to the needs of our customers by means of efficient multi-channel distribution where the branch is at the heart of the relationship with customers and this is complemented by cutting-edge technological support. This business model allows la Caixa to be the leader in individual banking in Spain with a penetration of 21%, 16.5% as the main institution. The strategic objective, bolstered by the Group s pre-eminance in individual banking, is to achieve leading positions in other segments such as Business Banking, Personal Banking, Private Banking or SME Banking. Therefore, commercial activity is focused on providing a personalised, tailored service that has a close relationship with the huge 10.5 million customer base through an appropriate customer segmentation process was marked by the Group s major commercial effort, with its banking business volume managed customer funds plus loans and credits increasing to EUR 437,443 million, up 5.2%, with a loans and credits portfolio which increased by EUR 11,520 million, to reach EUR 189,546 million, up 6.5%, with 939,463 new transactions and EUR 99,491 million in loans granted. Customer funds stood at EUR 247,897 million, up 4.2%, with a prudent price management approach and considerable growth in pension plans, insurance and investment funds. The Group has 5,409 branches in Spain, the largest network in the Spanish financial system, and owing to its wide-reaching model, it is a source of new jobs and wealth across the whole of Spain. The Group s workforce numbers 28,651 employees, making la Caixa one of Spain s most important generators of employment. As part of its international expansion, la Caixa has 13 international branches, of which three are operative branches and ten are representative offices. In 2010 la Caixa opened its first representative offices in Delhi (India) and Dubai (UAE). The other representative offices are in London (United Kingdom), Paris (France), Milan (Italy), Stuttgart and Frankfurt (Germany), Istanbul (Turkey), Beijing and Shanghai (China) and the operative branches are found in Warsaw (Poland), Bucharest (Romania) and Casablanca (Morocco), where it was the first Spanish institution to open a branch. la Caixa aims to open new branches in Algiers (Algeria), Cairo (Egypt) and Singapore (Singapore) in It also extended its foreign trade business, increasing its share of export and import documentary credits to 14.2% and 13.0%, respectively la Caixa Annual Report 7

10 The la Caixa Group in 2010 One of the la Caixa Group s distinguishing features is its leadership in multi-channel management, evidenced by its 8,181 self-service terminals and massive use of the Linea Abierta internet channel ( with 6.6 million contract customers, 3.3 million of which are operational users. In 2010, la Caixa maintained its leadership in online banking services in Spain, where the market share stands at 31.4% and strong innovation in contents and ease of access to the internet channel. The 1.8 million customer mark was exceeded in the Caixa Movil service, which positions la Caixa as the leader in mobile-based financial services with a market share of 46.0%. The extensive multi-channel support is also the basis for the commercial efficiency of our branches, which make personalised customer care a priority. The differentiated offering in payment systems positions la Caixa as the top card issuer in the Spanish market, with 10.3 million cards in circulation and a market share of 17.7%. In terms of point of sale (POS) terminals, la Caixa is the market leader with a network of 169,966 units and a 21.2% share of retail outlet turnover. To consolidate this market advantage, in 2010 la Caixa continued to launch new innovative service offerings for businesses and retail stores, and an agreement was reached with the American company Global Payments, the international leader in payment processing, to develop payment services through POS terminals for our customers. Despite the difficult economic climate marked by practically no growth in loans or deposits, la Caixa maintained and even increased its market share. In 2010 the la Caixa Group achieved market shares of 10.6% in loans and 10.0% in deposits, and notable rises in market shares for investment funds (10.6%), pension plans (16.2%) and savings insurance (14.8%). There was a notable increase in the market share for payroll deposits of 15.7% with over two million payrolls managed. As regards pensioner customers, the figure of over one million customers was reached with a market share of 13.6% in pension deposits. This was only possible thanks to the intense commercial activity through our extensive network of branches, efficient multichannel management and appropriate customer segmentation, and allowed the la Caixa Group to reinforce its leading position in the Spanish banking sector. Excellence in service, which is the cornerstone of la Caixa when retaining our customers confidence in us, is endorsed by the fact that, according to the Bank of Spain, la Caixa is the institution which has had the fewest complaints made about its financial activity. Other independent surveys have also rated la Caixa once again as one of the best in the banking industry in terms of quality. Criteria CaixaCorp: a vehicle for international expansion and investment in special-interest industries and future CaixaBank Criteria CaixaCorp is the subsidiary encompassing practically all of the la Caixa Group s investee portfolio and is responsible for implementing the Group s investing strategy and international expansion, with a portfolio made up of equity interests in leading companies in the utility, international banking, insurance and specialised financial services industries which complement the products and services of la Caixa saw the continuation of the strategy aimed at rebalancing the investee portfolio. In this respect the level of stakes in the financial sector reached 37% of the total value of Criteria CaixaCorp s portfolio at the end of 2010, close to the minimum objective set at the time of the flotation of Criteria CaixaCorp in 2007, having more than doubled its weight since that date, a process that will conclude when the la Caixa banking business is incorporated into Criteria CaixaCorp (future CaixaBank) as part of the Group s ongoing reorganisation. Criteria CaixaCorp holds the following ownership interests in international financial institutions: 20% of GF Inbursa, 10.1 % of Erste Group Bank, 15.2% of The Bank of East Asia (after the increase in its interest through the EUR 331 million subscription to a capital increase in January 2010), 30.1% of Banco BPI and 20.8% of Boursorama. Also, in the context of the internationalisation process, la Caixa and Criteria CaixaCorp reinforced in 2010 their strategic investment and cooperation agreements with their investees: The Bank of East Asia, Erste Group Bank, GF Inbursa and Banco BPI la Caixa Annual Report 8

11 The la Caixa Group in 2010 In addition, in June 2010 Criteria CaixaCorp acquired 99.8% of the share capital of Adeslas through a deal worth a total of EUR 1,193 million. As a result, Adeslas became part of the structure of VidaCaixa Group (formerly SegurCaixa Holding) giving rise to the VidaCaixa Adeslas insurance company, a non-life insurance company which has resulted from the merger of SegurCaixa and Adeslas, the leading health insurance company in Spain. Of particular note was the strategic agreement reached in January 2011 by la Caixa and Mutua Madrileña through which Mutua Madrileña will acquire 50% of the non-life insurance business for a total of EUR 1,075 million. Furthermore, as part of the transaction to acquire Adeslas, 24.5% of Agbar was sold to Suez Environnement, while maintaining a stake of 24.0% of the capital. Furthermore, in December 2010 an agreement was reached to formalise the sale of the vehicle leasing business to Arval (BNP Paribas Group). The market value at 31 December 2010 of the listed investee portfolio of the la Caixa Group amounted to EUR 18,685 million, with unrealised gains of EUR 2,709 million. Of particular note in 2010 was the 20.85% rise in the market value of Criteria CaixaCorp, whereas the IBEX 35 fell by 17.43%. Stringent risk management intensified la Caixa continued to apply its proactive, conservative global management policy with regard to the risks inherent to the business. Particularly, risk management and control structures were reinforced in 2010, by applying new loan granting policies based on customers creditworthiness. In the area of credit risk, the la Caixa Group s lending activity was geared towards meeting the financial needs of households and businesses, and, accordingly, its lending activity was diversified and fragmented, as evidenced by the fact that 51% of the loan portfolio was in the hands of individuals. The lending portfolio was also strongly collateralised since 66% is secured by mortgages and 89% of the porfolio had an average loan to value ratio of below 80%. Following the application at 2010 year-end, of principals of utmost prudence, the NPL ratio stood at 3.71% and the NPL coverage ratio rose to 70% (140% including mortgage collateral). The la Caixa Group s credit risk thus remains contained and ranks among the lowest of the Spanish financial system thanks to diversification, the value of collateral and a prudent risk coverage policy. In this regard, it is of particular note that the credit loss allowance of EUR 1,835 million remained the same as in December 2009, and this, combined with the other financial strengths of la Caixa, places the Institution in an extremely sound position to face new challenges. Consolidation of financial strengths: liquidity and capital adequacy Balanced growth, the capacity to generate quality earnings in 2010, stringent risk management and prudent recognition of provisions consolidated the Group s financial strengths with high levels of liquidity and capital adequacy, despite the economic crisis. Conservative and proactive management of liquidity and the diversification of the sources of financing have always constituted a distinguishing feature of la Caixa, and allows the Institution to adapt to the growth of the business and meet the credit needs of customers. In this regard, the liquidity position at 31 December 2010 was excellent, at EUR 19,638 million, 6.9% of the Group s total assets, substantially all of which were totally liquid. Furthermore, the level of dependency on the wholesale markets is very low, with a very good structure of maturities, which provide it with strong stability in a climate of liquidity problems, and reflects the Group s great proactive measures. Of particular note was that investors trusted the capital adequacy of la Caixa which, despite the complex market situation, managed to issue bonds totalling EUR 5,600 million in the institutional market, compared to issues maturing in 2010 totalling EUR 2,810 million la Caixa Annual Report 9

12 The la Caixa Group in 2010 The la Caixa Group maintained a high level of core capital of 8.6%, which reflects the Group s excellent capital adequacy level. Additionally, Tier 1 stood at 9.9% and the BIS II Solvency Ratio at 11.8%. The Group s eligible capital for meeting solvency requirements increased to EUR 19,198 million, with a surplus over the minimum regulatory capital requirement of EUR 6,130 million, EUR 1,463 million more than at 2009 year-end. Sustainable bottom line: our values, our long-standing commitment Leadership, trust and commitment to society are the values on which the action of la Caixa is based and which drive our commitment to people and their projects, and to the progress of society. We have a commitment to financial inclusion and social integration through Microbank, the social bank of la Caixa, leader in the granting of micro-loans to small businesses, entrepreneurs and to people or collectives that have difficulty gaining access to the traditional financial system. We have a commitment to sustainable investment and financing, taking part in projects for viable economic, social and environmental investment and publicly committing ourselves not to finance the production or exportation of weapons. We have a commitment to entrepreneurs and their projects through the EmprendedorXXI initiative and to people and families with mortgages who temporarily have to face a reduction in income. We have a commitment to innovation, being pioneers in the development of new technological solutions to create new products and services and make them more easily accessible. And, lastly, we have a commitment to society, through our contribution to the improvement in people s living conditions, facilitating their integration into society and their development, through the la Caixa Welfare Projects. Social bottom line: thinking of people, more than ever before For more than 100 years, one of the differential features that has best defined la Caixa is its commitment to people. Through its Welfare Projects, la Caixa gives back to society a considerable part of the profits generated by its financial activity. la Caixa guides its social actions in accordance with two principles: looking forward, focusing on fulfilling needs that have not been covered by other institutions; and flexibility, aimed at providing responses to the new demands that arise out of the rapid changes in society. In the current economic situation, the importance of fostering social, educational, cultural and environmental programmes to help to relieve people s problems takes on even greater relevance. In this respect, for 2010 la Caixa approved a budget for its Welfare Projects of EUR 500 million. This sum positions la Caixa as the leading private foundation in Spain in budget size and as one of the largest in the world. The development of social programmes is at this time the basic priority for la Caixa. Overcoming child poverty, promoting employment for those members of society with difficulties, care of people in the advanced stages of illnesses, promoting active and healthy aging for the elderly and struggling against exclusion were our priority lines of action. Together with these, la Caixa has fostered educational and research programmes, projects aimed at conservation and the environment, the dissemination of science and initiatives to bring culture closer to people of all ages and levels of education la Caixa Annual Report 10

13 The la Caixa Group in 2010 The EUR 463 million invested during 2010 were allocated as follows to the different areas of action: EUR 326 million to carrying out social programmes; EUR 59 million to promoting environmental and scientific initiatives; EUR 50 million to encouraging cultural schemes and EUR 28 million to supporting educational and research projects. Responding to social needs The development of social programmes that are suitable for the emerging needs of this current era is taking up the main part of the efforts of la Caixa. More than ever, it wants to help to alleviate problems and create opportunities in times of difficulty. Overcoming child poverty, promoting employment among social groups with difficulties and fighting against exclusion takes on more importance than ever before. Through the programme CaixaProinfancia, we contribute to helping break the spiral of poverty in which many minors in Spain are trapped as a result of precarious family situations, which in turn give rise to a lack of educational opportunities, a deficient diet or unhealthy conditions. In 2010, more than 62,000 children who live in situations of social exclusion have received help through a programme which strives for everyone to have an open door to a better future, a future in which they can enjoy the same opportunities as the rest. la Caixa has already invested EUR 137 million in the project since it was set up in People with difficulties in finding a job are also trapped in this circle of exclusion. Aware that unemployment not only affects the unemployed but also has a bearing on society as a whole, the la Caixa Welfare Projects has launched the Incorpora programme. More than 13,600 companies have already joined us in the endeavour to provide decent employment for the most vulnerable groups. The joint efforts of the Welfare Projects, social institutions, the 369 experts in work placement that form part of the programme, the network of la Caixa branches from which opportunities to contract these people are detected and the companies supporting the scheme have led to 32,740 people getting jobs thanks to the programme, 11,596 of these in In the area of new programmes, we have recently set up a project aimed at establishing a model for civil coexistence in 17 locations around Spain which are characterised by their high degree of diversity. Through the programme for Intercultural Community Participation, the la Caixa Foundation favours social cohesion and integration and preparing society to face the problems particular to communities with a broad spectrum of diversity. With the elderly since the origins of the Institution Another major challenge to be faced by society is ageing. Older people are one of society s main assets. Ensuring both their well-being and their participation and full integration in society has been part of la Caixa s commitment to society for more than 100 years. The programme for the elderly is, therefore, our most long-standing project. With it, we hope to contribute to healthy aging, in that, just as our older generations add years to their lives, they can also add life to each of their years. And they bring this life to society as a whole, which needs them. Innovation has always played a significant role in Welfare Projects. Linked with aging, la Caixa was the first private institution to focus on bringing new technologies to older people, but it has also focused on awarding grants to Spanish university students, on professional training of inmates in correctional facilities or on promoting affordable rental housing for the young and elderly la Caixa Annual Report 11

14 The la Caixa Group in 2010 True to this spirit, Welfare Projects consolidated the programme of integrated care for the terminally ill and their families. With this programme, we intend to help people who are in the last stage of their life. Our desire is to alleviate their suffering, contribute to making them feel properly cared for in their final days and guarantee that they and their families receive the appropriate emotional, spiritual and social care. In 2010, nearly 8,400 patients and 13,900 family members benefited from this programme. In addition to the above lines of action, the la Caixa Welfare Projects launched other projects aimed at covering various deficiencies in society. The raising of awareness about drug consumption and its prevention or the promotion of voluntary work were just a couple of these. To all these programmes we should add the more than 1,000 projects launched by associations throughout Spain which have been supported by Welfare Projects in 2010 through a call for applications for aid in social initiatives. All these projects were aimed at meeting the needs of society s most disadvantaged groups, adapted to the characteristics and deficiencies of each territory in particular. The la Caixa Welfare Projects also act beyond the borders of Spain. Through our International Cooperation programme, we contribute to the eradication of extreme poverty in the most disadvantaged countries, through supporting 52 initiatives aimed at improving living conditions and promoting sustainable development of the countries most in need. In these countries, the lack of resources and diseases are very closely related and keeping healthy is a fundamental aspect of the fight against poverty. Aware of this, the la Caixa Welfare Projects leads a vaccination programme targeting boys and girls under five, which has already immunised more than a million of them. A commitment to science and the advancement of knowledge The advancement of knowledge is possibly one of the best ways to bring about improvements in social welfare. True to this idea, we supported the education of all kinds of groups. 217 university students have broadened their studies in 2010 in the most prestigious universities in Spain and abroad thanks to a grant from la Caixa. To them we must add, among others, the 40 beneficiaries of the program for Aid to Biomedical Research in Spanish scientific centers of research (National Cancer Research Centre, National Centre for Biomedicine, Institute of Biomedical Research and Centre for Genomic Regulation). Support for research also received a considerable boost from Welfare Projects in The opening of the la Caixa Unit for Molecular Cancer Therapy, directed by Dr. Josep Baselga, and the birth of the Institute for Global Health in Barcelona ratify the commitment of la Caixa in this direction. These programmes were in addition to our support of the National Centre for Cardiovascular Research, the Wider Centre for Endoscopic Surgery in Barcelona, the AIDS reseach laboratory, IrsiCaixa, or the RecerCaixa project, which is geared towards encouraging university research. The environment has also recently become a primary issue within the fields of action of Welfare Projects. The Conservation of Natural Spaces and Social Rehabilitation programme contributes to the conservation of the most valuable ecosystems in Spain, through many different projects to preserve the environment. This programme, which has been developed in collaboration with the environment departments of the various autonomous communities and local administrations involved, also prioritises hiring the disadvantaged. In this regard, the 2,351 environmental projects launched since the programme began have also led to the rehabilitation of 6,081 people at risk of social exclusion. The scientific commitment of Welfare Projects is completed with la Caixa programme supporting the sea, the huge informative and awareness-raising task undertaken both by the CosmoCaixa science museums in Madrid and Barcelona and by the travelling exhibitions on the environment supported by la Caixa which 2010 la Caixa Annual Report 12

15 The la Caixa Group in 2010 each year visit Spanish cities, towns and villages. Among the topics that we have covered in 2010 are the origin of language, the evolution of mankind and the use of energy. Culture as a tool for social integration Culture is a powerful tool for people s growth. Based on this principle, Welfare Projects is committed to the dissemination of culture in all of its various forms to an audience comprising all age groups and educational levels. The CaixaForum social and cultural centres spread knowledge about major civilisations in the past, contemporary creation, music, literature and humanities. The CaixaForum model has consolidated its identity as the 21st century reference model. It comprises meeting points, open spaces and platforms for knowledge, and tradition and vanguard go hand in hand in the proposed programmes. The existing centres in Barcelona, Madrid, Tarragona, Lleida and Palma will soon be joined by the new centre in Girona. Also, in 2010 the CaixaForum centres in Zaragoza and Seville took the first steps towards their inauguration, which is scheduled for 2011 and 2015, respectively. In a similar manner to the science and environmental programmes, the proposals made by the proprietary centres are complemented by cultural exhibitions offered by Welfare Projects, which travel throughout Spain. The career of Miquel Barcelo, the relationship between Federico García Lorca and Salvador Dalí, the legacy of Toulouse-Lautrec or the paintings of Matisse have been the subjects of some of these. Continuing our policy of joining our efforts with those of others, one of the new cultural developments undertaken recently by Welfare Projects was the signing of agreements with important cultural institutions. In 2010, the union of the collection of contemporary art of the la Caixa Foundation and of the MACBA materialised in one of the most valuable joint collections in the genre. This project joins the agreements signed with the Prado Museum in Madrid and the Louvre Museum in Paris. Talks on current affairs, poetry, cinema and music, through such emblematic ideas such as the Messiah concerts inviting participation by all or the project known as Diversons. Música para la integración have completed a cultural programme that has proved highly popular with the public la Caixa Annual Report 13

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17 la Caixa Annual Report Corporate Governance of la Caixa The la Caixa Group Strategic keys The la Caixa Group s New Structure 2010 Financial Report of the la Caixa Group 1. High-quality profits in Great commercial capacity: the strength of the banking business 3. Investee portfolio 4. Active risk management 5. High financial strength

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19 Corporate Governance of la Caixa Governing Bodies General Assembly Board of Directors Control Committee Management

20 Corporate Governance of la Caixa GOvERNING BODIES CajadeAhorrosyPensionesdeBarcelona, lacaixa,isafinancial institution governed by Legislative Decree 1/2008, of 11 March, approving the Consolidated Catalan Savings Banks Law, and is registered in the special register of savings banks of the Catalonia AutonomousCommunityGovernment.Asasavingsbankitisa non-profit foundational financial institution serving the community, itdoesnotdependonanyothercompanyanditengagesin attracting, administering and investing the savings entrusted to it. THE GENERAL ASSEMBLY IS THE HIGHEST GOvERNING AND DECISION-MAKING BODY IN LA CAIxA COMPOSITION OF THE GENERAL ASSEMBLY (1) 20 (13%) According to the powers established in the law and its Bylaws, la Caixa is governed, ruled, run, represented and controlled by the General Assembly, the Board of Directors and the Control Committee. In addition the President and CEO, the Investment Committee, the Remuneration and Appointments Committee and the Welfare Projects Committee are considered bodiesof lacaixa. General Assembly 34 (21%) Deposit holders Local government corporations 58 (36%) 48 (30%) Total 160 Founder and community-interest entities Employees The General Assembly is the highest governing and decisionmakingbodyof lacaixa.inadditiontoitsgeneralgoverning powers, the following duties also fall especially and exclusively within its powers: ToappointtheBoardofDirectorsandmembersofthe Control Committee. To decide upon the reasons for the removal and revocation ofthepowersofthemembersofthegoverningbodies beforetheendoftheirtermofoffice. ToapproveandamendtheBylawsandregulationsgoverning thesystemforelectingthemembersofthegoverningbodies. Toresolveuponthechangeofregisteredoffice. ToresolveupontransformingtheInstitutionintoaspecial foundation, how this will be managed as a credit Institution, the alteration of the Institution s legal form, or its merger with otherinstitutions,ormakeanydecisionaffectingitsnature,and resolve upon dissolution and liquidation. TodefinethegeneralguidelinesfortheInstitution sannual action plan. ToapprovemanagementofaffairsbytheBoardofDirectors, thenotestothefinancialstatements,annualbalancesheet andincomestatement,andtheallocationofprofittothe aimsof lacaixa. ToapprovemanagementofWelfareProjects,andtherelated annual budgets and expenditure. ToconfirmtheappointmentofthePresidentandCEOofthe Institution. Todesignate,attheproposaloftheBoardofDirectors,the community-interest entities that are able to appoint members ofthegeneralassembly. To deal with any other matter submitted to it for consideration by the bodies empowered to do so. ThemembersoftheGeneralAssemblyoverseethatthe interests of deposit holders and customers are safeguarded, thattheinstitution scommunity-orientedaimsinitsareaof influencearefulfilledandthattheintegrityofitsassetsis preserved, while setting the regulations guiding the Institution s activities. The stakeholder groups making up the General Assembly are representedinit.thecatalansavingsbankslawdividesthese stakeholder groups into four sectors: a)thedepositholders; b) The founder entities and other community-interest entities; c) Local government corporations; d) The Institution s employees; (1)SoastoadapttothechangesintroducedbytheLegislativeDecree1/2008,11March, through Decree Law 5/2010, 3 August, the Institution s General Extraordinary Assembly heldon29november2010agreedtochangethebylawsbyamendingthecomposition oftheassemblysettingthenumberofboardmembersatsixty-fourforthesectorof deposit holders, forty-five from the sector of founder and community-interest entities and thirty-onefromthesectoroflocalcorporations.thischangeshallcomeintoforcewhen theprocessofrenewingthegoverningbodiescommences andthoseelected,which hastobecarriedoutatthegeneralordinaryassemblyin2012,bywhichtherenewal processwillbeconductedpursuanttothecompositionoftheassemblywhichwasthe resultofthechangeagreedatthegeneralextraordinaryassemblyheldon29november 2010, following with the previous composition of the assembly until the aforementioned GeneralOrdinaryAssemblyisheldin la Caixa Annual Report 18

21 Corporate Governance of la Caixa GeneralAssemblyMeetingsmaybeeitherannualor extraordinary. Annual Assembly Meetings are held once a year within the first six months of the calendar year to approve, whereapplicable,thenotestothefinancialstatements,the balancesheet,theincomestatement,theproposedallocationof surpluses and the proposed transfer to the Welfare Projects, and toreappoint,whererequired,positionsontheboardofdirectors and the Control Committee, and to discuss and make decisions inrelationtotheothermattersandproposalsontheagenda. Extraordinary Assembly Meetings are held as and when they are called,andmayonlydealwiththepurposeforthemeeting. THE BOARD OF DIRECTORS AGREES ON THE ACTIONS TO ACHIEvE THE AIMS AND OBJECTIvES OF LA CAIxA COMPOSITION OF THE BOARD OF DIRECTORS Board of Directors 6 Total 21 Pursuanttothelaw,theBoardofDirectorsisthebodyappointed by the General Assembly to govern, manage run and represent thesavingsbankandmaybemadeupofaminimumof10and a maximum of 21 members. Its composition must reflect the composition of the General Assembly. Deposit holders Local government corporations Founder and community-interest entities Employees TheBoardofCajadeAhorrosyPensionesdeBarcelonaismade upof21members.asthelargestsavingsbankinspain,itis reasonableforittohavechosentoappointthemaximumnumber of Board members (and General Assembly members) to ensure thatitsgoverningbodiesareasrepresentativeaspossible,both in terms of the four stakeholder groups represented and from a geographical standpoint, in view of the areas where the Institution carriesonitsactivitiesandtheclosetiesthatsavingsbankshave in the territories where they operate. This relationship is especially clear in the way in which its Welfare Projects are distributed. TheBoardofDirectorsismadeupof: Eightdirectorsrepresentingdepositholders,ofwhichsixmustbe elected from among the General Assembly members representing thissector,andtwomaybeelectedfromamongnonmembers meeting the appropriate professional conduct requirements. Sixdirectorsrepresentingthefounderentitiesorcommunityinterest entities, elected from among the General Assembly members representing this sector. Fourdirectorsrepresentinglocalgovernmentcorporations, ofwhichtwomustbeelectedfromamongthegeneral Assemblymembersrepresentingthissectorandtwomaybe electedfromamongnonmembersmeetingtheappropriate professional conduct requirements. Threedirectorsrepresentingemployees,electedfromamong thegeneralassemblymembersrepresentingthissector. Board meetings are also attended by the President and CEO of lacaixa,whohastherighttospeakandvotebylaw. The Welfare Projects Committee, the Executive Committee, the Investment Committee and the Remuneration and Appointments Committee are delegate committees of the Board of Directors. Welfare Projects Committee TheroleoftheWelfareProjectsCommitteeistosubmitfor approval by the Board of Directors all new welfare projects for which support has been sought from la Caixa, and the budgets for existing projects, and to manage and run the projects, guided by economic rationality concerns and the aim toserve,tothefullestextentpossible,thegeneralinterestsof theterritorywheretheyarecarriedout. The members of the Welfare Projects Committee are the ChairmanoftheBoardofDirectorsandeightpeopleelectedby the Board of Directors from among its members, in proportion to the sectors represented on the Board. Committee meetings arealsoattendedbythepresidentandceoof lacaixa and theexecutivevice-presidentinchargeofwelfareprojects. Executive Committee TheExecutiveCommitteeisthepermanentdelegatebody of the Board of Directors. Its powers are all those delegated bytheboardofdirectorsandthoseattributedtoitunderthe 2010 la Caixa Annual Report 19

22 Corporate Governance of la Caixa Bylaws, mainly in relation to activities concerning management, disposal,taxationandownership,aswellastheexerciseofthe administrative,courtandout-of-courtactionstowhichthe lacaixa isentitled. ThefollowingBoardmemberssitontheExecutiveCommittee: thechairman,thedeputychairmenandfourmembers,onefrom eachofthesectorsrepresentedatthegeneralassembly.meetings arealsoattendedbythepresidentandceoof lacaixa. Investment Committee TheroleoftheInvestmentCommitteeistoinformtheBoard ofdirectorsortheexecutivecommitteeoftheinvestmentsor divestments which, in accordance with current legislation, are of a strategic and stable nature. It also informs on the financial viability oftheseinvestmentsandhowtheyfitinwiththeinstitution s budgets and strategic plans. Current legislation defines strategic asthepurchaseorsaleofasignificantinvestment inalistedcompanyorparticipationinbusinessprojectswith a presence on managing or governing bodies implying a total investmentby lacaixa ofover3%ofitseligiblecapital. TheInvestmentCommitteeconsistsoftheChairmanofthe BoardofDirectorsandtwodirectors,chosenaccordingtotheir specialist skills and professional experience. Meetings are also attended by the President and CEO of la Caixa. Remuneration and Appointments Committee TheroleoftheRemunerationCommitteeis(i)toinformofthe general remuneration and incentive policy for the members of the BoardofDirectors,oftheControlCommitteeandmanagement personnel; (ii) to guarantee compliance of legal requirements toexercisethepostofmembersontheboardofdirectors and Control Committee and also those necessary for the post ofpresidentandceoand(iii)toreceivereportsonconflictsof interest which must be prepared by the governing bodies in accordance with the Bylaws. TheRemunerationandAppointmentsCommitteeconsistsofthe Chairman of the Board of Directors and two directors. Meetings arealsoattendedbythepresidentandceoof lacaixa. Control Committee TheroleoftheControlCommitteeistoactasanindependent supervisorybodyoftheboardofdirectorswhichisnot subordinatetothelatter.itssupervisoryrolenotonly encompasses financial issues but it also plays a significant part intheinstitution selectionprocessesandcanevenrecommend to the Department of Economy and Finance of the Catalonia Autonomous Community Government that any Board resolutions itconsiderstocontravenecurrentlegislationbesuspended. Its composition must reflect the proportional representation of the various stakeholder groups in the General Assembly. Moreover,theremaybenoduplicationofrepresentativesso that no institution may have representatives on both the Board ofdirectorsandthecontrolcommitteeatthesametime. TocarryoutthesedutiestheControlCommitteehasthe following powers: To supervise management of affairs by the Board of Directors, while overseeing that their decisions are consistent with the guidelines and resolutions of the General Assembly andwiththeaimsoftheinstitution. Tomonitorthefunctioningofandthetaskscarriedoutby the Institution s supervisory bodies. To examine the external auditors reports and be familiar with the recommendations made by the auditors. Toreviewthebalancesheetandincomestatementforeach year and make such observations as it sees fit. ToreportonitsactivitiestotheGeneralAssemblyatleast once a year. To request that the Chairman call an extraordinary General AssemblyMeetingwheneveritseesfit. TosuperviseelectionsformembersoftheGeneralAssembly andboardofdirectors,jointlywiththedepartmentof Economy and Finance. Also, the Control Committee will often supervise elections for new Control Committee members. ToexaminethereportsofthedelegateWelfareProjects Committee and issue its opinion thereon. ToproposetotheDepartmentofEconomyandFinanceto suspendtheboardofdirectors resolutionsiftheycontravene current legislation. AllofthedutiesconferredupontheAuditCommitteeby virtue of additional provision eighteen of Securities Market Law24/1988,of28July,withregardtothepowersnot conferred with the aforementioned functions, in particular: a)toinformthegeneralassemblyofissuesarisingin their committee meetings in relation to matters of their competence. b) To propose the appointment of external financial auditors totheboardofdirectorsforsubmissiontothegeneral Assembly. c)tosupervisetheeffectivenessofinternalauditservices and the risk management systems and to discuss with the 2010 la Caixa Annual Report 20

23 Corporate Governance of la Caixa THE CONTROL COMMITTEE OvERSEES THE CORRECT MANAGEMENT OF THE BOARD OF DIRECTORS COMPOSITION OF THE CONTROL COMMITTEE (2) TheControlCommitteehasninememberselectedbythe General Assembly from among its non-director members, in the following proportions: Threemembersfromthedepositholderssector. Threemembersfromthefounderandcommunity-interest entities sector. Two members of the local government corporations sector. Onememberfromtheemployeessector. President and CEO Deposit holders Local government corporations 3 Total 9 Founder amd community-interest entities Employees external auditors any significant weaknesses detected in the internal control system when conducting the audits. d) To supervise the financial information process and presentation of regulated financial information. e) To contact the external auditors to receive information on any issues that could jeopardise their independence, including issues related to the audit process and any other communications envisaged in current legislation and must receive from auditors annually written confirmation of their independence together with any information of additional services rendered to la Caja de Ahorros y Pensiones debarcelonaortoorganisationsdirectlyorindirectly linkedtoit. f)toissueanannualreportwhichexpressesanopiniononthe independence of the auditors prior to issuing the auditors report on the accounts. AnyotherpowersconferreduponitbytheGeneralAssembly within the guidelines set in the above paragraphs. (2)SoastoadaptthecompositionoftheControlCommitteetothepercentagesofthe compositionoftheassemblyscheduledforrenewalin2012,thegeneralextraordinary Assembly held on 29 November 2010 agreed to change the Bylaws, thus the Control Committee will be made up of four members from the deposit holders sector, two members fromthefounderentitiesorcommunity-interestentities,twomembersfromthesectorof local corporations and one from the employees sector. Inadditiontotheabovebodies,alsoworthyofmention istheofficeofthepresidentandceoof lacaixa asthe executivewhoisresponsibleunderthelawforimplementing theresolutionsoftheboardandcarryingouttheotherduties entrusted to him in the Institution s Bylaws or regulations. The postofpresidentandceoisespeciallyimportantas,inaddition tobeingappointedbytheboard,theofficemustbeconfirmed by the General Assembly, as must the removal from the role. Moreover, under Catalan law the President and CEO sits on the BoardofDirectorsinaspeakingandvotingcapacity. Therefore, there is a separation between the various bodies with different functions which acts as a means of control and provides abalance,inlinewithgoodcorporategovernancepractices.each of the governing bodies contains a suitable proportion of the various sectors, thereby maintaining the same balance. Regime applicable to members of the Governing Bodies With respect to the characteristics of Board members, it should be noted that the qualifications on use in codes of governance donotapplytosavingsbankssince,duetotheirfoundational nature, they may not have proprietary directors. All of the members belong to or represent a specific stakeholder group, although the deposit holders and local government corporations sectorsmayappointuptotwomembersoftheboardof Directors for each of these sectors from among persons who arenotmembersofthegeneralassemblybutmeetthe requirements concerning professional conduct, without this resulting in the removal from the Board of representatives of those groups who are also General Assembly members. Under applicable legislation, the following persons shall be disqualified from holding office in the General Assembly and on the Board of Directors and Control Committee: 2010 la Caixa Annual Report 21

24 Corporate Governance of la Caixa a) Undischarged bankrupt traders or non-traders, as well as persons subject to judgments that disqualify them from holding public office. b) Those who breached their obligations to la Caixa, prior to orduringtheirappointmenttooffice. c) Board members and members of the governing bodies of more than three business corporations, CEOs, board members, executives, advisors and employees of other credit institutions or companies dependent thereon, or of Caja de Ahorros y Pensiones de Barcelona itself, except where they hold such positionsintheinterestsofcajadeahorrosypensiones de Barcelona, and of corporations or entities that promote, supportorguaranteecreditinstitutionsorestablishments. Thisincludestheholdersofpostsinanycommercialcompany, except: Wherethepostisheld,intheirownnameorotherwise,on thedirectorindirectrecommendationofcajadeahorrosy Pensiones de Barcelona and is exercised in its interests. Wherethepostisheldsolelyforthepurposesofcarrying out the holder s commercial or professional activities. Wherethepostisheldinacompanywhichdoesnotcarry onindependentcommercialactivityonaregularbasisand which belongs to a family group of which the post holder, his/her spouse, ascendants or descendants form a part. Wherethepostisinacompanybelongingtoother companies included in the calculation in accordance with the above rules. Notwithstanding the above rules for calculating the number of members of the Board of Directors, under no circumstancesmaymembersoftheboardofdirectorssit on the Board of more than eight commercial or cooperative companies, whether or not they are included in the limit established in the rules. d) Public servants with duties directly related to the activities of savings banks. e) The Chairman of the founder institution or corporation. f)thosewhohaveheldtheofficesofboardmemberor PresidentandCEOformorethan20yearsinthesamesavings bank or in an another which has been absorbed or merged. g)thosepersonswhoholdanelectedpoliticalpost. h)thosepersonsholdingahighpositioninthestate sgeneral Administration, the Administration of the Autonomous Communities or Local Administration, and also in institutions belonging to the public sector, administrative or private law whichhavelinkswithordependonthese. Thisincompatibilityshallcovertheperiodoftwoyearsafter theholdersofhighpositionshaveleftofficewheneitherofthe two following cases arises: Whenthoseholdinghighpositionsortheirsuperiors proposed by them or those in charge of dependent institutions, by delegation or substitution, have passed resolutions related to savings banks. When they have participated in meetings held with regulated institutions in which an agreement or resolution has been passedrelatedtothesavingsbanks. ThetermofofficeofthemembersoftheGeneralAssembly,the Board of Directors and the Control Committee is six years, and they maybereappointedforasecondtermiftheymeettheconditions for appointment, up to a maximum term of 12 continuous or uninterrupted years. The calculation of this limit does not include any time when the office may have been discharged through delegation,sincethetermmustbecalculatedentirelyinrelationto the original office-holder. Eight years after expiry of the previous term,thecalculationofthe12-yearlimitstartsagain. In addition, members of the General Assembly, of the Board of DirectorsandtheControlCommitteemaynotbelinkedto lacaixa ortocompaniesinwhich lacaixa hasan investment of more than 25% due to contracts for project work, services, supplies or paid work during the period in whichtheyholdsuchofficeandinthetwoyearsfollowing their removal, except in the case of an employment relationship when they are members representing the employees. Moreover,thegrantofloans,guaranteesandsuretiesto membersoftheboardofdirectorsorthecontrolcommittee, ortothepresidentandceoortotheirspouses,ascendants, descendants and second-degree relatives, as well as to companiesinwhichsuchpersonsholdanownershipinterest which, individually or jointly, is a majority interest, or in which theyholdexecutiveoffice,mustbeapprovedbytheboard ofdirectorsorbytheexecutivecommittee(asauthorisedby theboardandreportingtoit)andexpresslyauthorisedby thedepartmentofeconomyandfinanceofthecatalonia Autonomous Community Government. Thisregimeisalsoapplicabletotransactionsperformedby the above individuals or legal entities for the purposes of transferring the assets, rights or securities they own, or that were issued by them, to the Institution. Transactions performed by individuals not exceeding a total of EUR 140,791 and by legal entitiesnotexceedingeur351,990aregenerallyapproved. However, transactions with legal entities in which the executive acts on behalf of the Institution and has no personal or family financial interest, either directly or through a nominee, do not require authorisation la Caixa Annual Report 22

25 Corporate Governance of la Caixa From another standpoint, since the Institution issues securities, CajadeAhorrosyPensionesdeBarcelonaissubjecttothe InternalRulesofConductoftheSecuritiesMarket,approved bythespanishfederationofsavingsbanks,towhichit adheredbyaresolutionoftheboardofdirectorsdated19 July 2007, amended by a subsequent resolution dated 18 September 2008, in accordance with a change to the Internal Rules. These Rules regulate various issues such as the general rules, transactions carried out by parties subject to the Rules ontheirownbehalf,thepreventionofabuseofthemarket, theconflictsofinterestmanagementpolicy,thedepositary arrangements for collective investment schemes and pension funds and the application of the Rules. Therefore, the Rules havebeenadaptedtothelatestchangeswithrespectto this subject matter, introduced by the Securities Market Law andimplementingregulations,which,inturn,hasbeen implemented and completed by a Circular approved by the Board of Directors on 23 October 2008, which relates to specific areas such as the control and compliance structure, the scope of application and transactions carried out by parties subject to the Rules on their own behalf, separate areas and information barriers, abuse of the market, suspicious transactions reporting and conflicts of interest policy. Other Corporate Governance measures Having set forth above the legal regime applicable to the governing bodies of Caja de Ahorros y Pensiones de Barcelona, there follows a description of certain measures adopted by the Institution concerning Corporate Governance: 1)Tocounteroneoftheaccusationstraditionallymadeagainst savings banks that they are subject to excessive political influence,cajadeahorrosypensionesdebarcelonachosea system for the election of members of the General Assembly torepresentdepositholdersbasedondelegatesdrawnbylots and elected by the General Assembly members from among the delegates in each electoral district, since a direct electoral system could distort representation of these interests as there are veryfeworganisationsofthesamesizeas lacaixa,besides the political parties, to organise candidatures and a genuine electoral campaign throughout the territory where they operate. Theaimofusingasystemofdelegateswhoareelectedineach electoraldistrictistopreventtheelectionofdepositholders representatives from being affected by politics and to prevent politicsfromhavinganexcessiveinfluenceon lacaixa. 2)WithregardtothedutiesattributedbytheSpanish Companies Law to the Audit Committee (which is a body appointedbytheboardofdirectors),inaccordancewiththe BylawsofCajadeAhorrosyPensionesdeBarcelona,the Institution has opted to have such duties discharged by the Control Committee, since it is an independent body from theboardofdirectorsandthissystemenablesthorough compliance with good governance guidelines. 3)TheInstitutionhaschosentoestablishthemaximumageforits BoardmembersaswellasControlCommitteemembersat78, although the member in question may continue to discharge office until the first Annual General Assembly following his 78th birthday. In addition, in order to avoid short-term appointments, membersmustbeunder75yearsofagewhenelected. 4)TheBylawsofCajadeAhorrosyPensionesdeBarcelonaalso stipulate that persons belonging to the Board of Directors or Control Committee of another savings bank, financial, credit institutionorthosemembersoftheboardofdirectorsinan insurance institution are disqualified from taking a seat on theinstitution sboardofdirectorsunlesstheyholdapostof interestfor lacaixa. Public or private entities and local government corporations represented on the Board of Directors or Control Committee of another savings bank may not have the same representatives on the Control Committee of Caja de Ahorros y Pensiones de Barcelona. Lastly, in line with the corporate governance recommendations vis-à-vis the flotation of the subsidiary Criteria CaixaCorp, S.A.,on19September2007 lacaixa signedaninternal Relationship Protocol with Criteria CaixaCorp, S.A. The purpose oftheprotocolistogoverntherelationshipbetween lacaixa andcriteriacaixacorp,s.a.andtheirrespectivegroups,with the aim of defining the required mechanisms to guarantee the appropriate degree of coordination, and to ensure that it inurestothebenefitandcommoninterestofthe lacaixa Group (to which Criteria CaixaCorp, S.A. belongs) and of the listed company, while ensuring due respect and protection for the other shareholders of Criteria CaixaCorp, S.A. within a framework of transparent relations. In addition, an objective of the Protocol is to strike a balance in the operating relations so as to minimise and regulate conflicts of interest while responding totherequirementsofthemarketsandtheregulators. In accordance with the above objectives, the areas governed by the Protocol are the principles and objectives, the main areas of activity of the Criteria CaixaCorp group, the intra-group operations andservices,theflowsofinformationandthefollow-upofthe Protocol. The Protocol is available on the websites of the Spanish National Securities Market Commission ( and Criteria CaixaCorp, S.A.( la Caixa Annual Report 23

26 Corporate Governance of la Caixa General Assembly at 31 December 2010 Honorary Chairmen José Vilarasau Ricardo Fornesa Chairman Isidro Fainé First Deputy Chairman Salvador Gabarró Second Deputy Chairman Jordi Mercader Third Deputy Chairman Javier Godó Secretary (non director) Alejandro García-Bragado Deputy Secretary (non director) Óscar Calderón Members Alejandro Aguilar Luis Enrique Alameda Núria Aloy Mercè Àlvarez (*) Estrella Amoedo Joan Albert Argenter Maria Artigas Eva Aurín Enrique Azpeleta Enric Bach Ramon Josep Badia Joan Badia Francisco Javier Báez Albert Balcells Victòria Barber Antoni Baron María Teresa Bartolomé Maria Teresa Bassons Albert Batalla Ferran Bel Robert Benaiges Josefa Benavent Antoni Joan Bertomeu Macià Bibiloni Ruth Bolaños Fernando Bonet Carles Bonet Guillem Boscana M.ª del Carmen G. Bruach Francesc Cabana Montserrat Cabra José Luis Calvo José Ramón Calvo Joaquín Calvo Aina Calvo Francesc d Assís Carbonell Jordi William Carnes Antonio José Carrique Marc Casadellà Xavier Casoliva Jaume Castán Josefina Castellví Ramon Clotet Miguel Coca Josep Colomer Susana Company Maria Crespo Josep Antoni Díaz José Luis Echavarría Óscar Luis Egea Irene Erra M. Àngels Esteller Josep Fabra José Antonio Fayas José Manuel Fernández Albert Fernández Carlos Fernández-Lerga M. Teresa Ferrés Joana Font Llorenç Fontan Joaquim Forn Josep Antoni Frias Josep Fullana Rafael Gabriel Maria Cristina Galindo Bárbara García-Andrade Rosa Garicano Joan Gaspart Joaquim Gay de Montellá Pere Gifré Jaume Gil Maria Mercè Giné Albert Gras Josep-Delfí Guàrdia Carlos Güell José Guirao Monika Habsburg Anna Hernández Rafael Hinojosa Alicia Huerta Lluís Jerez Inmaculada Juan Enric Lacalle Juan-José López Montserrat López Mario López Catalina Llibre (*) On 18 January 2011 the General Assembly appointed Mercè Àlvarez as member representing the Ateneo Barcelonés, in place of Ferran Mascarell, who resigned on 29 December la Caixa Annual Report 24

27 Corporate Governance of la Caixa Dolors Llobet Manuel Llorca Miguel Martín Gustavo Martínez Ramon Masià Josep Maria Mauri Josep Mayoral Vicente Miguel Francesc Josep Miró José María Momblant Rosa Maria Mora Ángel Morales Joan Andreu Morant Antoni Maria Muntañola María Antonia Muñoz Pere Navarro Carlos Nieto Miquel Noguer Justo Bienvenido Novella Lluís Obiols Joan Oliveras Albert Ollé Nuria Ortega Antonio Padilla Anna Pagans Jordi Pàmies Anton Pàmies Jordi Panal Xavier Parés Víctor Ignacio Pascual Francisco Javier Pérez Celia Pino Maria Carme Piqué Joan Pons Jordi Portabella Ramon Pou Josep Manel Puente Maria Rosa Pujol Enrique Quijano Francisco Ramírez Francisco Ramos Xose Mario Rey Lluís Riera Óscar Rionegro Miguel Ángel Roa Josep Roca Leopoldo Rodés Jordi Roglà Àngel Ros Josep Manel Ruiz Gaspar Sabater María del Carmen Sanclemente Carlos Santana Pablo Saravia José Antonio Segarra Mariano Serra Alfredo Santiago Serrano Joan Sierra Juan Antonio Socías Roser Soldevila Benet Triquell María Ángeles Trouillhet Sandra Maria Van Dellen Josep M. Vila Alfonso Vilá Josep Vilaró Jaume Vilella Nuria Esther Villalba Francisco Villoslada Jeroni Vinyet Josep Francesc Zaragozà Executive Officers President and Chief Executive Officer Juan María Nin Senior Executive Vice-Presidents Antonio Massanell Tomás Muniesa Marcelino Armenter Juan Antonio Alcaraz 2010 la Caixa Annual Report 25

28 Corporate Governance of la Caixa Board of Directors at 31 December 2010 Chairman Isidro Fainé First Deputy Chairman Salvador Gabarró Second Deputy Chairman Jordi Mercader Third Deputy Chairman Javier Godó Directors Victòria Barber María Teresa Bartolomé Maria Teresa Bassons Montserrat Cabra Aina Calvo Josep-Delfí Guàrdia Monika Habsburg Inmaculada Juan Juan-José López Montserrat López Dolors Llobet Rosa Maria Mora Miquel Noguer Justo Bienvenido Novella Leopoldo Rodés Nuria Esther Villalba Josep Francesc Zaragozà Secretary (non director) Alejandro García-Bragado Deputy Secretary (non director) Óscar Calderón Executive Officers President and Chief Executive Officer Juan María Nin Senior Executive Vice-Presidents Antonio Massanell Tomás Muniesa Marcelino Armenter Juan Antonio Alcaraz Executive Committee Chairman Isidro Fainé First Deputy Chairman Salvador Gabarró Second Deputy Chairman Jordi Mercader Third Deputy Chairman Javier Godó Members Inmaculada Juan Dolors Llobet Miquel Noguer Leopoldo Rodés Secretary (non director) Alejandro García-Bragado Deputy Secretary (non director) Óscar Calderón Executive Officers President and Chief Executive Officer Juan María Nin Welfare Projects Committee Chairman Isidro Fainé Members Salvador Gabarró Jordi Mercader Javier Godó Montserrat Cabra Aina Calvo Juan-José López Montserrat López Justo Bienvenido Novella Secretary (non director) Alejandro García-Bragado Deputy Secretary (non director) Óscar Calderón Executive Officers President and Chief Executive Officer Juan María Nin Executive Vice-President Jaime Lanaspa Investment Committee Chairman Isidro Fainé Members Javier Godó Dolors Llobet Secretary (non director) Alejandro García-Bragado Deputy Secretary (non director) Óscar Calderón Executive Officers President and Chief Executive Officer Juan María Nin Remuneration and Appointments Committee Chairman Isidro Fainé Secretary Salvador Gabarró Jordi Mercader Secretary (non director) Alejandro García-Bragado Deputy Secretary (non director) Óscar Calderón Executive Officers President and Chief Executive Officer Juan María Nin 2010 la Caixa Annual Report 26

29 Corporate Governance of la Caixa Control Committee at 31 December 2010 Chairman Jaume Gil Secretary Àngel Ros Members Josefina Castellví Josep Antoni Frias Josep Fullana Albert Gras Maria Rosa Pujol Carlos Santana Joan Sierra 2010 la Caixa Annual Report 27

30 Corporate Governance of la Caixa MANAGEMENT Steering Committee Isidro Fainé Chairman Juan María Nin President and Chief Executive Officer Antonio Massanell Senior Executive Vice-President Juan Antonio Alcaraz Senior Executive Vice-President Jaume Giró Communication, Institutional Relations and CSR Executive Vice-President Tomás Muniesa Senior Executive Vice-President Francisco Javier Coll Human Resources Executive Vice-President Jaime Lanaspa Welfare Projects Executive Vice-President Marcelino Armenter Senior Executive Vice-President Alejandro García-Bragado General Secretary Joaquim vilar Financial Executive Vice-President 2010 la Caixa Annual Report 28

31 Corporate Governance of la Caixa Management President and Chief Executive Officer Juan María Nin Senior Executive Vice-Presidents Antonio Massanell Tomás Muniesa Marcelino Armenter Juan Antonio Alcaraz Executive Vice-Presidents HEAD OFFICE Ignacio Alegre Ignacio Álvarez-Rendueles Francisco Javier Coll Luis Deulofeu Elisa Duran Jesús Escolano Joan Fábrega Alejandro García-Bragado Jaume Giró Jaime Lanaspa Robert Leporace Sebastià Sastre Joaquim Vilar GENERAL AREA MANAGERS Juan Carlos Gallego Joan Ramón Fuertes Victorino Lluch Bibiano Manuel Martínez Juan José Muguruza Andrés Orozco Juan Reguera Manuel Romera Global Risk Management International Banking Human Resources Executive Chairman of SILK Deputy to the la Caixa Chairman s office Risk Analysis and Approval Network business International Banking General Secretary s Office Communication, Institutional Relations & CSR Welfare Projects Recoveries Legal Services Financial Division Madrid Balearic Islands Castile-Leon and Castile-La Mancha Levante and Murcia Northern Spain Canary Islands Southern Spain Catalonia General Managers / Area Managers GENERAL MANAGERS Manuel Barrachina Organisation and Quality Luis Cabanas Business Banking Julián Cabanillas General Services Management Fernando Cánovas Markets Pablo Arturo Forero Asset Management Juan Miguel Gandarias Private and Personal Banking Juan Antonio García Banking Services Jordi Gual Research Department Juan Llopis Internal Audit M. Victòria Matia Electronic Banking Manuel Fdo. Menéndez Investment Banking Josep Ramón Montserrat Property, SME s and Individuals Risk Oriol Ordax Validation and Technical Secretary s Office Javier José Paso Tax Advisory Àngel Pes Corporate Responsibility and Brand 2010 la Caixa Annual Report 29

32 Corporate Governance of la Caixa AREA MANAGERS Jesús Lorenzo Alonso Marc Arthur Benhamou José Manuel Bilbao Joaquín Antonio Chaparro Francisco Cornejo José Ramón Cuesta Rafael Fernández Feliu Formosa Víctor Guardiola José Alberto Gutiérrez Raúl José Marqueta Amparo Martínez Jordi Nicolau Miguel Ángel Palanco Miquel Àngel Pla Enrique Pujol Felipe Pulido Carlos Javier Serrano Jaume Torrents Ana Belén Vuelta Juan Ignacio Zafra BUSINESS BANKING AREA MANAGERS Juan Pedro Badiola María Jesús Català Francisco Costa Juan Antonio Pérez María de las Cruces Rivera Rafael Herrador PRIVATE BANKING AREA MANAGERS Lluís Caballé Ana Guzmán Juan Andrés Llamas Corporate Directors Óscar Calderón Natividad Capella Óscar Valentín Carpio Jordi Fontanals Javier Ceferino Garcia-Lluís Carles Gramunt Jordi Ibern Jordi Mondéjar Ignacio Moreno de Guerra Javier Pano Luis Enrique Pérez Ignacio Redondo Alfons Salvó Albert Soler North West Madrid Galicia Basque Region Extremadura and Huelva Cordoba and Malaga Castile-Leon East Madrid Barcelona Province Murcia and Alicante South West Madrid Aragon, Navarre and La Rioja Tarragona Girona Granada, Jaén and Almeria Barcelona City Lleida Seville and Cadiz Asturias and Cantabria Metropolitan Area of Barcelona Castile-La Mancha Valencia and Castellón Northern Spain Catalonia Levante-Murcia Castile-Leon and Castile-La Mancha Madrid Southern Spain Catalonia Northern Spain Madrid General Vice-Secretary s Office Risk and Management Control of Markets Operation Corporate and Public Sector Risk Control Information Systems Transactional Banking and SMEs Corporate Banking Global Risk Management Management and Expenditure Control Commercial Information Treasury Commercial and Individual Banking Legal and Tax Advisory Human Resources Structured Financing 2010 la Caixa Annual Report 30

33 Corporate Governance of la Caixa Division Heads Ricardo Agramunt Commercial Positioning Teresa Algans Quality Víctor Manuel Allende Private and Personal Banking Development Joan Alfons Álvarez Regulatory Compliance Fernando Arce Structured Finance-Businesses Ignacio Badiola Institutional Banking José Ballbé Territorial Audit Juan Manuel Bermejo International Branches and Business Tomàs Bravo Customer Treasury Division Alfredo Bustillo Communication and Sponsorship Vicenç Buxarrais Counterparty Risk Pere Capella Institutional Relations Pere Lluís Carrera Legal & Labour Relations Carles Casanovas Marketing and Advertising Services Juan Cebrián Capital Management and Planning Carlos de Parias Corporate and Acquisitions Ángel José Díez Corporate Finance Ana María Díez Foreign Trade Fco. Javier Estrada Altium and Investment Strategy Carles Feliu Brand and Corporate Image Miguel Ángel Fernández Security Marta Fina Organisation and Efficiency Ernesto Gil Accounting Adolfo Gómez Financial Auditing and Risk Management Francesc Xavier Gómez Consolidation and Internal Control Pere Huguet Technical Secretary to the President and CEO s Office María Beatriz Kissler Banking Operating Services Jesús Antonio Losa Energy Financing Javier Marín Martínez Distribution and Origination María Luisa Martínez Communication and External Relations Juan Masjoan Compliance and Investee Audit Juan Morlà Cards María Isabel Munuera Market Operating Services José Javier Nicolás Personal Banking Edward Michel O Loghlen Investor Relations Felipe Augusto Oriol Strategic Banking Alliances Josep Parareda SME Banking Juan José Pelayo Syndications Javier Ignacio Peyra Approval Policies and Procedures Mª Luisa Retamosa Media Audit José María Rifé Default Management Joan Rosás International Financial Institutions and Representative Offices Francisco Emilio Ruiz Administration of Own and Investee Portfolio Sergio Sala Specialised Finance Daniel Torras Management Development Centre Àlex Valencia Balance Sheet Risk Analysis Francisco Javier Zuloaga Internal Communication 2010 la Caixa Annual Report 31

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35 The la Caixa Group Strategic Keys Mission, Vision and Values New Strategic Plan The la Caixa Group s New Structure la Caixa Group s reorganisation This section of the 2010 Annual Report describes Management s perspective on and analysis of the la Caixa Group s strategic keys: Mission, Vision and Values, and offers a description of the New Strategic Plan. This will also include general details of the la Caixa Group s New Structure.

36 The la Caixa Group Strategic Keys THE LA CAIxA GROUP: STRATEGIC KEYS Mission, vision and values Caja de Ahorros y Pensiones de Barcelona, la Caixa, was established in 1990 as a result of the merger of Caja de Pensiones para la Vejez y de Ahorros de Cataluña y Baleares, founded in 1904, with Caja de Ahorros y Monte de Piedad de Barcelona, founded in 1844, and it is therefore the lawful universal successor to the personality of those institutions, namely their nature, aims, rights and obligations. Due to its origins it was established as a non-profit financial institution providing beneficent, community services with a private board of trustees, and is separate from any company or institution. The object of la Caixa is to encourage all authorised forms of saving, to carry out beneficent work for the well-being of the community and invest the related funds in safe and profitable assets of general interest, and promote economic and social development in its action area. The basic aims set forth in its Bylaws are as follows: To encourage savings as the individual economic expression of collective interests. To encourage providence generally as the expression of an individual and collective interest. To provide financial and social-interest services. To finance and support beneficent and/or social-interest activities. To develop the Institution so as to enable it to fulfil its aims in the most appropriate manner. The Mission and Vision of la Caixa have been shaped by its origins, object and basic aims and constitute a reference for the Institution s future. This year, as part of the new Strategic Plan, the la Caixa Group s Mission was reinforced as a clear sign that the Institution wishes to remain as it is. The Group s Vision has been updated in the new Strategic Plan to include the international character of the Institution in its interest to be close to its customers. And its Values, which form the foundation on which its strategy stands, have also been brought up to date to place more emphasis on the Leadership of all those who form part of the la Caixa Group. Mission The Mission of an institution defines its reason for existing, its aims and the basic objective to be achieved, vis-à-vis the various stakeholder groups. THE MISSION AND THE vision OF LA CAIxA AS BASIC FACTORS FOR THE STRATEGIC DEvELOPMENT OF THE GROUP The Mission of la Caixa Group: To encourage saving and investment by offering the best and most comprehensive range of financial services to the greatest number of customers and make a decisive contribution to society to provide flexible tailored coverage of basic financial and social needs. vision Its Vision is a projection, an image of the institution s future in the long term. The Vision of la Caixa Group: The leading financial group in the Spanish market with an international vocation aimed at generating value for its customers, employees and for society. values The strategic action of la Caixa is based on its identifying values, action guidelines and characteristic convictions. The Institution s values are: THE DEFINING values OF LA CAIxA UNDERPIN THE INSTITUTION S STRATEGY Leadership: commitment, integrity, professionalism and teamwork. Trust:of customers and society based upon service and top quality customer attention. Socialcommitment:the ultimate aim of our business la Caixa Annual Report 34

37 The la Caixa Group , a new Strategic Plan to once again make the difference In 2010 the la Caixa Group successfully completed the development of its Strategic Plan. Despite an economic setting that was far more complex than expected, all the organisational and business structure challenges were met, with increases in market share. In Spain individual banking was consolidated as a fundamental cornerstone of the Group s business coupled with the development of a specific model for each segment: individual banking, private banking, SME banking, business banking and corporate banking. All the above have enabled the Institution to strengthen its commercial positioning with generalised gains in market shares. A platform has been set up to expand internationally based on three cornerstones: representative offices, operating branches and banking associates. Furthermore, during this period Criteria CaixaCorp was listed on the market and has acted as a vehicle towards expanding abroad through holding a distinctive investee portfolio. Finally, in the la Caixa Group consolidated its social standing through its Welfare Programmes and the creation of MicroBank. GENERATING LONG-TERM value FOR STAKEHOLDERS S O CIETY CUSTOMERS E M PLO YEES Thus, the la Caixa Group now presents a good starting point to develop anew Strategic Plan: enviable financial situation, great commercial strength, model of customer care (quality service, territorial expansion), excellent professionals, and so on, which will clearly allow the Institution s challenges to be met. With the slogan Making the difference, the Strategic Plan aims to underscore its vocation to leadership and growth, both nationally and internationally, and to maintain its commitment to the business fabric. Thus underscoring the social responsibility of the la Caixa Group, now more than ever in a complex economic setting. This means growing to guarantee the la Caixa Group model and making the difference. The la Caixa Group has always had and wishes to continue having a management model with a difference defined by: Social commitment Prudence and long-term vision Proximity to customers Excellence in service ualified, motivated staff Technological innovation Model of corporate governance 2010 la Caixa Annual Report 35

38 The la Caixa Group Strategic Keys To achieve the above, the Strategic Plan has considered 11 Great Challenges, such as consolidating the leadership of la Caixa in retail banking in Spain, diversifying the business, becoming more international, maintaining its commitment with the business fabric also through a distinctive investee portfolio and underscoring its social commitment. Particularly, the 11 Great Challenges for the la Caixa Group in are as follows: THE STRATEGIC PLAN REAFFIRMS THE GROUP S vocation TO LEADERSHIP AND GROWTH 1. To strengthen its leadership in retail banking. 2. To diversify its business towards companies. 3. To balance its territorial presence. 4. To grow internationally. 5. To maintain a distinctive investee portfolio. 6. To maintain financial strength. 7. To improve returns. 8. To progress in organisational efficiency and flexibility. 9. To develop and motivate talent. 10. To underscore its social commitment. 11. To communicate the aims of the institution both internally and externally la Caixa Annual Report 36

39 The la Caixa Group THE LA CAIxA GROUP S NEW STRUCTURE la Caixa Group s reorganisation The Financial Report (pages 39 to 121) of the la Caixa Annual Report includes the fundamental features which will help to interpret the business and the economic and financial performance of the Group in WITH THE NEW STRUCTURE LA CAIxA CHOOSES THE INDIRECT CONTROL OF THE BANKING BUSINESS THROUGH A LISTED BANK Additionally, it is worth noting that on 27 January 2011 the Boards of Directors of la Caixa and Criteria CaixaCorp agreed to sign a Framework Agreement for la Caixa Group s reorganisation, by virtue of which, and as established in Spain s new Savings Bank Act (LORCA in Spanish), la Caixa shall indirectly control the banking activity through a listed bank (the current Criteria CaixaCorp). On 24 February 2011, the Boards of Directors agreed on the definitive conditions of the reorganisation, which is subject to approval by the General Assembly of la Caixa and the General Shareholders Meeting of Criteria CaixaCorp. The process, which in all likelihood will conclude in July 2011, aims to define a new structure, which, while maintaining the fulfilment of the social aims offered by la Caixa and developing the Group s present business, will enable it to adapt to the new domestic and international regulatory requirements, particularly the new requirements of the Basel Committee on Banking Supervision (Basel III). Through this reorganisation, la Caixa will transfer its banking business (except some assets, mainly real estate assets and certain liabilities) to Criteria CaixaCorp (which will become a banking group called CaixaBank) in exchange for Criteria CaixaCorp transferring part of its stakes in listed companies (Abertis, Gas Natural Fenosa, Aigües de Barcelona, Port Aventura and Mediterránea), together with newly issued shares for an amount totalling EUR 2,044 million. CaixaBank, controlled by la Caixa, will start out with a leading position in the Spanish market in the financial and insurance sector, and additionally will be diversified with further complementary businesses, such as stakes in international banks and in Telefónica and Repsol. It will have the best level of asset quality among the main comparable groups in the sector, given its lower NPL ratio (3.66%) the best coverage (70%) and the fact that it has no direct exposure to real estate assets. As regards capital adequacy, and considering an issue of necessarily convertible bonds totalling EUR 1,500 million, it will achieve pro forma core capital of 10.9% (Basel II) in 2010, the highest level within the largest banking groups in Spain, and will boast an excellent liquidity level of EUR 19,638 million. It is estimated that CaixaBank will be ranked number 10 in the euro zone and among the top 20 in Europe in terms of stock capitalisation. In addition, la Caixa will form a group of another series of investees and businesses, such as real estate businesses as part of a new company, of which it will hold 100%. The new configuration of the Group will allow la Caixa to maintain its leadership in the Spanish financial system, the completion of the new Strategic Plan, and to take advantage of the growth opportunities that may arise in the coming years. la Caixa, which will continue to be a savings bank, will maintain its level of funds allocated for the Welfare Projects, and it will be strengthened with the new reorganisation, with a sounder financial structure that guarantees its sustainability and future growth. CURRENT STRUCTURE NEW STRUCTURE Welfare Projects Banking business Welfare Projects 79.5% Insurance companies International banks Services (Listed) 81.1% (Former Criteria, listed) Banking business and insurance companies International banks Repsol + Telefónica 100% NEW INSTITUTION (Unlisted) Industrial portfolio Real estate assets 2010 la Caixa Annual Report 37

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41 2010 Financial Report of the la Caixa Group 1. High-quality profits in Great commercial capacity: the strength of the banking business 3. Investee portfolio 4. Active risk management 5. High financial strength This section of the Annual Report describes the key features which may aid interpretation of the Group s overall economic and financial performance in 2010, within the context of its business and risk management setting. The most significant details of these key features are provided on pages 40 and 41. To aid analysis of the Group s activities and profits, information from the last three years is provided. The information is based on the consolidated financial statements of the la Caixa Group. The consolidated financial statements and directors report for 2010, together with the auditors report dated 27 January 2011, which contains an unqualified opinion, may be consulted on the website of the Spanish National Securities Market Commission ( As part of restructuring in the banking sector, on 16 September 2010 the Extraordinary General Meetings of la Caixa and Caixa d Estalvis de Girona (Caixa Girona) approved the merger of Caixa Girona (the institution absorbed) by la Caixa (the absorbing institution) and which, after receiving official approval, came into force on 3 November On this day la Caixa registered in its financial accounts all the assets, liabilities and contingent risks of Caixa Girona appraised at a fair value. The balance sheets of the merger with Caixa Girona totalled assets of EUR 7,802 million at 31 December For an adequate interpretation of the 2010 Annual Report it is thus necessary to take into account the merger, which concluded on 1 January 2011 with the rapid and satisfactory integration of Caixa Girona from a technological and operative viewpoint in the information systems and processes of la Caixa.

42 2010 FINANCIAL REPORT OF THE LA CAIXA GROUP 1. High-quality profits in Business growth coupled with good profits and conservative write-downs PAGE 42 Recurring profit: EUR 1,507 million, down 11.9%. Profits attributable to the Group: EUR 1,307 million, down 13.4%. Total assets: up 5.1%. High, sustained recurring profits enabled the institution to make conservative allowances. Total net extraordinary profits EUR 200 million. Total assets stand at EUR 285,724 million. RECURRING PROFIT ATTRIBUTABLE TO THE GROUP (Millions of euros) 2,052 1, % 1, % 1.2 Active management of margins, efficiency and high returns PAGE 44 The Group s high level of income. Large fall in operating expenses ( 4.0%). Efficiency ratio of 43.6%. Net operating income of EUR 3,323 million. Pressure on net interest income offset by sustained rise in commissions and other sources of revenue. Sound net operating income enabled the institution to absorb larger credit-loss allowances and write-downs without making use of the generic provision. Good levels of returns. Recurring ROE of 9.3%. ROA 0.7%. RORWA 1.4%. 1.3 Welfare Projects PAGE 50 Budget for 2011: EUR 500 million. 1.4 Business segment reporting PAGE 51 Good evolution of business results. The budget remains the same, thus reflecting the institution s commitment to society. Spanish banking and Investee portfolio. 2. Great commercial capacity: the strength of the banking business 2.1 Sustained and balanced growth in banking activity PAGE 53 Rise of EUR 21,618 million in the banking business volume, up 5.2% to EUR 437,443 million. Customer funds totalled EUR 247,897 million, up EUR 10,098 million (4.2%) and loans totalled EUR 189,546 million, up EUR 11,520 million (6.5%). High market shares: Deposits 10.0% and loans 10.6%. 2.2 Customer base: the core of the business PAGE 56 Retail banking model with specialised segmentation and focus on commercial activity million customers and penetration of 21% in individual customers, 15.7% market share in payroll deposits and 13.6% in pension deposits. Boosting business specialisation. 2.3 Commercial network and human resources: cornerstones PAGE 64 Extensive network and qualified staff. 5,409 branches (market share of 12.6%) and 28,651 employees. 2.4 Multi-channel management: permanent relationship with customers PAGE 66 Multi-channel management: permanent relationship with customers, providing a comprehensive range of products and services. 2.5 Payment systems: a distinctive offering PAGE 70 Payment systems: a distinctive range and comprehensive service. 2.6 Innovation in customer services PAGE 71 ATMs: network of 8,181. Línea Abierta (Internet channel): 6.6 million customers. Mobile banking: 1.8 million customers million cards issued by la Caixa, leader in turnover with a market share of 17.7%. 169,966 Points of Sale (POS) Technological innovation as a priority for improving customer care and service PAGE Innovation and leadership in information systems PAGE Branches and services designed for personalised attention PAGE Quality and customer care: the groundwork for the future PAGE 77 Quality to satisfy customers and guarantee future growth. Better results than competitors in terms of quality, as rated by customers. 2.8 Supporting the business: la Caixa subsidiaries PAGE 78 Subsidiaries that provide support services. Multi-channel management, property services and others Total profit attributable to the Group 1,802 1,510 1,307 RECURRING PROFIT 2010 Yr-on-yr change Gross income 6, % Net operating income , % Efficiency 43.6% +0.7 ROE 9.3% 2.0 WELFARE PROJECTS Budget of EUR 500 million 67% for social programmes BANKING BUSINESS VOLUME (Millions of euros) 414, , % 0.4% 437, % Customer funds Loans to customers la Caixa LEADER 10.5 million customers 21% penetration in individual customers Branches 5,409 la Caixa Group s employees 28,651 ATMs 8,181 Línea Abierta customers (millions) 6.6 Mobile banking customers (millions) 1.8 Cards issued (millions) 10.3 POS terminals (POS) 169,966 Market shares and place in the ranking RANKING Latest data available 2010 SHARE Payroll deposits 15.7% Pension deposits 13.6% Mortgages 11.0% Card turnover 17.7% 1 st Merchant business (POS) 21.2% Savings life insurance 14.8% Loans (resident private sector) 10.6% Demand deposits 11.8% National electronic clearing system (SNCE) 12.7% Deposits (resident private sector) 10.0% 2 nd Pension plans 16.2% Commercial loans 9.5% Investment funds 10.6% 3 rd Factoring and confirming 13.3% 2010 la Caixa Annual Report 40

43 3. Investee portfolio 3.1 Criteria CaixaCorp: internationalisation and diversification PAGE Criteria: subsidiary which encompasses the largest portion of the la Caixa Group s investee portfolio PAGE 80 Investment strategy: diversification of income and international expansion Utility business PAGE 81 Strategic stakes in utility companies, offering basic services to society Financial business PAGE 83 Insurance companies and specialised financial services. International banking. Generating value with controlled risk. The la Caixa Group maintains a 79.5% stake at 31/12/10. Investments in leading companies, with capacity to grow and generate value. Spain s leading company in the insurance sector. Complementing the products and services of la Caixa. Stakes in countries where it can provide value and take advantage of the growth potential. 3.2 Active management of the la Caixa Group s investee portfolio PAGE 86 Strategic objectives: increasing the proportion of the financial business with active management. 3.3 MicroBank PAGE 88 Increasing the stake in The Bank of East Asia to 15.2%. Acquiring 99.8% of Adeslas and reducing the stake in Agbar to 24.0%. Agreement in January 2011 to sell 50% of VidaCaixa Adeslas to Mutua Madrileña. Sale of vehicle lease division to Arval. 3.4 Venture capital and financing for entrepreneurs PAGE Active risk management Global risk management. Key factor within the Group s strategy. Credit risk: ensuring the quality of the Adequate risk approval procedures. Support provided loan portfolio. with advanced tools and measurement and monitoring procedures. Diversified loan portfolio with Contained NPL ratio of 3.71%, lower than the average of adequate collateral. the sector with high coverage of 70% and 140% including mortgage collateral. Market risk: reducing exposure to risk on the balance sheet positions. Liquidity risk: diversifying financial sources in markets and products. Operational risk: minimising the risks inherent to the business. Regulatory compliance risk. 5. High financial strength 5.1 Excellent liquidity levels PAGE 118 Conservative, proactive management of liquidity levels. Extensive natural hedges and financial market dealings. Active management of the balance sheet and sources of financing to reach excellent levels of liquidity. Qualified staff, procedures established and controls introduced enable the institution to lower risks. Promoting the culture of compliance. 5.2 Excellent capital adequacy levels PAGE 119 Excellent position of capital adequacy enables the Group s future business growth: 6.9% of Assets. Core Capital of 8.6%. Capital ratio (BIS ratio) 11.8%. Tier 1: 9.9%. Surplus capital: EUR 6,130 million. 5.3 la Caixa Group very good ratings PAGE 121 Very good ratings. Highlighting the Institution s strong market positioning and financial strength. QUALITY OF ASSETS 2010 NPL ratio la Caixa Group 3.71% Financial sector 5.81% High coverage Coverage ratio 70% Coverage ratio with mortgage collateral 140% Generic provision for credit losses at 31/12/10 (millions of euros) 1,835 FINANCIAL STRENGTH Liquidity (millions of euros) 19,638 Solvency Basel II (%) 79.5% CRITERIA CAIXACORP UTILITIES LISTED COMPANIES UNLISTED COMPANIES FINANCIAL BUSINESS INTERNATIONAL RETAIL BANKING INSURANCE COMPANIES SPECIALISED FINANCIAL SERVICES PERFORMANCE OF MARKET VALUE OF CRITERIA AND IBEX 35 (Millions of euros) % Criteria % IBEX Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Criteria Ibex Core Capital 8.6% Tier 1 9.9% Bis Ratio 11.8% Surplus capital (millions of euros) 6,130 SHORT-TERM LONG-TERM Moody s P 1 Aa2 Standard & Poor s A 1 A+ Fitch F1 A+ As of March la Caixa Annual Report 41

44 2010 Financial Report of the la Caixa Group 1. High-quality profits in High-quality profits in Business growth coupled with good profits and conservative write-downs The la Caixa Group s recurring profit amounted to EUR 1,507 million in 2010, down 11.9%, without making use of its general credit loss provisions, and with a strong commercial performance: Total income (gross income) stood at EUR,745 million and this, coupled with a stringent cost-containment and streamlining policy (expenses were down 4.0%) and the Group s high commercial capacity, enabled the efficiency ratio to grow to 43. %, while net operating income reached EUR 3,323 million, 8.3% down on the previous year. Highly prudent strategy, with a total of EUR 2, 51 million allocated to provisions to reinforce the strength of the balance sheet, without making use of credit loss provisions. Net extraordinary profit of EUR 34 million allocated in full to provisions and an amount of EUR 200 million net of taxes for future management of the business. The Group s attributable profit stood at EUR 1,307 million, 13.4% down on the previous year, in a complex environment. The institution consolidated its financial strength and liquidity, restraining its NPL ratio and increasing its coverage, without making use of the general credit loss provisions, which remained at EUR 1,835 million as at the end of 2009, due to its capacity to generate revenues, thus consolidating its financial strength to counter possible future adverse conditions. The la Caixa Group s business displayed balanced, quality growth in 2010, in a complex economic and financial context characterised by volatility in the financial markets and stagnant interest rates, rising NPL ratios and fierce competition in the banking sector. The Group s robust commercial capacity, its effective management of margins, its customer service management efforts and the favourable performance of the investees led to income of EUR,745 million. This strong rise in income, combined with a significant reduction in costs, made it possible to reach an efficiency ratio of 43. % and maintain high returns of 9.3% recurring ROE. Hence, net operating income reached EUR 3,323 million and absorbed significant provisions (mainly for credit losses) to reinforce the strength of the balance sheet with the result that net recurring profit stood at EUR 1,507 million, down 11.9%. Total attributable profit stood at EUR 1,307 million in 2010, including extraordinary net gains of EUR 34 million allocated in full to provisions to strengthen the balance sheet, and also EUR 200 million (EUR 28 million before tax) to provisions for the future management of the business. All the above, in conjunction with active and stringent risk, liquidity and capital adequacy management, consolidated the Group s considerable financial strengths. Therefore, the la Caixa Group is optimally positioned to manage successfully a complex and demanding context like the present, and to ensure the growth of its businesses and respond to the credit needs of all its customers. PROFIT ATTRIBUTABLE TO THE LA CAIxA GROUP (Millions of euros) 2,052 1,710 1, Recurring profit (250) 08 1, % Extraordinary profit (200) 09 1, % 11.9% 10 (200) 10 1, % Total profit 2010 la Caixa Annual Report 42

45 2010 Financial Report of the la Caixa Group 5.1% increase in total assets. The la Caixa Group s total assets amounted to EUR 285,724 million, an increase of EUR 13,851 million in 2010, 5.1% up. In an economic climate affected by the slowdown in economic activity, la Caixa managed to achieve an increase in the volume of the banking business (loans and credits plus funds managed) of EUR 21, 18 million compared to 2009 to reach a figure of EUR 437,443 million. The gross amount of loans and credits grew by EUR 11,520 million, up.5%, and net loans rose by EUR 8,887 million. Total customer funds rose by EUR 10,098 million, up 4.2%, thanks to active management of margins and structure, and off-balancesheet funds increased by EUR 4,421 million. Other liabilities and accrued expenses and deferred income increased by EUR 11,027 million of which EUR 9,282 million were assets sold under repurchase agreements through counterparty entities and EUR 1,391 million through the Treasury. Own funds (reserves plus profits) increased by EUR 725 million or 4.3%, after taking into account the profit attributable to the Group of EUR 1,307 million and the sum allocated to Welfare Projects. In addition, the fair value adjustment to available-forsale financial assets fell in 2010 by EUR 208 million due to the impact of the negative performance of the securities markets in For a more detailed explanation of the main balance sheet aggregates, please see section 2. Great commercial capacity: the strength of the banking business, section 3. Investee portfolio, and section 5. High financial strength. GROWTH IN THE BANKING BUSINESS Consolidated income statements of the la Caixa Group YEAR-ON-YEAR CHANGE (Figures in millions of euros) AMOUNT IN % Assets Cash, balances with central banks and credit institutions and fixed-income securities 33,240 33, 78 (438) (1.3) Loans and advances to customers, net 182, ,641 8, Insurance contract assets 21,389 21, Equity securities 20,367 19, Tangible and intangible assets 10,241 8,845 1, Other assets and prepayments and accrued income 17,959 14,451 3, Total Assets 285, ,873 13, Liabilities 263, ,470 13, Deposits from credit institutions 19,041 22,521 (3,480) (15.5) On-balance-sheet customer funds 211, ,631 5, Provisions 2,975 2, Other liabilities and accrued expenses and deferred income 30,420 19,393 11, Equity 21,980 21, Own funds 17,421 1, Of which: Profit attributable to the Group 1,307 1,510 (203) (13.4) Valuation adjustments 1,404 1,612 (208) (12.9) Non-controlling interests 3,155 3, Total Liabilities and Equity 285, ,873 13, la Caixa Annual Report 43

46 2010 Financial Report of the la Caixa Group 1. High-quality profits in Active management of margins, efficiency and high returns Consolidated income statements of the la Caixa Group (Figures in millions of euros) Financial income,91 9,097 (24.0) Financial expenses (3,7 4) (5,1 5) (27.1) Net interest income 3,152 3,932 (19.8) Dividends Share of results of entities accounted for using the equity method Net fee and commission income 1,407 1, Gains/losses on financial assets and exchange differences Other operating income and expenses (7.1) Gross income 6,745 7,187 (6.1) Total operating expenses (3,422) (3,5 5) (4.0) Net operating income 3,323 3,622 (8.3) Credit loss provisions and other (1,454) (1,401) 3.9 Gains/losses on disposal of assets and other (113) (90) 24.3 Profit before tax 1,756 2,131 (17.6) Income tax 66 (127) (153.0) Profit after tax 1,822 2,004 (9.0) Profit attributable to non-controlling interests Recurring profit (*) 1,507 1,710 (11.9) Extraordinary income Extraordinary write-downs ( 34) (249) Provision for future management of the business (200) (200) Extraordinary profit (200) (200) Profit attributable to the Group 1,307 1,510 (13.4) ( ) Recurring profit excluding extraordinary profit. CHANGE % In view of the particular significance of the non-recurring extraordinary profits recorded in 2010 and 2009, and in order to aid understanding and analysis of the performance of the business, the accompanying consolidated income statement shows the profit from the ordinary recurring activities of the la Caixa Group. In addition, the recurring profit is adjusted for the effects of extraordinary profit net of tax and non-controlling interests, in order to establish the profit attributable to the Group. Gross income totals EUR 6,745 million. Net interest income totalled EUR 3,152 million, down 19.8% after operating volume and margins management and the impact of the interest rate yield curve. This income largely reflects the transferring of falling interest rates by the Institution to the mortgage instalments of its customers. SOUND LEvEL OF GROUP PROFITS NET INTEREST INCOME (Millions of euros) 3,932 3, % 3, % la Caixa Annual Report 44

47 2010 Financial Report of the la Caixa Group The total income from the investee portfolio (dividend income and the share of results of companies accounted for using the equity method) amounted to EUR 1,394 million, up 12.5% due to the performance of the investees businesses and their capacity to distribute recurring dividends. Thus, the dividends from investees classified as available-for-sale financial assets totalled EUR 4 0 million, up 15%, and post-tax profits of the companies accounted for using the equity method, basically Gas Natural, Abertis Infraestructuras, Banco BPI, Aig es de Barcelona, GF Inbursa, Erste Group Bank, The Bank of East Asia and Boursorama, totalled EUR 934 million, a considerable rise of 11.2%. Net fees and commission income grew by 8.0% to reach EUR 1,407 million, thanks to the rise in business, particularly in companies and investment banking coupled with investment and insurance funds with appropriate management of the services offered to customers. Fees and commissions relating to banking services increased by 9.3%, based on the provision of quality services and personalised advice, with maintenance and deposit administration fees being the lowest in the market, especially for bankbooks. Furthermore, the fees and commissions relating to investment funds rose by 25.7%. The gains/losses on financial assets and liabilities and exchange differences stood at EUR 252 million. Other operating income and expenses amounted to EUR 540 million and include the net insurance premiums and the mathematical provisions relating to the non-life business of the insurance subsidiaries, as well as the income from the non-banking subsidiaries and the accrued financial fees and commissions offsetting expenses. Despite a considerable fall in the net interest income offset by the positive performance of the remaining business, gross income proved its capacity to generate recurring income, and stood at EUR,745 million, down.1%. INCOME FROM INvESTEES Dividend income plus the share of results of companies accounted for using the equity method (Millions of euros) 1,113 1, % 1, % COMMISSIONS (Millions of euros) 1,250 1, % 1, % GROSS INCOME (Millions of euros) 6,752 7,187 6, % 6.1% la Caixa Annual Report 45

48 2010 Financial Report of the la Caixa Group 1. High-quality profits in Active management of margins, efficiency and high returns (cont.) Efficiency and productivity The Group s stringent cost containment and streamlining policy, coupled with improved productivity, allowed a reduction of 4% in operating expenses which stood at EUR 3,422 million. The Group s considerable commercial strength, with its 28, 51 employees, the largest network of the Spanish financial system with 5,409 branches, 8,181 ATMs and its leadership in online banking via Linea Abierta (with over. million customers), and in mobile phone and electronic banking services, has resulted in the balanced and high-quality growth of the business and the commercial activity. The objective of growing the la Caixa Group s banking business is being carried out through managing the cost-to-income ratio to ensure competitiveness and future profits. In 2010 la Caixa proved its flexibility and considerable capacity to adapt to the environment, despite having increased its number of branches by 83, mainly due to absorbing Caixa Girona. In recent years considerable investments have been made which mainly relate to the development of businesses, technology and new retail channels, improvements to the information systems and the optimisation of processes to enhance the branches commercial activities, the internal risk management and control systems and human capital training. Technological advances have cut administrative tasks at the branches, thereby freeing up resources to focus on commercial activities and personalised care to customers. These improvements, in conjunction with the efforts made in streamlining and controlling operating expenses, including administrative expenses and amortisation charges, led to a reduction in these expenses of 4% in The combination of these factors explains the ongoing growth in the business volume ratios (total customer funds and loans) per employee and branch, while the number of employees per branch remains at a low level of 4.7, one of the lowest in the Spanish financial industry. As a whole, the streamlining of the Group s costs and the favourable performance of the business volume ratios show the high growth potential in terms of efficiency and profit. In 2010 total income (gross income) stood at EUR,745 million, down.1%. In this respect, the strict cost containment, streamlining and reduction policy, coupled with the network s high commercial capacity led to a 43. % efficiency ratio, while net operating income stood at EUR 3,323 million, down 8.3%. FALL IN ExPENSES (Millions of euros) 3,565 3,529 1% MAIN COMPONENTS OF THE OPERATING ExPENSES OF LA CAIxA 25,335 5,530 24,944 25,288 5,326 5, Branches Employees (*) (*) Total Group employees: 28,651 3,422 4% EMPLOYEE PRODUCTIvITY RATIOS (Thousands of euros) 16, , , Business volume per employee Recurring net operating income per employee BRANCH PRODUCTIvITY RATIOS (Thousands of euros) 74, , , Business volume per branch Recurring net operating income per branch 2010 la Caixa Annual Report 46

49 2010 Financial Report of the la Caixa Group Efficiency Improvement Plan The Efficiency Improvement Plan aims to achieve a high level of efficiency of the la Caixa Group, with permanent and sustainable improvement over time. The plan involves setting and implementing objectives defined around three major cornerstones: Securing income: To ensure that the Group s businesses and segments make positive and increasing contributions to the Institution s profit. The differentiated product offering, the excellent standard of service quality provided to customers through the branch network or other banking channels, the commercial effort and active margin management have been the keys to ensuring the generation of income in a highly competitive setting. Containment of costs and investment needs: Given the current economic climate and the new specialised network model implemented, the Institution has continued its considerable efforts to contain and rationalise costs and investments by analysing and assessing each entry according to the need and expected saving. This year the Branch Optimisation Plan for the retail banking segment continued to be implemented to integrate certain branches, often owing to the close distances between them. la Caixa also introduced improvements which enabled it to reduce the number of documents sent from one branch to another, greater energy saving in all workplaces and a reduction in the consumption of paper and in correspondence sent to customers, among other things, which in addition to the positive impact on efficiency, will contribute to reinforce the Institution s commitment to sustainability. Fostering the self-service channels and operational innovation: These factors are key to ensuring that, while customers are provided with a differentiated service, the operating processes and therefore the related costs are effectively managed, so that the efforts of la Caixa and its staff are focused on serving the financial needs of households and companies efficiently. As part of this, in 2010 la Caixa merged with Caixa Girona following a merger by absorption and this will enable considerable operating and commercial synergies to be achieved which are already reflected in the budget for the coming year, which foresees incorporating a substantial number of the branches previously owned by Caixa Girona and relocating all its personnel to cover vacancies. TAKING ADvANTAGE OF TECHNOLOGY TO IMPROvE PRODUCTIvITY AND MAxIMISE TIME SPENT ON COMMERCIAL ACTIvITIES EFFICIENCY RATIO (%) (*) (*) Staff + overhead costs / gross income la Caixa Annual Report 47

50 2010 Financial Report of the la Caixa Group 1. High-quality profits in Active management of margins, efficiency and high returns (cont.) Recurring net operating income reached EUR 3,323 million, down 8.3%. Due to total income (gross income) of EUR,745 million (down.1%), the strict policy of containing and streamlining costs (operating expenses were down 4.0%) and the Group s high commercial capacity, the efficiency ratio reached 43. % and Net Operating Income, which includes the profits from the Group s businesses, amounted to EUR 3,323 million. The net operating income shows the la Caixa Group s great capacity to generate high recurring profits and confirms the Group s strategy of maximising its high potential for efficient and profitable growth. The considerable profits generated from recurring activities afforded significant provisions of EUR 2, 51 million, of which EUR 1,454 million were charged to for recurring NPL and EUR 1,197 million to extraordinary write-downs, and this was done without making use of the general credit loss provision, which remained at EUR 1,835 million as at the end of Nevertheless, the NPL ratio of 3.71% is considerably lower than the average of 5.81% in the sector and coverage of assets stood at 70%, 140% with mortgage collateral. Recurring profit attributable to the Group stood at EUR 1,507 million, ( 11.9%), maintaining high levels of return (ROE of 9.3%). Recurring Profit After Tax amounted to EUR 1,822 million, down 9.0%. For a proper interpretation of Income Tax, first of all, it must be taken into account that virtually all the dividends from investees are not taxed to avoid double taxation; that, in accordance with accounting regulations, the profits of companies accounted for using the equity method are shown net of tax and, lastly, that contributions to Welfare Projects are a deductible expense. The profit of non-controlling interests of EUR 315 million relates basically to the 2010 profit of the Criteria CaixaCorp Group attributable to non-controlling interests. Therefore, the Recurring Profit Attributable to the Group, after tax and non-controlling interests, amounted to EUR 1,507 million ( 11.9%), with a recurring ROE (Recurring attributable profit / Average own funds) of 9.3%. NET OPERATING INCOME TOTALS EUR 3,323 MILLION RECURRING NET OPERATING INCOME (Millions of euros) 3,622 3,223 3, % 8.3% RECURRING NET PROFIT (Millions of euros) 2,317 2, % 1, % RECURRING ATTRIBUTABLE PROFIT (Millions of euros) 2,052 1, % 1, % la Caixa Annual Report 48

51 2010 Financial Report of the la Caixa Group Extraordinary profit: extraordinary income was offset in full by provisions to bolster the balance sheet and additionally a provision of EUR 286 million before tax, EUR 200 million net, was recognised for the future management of the business. In 2010, a total of EUR 34 million in extraordinary gains, net of tax and noncontrolling interests, were recognised on the sale of stakes in investees, the agreement reached with Global Payments to expand its services to commercial outlets, freeing up provisions made in past years for the liability adequacy test for insurance transactions and the sale of CaixaRenting. This income was allocated in full to strengthen the balance sheet, mainly to cover credit risk. In addition, following conservative principles a provision before tax amounting to EUR 28 million (EUR 200 million net) was recognised in 2010 for the future management of the business. Furthermore, extraordinary gains in 2009 rose to EUR 249 million (for the sale of 1% of Telefonica) and this was offset in full with provisions for credit losses additional to those established by the regulatory schedules and others. Additionally a provision of EUR 200 million net was provisioned to future management of the business. The profit attributable to the Group totalled EUR 1,307 million. Having considered the excellent performance of the businesses and of the la Caixa Group s high-quality recurring profits, despite the complex environment, as well as the impact of the extraordinary profits, the Profit Attributable to the Group totalled EUR 1,307 million in 2010, down 13.4%. Recurring return on average own funds (excluding extraordinary profit) (ROE) stood at 9.3% in Taking into account the total profit, the ROE stood at 8.1%. Recurring returns on average total assets (ROA), net of cash brokerage, stood at 0.7% in Also, the low risk exposure of the assets on the la Caixa Group s balance sheet meant that the recurring return obtained in relation to the risk taken (RORWA), which is calculated on the basis of riskweighted on-balance-sheet assets, was much higher than the ROA, at 1.4% in Taking into account the Group s total profit, the ROA and RORWA stood at 0. % and 1.3%, respectively. ROE (Attributable profit/average own funds) 14.8% 11.3% 9.3% Recurring business 13.0% 10.0% 8.1% Total ROA (Net profit/average total assets) RORWA (Net profit/risk-weighted assets) 1.0% 0.8% 0.7% 2.0% 1.6% 1.4% ROA RORWA Recurring business 2010 la Caixa Annual Report 49

52 2010 Financial Report of the la Caixa Group 1. High-quality profits in Welfare Projects Welfare Projects budget for 2011: EUR 500 million Thinking of people, more than ever before. In 2010 la Caixa consolidated its commitment to the needs of society. With this objective, Welfare Projects continued to promote programmes to provide opportunities for people, by promoting education and training for all kinds of groups, making culture more easily available to all and promoting both scientific breakthroughs and the protection of the environment. The Welfare Projects budget for 2011 totals EUR 500 million, thereby showing despite the unfavourable economic climate the Institution s commitment to society. Of this budget, 7% is to be used for social programmes. Fighting child poverty, promoting jobs for disadvantaged groups, supporting active and healthy ageing for the elderly, encouraging social integration in areas with a high level of cultural diversity and providing care for patients with serious illnesses are currently the projects main priorities. WELFARE PROJECTS BUDGET 2011 (Millions of euros) 335 Programmes Social Culture Environmental and scientific Educational and research 2010 la Caixa Annual Report 50

53 2010 Financial Report of the la Caixa Group 1.4. Business segment reporting Business segment reporting of activity and profits: a basic management tool for the Group The objective of business segment reporting is to enable internal control, monitoring and management of the la Caixa Group s activity and profits. The information is organised by reference to the various lines of business established on the basis of the Group s organisation and structure. The lines of business are defined taking into account the inherent risks and characteristics of each business. To aid the interpretation of the business and results of the la Caixa Group s business segments and mainly due to the impact of the evolution of interest rates in the market on reviews of the loan portfolios and banking business deposits, in 2010 the profits of the business segments will be presented by including the effects derived from the ALCO (Asset-Liability Committee) management of the risks inherent to each business (the interest rate risk affecting the balance sheet, liquidity risk and others). Therefore, in the segment of Corporate Activities, only the la Caixa Group s extraordinary profits have been included. Furthermore, the segment of the Investee Portfolio business has been split into two sub-segments: Banking Investee Portfolio and Non-Financial Investee Portfolio. Thus, in 2010 data from the la Caixa Group s business segments were recalculated with the best information and assumptions available and figures from the previous year have been standardised so that year-on-year comparisons will be homogenous. Spanish Banking: This is the la Caixa Group s core business and includes the entire banking business (loans and receivables, customer deposits, providing financial services for Group customers, marketing investment funds, insurance and pension plans, treasury activities related business...) carried on mainly in Spain through the branch network and other complementary channels. It encompasses the activity and recurring profits generated by 10.5 million customers, whether these are individuals, companies or institutions. It also includes the results of the ALCO management of interest rate and liquidity risk on the balance sheet, conducted through managing issues in the institutional market, and management of own funds and of investment/financing in the remaining business activities. The total volume of business managed by this segment at 31 December 2010 amounted to EUR 437,443 million, a rise of 5.2% compared to the previous year, thanks to the high commercial capacity of the network in a complex business climate of slower growth and high competition in the banking sector. Customer loans reached a gross amount of EUR 189,54 million and customer funds reached EUR 247,897 million. In 2010 the interest income from this business reflects stringent management of margins to offset the transfer of the fall in interest rates to mortgage payments and amounted to EUR 3,738 million while gross income amounted to EUR 5,939 million. Net operating income stood at EUR 2,583 million, thereby enabling higher recurring provisions to be recognised which, for this business, amounted to EUR 1,437 million, 3.1% higher than the previous year, without making use of the general credit loss provision. Net profit attributable to the Group totalled EUR 790 million. Banking investee portfolio: This segment basically includes the recurring profits of the investee portfolio s investments in international banks, held through Criteria CaixaCorp. The gross income of this business totalled EUR 159 million, up 177% on the previous year. This rise was mainly due to income accounted for using the equity method, which stood at EUR 2 3 million, 71% up on 2009, derived from the performance of these businesses and the increase of the investments made GROSS INCOME OF SPANISH BANKING (Millions of euros) 6,412 5,801 5, % 7.4% INCOME FROM THE BANKING INvESTEE PORTFOLIO (DIvIDEND INCOME AND THE SHARE OF RESULTS OF EQUITY ACCOUNTED COMPANIES) (Millions of euros) % % % INCOME FROM THE NON FINANCIAL INvESTEE PORTFOLIO (DIvIDEND INCOME AND THE SHARE OF RESULTS OF EQUITY ACCOUNTED COMPANIES) (Millions of euros) 1,108 1, , % % la Caixa Annual Report 51

54 2010 Financial Report of the la Caixa Group 1. High-quality profits in Business segment reporting (cont.) in Erste Group Bank, AG, and The Bank of East Asia, LTD, in late 2009 and early 2010, which allows significant influence, and thereby including them using the equity method in The net attributable profit of the business stood at EUR 124 million. Non financial investee portfolio: this segment basically includes the recurring profits of the investee portfolio s investments in utilities, held through Criteria CaixaCorp. The dividend income and the share of results of equity-accounted companies amounted to EUR 1,108 million (of which EUR 5 million relate to the share of results of jointly controlled entities and associates accounted for using the equity method), up 5.2% on 2009, as a result of these investees ability to generate high profits and distribute recurring dividends. Gross income totalled EUR 47 million, 9.8% down on 2009 due to a change in scope (see Chapter 3. Investee portfolio). The net attributable profit of the business stood at EUR 593 million. Corporate activities: this segment includes revenues, write-downs and extraordinary provisions which, due to their nature are not possible to allocate to the rest of businesses so as not to distort the analysis of its recurring performance in Description of the segment reporting methods and measurement bases applied For the purposes of business segment reporting of the Group s activities and profits, the core business units on which accounting and management figures are available are taken as a reference. The same general principles as those used for the Group s management information are applied and the accounting principles and measurement bases used are basically the same as those used to determine the financial statement figures, and there are no mismatched allocations. The gross income of the Spanish banking segment is determined on the basis of the financial income and financial expenses in both the la Caixa Group s business with 10.5 million customers, whether individuals, companies or institutions, and those derived from managing the interest rate risks and liquidity risks of the balance sheet. The gross income from the investee portfolio (Banking and Non-financial) includes dividend income and income from the respective equity-accounted investments, net of the related borrowing costs, equal to the opportunity cost of retaining the investment in the long term. The operating expenses of each business segment include both direct and indirect expenses, which are allocated in accordance with internal allocation methods. The allocation of capital to the businesses is calculated on the basis of the requirements of the New Capital Accord (Basel II), in accordance with the risks taken by each business unit. These risks include credit risk, market risk, operational risk, equity risk, fixed asset risk and the risks relating to the insurance business. The consolidated income statements of the la Caixa Group for 2010 and the changes with respect to 2009, by business segment, and the aggregates of assets of each, are as follows: Consolidated income statements of the la Caixa Group - By business segment SPANISH BANKING BANKING INvESTEE PORTFOLIO NON FINANCIAL CORPORATE ACTIvITIES LA CAIxA GROUP TOTAL (Figures in millions of euros) 2010 CHANGE (%) 2010 CHANGE (%) 2010 CHANGE (%) CHANGE (%) Gross income 5,939 (7.4) (9.8) 214 6,959 (3.2) Administrative expenses (2,881) (1.8) (25) (7.0) (32) (73.4) (2,938) (4.7) Depreciation and amortisation charge (475) 3.5 (2) (7) ( 7.1) (484) 0.6 Net operating income 2,583 (14.4) ,537 (2.3) Impairment losses on financial assets and other (1,437) 3.1 (17) (932) (2,38 ) 32.2 Gains (losses) on disposal of assets and other (12 ) Profit before tax 1,020 (33.5) (316) 1,440 (22.9) Tax (131) (59.7) 33 (1.4) Profit after tax 889 (26.5) (136) 1,686 (8.0) Profit attributable to non-controlling interests 99 (7.3) Profit attributable to the Group 790 (28.4) (200) 1,307 (13.4) Total assets 264, , ,650 (4.8) 285, la Caixa Annual Report 52

55 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.1. Sustained and balanced growth in banking activity In 2010 the volume of the banking business (loans and advances to customers plus customer funds) stood at EUR 21, 18 million, up 5.2%, to reach a figure of EUR 437,443 million. Customer funds The la Caixa Group s total customer funds financial liabilities with customers, insurance contract liabilities (technical provisions) and off-balance sheet funds (investment funds, pension funds, managed portfolios and others) reached the figure of EUR 247,897 million at yearend. Compared to 2009, the figure was conditioned by the complex economic and financial climate and stiff competition in the banking sector. On balance-sheet customer funds reached EUR 211,308 million, with a rise of EUR 10 million in demand deposits, a fall of EUR 5, 98 million in term deposits and a rise of EUR 5,548 million in debt securities and subordinated liabilities marked by the issue of EUR 3,000 million of subordinated debt made in the first quarter of Developments of funds were marked this year by the active management of prices and an effort to protect margins, which has had an impact on product structure. On the other hand, institutional issues rose by EUR 2,980 million and liabilities due to insurance contracts grew to EUR 2,033 million. The pension schemes, mainly managed by VidaCaixa, rose by 9.0%, while the assets managed by the investment funds rose by 10.1%, due to the high level of funds entering while the market contracted, the launch of Foncaixa Benvinguda which managed to attract over EUR 1, 00 million being of particular note. BANKING BUSINESS volume (Millions of euros) 414, , % Customer funds 0.4% TOTAL CUSTOMER FUNDS (Millions of euros) 237, , % 437, % Loans to customers 247, % 7% = 4.2% 77% Total customer funds Financial liabilities with customers Investment funds Insurance, pension plans and other YEAR-ON-YEAR CHANGE (Amounts in millions of euros) ABSOLUTE IN % Financial liabilities - Customers 190, ,690 3, Proprietary products 142, ,778 (140) (0.1) Demand deposits 55, 80 55, Term deposits 8,4 3 74,161 (5, 98) (7.7) Debt securities and subordinated liabilities 18,495 12,947 5, Repurchase agreements and other accounts 4,925 4, Institutional issues 42,771 39,791 2, Liabilities for insurance contracts 20,974 18,941 2, Total customer funds on-balance-sheet 211, ,631 5, Investment funds 17,017 15,457 1, Pension plans 13,060 11,982 1, Other managed funds 6,512 4,729 1, Total customer funds off-balance-sheet 36,589 32,168 4, Total customer funds 247, ,799 10, la Caixa Annual Report 53

56 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.1. Sustained and balanced growth in banking activity (cont.) Loans and advances to customers Gross loans and advances to customers reached EUR 189,54 million by the end of 2010, an increase of EUR 11,520 million,.5% up on the previous year. As of December 2010, 939,4 3 loan operations had been approved and granted, worth a total of EUR 99,491 million. The growth in loans to both individuals and companies mirrors the Group s contribution to the country s economic development. Of particular note among total loans are the financing transactions for the business segment and investment in productive development in other sectors, in addition to the public sector. Regarding mortgage loan investments, 2010 showed a slight increase and these were mainly granted to primary residence home-buyers. In addition, the remaining loans for the private sector rose by 8.7%. Thus investment in companies is driving growth with a 12% increase in loans in 2010 through our 83 business centres and the whole branch network. Of particular note was the considerable growth in factoring and reverse-factoring products, with market shares of 13.3%. In 2010, la Caixa made great efforts to complete the range of products and services provided to meet the international needs of companies. LOANS TO CUSTOMERS, GROSS (Millions of euros) 176, , % 0.9% 189, % Gross loans and advances to customers by segment YEAR-ON-YEAR CHANGE (Figures in millions of euros) ABSOLUTE IN % Public sector loans 9,2 9,298 2, Private sector loans 180, ,728 8, Secured loans 123, , 07 4, Unsecured loans and other 56,655 52,121 4, Total loans and advances to customers, gross 189, ,026 11, la Caixa Annual Report 54

57 2010 Financial Report of the la Caixa Group The Group s strong commercial activity secures high market shares. In an adverse economic climate marked by growth rates standing at practically nil in the market in terms of deposits and lending activity, la Caixa has managed to maintain and even increase its market shares. According to the latest information available on credit institutions, including specialised credit institutions, the la Caixa Group obtained market shares in Spain of 10. % in loans and 10.0% in deposits (excluding insurance and funds). As a whole, the share of business volume stands at 10.4%, exceeding the share of employees. la Caixa continued to focus its loan business on financing for individuals and SMEs. In this regard, there was a rise in market share in mortgages (which totalled 11%) despite the downturn in property development, which was accompanied by a strong increase in the share of loans secured by other types of collateral, which rose to 10.3%, up 1.0% on The strategy for penetration into the business segment has continued to reap significant rewards. With respect to customer funds attracted, although there was hardly any growth in the market, the offering of high interest rates for fixed-term deposit accounts by some competitors in the sector led to a change in the structure for attracting customers, these accounts gaining ground in comparison to investment funds or pension plans, which were additionally affected by the performance of the stock markets. Against this background, la Caixa maintained practically the same market share of deposits at 10.0% and achieved a considerable increase in market share of investment funds (10. %), pension plans (1.2%) and savings insurance (14.8%), thanks to its highly active commercial management. Also, in line with the customer loyalty policy, la Caixa continued to promote the MultiEstrella Nomina and MultiEstrella Pension programmes by extending them to the segment of selfemployed professionals, and increased the advantages of the Puntos Estrella loyalty programme to customers who directly deposit their salaries. The programme s success allowed the market share of the payroll deposits to grow to 15.7% despite the minor fall in 2010 in the number of employees registered for Social Security purposes. As regards pensioners, a figure of over one million was achieved with a market share of 13. %. HIGH, GROWING MARKET SHARES AMONG THE TOP THREE IN THE MAIN FINANCIAL PRODUCTS Market shares and place in the ranking RANKING Latest data available in 2010 SHARE Payroll deposits 15.7% Pension deposits 13. % Mortgages 11.0% 1 st Card turnover 17.7% Merchant business (POS terminals) 21.2% Savings life insurance 14.8% Loans (resident private sector) 10. % Demand deposits 11.8% SNCE ( ) 12.7% 2 nd Deposits (resident private sector) 10.0% Pension plans 1.2% Commercial loans 9.5% 3 rd Investment funds 10. % Factoring and Confirming 13.3% ( ) National Electronic Clearing System la Caixa Annual Report 55

58 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.2. Customer base: the core of the business A broad customer base that guarantees growth The growth of la Caixa Group s business is based on its broad base of 10.5 million customers at the close of December This base constitutes the Group s main asset as it provides stability and drives growth in the volume of the business, managed funds and lending, with high market shares, all of which must be viewed within the context of the high degree of competition in the financial industry. Leader in Individual Banking la Caixa has the strategic aim of consolidating its leadership in Individual Banking. This strategy is supported by the professional, innovative and high-quality service which is carried out through an efficient multi-channel distribution system in which the branch, supported by cutting-edge technology, is at the heart of our relationship with the customer. Our focus on the customer is complemented by ongoing innovation in products and services such as mortgages, personal loans, insurance, banking services, payment methods, complementary channels, etc, which enable la Caixa to maintain its leadership in retail banking and achieve considerable and growing market shares (see section 2.1. Sustained and balanced growth in banking activity High market shares). Thus, with a penetration of 21.0% in individual customers according to the study conducted by FRS Inmark, la Caixa is the leader in individual banking in Spain, increasing the gap year by year between it and the second entity in the ranking, which proves the Institution s capacity to achieve its customer s loyalty, allegiance and trust. This leading position is also held in the other two segments which make up Individual Banking: small entrepreneurs and self-employed professionals. Hence, in the small entrepreneur division, according to the latest data made available by FRS Inmark, la Caixa leads the market with a penetration share of 24.2%, and as regards selfemployed professionals, the penetration share reached 22.0% according to data provided by the Social Security, which represents 98 basis points up on the previous year. The aim being pursued is to become the main financial provider for all our customers and to fully manage their financial life cycle, and therefore the commercial activity in 2010 was characterised by focusing on attracting, building allegiance with and retaining the almost ten million customers managed by the Individual Banking business. This effort was rewarded with an increase of 90 basis points in the penetration share as the leading institution for individual customers according to a study conducted by FRS Inmark. Systematic commercial activities were deployed to attain this objective of customer allegiance. In 2010 five major campaigns were launched: mortgages, recurring revenues, investment funds, insurance and pension schemes which aimed to foster the flow of customers to our branches. Particularly notable in terms of commercial revenues in the year was the high level of recurring revenues attracted which has enabled considerable growth of 5 basis points to be achieved in the market share of payroll direct deposits and 7 basis points in the market share of pension direct deposits. Regarding the development of managed funds, of particular note was the effort to attract investors to our investment funds, which has allowed year-on-year growth of the market share amounting to 214 basis points, reaching 10. %, and to our individual pension schemes, with a rise of 58 basis points which has enabled the Institution to achieve a market share of 15.78%. CONSOLIDATION, THROUGH PERSONALISED ADvICE, OF A BROAD BASE OF 10.5 MILLION CUSTOMERS LEADER IN THE INDIvIDUAL CUSTOMERS SEGMENT IN SPAIN WITH 21% PENETRATION Penetration in % Penetration main entity Source: FRS Inmark 21.0 Total penetration 2010 la Caixa Annual Report 56

59 2010 Financial Report of the la Caixa Group 2010 was also a year dedicated to consolidating the MultiEstrella programme (customer loyalty and allegiance programme for customers with recurring incomes which allows them to obtain advantages progressively), by introducing new advantages and including self-employed professionals. Specialised approach to target customer segments Additionally, the Strategic Plan, which aims to complement the traditional leadership of la Caixa in Individual Banking, contained the express intention of implementing specialised offers of value for companies and individuals which would drive positioning in these market segments. At the end of 2009 this implementation concluded and 2010 was thus both the first year that the Institution was able to make full use the differentiated offers of value for these segments and also a year of consolidating the activity for each newly founded business. Personal Banking The business aimed at individual customers with over EUR 100,000 in managed funds was strengthened in la Caixa universal network of branches in 2010 by consolidating the management model and our action protocols and increasing the number of specialised managers in this division, which at the end of the year stood at 1,015 professionals. In branches where the critical mass of customers does not justify the presence of a manager who is exclusively dedicated to this business, the branch manager takes over the care of these customers. This value offer, which is already over a year old, strengthened its contribution to Group profits; volume of funds plus stocks managed rose to EUR 5,100 million by the end of the year and this has consolidated its position among the two leading institutions in Spain. At the end of the year, the customer business base stood at 540,000, which is 15% up on the previous year. The Personal Banking service helps customers to adequately plan their needs and objectives with suitable products and services for each stage of their lives and is characterised by three main attributes: personalised service, a close relationship with the customer and a tailored service, according to FRS Inmark. In the year, activity focused on launching loan and credit products specially designed for this division and various lending and services campaigns which allowed la Caixa to consolidate its business position and image. In this respect, it is worth noting that in 2010 the volume of structured deposits grew by 21% compared to 2009, savings insurance by 13% and the investment fund balance by 11%, mainly due to issuing new guaranteed funds, the range of elective funds and the excellent results of the fund campaign which took place in the summer months. As regards pensions, special emphasis was focused on annuities, making use of the knowhow and the favourable tax regime for a large number of our customers. At year-end, by making use of the pension scheme campaign and seeking to combine security and future yields in this range of products, the PlanCaixa T ndem was launched, which is an exclusive product particularly aimed at customers from this segment. It is also worthy of mention that in 2010 specific innovative advisory tools were developed to provide customers with a service in accordance with their investment needs and personal wealth, with the rigour required by the MIFID standards. In the last quarter of the year a special effort was made to train managers in Personal Banking with the aim of consolidating and standardising the method and quality of work when SEGMENTING CUSTOMERS ALLOWS US TO CONCENTRATE COMMERCIAL ACTIvITY Business Banking 9 SME Banking 1 Corporate Banking 200 LEGAL ENTITIES Turnover 10.5 million total customers Wealth Banking 10 Individual Banking Private Banking 0.5 INDIVIDUALS Assets under management Ranks in millions of euros Personal Banking 0.1 1,015 TRAINED PROFESSIONALS IN PERSONAL BANKING 2010 la Caixa Annual Report 57

60 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.2. Customer base: the core of the business (cont.) rendering advisory services to customers. Developing this service will be a priority for promoting the segment in the coming years. enabled la Caixa to consolidate its position in Private Banking as the second largest financial institution in Spain in terms of total assets. 32 CENTRES AND 357 SPECIALISED PROFESSIONALS IN PRIvATE BANKING Additionally in 2010, customers benefited from new communication channels, such as the mobile L nea Abierta, which has made this type of banking easier. All this is the result of the Institution s focus on technological innovation, allowing all the latest financial data and products to reach customers through the electronic magazine A Medida, launched last April. Private Banking The consolidation of la Caixa Private Banking, aimed at customers with over EUR 500,000 of managed private wealth, led to an increase in funds and stocks managed, which reached EUR 35,000 million, representing growth of 5% compared to the previous year, and 2010 saw intense work on developing innovative tools aimed at strengthening business customer relations, based on rigorous methodology to guide the customer advisory process. The priority of Private Banking is to assist customers to objectively identify their risk position and to structure their portfolios according to a division of their savings that corresponds with their objectives as regards security, growth and pensions. This will be the reference framework for la Caixa Private Banking s advisory model from It must also be mentioned that, despite the coverage given by the sector to high yielding deposits in search of liquidity and customers, la Caixa managed to grow its investment funds with the launch of the investment fund campaign in the summer months and the strong commercial activity of the 333 Private Banking managers who, backed by the 32 specialised centres which form partof its network of branches, conduct highly qualified strategic management. In the first two quarters, the FonCaixa Bienvenida IF was the fund that captured most assets in Europe, according to Lipper FMI. Likewise, efforts in the year also focused on offering high yields through attractive alternative personalised 2010 la Caixa Annual Report 58

61 2010 Financial Report of the la Caixa Group management products, and the product range of innovative pension schemes was promoted, such as the PlanCaixa T ndem, achieving growth of 7% in At la Caixa Private Banking, innovation is both an obligation and a commitment and is driven by initiatives which provide tailor-made solutions for customers. This is the positioning goal sought with the image of the art of creating value which became reality last year following the agreement signed at the first meeting held in Spain between the financial sector and the world of fashion. In April, la Caixa Private Banking signed an agreement with the Association of Fashion Creators in Spain (ACME) which includes an ambitious action plan and encompasses holding exclusive events with customers, a loyalty card and developing Corporate Community Responsibility initiatives which enable those at risk of social exclusion to find jobs. Within Private Banking, customers with over EUR 10 million in managed personal wealth are catered for by the Altium division, with a specific value-added proposal and access to interdisciplinary teams who can provide answers to the needs of quality, sophistication and commitment required by high net worth customers. A volume amounting to EUR 5,273 million is managed in this division, 14% up on 2009, which makes the Institution one of the main firms of reference in terms of managing large fortunes in Spain. The range of commercial products for this division is based on comprehensive advice which revolves around a sound financial offer and a clearly differentiated competitive model of service, leveraged by the la Caixa Group s capacities and resources and by the offering of a specific product which responds to the investment interests of customers, both for traditional financial assets and for alternative assets. SME Banking SME Banking is a division created by la Caixa to provide service to enterprises with a turnover of between EUR 1 million and EUR 9 million. In order to give appropriate support to this model, la Caixa managers that have specialised in SMEs are located at those branches in the network where there is a sufficient number of customers using the services of this division. At branches with a lower volume of companies, the branch manager provides the service for these customers and thus la Caixa covers the whole spectrum of the business fabric s needs. The sole duty of SME managers is to manage and advise SME customers. They are supported by a multidisciplinary network of experts specialising in certain products whose goal is to provide tailormade solutions for the customers who need them. Hence, la Caixa continues to make headway in its aim to be closer to companies in their day to day business activities, in fields such as managing liquid assets, foreign trade and cash-flows was the first year of comprehensive business activity, after having designed a new value-added product for SMEs in At the end of December 2010, the team was made up of 820 specialised managers and backed by the commercial power provided by the extensive network of la Caixa branches. This specialisation of SME services enabled the business to continue to report organic growth despite the current unfavourable economic climate. Thus, as of 31 December 2010, this business managed 197,000 customers, which allowed the la Caixa to maintain a penetration share of 38. % in the small businesses division, according to FRS Inmark. Commercial efforts this year focused on achieving a closer relationship with the customer base, achieving increases 820 SPECIALISED PROFESSIONALS IN SME BANKING 2010 la Caixa Annual Report 59

62 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.2. Customer base: the core of the business (cont.) in sales in all the SME business priority indicators such as insurance, managing collecting payments and payments made, the use of L nea Abierta and payment of payrolls and payment collections. Hence, revenues from foreign trade products rose by 1 % and cash-flow hedging by 18% compared to The business volume managed by the SME bank at the end of 2010 totalled over EUR 3,500 million, of which 74% correspond to asset products. In the section of specialised finance, of particular note are the transfer of factoring transactions, 35% up compared to Business Banking In order to better serve medium and large companies (companies with turnovers of between EUR 9 and 200 million), in 2008 the Group implemented a differentiated management model in the provision of services to this group. This model, at yearend in 2010 and following the opening of three new specialised centresduring the year, allowed la Caixa to have its own network of 83 company centres boasting 804 highly trained specialists and under decentralised, flexible management which forms part of the territorial structure, making the most of synergies with other divisions. As a result of consolidating this model, it is worth noting that the la Caixa Business Bank achieved a notable growth in its commercial activity in 2010, despite sluggish market movement. Thus, as regards volume development in the preceding twelve months, CaixaEmpresas experienced growth that reached 12% in loans under management, amounting to almost EUR 17,233 million, and funds under management totalled over EUR 9,007 million, with year-on-year growth of 14.5%. As regards the number of companies advised, in 2010 the Institution attracted 3,500 new customers, thus reaching a figure of almost 29,000. Among the most dynamic products, of particular note is factoring with an increase of 27%, and reverse factoring with an increase of 44%. This growth contributed to la Caixa consolidating its third place position in the ranking of the Spanish Factoring and Reverse Factoring Association with a global market share of 13.3%. This fact corresponds with its aim of becoming an international reference for companies, providing service in their dayto-day business, and with the objective of making companies consider la Caixa as an alternative solution in their business decisions. Great efforts were made to complete the range of products and services to attend the international needs of companies, and this was well received, as is reflected in the increase in documentary credits and financing for foreign trade. As regards new products and services launched in 2010, worthy of mention was the adaptation of national and international payment services to the requirements of the new payment law and the creation of advanced B2B services for issuers of bills paid by direct debit. Likewise, the new default payment law required an adaptation of the solutions of managing payments made by customers of the reverse factoring service. In 2010 a new advanced personalised telephone service was launched to cater for any queries by business customers as to factoring. As regards the cash flow products, the range of products continued to grow with new proposals for commodity hedges, as they are a solution when working with electricity products. New special products were also launched for foreign currency hedging operations 83 COMPANY BANKING CENTRES AND 804 SPECIALISED PROFESSIONALS for currencies linked to the exchange rate of the dollar and new structures for interest rates hedges. Also worthy of mention for 2010 is the COME customer service unit which was set up to provide technical and commercial support to the Institution s customers, particularly companies, about foreign trade products. Additionally, customers operating needs are always met through L nea Abierta Empresas, which allows users to access a wide range of products and services. It includes over 1,000 functions which facilitate the integral management of all kinds of transactions. In the latest A Metrix survey, la Caixa was again selected as the leading provider in Spain of internet services for companies. In this division la Caixa is strongly committed to technology, not only in the range of products and services and business operations carried out through Internet, but also when communicating with customers. This year the new digital magazine aimed at companies called InfoCaixaEmpresa Digital was set up, in which relevant commercial and financial news can be found, together with the latest changes in tax and law and further useful information la Caixa Annual Report 60

63 2010 Financial Report of the la Caixa Group Corporate Banking Corporate Banking, the division specialising in providing services for business groups with over EUR 200 million in annual turnover, has two Corporate Banking offices, in Madrid and Barcelona, and also manages subsidiaries of Portuguese companies through the International Market Company Centre (see the agreement with Banco BPI in the section on International business). The team is made up of 117 professionals who manage relations with some 570 groups made up of almost 4,000 companies. In 2010, the wide range of products and excellence in service enabled the objectives set by the business to be achieved, with a 55% increase over revenues obtained in 2007 in this division of companies. The volume of assets managed amounts to almost EUR 29,000 million (growth of 1 %), of which some EUR 19, 00 million correspond to investment (14%). Also, managed funds totalled EUR 10, 00 million, % up on the previous year. International business la Caixa caters for its customers with international interests and commercial relations by means of different types of foreign operations where, according to the country, it has strategic alliances, operative branches, representative offices, Spanish Desks and associated banks. As part of strategic banking alliances, la Caixa, through Criteria CaixaCorp, holds investments in leading banks in their respective markets, such as Banco BPI in Portugal, GF Inbursa in Mexico, Erste Group Bank in Austria and Eastern Europe, and The Bank of East Asia in Hong ong and China (see chapter 3.1. Criteria CaixaCorp: internationalisation and diversification of revenues). The aim is to provide specialised attention for la Caixa customers in these partners home countries through leading institutions with an extensive network of branches. Thus, preferential associate agreements have been signed and several cooperation initiatives have begun among institutions both in business areas and in support areas. In 2010 strategic cooperation agreements signed earlier with these investee banking groups continued to be developed and in October a product was launched in collaboration with Erste Bank known as International Solutions for Companies, which rolls out the model developed previously with Banco BPI. International Presence International Branches Morocco Poland Romania Spanish Desks Germany France Italy United ingdom Banking Investees Central and Eastern Europe Hong ong / China Mexico Portugal Representative Offices China Arab Emirates India Turkey 2010 la Caixa Annual Report 61

64 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.2. Customer base: the core of the business (cont.) la Caixa also has Operative Branches outside Spain: in Warsaw (Poland), Bucharest (Romania) and Casablanca (Morocco). The branches are aimed at Spanish companies with interests and operations in these countries. Due to their particular legal nature they can carry out all types of banking operations, mainly offering financing and basic banking services. The offices also focus on attracting the business of local companies which have considerable commercial ties with Spain. In 2010 the operations and teams were strengthened in the branches in Bucharest and Warsaw and the Casablanca office, which opened a year earlier, was consolidated, after implementing a new information systems platform developed in-house. Notably, la Caixa is the first Spanish institution to set up an operative office in Morocco. Additionally, the Representative Offices provide support for Spanish companies with projects abroad, and information is provided about calls for bids and procedures related thereto. They act as a link with local financial institutions, guide our customers in their business ventures in the country and are a commercial tool and pillar for business activities which the la Caixa network of offices carry out with companies operating in those countries. The Representative Offices already open are located in China (Beijing and Shanghai), Turkey (Istanbul), Arab Emirates (Dubai) and India (Delhi). In addition, offices are in the process of being legally set up in Algeria, Singapore and Egypt. Thus, despite the worldwide economic climate, a significant increase has been achieved in revenues and business volume in the aforementioned countries. In the Representative Offices, the Spanish Desks are aimed at Spanish companies, multinational companies with subsidiaries in Spain and also local SMEs in these countries which conduct business in Spain. la Caixa has offices like these in Italy (Milan), Great Britain (London), France (Paris) and Germany (Stuttgart and Frankfurt). la Caixa has a network of correspondent banks through which it channels its customers foreign trade business in the countries where it does not operate directly. This is the most universal way to gain access to other countries and provide coverage for any type of customer of la Caixa. As regards this, bilateral agreements have been signed with over Directors of International Branches Ali adiri Ra l Carmona Juan Luis Mart n Directors of Representative Offices Maya helladi Peter Hansen Carlos Morales avier Serrado Danni Cheng Zhou Spanish Desks Berta Rod Joan Francesc Riutort Jordi Fuster Claudina Farr Álvaro Valera Morocco (Casablanca) Poland (Warsaw) Romania (Bucharest) Arab Emirates (Dubai) India (New Delhi) Turkey (Istanbul) China (Beijing and Country Manager) China (Shanghai) Germany (Stuttgart) Germany (Frankfurt) France (Paris) Italy (Milan) United Kingdom (London) 2010 la Caixa Annual Report 62

65 2010 Financial Report of the la Caixa Group 2,900 international banks to facilitate international operations and foreign trade, both for individuals and companies in any country in the world. The vast array of international banking products and services on offer include transfers, cheques, remittances, bank guarantees, pledges, letters of credit and so on. Finally, worthy of mention is the international cash management service which la Caixa offers to its business customers, with over 40 agreements with banks all over the world. Organisations and multilateral bodies In 2010, agreements were strengthened with multilateral development organisations and Spanish official bodies to increase business and the customer base. With the collaboration of the whole la Caixa Group, this model continued to consolidate a model in the market based on knowledge and proactive actions in addition to striking pioneering, unique deals and providing support for the expansion abroad of companies and customers. Several deals were struck with the European Investment Bank (EIB), including, notably, the signing of a loan worth EUR 300 million to finance projects and foster business and social development for SMEs from a sustainable viewpoint; corporate bank guarantees were signed to finance several projects and the Institution also participated in issues made by the EIB. In addition la Caixa will finance the new buildings and equipment of the Santa Creu i Sant Pau hospital, with a loan granted to it by the Council of Europe Development Bank (CEB). This is a pioneering transaction as, thanks to the advice, structuring and participation of la Caixa, it is the first time these two oldest European multilateral institutions, the CEB and EIB, have jointly financed a project. In addition, la Caixa forms part of the working group developing instruments to finance the Mediterranean Solar Plan as part of the Union for the Mediterranean (UPM) headquartered in Barcelona la Caixa Annual Report 63

66 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.3. Commercial network and human resources: cornerstones la Caixa is the leading institution in number of branches. The la Caixa Group s banking business strategy is based on an extensive distribution system in the form of a widereaching branch network, which is the basic tool for forging relationships and maintaining close ties with customers, reinforced by the development of additional communication channels (see section 2.4. Multi-channel management: permanent relationship with customers). At the end of 2010, la Caixa had 5,409 branches, 5,39 of which were located in Spain. la Caixa is the leading player in Catalonia and the Balearic Islands, its traditional area of activity, where it has 2,097 branches, and is also one of the best established institutions in other autonomous communities such as Madrid, Andalusia and Valencia. With its extensive network, la Caixa continues to be the Spanish financial industry leader in terms of number of branches with a market share of 12. %. Additionally, the network of la Caixa branches has specialised centres responding to the needs of business customers in corporate banking, business banking and private banking (see chapter 2.2. Customer base: the core of the business). Outside Spain, it has three operating branches (one in Warsaw, one in Bucharest and another in Casablanca) and ten representative offices and Spanish desks (see section 2.2. Customer base: the core of the business). GREAT FLExIBILITY OF THE NETWORK ALLOWING A PERSONALISED QUALITY ADvISORY SERvICE NUMBER OF LA CAIxA BRANCHES 5,530 3,489 2,041 5,326 3,411 1,915 5,409 3,312 2, Catalonia and Balearic Islands Rest of Spain GEOGRAPHIC DISTRIBUTION OF OFFICE NETWORK IN SPAIN , DISTRIBUTION ACCORDING TO TYPE OF BRANCH NETWORK Universal network Corporate Banking Business Banking Private Banking Branches in Spain International branches 5, , Total branches 5, la Caixa Annual Report 64

67 2010 Financial Report of the la Caixa Group The la Caixa Group s workforce numbered 28,651 employees in At the end of 2010 the challenges set by the Strategic Plan were successfully met as regards managing human resources, among which the following are particularly worthy of mention: identifying and managing internal talent, creating professional career development programmes and implementing conciliation and equality policies. In this respect, in acknowledgement of our application of these policies, the M sfamilia Foundation awarded the Institution the EFR Certification (Company respecting Family Responsibility), which marks one more step in the Institution s Equality Plan. Additionally, as regards 2010, of particular note is the incorporation of human resources from Caixa Girona, which was conducted swiftly and satisfactorily following the principles of efficiency and conservation of existing talent. As for the development of professional careers, this has been combined with the need for internal rotation and mobility, while always guaranteeing transparency, objectivity and equal opportunities. In 2010, over 2,800 job vacancies were advertised internally for in-house candidates. However, the vacancies that could not be filled by current employees were advertised through the la Caixa website. As regards territorial expansion, la Caixa continued to increase its presence abroad, applying the same principles when recruiting employees in international offices in With respect to remuneration management, the most noteworthy initiatives carried out were: consolidating the variable remuneration scheme in the commercial network; and defining the duties of the centralalised services areas, establishing a framework for retribution structures, having also worked on an analysis of how to adapt these to the European directives as regards retribution in the sector approved in October The recruiting procedures for managerial positions and the individual career development plans took into account the considerations put forward by the executive talent management programme, which was applied both to the commercial network and to centralised services, recruiting over 800 people. As regards professional development, a general appraisal of talent was also conducted, identifying areas of skills improvement and making organising a professional development plan for each candidate easier. As regards training programmes, worthy of mention is that concerning commercial leadership, which most branch managers have taken part in, with the aim of facilitating change management and aligning the commercial proactivity in the branches with the strategic strategies laid down by la Caixa. Regarding the above, the e-learning platform named Virtaula is becoming an interactive learning community with the collaboration of our employees, who share their knowledge and experience, and the aim of which is to take advantage of the effectiveness of new technologies to boost the Institution s talent. QUALIFIED STAFF COMMITTED TO SERvING EMPLOYEES Yr-on-yr change la Caixa 25,288 24, la Caixa Group 28,651 27,505 1,146 BEST FINANCIAL COMPANY TO WORK FOR IN SPAIN (Source: MercoPersonas 2010) 2010 la Caixa Annual Report 65

68 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.4. Multi-channel management: permanent relationship with customers The multi-channel management of la Caixa : Shall we talk? The strategy of la Caixa is based on providing customer satisfaction and offering all the services, technological advances and information that customers need to enable them manage their finances effectively. The multi-channel management of la Caixa takes advantage of new technologies to bring quality banking services closer to all users and make them more accessible through innovative services available anywhere, any time. This permits a constant and high-quality relationship with customers and fosters their loyalty through the creation of new contents, designs and images which help to increase the emotional bond between customers and la Caixa. The leading network of self-service terminals la Caixa has 8,181 self-service terminals, with functionalities available in 15 languages. This makes it the institution with the most extensive network of selfservice terminals in the Spanish financial system, with a market share of 13.0%, and the second largest in Europe, thereby reflecting its strong commitment to, and vocation for, customer service. The most widely requested transactions were cash withdrawals and savings passbook updates, which accounted for 71% of the main ATM transactions. The second most common transaction, which accounted for 15.4% of the total, was checking the balance and next, with 5. %, was paying in cash, either in banknotes or using an envelope. Currently, 7, 22 ATMs (95% of the total network) are equipped for depositing cash. In 2010, the la Caixa ATM network accounted for 527 million operations. Over 4 million customers use them habitually and therefore considerable efforts have been made to further optimise ease of use, security and accessibility for all our customers, regardless of their physical capabilities. The ATMs of la Caixa are adapted to Braille and some are equipped with voice-operated software for the visually impaired, with 3,312 ATMs currently equipped with this technology. The la Caixa ATMs also provide various features to make them more accessible and user-friendly, such as the CaixaF cil functionality, which has a simpler menu and larger buttons, and My Usual Transactions, which has a screen menu that the customer can personalise. Another tool to help the customer is the search engine, which is used both for the functionalities of the ATM itself and for locating nearby branches and ATMs in a highly visual manner using Google Maps. As for people with hearing disabilities, the ATMs include helpful videos where they can consult how to use the most commonly-requested ATM operations: cash withdrawals and checking account balances and statements. In line with the multi-channel strategy of la Caixa, ATMs use the technology at their disposal to make themselves another sales channel, and thus through the terminals customers may contract other services provided by la Caixa such as L nea Abierta, CaixaM vil, loan applications or the Cybercard. Additionally,,985 terminals sell tickets, giving customers access to the widest range of entertainment on offer in Spain (including cinema, theatre, music, and sport). is the leader in Internet banking The la Caixa website consolidated its leadership in online banking services in Spain, with a market share of active internet users (December 2010) of 31.4%, measured by Nielsen Net Ratings. 8,181 SELF-SERvICE TERMINALS OF WHICH 6,985 PROvIDE ADvANCE SALES OF TICKETS LÍNEA ABIERTA CUSTOMERS (Thousands) 5,544 6,020 6, % MARKET SHARE IN ONLINE BANKING Source: Nielsen Net Ratings (December 2010) 2010 la Caixa Annual Report 66

69 2010 Financial Report of the la Caixa Group la Caixa was once again rated the leading Institution in terms of quality for all internet services (Individual Banking, Personal Banking, Business Banking, Professional and Business Banking, Online Broker and Foreign Trade), according to the latest study by A Metrix. The internet portal allows access to L nea Abierta, the online management tool for financial products, available in 19 languages with over 850 different functionalities. This service currently has over. million contract customers, of whom 3.3 million used L nea Abierta in 2010, making 1,730 million transactions. The website provides corporate information regarding the Group and acts as a showcase for promoting the new products offered by la Caixa, in addition to being a tool for providing financial knowledge. It is also the access point for la Caixa Welfare Projects, the investment holding company Criteria CaixaCorp and non-financial services, such as leisure services (ServiCaixa.com). Some highlights of developments in 2010 include the Criteria CaixaCorp website and the portal of other Group companies plus the new Corporate Responsibility website where la Caixa divulges and promotes adopting corporate responsibility in its companies. In 2010 work continued on universalising its second-generation website based on specific communities and fostering interaction among users. Thus Online Community was born, which is the first private network for self-employed professionals and SMEs, a gateway for businesses which facilitates collaboration and interaction for customers of la Caixa, who have a space and meeting point where they can create new business opportunities. la Caixa has actively joined social media, occupying an area on social platforms to disseminate its identity and publishing contents on global platforms with the highest audiences. The internet channel optimises its potential as a channel through which to sell the Institution s products and services by incorporating new functionalities such as search engines, online catalogues covering deposits, investment plans, pension schemes and insurance, or the investment fund comparer. Online accounts were promoted, and the MultiEstrella space was extended to include self-employed professionals. la Caixa continued to offer new multimedia initiatives, which means one step further for the Institution towards the website 2.0. In 2010, new examples of multimedia initiatives were created such as the new service, My Usual Transactions, which allows customers to tailor their use of L nea Abierta, modifying it according to their particular needs and interests. As regards company services, the Country Solutions Space facilitated commercial relations for companies in Portugal and this was extended, by means of an agreement signed between la Caixa and Erste Group Bank, to eight countries in Central and Eastern Europe (Austria, the Czech Republic, Slovakia, Hungary, Croatia, Serbia, Romania and Ukraine). The great acceptance of the service was mirrored by the rise in the absorption rate of the main 2010 la Caixa Annual Report 67

70 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.4. Multi-channel management: permanent relationship with customers (cont.) functionalities, notably an absorption of 9 % in transfer of invoice files, 73% in the case of payment files, 75% for bank transfers and 95% for the collection of bills of exchange. Mobile phone services: CaixaMóvil CaixaM vil encompasses all the products and services that the Institution has been offering by mobile phone for over nine years. la Caixa is the leading financial institution in mobile phone financial services both in terms of the range of services available and the 1.8 million customers who use these services. It is also considered the leader in mobile banking service quality, according to A Metrix. In 2010 L nea Abierta M vil continued to improve the design and navigation of the wide range of functionalities and services CaixaM vil places at the disposal of its customers. Invoice payments were incorporated into the services, together with confirmation of the draft copy of income tax returns, payments made to pension schemes and new options for cards, such as using mobile phones to activate or block their use. CaixaM vil now has mobile portals for Criteria CaixaCorp, MicroBank, Servihabitat I, L A, Welfare Programmes with icaixaforum and also applications such as Private Banking or the MultiEstrella portal. New mobile systems were also deployed such as the new Apple ipad, and it was the first financial institution with its applications involved in the international launch of the new Windows Phone operating system. la Caixa was the first banking institution to have a store ( CaixaM vil Store ) selling mobile phone services and applications which can be downloaded easily by customers, and that acts to unify access to la Caixa mobile phone services, with over 1 million mobile phone applications downloaded in : 1.8 MILLION CUSTOMERS USE OUR MOBILE PHONE SERvICES 2010 was also marked by the development of new technological innovation projects which seek to universalise the mobile phone as a sales and payment channel. Thus, as regards ticket sales, the M-ticketing application was created, which allows customers to use the ticket purchased without needing to print it onto paper. Jointly with Movistar and Visa, the first experiment in Spain was conducted as regards payments made via mobile phones with NFC technology (see section Technological Innovation). Further developments included incorporating into the iphone the function for paying invoices by scanning bar codes, which enables 2010 la Caixa Annual Report 68

71 2010 Financial Report of the la Caixa Group funds to be transferred from one mobile phone to another. CaixaM vil also uses virtual reality technology, and one example can be found on the Welfare Projects portal through which users may visit the exhibitions at CosmoCaixa through their mobile phones. Augmented reality was also incorporated into Android and ipad terminals, which enables customers to find ATMs and branches. In addition, thanks to the CaixaM vil alarm service, customers may receive information via SMS or regarding their accounts, transactions made, card payments or operations made through self-service terminals. The Alert Service also provides exclusive alerts for companies such as cash, card and file status reports sent by SMS to various recipients based on the type of alert. In 2010, over 35 million messages were sent to la Caixa customer mobile phones. Ticket sales: ServiCaixa.com Through ServiCaixa.com, la Caixa leads the Spanish market in ticket sales, both in terms of volume and in the range of products. In 2010, 9.7 million advance ticket sales were made through electronic channels and the number of members of Club ServiCaixa reached 1.8 million, thereby consolidating its position as one of the main cultural clubs in the country. In 2010 ServiCaixa.com launched M-ticketing, the new mobile ticket application which allows customers to use their own mobile phones as a ticket by showing it on entering the venue. This also allows tickets to be printed at home, making it unnecessary to pick up the tickets at the venue. Also on the ServiCaixa website, customers can find a wide range of consumer products and access to attractive commercial offers made by la Caixa Group companies. In line with its online strategy, ServiCaixa joined social networks, being present in such platforms as Facebook, Twitter and Tuenti. Accessible multi-channel management la Caixa Group s strong social commitment and its vocation to serve and work in the general interest is shown in its efforts to make access to its services easier for all user groups, through an active policy aimed at removing architectural, technological and communication barriers. la Caixa aims to provide quality banking to everyone and, for this reason, it has implemented A level international web accessibility standards (under the Web Accessibility Initiative or WAI) for L nea Abierta, its online banking service. la Caixa is committed to ensuring that its website and L nea Abierta service are accessible, regardless of the type of hardware, software or network infrastructure used, or the language, culture, geographical location or skills of its users. To this end, the WCAG 1.0, AA level accessibility guidelines have already been applied to a number of channels on the website. Furthermore, la Caixa also participates in the INREDIS project (INterfaces for REIations between environment and people with DISabilities). This is an accessibility initiative led by Technosite, the technological company belonging to ONCE (the Spanish association for the blind). The aim of the project, from 2007 to 2010, was to develop basic technologies to create communication and interaction channels between people with some kind of disability and their environment, thereby helping to make a substantial improvement to their quality of life. 2010: 9.7 MILLION ADvANCED SALES QUALITY ONLINE BANKING FOR ALL 2010 la Caixa Annual Report 69

72 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.5. Payment systems: a distinctive offering With million cards in circulation, of which million were issued by la Caixa and 0.27 million by Finconsum, the la Caixa Group is the top card issuer in the Spanish market. In 2010, the la Caixa Group cards generated a total of 593 million transactions, with turnover of retail sales and cash withdrawals from ATMs totalling EUR 34,958 million, of which EUR 34,734 million related to la Caixa, 4% up on the previous year. If the volume of business generated through cards from other issuers used in retail stores and ATMs is added, the la Caixa Group manages EUR 1, 43 every second. la Caixa is the top-ranking financial institution in terms of bank card turnover, with a market share of 17.7%, or 17.8% including the Group. The market share of la Caixa in terms of bank card turnover through its customer retail stores stood at 21.2%, making it the leader in this area. Accordingly, la Caixa customers have access to the widest range of payment methods available in Spain, including all the card types and international brands. Of the million cards in circulation at the end of 2010, 3.9% were credit cards (4.2% of which were revolving credit cards), 53.7% were debit cards and the remaining 9.4% were private and electronic purse cards. The number of point of sale (POS) terminals, in which la Caixa is also the market leader, had reached 1 9,9 at the end of 2010, all of which are equipped for transactions with smart cards. During the year the current cards were replaced by smart cards with the aim of minimising the risk of fraud due to lost or stolen cards, since entering a PIN number substitutes the need to sign. Card holders can now contract insurance which covers the pending amount left on the card in the event of death or absolute and permanent disability, or the monthly amount in the event of unemployment or temporary disability. As regards the incentive campaigns to promote the use of cards, and thanks to the Premi loyalty programme, this year almost three million personalised offers were sent to customers with la Caixa cards, via purchase receipts, letters, L nea Abierta and messages to mobile phones, with prizes of purchases in supermarkets, extra Puntos Estrella points, etc. With the aim of adapting ourselves to the needs of each customer, in 2010 the credit limit was raised on cards belonging to 280,950 customers, bearing in mind an analysis of appropriate risk. In the area of Corporate Responsibility, la Caixa is committed to protecting the environment, and this year over 1 million fewer statements on paper were sent to customers. Regarding retail business, la Caixa reached an agreement with the American company Global Payments, international leader in payment processing, to create Comercia, which will provide payment management services to retail businesses, encouraging innovation and service quality and providing more services to our customers with business beyond Europe. LA CAIxA, LEADER IN BILLING FOR BANK CARDS WITH MARKET SHARE OF 17.7% LA CAIxA GROUP CARDS (Millions) Cards issued Transactions LA CAIxA TURNOvER volume (Millions of euros) 34,260 34,734 33,410 16,476 16,226 16,601 17,784 17,184 18, Turnover in retail stores Turnover in self-service terminals POINT OF SALE (POS) TERMINALS (Units) Market share retail turnover 2010: 21.2% 171, , , la Caixa Annual Report 70

73 2010 Financial Report of the la Caixa Group 2.6. Innovation in customer services Technological innovation as a priority for improving customer care and service Línea Abierta Innovation is a constant objective for la Caixa in all the areas where it acts, and is becoming an essential tool in its multi-channel relationship with its customers. Hence we can offer improvements in the new services and products which are the result of intensive use of the technology within our reach. Customers can access products through the L nea Abierta channel, such as My Finances, which enables customers to manage their household finances. My Usual Transactions was introduced in 2010 and now provides newer, easier, personalised ways for customers to see their statements and transactions of interest to them. Another example is the viewing through L nea Abierta of cheques paid in through the ATMs and provides customers with information both on operations in their accounts, relating to accounting entries, and on specific deposit transactions. la Caixa has continued its initiative, which began last year, of involving customers in creating and improving the services and products of L nea Abierta. Users have tried new functionalities in the beta version and have given us their opinion. They have also rated existing functionalities through Permanent Rating surveys and participate actively through their suggestions on how to improve our services. This line of interaction with its users led la Caixa to create an Online Community in 2010, the first private network for self-employed professionals and SMEs. Having been created as a business booster which facilitates cooperation and interaction, customers of la Caixa have a unique space where they can create new business initiatives and where they can find interlocutors with similar interests and needs. Furthermore, la Caixa joined social platforms to actively spread information about the Institution. The la Caixa portal includes several catalogues with web functions which simulate the turning of a real page, and links to the related product descriptions have been added. Examples include the Puntos Estrella catalogue or the Corporate Responsibility Report. Search engines have also been included and online catalogues for deposit products, investment funds and schemes and comparative charts of funds that provide customers with the information they need to make decisions on investments or savings. New functions were incorporated for Private Banking and Personal Banking, such as access to 2010 la Caixa Annual Report 71

74 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business Technological innovation as a priority for improving customer care and service (cont.) exclusive magazines for these groups in Flash and options for tailoring their use for these divisions on L nea Abierta. In 2010 CaixaM vil Store, the showcase for mobile telephone applications and the Institution s mobile channel, continued to incorporate the various portals belonging to Group companies (Stock Exchange, L A Portal, Private Banking, etc.). As regards environmental responsibility, and within the ecocaixa initiative, L nea Abierta offered its customers a wide range of technology which enables them to consult bank correspondence totally online without the need to receive it on paper, through the Service of Personalised Correspondence, which already has over 3 million customers. In addition, ecocaixa offers its customers various options regarding optimising resources and protecting the environment through the la Caixa Welfare Projects. ATMs In 2010 the ATM area focused its efforts on incorporating EMV technology into pay cards, enabling a change of functionality profiles in stores to be made for this kind of plastic cards. For sightimpaired people, when they introduce their card or bank book, the ATMs at la Caixa offer a specific easy-to-read screen. In 2010, 3,312 ATMs already featured videos providing assistance in sign language, explaining the most common uses: cash withdrawal and consulting balance and transactions. Mobile phones la Caixa has been a pioneer among banks in launching a store for mobile phone services and applications called CaixaM vil Store, where customers can download them easily. The la Caixa applications are available from the application stores of the leading manufacturers and operators. Applications have been created for iphone, ipad, Blackberry, Android and Windows Phone, with a branch locator that finds the nearest branches using the device s GPS and displays them using Google Maps; in the case of Android, iphone and ipad, an augmented functionality has been added which, in this case, shows information (address, telephone number, ATMs, etc.) on branches using the device s camera. Further experiments have featured the use of virtual reality on the mobile phone which enables the phone to present the Welfare Programme exhibitions and act as a guide for the user. In 2010 the first experiment was conducted in Spain featuring payment by mobile using NFC technology. This pilot scheme involved 500 retail outlets and over 1,500 customers and was warmly welcomed by the public. 70% of the retail outlets involved received purchases made by mobile phones and 80% of customers used their mobile phones to pay. 70% of participants rated the experiment as positive, with a score of over 8 points out of 10. The ease, speed and safety of the system were especially rated highly. This positive appraisal has resulted in the companies promoting the system deciding to maintain the infrastructure in the outlets indefinitely. A system for paying bills with a bar-code scanner and for transferring funds from mobile to mobile was also implemented in the iphone. Finally, as regards ticket sales, the M-ticketing application was created which enables customers to use the ticket they have purchased without the need to print it onto paper, since the customer s terminal becomes the ticket. CaixaProtect To consolidate its leadership in the area of electronic channels, la Caixa has continued to give priority to ongoing innovation by offering CaixaProtect, 2010 la Caixa Annual Report 72

75 2010 Financial Report of the la Caixa Group a service that automatically provides total security in the event of irregular transactions using cards, the L nea Abierta service or ATMs and guarantees customers full protection, thereby giving them peace of mind and confidence. The CaixaProtect service also activates a system of mobile phone alerts when transactions involving large amounts are carried out, whether these be purchases, cash withdrawals, or card transactions and transfers using L nea Abierta or ATMs. In 2010, almost 9 million alerts were sent. Cards A new, faster, more convenient method of payment by card was developed for customers and retail outlets. This is a smart card with a chip and contactless technology, with which you can make purchases by holding it close to the POS terminal and entering the PIN (for operations over 20 euros). la Caixa has activated over 3,000 of these smart cards, which may already be used in the town of Sitges (Barcelona). Retail outlets Within the area of retail outlets, a new service has been developed aimed mainly at self-employed professionals who sell door-to-door, and consists of enabling payments to be made via their mobile telephones through an effective, easy and safe system. This involves customers paying with their debit or credit cards via the vendor s mobile telephone, directly transferring the amount of the sale to the retail outlet account. There are currently some 200 terminals of this type in use. la Caixa received one of the prizes awarded by the Actualidad Económica magazine each year for the 100 best ideas for this innovative system la Caixa Annual Report 73

76 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business Innovation and leadership in information systems la Caixa Group, as regards technological development, continued to work to improve its information systems in 2010, setting the bases to consolidate the future model of managing the Group s IT technologies. In addition, advances were made in aligning costs and consumption of technical resources according to market standards, developing applications in response to the growing business needs and simplifying technological infrastructures. Currently work is being carried out to extend the la Caixa model for optimising IT of Computer Services to all the Group companies, mainly aimed at improving efficiency and effectiveness. Another feature worth noting was the decisive drive this year to build the new state-of-the-art Data Processing Centre. This project, which will house the Institution s IT servers and data, will add to the technological leadership of la Caixa by providing innovative and cutting-edge facilities as regards data processing, energy and telecommunications infrastructures. Construction of the first centre is going according to plan and it is scheduled to start operating in As regards data systems, work has gone ahead on merging the Institution with Caixa Girona, providing the necessary technical resources at each branch originally from Caixa Girona and integrating the functionalities and particular business features of that entity into the la Caixa systems swiftly and efficiently. As regards the branches, in 2010 work on the Financial Terminal continued, adding new features and improving some existing ones, and the process of migrating towards a platform with a more advanced technological version is underway. As part of defining the branch of the future, work was also carried out to integrate new technologies applied to the everyday work at the branches, such as integrated communications and making it easier to share documents online la Caixa Annual Report 74

77 2010 Financial Report of the la Caixa Group Continuing with the aim of improving efficiency and joined with its growing environmental awareness, in 2010 particular emphasis was placed on the energy efficiency of the computers both in branches and at the headquarters, and on other measures at the data processing centers, which achieved a saving ofapproximately 14% in electricity thanks to lighting activated by sensors and optimising air conditioning in rooms. In addition, in the area of la Caixa data processing services, the key contribution was to make technological innovation a cornerstone in the policy of bringing the multi-channel system closer to customers with an array of innovating value proposals (see the previous chapter: Technological innovation as a priority for improving customer care and service). Continuing on the subject of innovative initiatives, in 2010 la Caixa, in collaboration with BDigital, embarked on an innovation project to develop state-of-the-art banking information systems which allow access to business information by means of questions phrased in natural language. This proposal is part of the growing interest of the Institution in participating in research projects with technological centres which place it in a leading position in terms of new technologies. Another fundamental aspect which evolves with technological leadership and is vitally important for the Institution, is related to controlling information security. Thus, la Caixa continued to work to minimise risks of data leaks by establishing new safeguards to protect customer and business data, continually checking that the control measures were working correctly and spreading good security practices to all employees. In addition, complying with the requirement to adapt in a flexible manner to an everchanging environment, certification programmes based on international standards were adopted to guarantee compliance with the regulations and ensure quality in security management la Caixa Annual Report 75

78 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business Branches and services designed for personalised attention There are currently over 850 branches which have been adapted to the new model, where our customers can enjoy all the advantages provided by this change. The use of glass as the main material for separating areas provides pleasant bright surroundings, making our customers feel comfortable. The transactions and quick cash area is also sufficiently set apart and identifiable to make it easier to use. In 2010 the work carried out to modernise the facilities focused mainly on the adaptation of 40 branches, based on the space layout concepts and criteria applied at the new model branches introduced in recent years, which represented a genuine revolution in bank branch design, affording comfort and privacy for business meetings with customers. As with the new design branches, these adapted branches give priority to areas for individualised attention, thereby fostering a personalised business relationship which enables advisory services to be tailored to each customer. The result of this adaptation process has been welcomed and highly appraised by customers. In addition, in 2010 business and private banking branches were inaugurated which, as in previous years, followed a similar design pattern to the general bank branches in terms of materials used and comfort for our customers, but were also adapted to the particular characteristics of these customer groups. In addition to the innovation in space layout and the use of cutting-edge technologies, in 2010 there was a notable improvement in the energy efficiency at branches and offices without negatively affecting comfort, thus aiding advances in the application of our environmental sustainability policy. THREE COMPONENTS: INDIvIDUALISED SPACES, QUICK CASH AREA AND SELF- SERvICE AREAS SPACES DESIGNED TO ENCOURAGE FACE-TO-FACE MEETINGS 2010 la Caixa Annual Report 76

79 2010 Financial Report of the la Caixa Group 2.7. Quality and customer care: the groundwork for the future Service excellence Service excellence has always formed part of the identity of la Caixa. Exceeding its customers expectations is the only way to continue deserving their trust. Independent market surveys frequently confirm la Caixa as one of the institutions with the highest quality of service. According to FRS Inmark s financial behaviour study, la Caixa is the institution with the highest recommendation rate, which indicates how strongly quality is associated with the Institution. Also, with regard to the multi-channel service, according to the data provided by A Metrix, the L nea Abierta service of la Caixa is the leader in terms of quality in all the categories measured. Customer satisfaction surveys In 2010 la Caixa continued to monitor on an ongoing basis its customers assessment of the service they receive. This programme of surveys is used to obtain a service quality indicator for individual customers and businesses. 275,557 surveys were carried out in 2010 and were used to obtain a satisfaction indicator for each la Caixa branch. This system of surveys enables each branch to monitor customer satisfaction and apply specific measures to provide continuous improvements. Customer Service Office la Caixa provides its customers with multiple forms of communication: letters to the President and CEO, the free customer care telephone service and the website, all of which are accessible from the branches. All the complaints received through any of the above channels were handled by the people in charge in the territorial network, at head office or at the Group s subsidiaries. In 2010, 20, 32 complaints were received. A total of 2,201 complaints were processed by the customer care/customer ombudsman service in 2010, of which 436 were resolved in favour of the claimant, 785 in favour of the Institution, 665 were classified as inadmissible, 10 claims were dropped by customers and 305 have not yet been resolved. la Caixa regards each complaint as an opportunity to improve internal procedures and the services it provides. Thanks to the thorough way in which it handles claims, la Caixa is regularly one of the institutions with the fewest number of complaints in relation to the size of its business, as highlighted by the Bank of Spain s Complaints Service. Branch satisfaction with internal services To maintain and improve the high standard of service that la Caixa offers itscustomers,itisfirstnecessaryto ensure that employees are fully satisfied with the service they receive from their internal suppliers. To this end, periodic surveys of branches provide information about the employees level of satisfaction with the internal services they receive. uality levels are also monitored on the basis of objective data, using indicators obtained by measuring various activity parameters e.g. the time taken to resolve breakdowns and downtime for certain services FINANCIAL BEHAvIOUR STUDY Rating of perceived quality (Scale of 0 to 10) Branch service ATM Internet Banking WORKING WITH QUALITY TO GUARANTEE RESULTS AND FUTURE GROWTH la Caixa Source: FRS Inmark Market average 2010 la Caixa Annual Report 77

80 2010 Financial Report of the la Caixa Group 2. Great commercial capacity: the strength of the banking business 2.8. Supporting the business: la Caixa subsidiaries The la Caixa Group encompasses a number of subsidiaries whose basic objective is to provide support services to the Group. e-la Caixa is responsible for carrying out the multi-channel management strategy developed by la Caixa (see section 2.4 Multi-channel management) and is in charge of co-ordinating, managing and developing the electronic channels made available by la Caixa to its customers, which include both financial and nonfinancial services. The main tasks assigned to e-la Caixa include both researching and implementing new functionalities and solutions and commercial management of all distance channels. These activities are carried out in co-ordination with the branch network to ensure full integration of all the channels used in its dealings with customers, in line with the multi-channel strategy adopted by the Institution. Through a hot-line service, e-la Caixa provides customers with all the assistance they may need to make proper use of the various channels: telephone, or online tools. It also offers its services to other Group companies. e-la Caixa also manages investments in electronic channel projects which provide the traditional banking business with added value and differentiated services. Serviticket, the leading company in the Spanish ticketing market, is the la Caixa Group company in charge of managing the advance ticket sale service through the various existing channels (self-service terminals, internet, mobile phone, etc.), and offers an extensive, permanent entertainment programme. Serviticket offers the widest range of entertainment options including cinema, theatre, music, sports, theme parks and historical monuments. Servicios Informáticos la Caixa is the company in charge of managing and providing technology support to la Caixa and its Group, by managing the Institution s technical infrastructures and also providing comprehensive IT services to the Group s subsidiaries. It is also the company that manages the technology resources in the areas of internet, self-service, mobile phone banking and digital television, monitoring the security and integrity of customer information, in order to offer customers a service of maximum quality. In addition, through its subsidiary company Silc Immobles, it manages the building of new data processing centres which will shortly house the infrastructure and technological processing capacity of the Group. CaixaRenting specialises in full-service lease( renting )transactions.thesales policycarriedoutinrecentyearshas enhanced its presence in the SME sector through distribution using the la Caixa network. In 2010, 337 million new operations were conducted for vehicle,capitalgoodsandproperty leases. In virtue of an agreement signed indecember2010witharval(bnp Paribas Group), (see section 3.2. Active management of investee portfolio) la Caixa will continue to market vehicle leases with the CaixaRenting brand 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% SUPPORT COMPANIES ACTIVITY Multi-channel E-LA CAIXA management SERVITICKET Ticket sales SERVICIOS INFORMÁTICOS LA CAIXA CAIXARENTING GDS-CUSA CAIXAVIDA SERVIHABITAT XXI SUMASA PROMOCAIXA TRADECAIXA FOMENT IMMOBILIARI ASSEQUIBLE ARRENDAMENT IMMOBILIARI ASSEQUIBLE ARRENDAMENT IMMOBILIARI ASSEQUIBLE II Technology support Renting Default risk management Life insurance Property management and sales Construction projects and maintenance Marketing Administrative services Development of governmentsubsidised housing Rental of governmentsubsidised housing Housing rental 2010 la Caixa Annual Report 78

81 2010 Financial Report of the la Caixa Group through its network of offices while Arval will provide the customer service. Also, CaixaRenting will continue to carry out its activities of leasing capital goods. GDS-Cusa provides services related to the management of default risk and the centralised handling of certain operating tasks of the la Caixa branches. Caixa de Barcelona Seguros de vida, S.A. de Seguros y Reaseguros is one of the Group companies engaged in life insurance, to which la Caixa transferred the insurance business in 1994 as credit institutions were no longer allowed to recognise insurance operations in their financial statements. Since then, the company s activity has been limited to maintaining the existing operations until expiry. Since the establishment of VidaCaixa Group in 1992, the execution of new insurance contracts has been channelled through its subsidiaries (see section 3.1. Criteria CaixaCorp: internationalisation and diversification of revenues). Servihabitat xxi is the property services company of the la Caixa Group. It engages in property investment and the provision of property services to the Group and to third parties. It develops, manages, administers and sells properties relating to the Group s business activity, as well as properties of third parties and Group-owned properties. Sumasa manages new office construction projects, refurbishment works and the maintenance of existing buildings, and is also in charge of procurements and utilities management for la Caixa and the la Caixa Group. PromoCaixa is the company in charge of managing the customer loyalty and promotion programmes, and performing other marketing activities for la Caixa and other Group companies. TradeCaixa provides administrative and accounting services to some support companies in the la Caixa Group, and provides support in managing reporting and following up the Institution s variable interest investment portfolio. Foment Immobiliari Assequible, Arrendament Immobiliari Assequible and Arrendament Immobiliari Assequible II are the companies by which the Affordable Housing programme is carried out as part of the Welfare Projects of la Caixa to develop and manage affordable quality rented housing la Caixa Annual Report 79

82 2010 Financial Report of the la Caixa Group 3. Investee portfolio 3. Investee portfolio 3.1. Criteria CaixaCorp: internationalisation and diversification of revenues Criteria CaixaCorp: subsidiary which encompasses the largest portion of the la Caixa Group s investee portfolio Criteria CaixaCorp is the subsidiary in charge of carrying out the investment strategy and international expansion of the la Caixa Group. The stake of la Caixa in Criteria CaixaCorp s capital stood at 79.45% on 31 December la Caixa has stated its intention of holding the controlling stake indefinitely. Criteria CaixaCorp has stakes in the banking, financial and utilities sectors with a clear commitment to internationalisation which aims to provide long-term value through active management of its portfolio. The development of this active investment management is shown by how it has occupied influential positions in the investees, become involved in governing bodies and had active involvement when defining the most suitable business strategies and policies, to thus contribute to ongoing development and to create value for the shareholder. This management also aims to raise the value of investments which means identifying and analysing new investment and divestment opportunities in the market, with a controlled level of risk. To achieve this it has vast knowledge and experience of the sectors where it operates. The investment portfolio includes leading companies with a sound leadership position intheirbusinesssectorsandinthecountries where they operate, and furthermore they have a proven capacity to create value and revenues. In addition to its presence in the banking and financial sector, Criteria CaixaCorpalsooperatesthroughits investee companies in strategic sectors suchasenergy,telecommunications, infrastructures and utilities. Inaddition,theinvesteeportfolio contributes geographical diversification to the lacaixa Groupintwoways:investing in banks located in areas with high growth potential (Eastern Europe, Mexico and Asia), and through industrial holdings in entities which are multinational institutions in their own right. Theshareofstakesinthefinancialsector reached37%ofthecriteriacaixacorp portfolio value by year-end, very close to the minimum objective established when it was floated on the stock exchange. This share has more than doubled since its flotation, and the Group s reorganisation, as detailed in section The la Caixa Group s New Structure, page 37, which will transform Criteria CaixaCorp into the future CaixaBank, is geared to this aim. TO BE A MAIN INvESTOR IN LEADING COMPANIES, PRIORITISING OPERATIONS IN SECTORS WHERE WE HAvE ExPERIENCE 79.5% CRITERIA CAIXACORP UTILITIES LISTED COMPANIES UNLISTED COMPANIES FINANCIAL BUSINESS INTERNATIONAL BANKING INSURANCE COMPANIES SPECIALISED FINANCIAL SERVICES 2010 la Caixa Annual Report 80

83 2010 Financial Report of the la Caixa Group Utility business Listed companies: leading companies in the energy, infrastructure and utility sectors This group is made up of leading companies with the capacity to grow and create value, mainly focusingon Spain but with a high international presence in energy, infrastructure and utility companies, sectors where la Caixa Group has much knowledge and experience. A high performing portfolio has been built up which is capable of generating attractive dividends, with an excellent track record and a controlled risk level. In this regard it aims to create a value differential in these companies by taking up core positions which enable it to be active in the governing bodies and involved in key decisions and in developing business strategies. Gas Natural Fenosa is one of the top ten European energy companies and the leading company in the integrated gas and electricity sector in Spain and Latin America. It is one of the world s leaders in liquified gas and the main operator in the Atlantic and Mediterranean basins, and one of the main combined cycle operations in the world. With over 20 million customers (9 million in Spain) and over 1 GW of electric power installed all over the world. Gas Natural s total assets exceed EUR 45,300 million. Repsol YPF is an international integrated oil and gas company, with activities in over 30 countries and a leader in Spain and Argentina. It is one of the ten largest private oil companies in the world and the largest private company in the energy sector in Latin America in terms of assets. Repsol PF s total assets exceed EUR 7, 00 million. Abertis is a leading European infrastructure development and management corporation, with over 3,700 km of toll roads under management and total assets exceeding EUR 25,000 million. In recent years it has increased its geographical and business diversification with investments in motorways, telecommunications, airports, car parks and logistics centres. At present, 50% of its income is generated outside Spain. Telefónica is one of the world s leading integrated telecommunications operators, operating in Europe and Latin America, and a leader in the Spanishand Portuguese-speaking markets with total assets of over EUR 129,000 million. With almost 288 million access lines, Telef nica has a high international profile, generating over 0% of its business outside its domestic market: (i) in Spain, with over 47 million access lines, it leads in all the business segments, (ii) in Europe (United ingdom, Germany, Ireland, Czech Republic and Slovakia), it has over 5 million access lines, and (iii) in Latin America, with over 183 million access lines, it leads the market in the major countries (Brazil, Argentina, Chile and Peru), as well as doing significant levels of business in others such as Mexico, Colombia, Venezuela and Central America. LISTED COMPANIES ENERGY 36.6% GAS NATURAL FENOSA 12.7% REPSOL YPF INFRASTRUCTURES 25.1% ABERTIS SERVICES/OTHERS 5.0% TELEFÓNICA 5.0% BME % of Criteria CaixaCorp s stake 2010 la Caixa Annual Report 81

84 2010 Financial Report of the la Caixa Group 3. Investee portfolio Utility business (cont.) Bolsas y Mercados Españoles (BME) integrates all the registration, clearing and settlement systems for Spanish secondary securities and markets. Unlisted companies Colombia, Algeria, Cuba and Mexico. As part of the Adeslas takeover transaction, in 2010 Criteria CaixaCorp reduced its stake in Agbar to 24.03% (see section 3.2. Active management of the la Caixa Group s investee portfolio). COMPANIES Aigües de Barcelona (AGBAR) is one of the leading companies managing the whole cycle of water, which includes collecting, transporting, treating and supplying drinking water, in addition to collecting and treating waste water, reusing it and finally returning it to the environment with the least environmental impact. Port Aventura Entertainment, in which Criteria has a 50% stake, is the leading leisure complex in Spain and one of the largest in southern Europe. At present Port Aventura offers a theme park, water park and operates a Convention Centre and four hotels, two of which are owned by it. 24% 50% 100% AGBAR PORT AVENTURA ENTERTAINMENT MEDITERRÁNEA BEACH & GOLF COMMUNITY, S.A. % of Criteria CaixaCorp s stake With total assets of over EUR,500 million, Agbar is the top ranking private water management company in Spain, supplying water to almost 13 million people and providing sewerage services to over 9.3 million people. Internationally, the Agbar Group supplies drinking water and sewerage services to over 12 million people in Chile, United ingdom, China, Mediterránea Beach & Golf Community owns assets linked to Port Aventura: three golf courses, land for residential and commercial use already built on, and a beach club in addition to two hotels and a Convention Centre, which are leased to the Port Aventura Entertainment company la Caixa Annual Report 82

85 2010 Financial Report of the la Caixa Group Financial business International banking Regarding investments in the financial sector, the la Caixa Group is expanding abroad with acquisitions of financial institutions. This line of business consists of acquiring stakes in the banking sector in those countries where it can provide added value and take advantage of growth potential. Grupo Financiero Inbursa (GFI),with total assets close to EUR 1,000 million, with over 270 branches, more than,300 employees and 14,500 financial advisers, is the sixth largest financial group in Mexico in terms of total assets and one of the largest in terms of stock market capitalisation in Latin America. Founded in Mexico in 19 5, the Group offers commercial banking services, in which it is the leader in the sector, in addition to retail banking, asset management and life and non-life insurance products, pensions, securities brokerage and custody services, and it is the leading financial group in Mexico for property custody services and one of the best positioned in insurance and pension funds. Erste Group Bank was founded in 1819 and was Austria s first savings bank. The bank held an IPO in 1997 with a view to expanding its retail banking business in Central and Eastern Europe. It is currently Austria s second largest banking group and one of the leading groups in Central and Eastern Europe, with total assets of close to EUR 20,000 million. Outside Austria, Erste Group Bank controls banks in seven countries (Czech Republic, Romania, Slovakia, Hungary, Croatia, Serbia and Ukraine) and is market leader in the Czech Republic, Romania and Slovakia, providing services to some 17.7 million customers and operating over 3,200 branches. The Bank of East Asia (BEA), founded in 1918, with assets of over EUR 50,000 million, more than 200 branches and over 11,000 employees, is the leading independent private bank in Hong ong and one of the best positioned foreign banks in China, which, through its subsidiary BEA China, has a network of 90 branches and is still expanding. Banco BPI is a universal, multi-specialised financial group, focusing on commercial banking for business, institutional and private customers, and is the third largest private financial group in Portugal by business volume. Its total assets exceed EUR 45,000 million and it has a commercial network of over 800 branches in Portugal and more than 140 in Angola. Boursorama, founded in 1995, is one of Europe s leading online brokers and savings product distributors and is part of the Soci t G n rale Group with total assets of EUR 3, 00 million. Boursorama operates in four countries and is the leader in France in online financial information and a reference point in internet banking. It is one of the main online brokers in the United ingdom and Spain. In addition, since 2009 Boursorama has developed online banking in Spain (SelfBank, in a joint venture with la Caixa ) and in Germany (OnVista Bank). INTERNATIONAL RETAIL BANKING 20.0% GRUPO FINANCIERO INBURSA 10.1% ERSTE GROUP BANK 15.2% THE BANK OF EAST ASIA 30.1% BANCO BPI 20.8% BOURSORAMA % of Criteria CaixaCorp s stake 2010 la Caixa Annual Report 83

86 2010 Financial Report of the la Caixa Group 3. Investee portfolio Financial business (cont.) Insurance and specialised financial services: complementing la Caixa products and services In order to meet at all times the entire range of financial and service needs of households and businesses, especially SMEs, as well as institutions, the Group complements the banking products and services offered by la Caixa with specialised products through insurance companies, credit institutions and managers of collective investment and securitisation undertakings. Insurance companies An insurance group serving almost 6 million individual customers, with assets under management worth over EUR 33,000 million The insurance group operates through subsidiaries held by the holding company vidacaixa Group (formerly SegurCaixa Holding) which offers a wide range of brands for the different sectors in which they operate such as customised life and non-life insurance. Almost million customers and over 50,000 businesses and collectives have taken out pension plans and insurance (retirement plans, annuities and other products). vidacaixa engages primarily in life insurance. It administers assets of over EUR 14,000 million in pension plans, ranking second in the industry for this kind of business. The organic growth of the business has reinforced VidaCaixa s position as the top life insurance company, with technical provisions totalling over EUR 19,000 million. In addition, VidaCaixa consolidated its leadership of the supplementary benefits segment for businesses and individuals with assets under management (technical provisions and pension plans) of over EUR 33,000 million. vidacaixa Adeslas is the non-life insurance company of la Caixa Group which is the result of the merger between SegurCaixa, focusing on the non-life segment, and Adeslas, market leader in health insurance in Spain, which took place in June 2010 (see section 3.2. Active management of the investee portfolio). Additionally notable is its wellplaced position in home insurance, the consolidation process in car insurance and the new range of products for SMEs and self-employed professionals. On 13 January 2011, Mutua Madrile a and la Caixa reached an agreement under which the Madrid-based institution would acquire 50% of VidaCaixa Adeslas (see chapter 3.2. Active management of the la Caixa Group s investee portfolio). vidacaixa GROUP STRENGTHENS ITS LEADERSHIP IN INDIvIDUAL AND GROUP LIFE INSURANCE 100% 67% 100% 99.8% 100% INSURANCE COMPANIES VIDACAIXA GROUP VIDACAIXA VIDACAIXA ADESLAS AGENCAIXA GDS-CORREDURÍA DE SEGUROS BUSINESS Life insurance Non-life insurance Insurance agency Insurance brokerage % of Criteria CaixaCorp s stake 2010 la Caixa Annual Report 84

87 2010 Financial Report of the la Caixa Group Specialised financial services Complementary range of fund management InverCaixa Gestión is a collective investment undertaking manager of la Caixa Group and manages a wide range of products: investment funds, OIEC s and portfolios. In addition it advises la Caixa on operations to market investment funds managed by third parties. In 2010 the funds managed by this subsidiary stood at EUR 17,017 million, and its share of the investment fund market rose from 8.5% (December 2009) to 10. % in 2010, which placing it third in the ranking for fund managers. Specialised financial products Finconsum offers consumer financing, mainly through the point of sale channel (distributors of goods and services and car dealers). In 2010, it brought in EUR 521 million in new business, with loans and receivables which totalled EUR 774 million at 31 December GestiCaixa has continued to operate on the financial markets as an asset securitisation manager. As of December 2010, GestiCaixa managed 38 securitisation funds with a volume of outstanding bonds totalling close to EUR 29,000 million. 100% 100% 100% SPECIALISED FINANCIAL SERVICES BUSINESS INVERCAIXA GESTIÓN Fund and portfolio management Consumer FINCONSUM financing GESTICAIXA Asset securitisation % of Criteria CaixaCorp s stake INvESTMENT FUNDS ASSETS MANAGED BY THE LA CAIxA GROUP (Millions of euros) 17,017 15,457 12, Fixed income, money market and other Equity Mixed fixed income Guaranteed funds 2010 la Caixa Annual Report 85

88 2010 Financial Report of the la Caixa Group 3. Investee portfolio 3.2. Active management of the la Caixa Group s investee portfolio Active management of the la Caixa Group s investee portfolio in 2010 led to a number of net investments totalling approximately EUR 703 million.in 2010 the Group continued its strategy of rebalancing the investee portfolio, giving more weight to financial investments, without excluding investments in utilities. Thus, the proportion of investments in the financial sector have climbed from 17% at the time of Criteria CaixaCorp flotation to 37% at present. With regard to investments in the financial business, in January 2010 and as part of the agreements signed in June 2009 by The Bank of East Asia (BEA), la Caixa and Criteria CaixaCorp, a subscription of a large part of BEA s capital increase was undertaken at a cost of EUR 331 million. This transaction has enabled BEA to reinforce its growth strategy, particularly in the Chinese market, and to bolster its capital ratios, in addition to increasing the position of la Caixa Group in the bank, achieving a stake slightly in excess of 15% by year s end. On 7 June a deal was signed to acquire 99.8% of the share capital of Adeslas worth a total of EUR 1,193 million, in virtue of definite agreements signed on 14 January 2010 with Suez Environnement and Malakoff M d ric. This investment was added to the VidaCaixa Group (formerly SegurCaixa Holding), giving rise to vidacaixa Adeslas, a nonlife insurance company which was the result of a merger between SegurCaixa and Adeslas, the leading company in health insurance in Spain. Of particular note is that on 13 January 2011 la Caixa and Mutua Madrile a reached an agreement under which Mutua Madrile a would acquire 50% of VidaCaixa Adeslas, for a total of EUR 1,075 million. The deal includes a commercial agreement to distribute exclusively and indefinitely health, home and car insurance products and the remaining non-life business through the network of branches of la Caixa and other channels of VidaCaixa Adeslas. As part of the above deal to acquire Adeslas, 24.5% of Agbar was sold to Suez Environnement for a total of EUR million, keeping a 24.03% stake in Agbar s capital and enabling Suez Environnement to take over Agbar, with 75.01% of the capital. In addition, on 29 December, the la Caixa Group and Arval (Group BNP Paribas) signed an agreement to integrate the vehicle renting business of CaixaRenting into Arval. As part of this deal, la Caixa will continue to market vehicle leases under the CaixaRenting brand and Arval will provide the customer with the final product. Also CaixaRenting, a directly-held subsidiary of la Caixa, will continue to market lease operations of equipment. In addition, as part of the investments in utility companies, the la Caixa Group, with active management of the portfolio, took advantage of the situation of the market to sell off a total of EUR 588 million, generating extraordinary profits (see section 1. Highquality profits in 2010). Also in 2010, taking advantage of market opportunities, Criteria acquired 0.87% of Repsol for EUR 208 million, 0.95% of Gas Natural for EUR 93 million and 0.14% of Telef nica for EUR 107 million. ACTIvE MANAGEMENT - MAIN TRANSACTIONS: Financial business Subscription of a large part of a capital increase in The Bank of East Asia. Subsequently raise of the stake to over 15%. Acquiring 99.8% of Adeslas and reducing its stake in Agbar to 24.03%. Agreement in January 2011 to sell 50% of VidaCaixa Adeslas to Mutua Madrile a. Agreement to integrate the CaixaRenting leasing business of vehicles into Arval. Service business Divestments making the most of the market situation for a total of EUR 588 million. Acquiring 0.95% of Gas Natural, 0.87% of Repsol and 0.14% of Telefonica. Cancelling equity swap contracts which affected part of the Telefonica portfolio la Caixa Annual Report 86

89 2010 Financial Report of the la Caixa Group Also, in the first two quarters equity swap contracts were cancelled on part of the Telefónica portfolio and as a result, at 31 December 2010, the investment in this company stood at 5.03%, not subject to equity swaps. Market value evolution and unrealised gains on the la Caixa Group s listed companies The market value of stakes in listed companies of la Caixa Group, as of 31 December 2010, stood at EUR 18, 85 million, with unrealised gross gains of EUR 2,709 million. Notably, the market value of Criteria CaixaCorp, the company which includes a majority of the la Caixa Group s stakes, was revalued by 20.85% in 2010, while the main indices lbex-35 and Eurostoxx posted negative growth 17.43% and 5.81 %, respectively. PERFORMANCE OF MARKET value OF CRITERIA AND IBEx IN Dec Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec Criteria 20.85% Criteria - ÍBEX 17.43% Íbex la Caixa Annual Report 87

90 2010 Financial Report of the la Caixa Group 3. Investee portfolio 3.3. MicroBank MicroBank, the social bank of la Caixa, was established in 2007 to channel the business of microloans which, until that time, had been carried out by la Caixa through its Welfare Projects, with the aim of encouraging social and economic work using the parameters of rigour and sustainability that can be expected from a banking institution. la Caixa is the sole shareholder of MicroBank. Microloans for entrepreneurs and families MicroBank offers tailor-made financial products and services especially designed for the needs of entrepreneurs, micro-companies and families so as to contribute to: Promoting productive business and creating employment through financial support for self-employed professionals and micro-companies. Self employment through granting microloans to new entrepreneurs for setting up small businesses. Personal and family development, providing a response to needs and helping to overcome temporary difficulties. Financial inclusion, encouraging new customers to use banking services through the Institution s extensive commercial network. Range of financial products and services MicroBank s loans are based on two types of microloans: microloans for entrepreneurs and microloans for families. Microloans for entrepreneurs These in turn are also divided into two types: 100% MICROBANK Financial microloans: These are personal loans aimed at self-employed professionals and micro-companies that need financing to set up, expand or consolidate their business or to attend their working capital needs. The maximum amount of these loans is 25,000 euros. There is no need for property collateral and the maximum period for repayment is five years, with a six month period of grace. As a basic requirement, a business plan is needed so as to study the feasibility of the project that the entrepreneur is proposing to finance la Caixa Annual Report 88

91 2010 Financial Report of the la Caixa Group Social microloans: this is a personal loan with similar features to financial microloans, aimed at financing selfemployment projects created by people who may find it difficult to gain access to the traditional loan system and who, prior to the microloan being granted, receive guidance from one of MicroBank s collaborating institutions. Microloans for families Microloans for families are personal loans aimed at people with incomes below 18,000 euros per year to finance projects linked to personal and family development, in addition to needs arising from momentary or unforeseen situations. The most common reasons for these include: expenses related to housing, health, education and needs arising from situations of dependency or disability, family regrouping, or purchasing necessary transport. The maximum amount granted is 25,000 euros, these loans do not require property collateralisation and the maximum repayment period is years with an optional period of grace of 12 months. Secured microloans Since mid 2010, MicroBank has taken on the management of the pawn, or Monte de Piedad, division of la Caixa and as part of the range of products has included secured microloans. These loans start at 300 euros and customers are requested to provide a piece of jewellery belonging to them as collateral. These secured loans are aimed at people who, due to their job situation, finances or family, may find it difficult to gain access to traditional forms of financing. Liability products MicroBank also has a series of liability products which, together with the usual services provided by a financial institution, are specially adapted to the bank s customer profiles. These include: the Basic Bank Book and MicroBank Basic Current Account, the MicroBank Bank Book and Current Account and the MicroBank Servicuenta and Servicuenta MicroGiros. MicroBank deposit accounts may be accessed throughout the wide network of ATMs belonging to la Caixa. Services Also, to complete this range, MicroBank provides its customers with the following services: Visa Electron MicroBank, guarantees and commitments of guarantee and L nea Abierta. MicroBank Ethics Fund In 2010, MicroBank began to market the ethics fund aimed at those people and groups interested in investments with social returns. MicroBank Fondo tico Fl is a fund which invests in variable returns, guaranteed international corporate and public returns globally. With a minimum investment of 00 euros, this fund is managed by an external ethics committee made up of experts from the world of academia, businesspeople and representatives from NGOs which advises the fund manager in order to choose the most important principles taken into consideration and supervises the correct ethical compliance of the portfolio. MicroBank Fondo Etico Fl concedes 25% of its management fees to non-profit organisations. In addition, the la Caixa Foundation contributes an equal amount for an international cooperation project chosen by the Fund s Support Committee. 2010, a year of consolidation In 2010 the banking business was completely consolidated and its range of products became especially important given the current economic crisis. Since MicroBank was established it has granted 93,897 loans for which it has paid out EUR million, allocated for financing several types of projects. Despite the current economic climate, the NUMBER OF MICROLOANS GRANTED 4,403 (*) 20,641 32,008 (*) Includes loans granted previously through Welfare Projects 36, «THE AvERAGE AMOUNT GRANTED FOR TRANSACTIONS ASSOCIATED WITH BUSINESS PLANS WAS IN ExCESS OF 10,000 EUROS» TRENDS IN MICROBANK ACTIvITY (In thousands of euros) 212, , % 32,080 36, % Amount granted New loans 2010 la Caixa Annual Report 89

92 2010 Financial Report of the la Caixa Group 3. Investee portfolio 3.3. MicroBank (cont.) evolution of the business has largely been positive. In 2010, MicroBank formalised 3,845 microloans worth a total of EUR million. The average amount of the loans granted was 5,755 euros, a figure that reached 10,02 euros for loans for entrepreneurial projects. Compared to 2009, the number of contracts grew by 13.2% and the amount granted rose by 1.7%. At year end, the bank held total assets of some EUR million, which represents a rise of 24% compared to the previous year. The NPL rate remained stable throughout the year, ending with a ratio of 1.53%, considerably lower than the average in the Spanish banking sector. The quality of its loan portfolio confirms it as being one of the essential features for the sustainability of the project. The bank s high level of capitalisation and liquidity, an extensive distribution network, the support from its sole shareholder, la Caixa, and backing from European financial institutions are just some of the institution s competitive strengths. All these constitute a unique platform to continue expanding a business that will be complemented by the incorporation of new products and services that have been especially adapted to MicroBank s customers. Financing model MicroBank s financing model is based on: The Institution s own funds, which totalled EUR million at year end. Funds from customers attracted by the Institution s savings products. Financing received from loan institutions amongst which we can highlight the financing from its sole shareholder, la Caixa, and loans signed with the Council of Europe Development Bank (CEB). la Caixa has allocated a high amount of its own funds to this bank, which is in addition to its commitment to providing the financing funds necessary to adapt to MicroBank s growing business. The financing provided by the CEB and customer deposits contribute considerably to diversifying the sources of the bank s funding and to its sustainability. Over 400 entities collaborating MicroBank offers its products and services through the branches of la Caixa, which has the largest network in Spain, with over 5,400 branches. In addition, MicroBank has signed agreements with 417 social entities with the aim of promoting self-employment and providing access to financing by means of microloans, especially among for those groups which are excluded from financing or are at risk of suffering exclusion. Among the advantages provided by the entities collaborating with MicroBank, the following is particularly worthy of mention: Advising customers who apply for microloans, thus contributing to a better assessment of the transaction. Offering the necessary advisory services to carry out their business plan and prior appraisal of its feasibility and coherence. Extending the area of coverage of MicroBank s distribution network of products and services throughout Spain. Support for European institutions MicroBank s business is part of a trend supported by the European Commission of fostering private initiative in the area of self employment and provide support for creating, consolidating or expanding micro- DISTRIBUTION OF MICROBANK FINANCING 25% 7% Own funds CEB Loans Others 9% 30% 29% la Caixa loans Customer funds «THE COLLABORATING INSTITUTIONS ACT AS A LINK BETWEEN MICROBANK AND POTENTIAL CUSTOMERS, THUS PROvIDING COMPLEMENTARY SERvICES FOR THEM» «MICROBANK HAS SIGNED AGREEMENTS WITH LEADING EUROPEAN INSTITUTIONS WHICH HAvE ESTABLISHED SUPPORT POLICIES FOR MICRO-FINANCING PROJECTS» 2010 la Caixa Annual Report 90

93 2010 Financial Report of the la Caixa Group companies as a driving force for economic growth and job creation, with the positive repercussions of this as regards improving social cohesion. The positive rating of MicroBank in Europe is shown by the fact it has been able to sign collaboration agreements with two of the leading institutions through which the policies of support for microfinance projects are being drawn up: EIF: European Investment Fund with which MicroBank has signed a collaboration agreement as part of the European Union s Competitiveness Innovation Framework Programme (CIP). CEB: The Council of Europe Development Bank is the entity in charge of developing the Council of Europe s cooperation policies. A reference point in microfinance One indication of the attention attracted by MicroBank s business and model is the number of invitations to participate with the main European institutions with interests in this sector, and it has taken part in numerous congresses and work meetings, among which the following were of particular note: Presentation of the social banking model for the Council of Europe Development Bank (CEB), in Brussels. Participation in work sessions entitled Developing a code of good conduct for microfinance Institutions, in Brussels. Participation in the conference entitled Microfinance in Europe, in Brussels. In May MicroBank organised a conference entitled Boosting Microfinance in Europe with the aim of contributing to promoting the development of microloans in Europe through savings banks and banks. The social bank of la Caixa brought together over 200 participants to share experiences and present their model of social banking specialised in granting microloans at a meeting lasting one day. In its first three years of its life, MicroBank has also managed to attract interest outside the European Union. In 2010 the bank received an invitation from the leading monetary authority in Hong ong, the Hong ong Monetary Authority (H MA), and from the Bank of East Asia (BEA) to present its model of social banking, which is a pioneer both in Spain and Europe. Growth and specialisation MicroBank is currently the sole banking institution in Spain devoted exclusively to microfinance. Since it was established, its microloans business has grown steadily, which last year enabled it to achieve over 90,000 transactions granted. «MICROBANK IS ESTIMATED TO HAvE CONTRIBUTED TO CREATING OvER 30,000 JOBS SINCE 2007» MicroBank first began its business granting microloans for companies and today it has a growing range of products which enables it to offer an increasingly comprehensive service for its customers who, in addition to obtaining financing adapted to their needs, can manage their savings and use the necessary services to cover their basic operating requirements. Following three years of business, MicroBank has consolidated a sustainable model of social banking with a proposal of value adapted to the wants of its main customer groups, as shown by the high acceptance level and fast growth of its business to date. The bank is currently working so that its financial services can provide coverage for the ever growing demand for these, and thus, while expanding its financial business, it also contributes to providing increasingly equal access to loans for groups which have more difficulties obtaining financing through traditional channels. Social impact of microloans Microloans firstly and primarily encourage self-employment, and secondly also promote job creation. In early 2010, MicroBank published a study conducted by the ESADE business school regarding the social impact of its microloans on entrepreneurs who had applied for them. According to this report, and counting the business owner, companies in the survey created an average of 1.57 jobs. These jobs clearly contributed to integrating some people into micro-companies and may be an additional way for them to enter the job market. Based on the conclusions of this study, it is estimated that MicroBank has contributed to creating or consolidating over 30,000 jobs since it was first established la Caixa Annual Report 91

94 2010 Financial Report of the la Caixa Group 3. Investee portfolio 3.4. venture capital and financing for entrepreneurs The la Caixa Group operates in the venture capital industry through the following companies: Caixa Capital Risc administers and manages the assets of venture capital companies and funds. It currently manages three funds: Caixa Capital Semilla, Caixa Capital Pyme Innovaci n and Caixa Capital Micro. Caixa Capital Semilla has funds of EUR 15 million. The company invests, on a temporary basis, in small innovative companies at the concept building and developmental stages of their product or service, helping to cover the lack of financing for business innovation by entrepreneurs. At the end of 2010, the company had a portfolio of 55 projects undertaken. The total amount of committed investment was EUR 13.5 million. Caixa Capital Pyme Innovacion with funds of EUR 31 million, of which EUR 25 million were committed by la Caixa and the remainder by institutional investors (The Catalan Finance Institute and the Spanish National Innovation Corporation, ENISA). It complements the venture capital business by investing in the growth capital stage. The company invests, on a temporary basis, in small, recently created innovative companies which require financing to strengthen their structure and enable them to reach a stage whre they can consolidate a strong competitive position. At the end of 2010 the company had accumulated a portfolio of 13 projects underway. Committed investment totalled EUR 1 million. Caixa Capital Micro was founded in November 2010, with funds of EUR 8 million. It focuses on recently created micro-companies based in Spain which provide a growth plan in any business sector (except finance and real estate), encouraging co-investment from other private and public entities. As part of the activities which make up part of the Corporate Responsibility of the la Caixa Group, Caixa Emprendedor xxi operates and aims to promote and support entrepreneurs in general and the creation of innovative companies with high potential growth throughout Spain. As part of its programme and in conjunction with the branch network and leading national and regional institutional bodies, it conducts specific actions such as organising awards, courses and seminars, supporting networks and Business Angels activities, among others. 100% 100% 80.7% 100% 100% LA CAIXA VENTURE CAPITAL AT EARLY STAGES CAIXA CAPITAL RISC CAIXA CAPITAL SEMILLA CAIXA CAPITAL PYME INNOVACIÓN CAIXA CAPITAL MICRO CAIXA EMPRENDEDOR XXI % of la Caixa stake 2010 la Caixa Annual Report 92

95 2010 Financial Report of the la Caixa Group 4. Active risk management 4.1. Comprehensive risk management at the heart of the strategy Management of the risks inherent to the business is an essential component of the Group s strategy to secure a balance between returns and risk. Global risk management is essential for the business of any credit institution. At the la Caixa Group, global risk management is aimed at optimising the return/risk ratio by identifying, measuring and assessing risks and ensuring that they are always taken into account in the business decision-making process, without losing sight of enhancing customer service quality. Likewise, the Group wishes to safeguard the health of risk and preserve the capital adequacy mechanisms as a guarantee to consolidate the la Caixa Group s position as one of the soundest groups in the Spanish market. The fundamental risks undertaken as a result of the Group s own activities are classified as follows: credit risk, arising from the banking activity and also associated with the investee portfolio; market risk, which includes structural balance sheet interest rate risk, the price or rate risk associated with treasury positions and foreign currency risk, liquidity risk, operational risk and regulatory compliance risk. The la Caixa Group s risk management, monitoring and control tasks are performed autonomously from the standpoint of independence with respect to the risk approval function. Risk management is geared towards setting a risk profile aligned with the Group s strategic objectives and helps to ensure progress towards a delegation model for risk approval underpinned by all the fundamental risk variables and amounts, while supporting the quantification of risk through capital use and expected loss scenarios. The General Principles of Risk Management approved by the Board of Directors which monitors risk management in the la Caixa Group, can be listed as follows: Risk is inherent to financial business and managing this is a duty of the whole organisation. Notable among these general principles are the following: independence of this duty, joint decision-making, granting transactions in accordance with the applicant s capacity to pay back, monitoring these transactions until they are fully paid up, and obtaining returns in line with the risks involved. There are also further general principles which are the basis of the model of managing risk at la Caixa and which place it as a leading institution: measuring and managing cutting-edge models, decentralisation of decisions so they can be made swiftly and as close to the customer as possible, using standardised principles and tools and providing adequate resources to carry out these aims. GLOBAL RISK MANAGEMENT TO OPTIMISE THE RETURN/RISK RATIO 2010 la Caixa Annual Report 93

96 2010 Financial Report of the la Caixa Group 4. Active risk management 4.1. Comprehensive risk management at the heart of the strategy (cont.) Structure and organisation The Board of Directors of la Caixa is the Group highest risk policy-setting body. Senior management acts within the framework of the duties assigned by the Board of Directors and makes up the following risk management committees: Global Risk Committee. The Global Risk Committee is in charge of the comprehensive management of the Group s risk, as well as of the implications of risk on capital adequacy and capital management. It analyses the Group s risk positioning and sets policies aimed at optimising risk management within the framework of the Group s strategic challenges. Loan Approval Policy Committee. The Loan Approval Policy Committee proposes loan approval powers and loan prices, process efficiency and streamlining measures, the level of risk taken in the loan acceptance diagnostics, and the risk profiles accepted in commercial campaigns. Lending Committee. The Lending Committee analyses and, where appropriate, approves the transactions that fall within the scope of its authority and refers to any transactions that exceed its level of authority to the Board of Directors. Refinancing Committee. The Refinancing Committee analyses and, where appropriate, approves the transactions that fall within the scope of its authority and refers to any transactions that exceed its level of authority to the Lending Committee. Asset-Liability Committee (ALCO). The ALCO analyses liquidity, balance sheet interest rate and foreign currency risk as part of structural risk and proposes taking out hedges and launching issues to manage those risks. In addition, Criteria CaixaCorp manages and controls almost the entire equity securities portfolio of the Group. la Caixa has a Senior Executive Vice- President s office in charge of risk over the whole Group. The Global Risk Management Division, which reports to the Senior Executive Vice-President s office, is the global control unit performing the independence functions required by Basel II, with responsibility for safeguarding the quality of the assets and preserving the capital adequacy and security mechanisms. The objectives of this division are to identify, measure and integrate the various risk exposures together with the riskadjusted return in each line of business, from the overall standpoint of the la Caixa Group and in accordance with its management strategy la Caixa Annual Report 94

97 2010 Financial Report of the la Caixa Group One of the most important missions of the division, in conjunction with other divisions of la Caixa, is to lead the implementation of instruments throughout the branch network to ensure comprehensive risk management under the Basel II guidelines, in order to secure a balance between the risks taken and the expected returns. The tasks assigned to complete this mission define the organisational structure of the Global Risk Management Division, which is arranged around each of the risks of the la Caixa Group: Credit Risk: defining, validating and monitoring the portfolio risk measurement models, at operational and customer levels (ratings, scorings, probability of default (PD), loss given default (LGD) and exposure at default (EAD)) and developing tools for their integration into management and monitoring. The above measurements are used to determine the minimum capital requirements, from a regulatory and financial standpoint, and the riskadjusted return on the portfolio. Market Risk: independent supervision of the monitoring and control of risk relating to own positions, balance-sheet risk and liquidity risk, measured by the General Markets Division. Operational Risk: definition and implementation of the operational risk management model, developing the policies, methodologies and tools required to provide continuous improvement in business management quality; and measurement of the capital required to cover this risk, initially by the standard method. Risk Aggregation and Economic Capital: aggregation of the total risk, taking into account all risk types and studying any interactions between them. In 2009 the Recovery Management Division was created, which reports to the President and CEO s office and aims to reduce non-performing loans, by helping to prevent lending transactions from being placed in dispute status or speeding up the removal of such status. Procedures, tools and strategies For several years the la Caixa Group has used a set of tools and techniques based on the specific needs of each type of risk. These include probability of default calculations obtained through rating and scoring tools, loss given default and expected loss calculations relating to the various portfolios and risk-adjusted return tools, both at customer and branch level. Value at Risk (VaR) calculations are also performed for the various portfolios as a method for controlling and setting market risk limits, as well as a qualitative identification of the various operational risks relating to each of the Group s activities. The tools and procedures backing credit risk management are listed under the headings of Lending organisation and processes, and later. Credit risk measurement and rating, (see section 4.2.2). All the risk measurement, monitoring and management work is performed in accordance with the recommendation of the Basel Committee on Banking Supervision: International Convergence of Capital Measurement and Capital Standards A Revised Framework, commonly known as Basel II, and the ensuing implementation thereof by the related European directives and Spanish legislation in force, supported by three pillars: Pillar 1 determines the minimum capital requirements for financial institutions based on several financial risks: credit risk, market risk associated with 2010 la Caixa Annual Report 95

98 2010 Financial Report of the la Caixa Group 4. Active risk management 4.1. Comprehensive risk management at the heart of the strategy (cont.) financial assets and liabilities held for trading and the position in foreign currency and operational risk. Pillar 2 analyses the main principles of the supervisory process. It also sets out the guidelines to be followed to develop an internal capital assessment process, and defines the capital objectives in relation to each institution s risk profile and control environment, in order to cover possible risks, whether or not included in Pillar 1, such as: concentration of risk, credit risk pressure, liquidity risk, balance-sheet interest-rate risk, etc. Pillar 3, which supplements the other two pillars, encourages market discipline by setting out disclosure requirements helping the market players to assess the information on capital, risk exposure and measurement processes. Following a validation process, in June 2008 the Bank of Spain authorised the la Caixa Group to use advanced models for the calculation of the minimum capital requirements to meet credit risk. The Bank of Spain also authorised the use as of 31 December 2007 of the internal model for measuring market risk associated with financial assets and liabilities held for trading, foreign currency and gold risk or commodity price risk for the calculation of regulatory capital consumption. Going beyond merely satisfying the regulatory capital requirements proposed by Basel II, which relate to formulations geared towards guaranteeing capital adequacy with confidence levels of 99.9%, the la Caixa Group applies more exacting levels and is making progress towards a risk management model based on Economic Capital with the objective of assuring, at the least, its current rating levels. Internal auditing The mission of Internal Auditing at the la Caixa Group is to guarantee an effective monitoring of the internal control system by performing an independent function which is mostly based within the structure of the head company, reporting directly to the Board of Directors. Auditing is strategically focused on detecting, supervising and controlling the main risks at the la Caixa Group. Its aim is to keep the possible impact of the risks inachievingthegroup sgoalsata reasonable level and to provide added value through its actions. The organisation and methodology of the work are focused on attaining these objectives. The methodology currently used is based on identifying the Group s main inherent risks,theprocedureswherethesemay arise and the controls to mitigate them. This list of risks, processes and controls are brought up to date annually and allow the team, through the subsequent auditing tasks, to evaluate the Group s internal control system and obtain a Map of Residual Risks. Internal auditing checks that regulations and established controls are complied with and issues recommendations when weaknesses are detected. It carries out internal oversight as part of the overall Basel II risk management: Pillar 1 (credit risk, operational risk and market risk), Pillar 2(SCR-Self-AssessmentofCapitalReport and further risks) and Pillar 3 (PRR-Prudent Relevance Report) la Caixa Annual Report 96

99 2010 Financial Report of the la Caixa Group 4.2. Credit risk High-quality loan portfolio The Bank of Spain s accounting regulations classify loans and receivables and debt instruments into various categories according to the default status and/or the existing risk, as follows: standard, substandard, doubtful and loss. Standard risk also contains the following subcategories: negligible risk (public sector, credit institutions, cash collateral), low risk (mortgages on completed housing and on amounts under 80% of the appraised value), medium-low risk (other types of mortgages and secured loans), medium risk (other resident sectors and OECD countries), mediumhigh risk (consumer loans and loans to non-oecd countries) and high risk (card balances and current and credit account overdrafts). 75.3% of the loan portfolio of la Caixa was classified as being between low risk and medium-low risk according the accounting regulation. Diversified lending with adequate collateral The la Caixa Group s lending activity is geared towards meeting the financing needs of households and businesses, and its lending portfolio is characterised by its diversified and fragmented nature, which therefore reduces the already low and strongly collateralised credit risk. Along these lines, despite the stagnation in the real estate industry, mortgage loans accounted for % of total loans. Notably, 89% of the mortgage portfolio had an LTV (loan to value) ratio of less than 80%. Loans to private borrowers accounted for 50.8% of the la Caixa Group s total loan portfolio, 90.4% of which were mortgages. Of these, 92.3% were granted to primary residence homebuyers. A portion of the loans to primary residence homebuyers are first taken out temporarily LOAN PORTFOLIO COMPOSITION RISK TRANCHES (*) 3.1% 20.8% 22.5% 53.6% Low risk Medium risk 2.7% 22.0% 23.3% 52.0% Medium-low risk Medium-high / High risk (*) Categories based on the classification issued in Bank of Spain Circular TOP QUALITY LENDING AvERAGE MORTGAGE PORTFOLIO LTv OF 47% 89% OF PORTFOLIO WITH LTv < 80% BREAKDOWN BY COLLATERAL 29.4% 4.9% MORTGAGE PORTFOLIO BY LTv RATIO 18.9% 11.0% 30.5% 65.7% 22.8% 16.8% Mortgage portfolio Public sector Non-mortgage < 50% = 60%-70% > 80% 50%-60% 70%-80% 2010 la Caixa Annual Report 97

100 2010 Financial Report of the la Caixa Group 4. Active risk management High-quality loan portfolio (cont.) by developers to finance construction work, and then, once the development is finished and has been sold, the private homebuyer is subrogated to the loan. Developer loans are characterised by being granted primarily for the construction of new homes concentrated in urban areas, and have an LTV ratio of around 0%. As regards exposure to risk of developers totalling EUR 2,284 million at year-end in 2010, EUR 20,2 7 million were linked to property developments ( 0% finished developments, 23% ongoing and 17% in land) and,017 million in other loans to developers. The NPL ratio in this segment in December 2010 stood at 15.5%, with coverage of EUR 1, 47 million in specific provisions. Additionally, there are EUR 1,835 million of general provisions. Through the financing it grants to businesses, the la Caixa Group participates in the productive development of all of the business sectors of the Spanish economy: infrastructure construction, industry (manufacturing companies and electric, gas and water utilities), services (retail trade, hospitality and transport) and the primary sector (agriculture, livestock breeding and fishing). The strategy undertaken by la Caixa, which is aimed at achieving a greater presence in the business segment, gave a boost to lending for productive activities in Financing for SMEs accounted for 0.3% of the Group s business lending portfolio. In line with its clear commitment to further strengthening its ties with the country s industrial fabric, in 2010 la Caixa continued to develop new products and services for SMEs. In terms of geographical distribution, the la Caixa Group s lending activity is mainly concentrated in Spain. BREAKDOWN BY CUSTOMER TOTAL LOANS TO PRIvATE BORROWERS LOANS TO BUSINESSES 9.5% By collateral 9.6% By type of business 39.7% 50.8% 90.4% 60.3% 39.7% Private borrowers Others Businesses Mortgage Other collateral (*) collateral (*) Of which 92.3% relates to primary residence homebuyers SMEs Large companies 2010 la Caixa Annual Report 98

101 2010 Financial Report of the la Caixa Group Following the application of principles of the utmost prudence in terms of classifying risk and provisioning at 2010 year-end, the NPL ratio was 3.71% and the NPL coverage ratio stood at 70%, 140% with mortgage collateral without making use of the general provisions. Since most loans are to private borrowers and consist primarily of mortgages to primary residence homebuyers, the loan structure has a significantly low risk level. Doubtful loans rose to EUR 7,228 million in 2010 as a result of the overall deterioration of the economy and of prudent risk rating policies, which resulted in an NPL ratio (doubtful loans as a percentage of total loans) of 3.71% for the la Caixa Group and 3.47% for la Caixa. The ratio increased by only 0.29% compared to December 2009, and this is due to the high quality of the loan portfolio, prudent risk management and intensive recovery activity. These ratios continue to be lower than the average for the Spanish financial system taken as a whole, which stood at 5.81% at 31 December Credit loss provisions totalled EUR 5,025 million, EUR 1,111 million more than in 2009, with the result that the NPL coverage ratio stood at 70% at 2010 yearend. The coverage provided by mortgage collateral brings the total coverage up to 140%. At 31 December 2010, the general provisions amounted to EUR 1,835 million. The general provisions stood at 97% of the α ratio defined under Bank of Spain rules, considerably higher than the required minimum. Therefore, the level of credit risk at the la Caixa Group remains among the lowest in the Spanish financial system as a result of diversification, the value of the collateral and a prudent risk coverage policy. Management of the la Caixa Group s credit risk is characterised by a prudent loan approval policy and a high degree of anticipation to achieve one of the soundest positions in the Spanish financial market. Finally, as a result of management of the credit portfolio, the la Caixa Group s property portfolio available for sale amounted to a net sum of EUR 3, 52 million at 31 December 2010, with coverage of 25% thereof, of which EUR 1,724 million were in property, 154 million in unfinished developments and 1,774 million in land. NO USE WAS MADE OF THE GENERAL PROvISIONS IN 2010 CONSERvATIvE RISK COvERAGE POLICIES DOUBTFUL LOANS AND NPL RATIO (Millions of euros) NPL ratio Doubtful loans 3.42% 3.49% 3.46% 3.53% 6, ,427 1Q10 1Q10 6,529 2Q10 2Q10 6,636 3Q10 3Q % 7,228 PROvISIONS AND NPL COvERAGE RATIO (Millions of euros) 70% NPL 64% 66% 62% 62% coverage ratio 5,025 3,914 3,987 4,198 4,362 Provisions DOUBTFUL LOANS ADDED AND REMOVED BY SEMESTER (Millions of euros) 4,054 3,124 2,927 (*) 1,989 2,277 2,121 2,167 2,060 1,852 2, S08 2S08 1S09 2S09 1S10 2S10 Added Removed 30% 72% 82% % recovery (*) Includes Caixa Girona 2010 la Caixa Annual Report 99

102 2010 Financial Report of the la Caixa Group 4. Active risk management Credit risk management Lending organisation and processes In 2010 the risk-adjusted price system continued to be used, as in the previous two years, based on maximum amounts in relation to guarantees and customers, when this involves either individuals or very large companies, and for limits of expected loss per each customer, for the remaining business segments. Thus, in 2010, new policies were applied based on each customer s creditworthiness. The introduction of parameters into the system of powers was confirmed to be an extremely effective tool for delegating as regards taking risks. Therefore it has been decided to also extend this procedure to the segment of property developers, and in early 2011 this operation is scheduled to be introduced to the branch network. The branches have been trained to use a new measurement model for approving business-oriented transactions in the segment of non-customer self-employed professionals, or those not closely linked to la Caixa. This innovation concludes the wide range of creditworthiness measuring tools aimed at individuals. As regards the credit approval system, the electronic file continued to be key to the efficiency of this process to eliminate the physical movement of the file. Systems have been implemented to provide all kinds of authorisation, which allows a more accurate calculation of workloads at different levels of the organisation. As for dealing with transactions, it is worth noting the opening throughout the network of new general lines for contracting derivatives, together with improvements to integrate these into the customer risk assessment tools. As part the process of determining the price of transactions, both the pricing tools integrated into the applications system and the information regarding the benchmark spread and Risk-adjusted Spread are key items (see below in the section titled Riskadjusted return), which are calculated monthly. In 2010 offices were provided with greater leeway for negotiating the economic conditions applicable to an application, provided it guarantees adequate coverage of the risk premium. Finally, a new analysis platform for companies was introduced which is already operating in most of the network and in the first quarter of 2011 it will be in use at all the branches. In 2010, organisational changes carried out in 2009 to guarantee the independence of the function of risk regarding the commercial business were consolidated. LOANS GRANTED BY LEvEL OF AUTHORITY % of approved loans 4.4% 10.7% 13.4% Branches Area Managers LOANS GRANTED BY LEvEL OF AUTHORITY % of principal granted 17.2% 49.5% Branches Area Managers Board of Directors 20.3% 71.5% Business Division Managers Head Office and Board of Directors 3.5% 9.4% Business Division Managers Head Office 2010 la Caixa Annual Report 100

103 2010 Financial Report of the la Caixa Group Recovery Management The Group s risk management has focused on organisational efforts to deal with the increase in non-performing loans and to adopt careful measures to ensure that debts that are difficult to recover may be claimed effectively, starting from the first signs of deterioration of borrowers solvency, with ongoing monitoring of their creditworthiness and of the mortgage collateral saw the creation of the Recovery Management Division, which reports to the President and CEO s office and aims to reduce nonperforming loans by helping to prevent lending transactions from being placed in dispute status or speeding up the removal of such status. In addition to analysing transactions within its scope and participating in several committees (refinancing, developers risks, subrogation and for appraising the purchase of property assets), in 2010 the Recovery Division led training courses for personnel in the recovery teams deployed in each Territorial area. Notwithstanding the constant monitoring of the lending portfolio, la Caixa has also maintained measures to mitigate the impact of the recession on individual customers. Accordingly, la Caixa is adapting short-term payments to debtors current available funds, with the expectation that this deferral will result in a successful outcome for the transactions concerned. Out of the various options to achieve this end, an analysis is carried out with customers of the one which would best suit their situation, always ensuring the final objective is to recover the loan, while complying with internal risk approval procedures. Credit Risk Analysis and Monitoring At la Caixa, the Credit Risk Analysis and Monitoring Division, which reports to the Global Risk Management Division, is kept independent from the Risk Analysis and Approval Division and is organised into a set of territorial monitoring units. Its function is twofold: to prepare follow-up reports on borrowers or groups of companies with higher risks and to monitor risk holders whose creditworthiness shows signs of deteriorating, using a rating system based on risk alerts on each borrower. The risk alert system and the borrower scoring system based on the borrower s risk performance play a key role in assisting both the approval system, as discussed above, and the monitoring process. As a result, borrowers with a higher probability of default in the short term are analysed more thoroughly and more frequently. Another feature of the alert system is that it is fully integrated with the customer information systems as the alerts are allocated to each borrower and a rating 2010 la Caixa Annual Report 101

104 2010 Financial Report of the la Caixa Group 4. Active risk management Credit risk management (cont.) is established on a monthly basis. In addition, the information on a customer s alerts is integrated with the rest of the information on the customer and, whenever the customer applies for a loan, a report is obtained on these alerts and on the customer s rating. The outcome of the monitoring process is the establishment of Action Plans for each of the customers analysed. These aim to complement the alert-based rating while acting as a guide for the lending policy for future loans. Monitoring borrowers in the building and development sector continued to be the main focus of attention at the Credit Risk Analysis and Monitoring Division. With respect to individuals, preventive risk management enabled possible signs of deterioration in their capacity to repay to be detected as soon as possible, in order to analyse each case individually and adopt the most appropriate solution. Credit risk measurement and rating The mission of the Credit Risk Methodology and Models Division, which reports to the Global Risk Management Division, is to build, maintain and monitor the credit risk measurement systems. It is also in charge of guaranteeing and advising on the use of these systems, while seeking to ensure that the decisions based on these measurements take into account their quality. As established in the best practices, this function is independent from the business divisions to ensure that the risk rating policies are not affected by commercial considerations. On 25 June 2008, the Bank of Spain authorised the la Caixa Group to use an internal ratings based (IRB) approach to calculate the minimum capital requirements for credit risk. The la Caixa Group is therefore now among the leading institutions that have passed the supervisory validation process. To achieve the Division s aims, periodical reviews are performed of all the models, to detect any deterioration in the quality of the measurements, and of the estimates made, in order to include any shifts in the economic cycle. Practically the entire retail banking portfolio, which includes the individual and SME segments, is assessed on a monthly basis, enabling the knowledge base on these customers and their portfolios to be updated almost continually. This continual risk assessment provides information on the distribution of the risk exposure in the various portfolios with respect to creditworthiness, expressed as a probability of default. Risk measurement involves two basic concepts: expected loss and unexpected loss. Basel II provides for the need for entities to cover the expected loss amount through provisions. In this area, the la Caixa Group applies the rules contained in Annex I of Bank of Spain Circular 4/2004. Therefore, it recognises the specific, general and country risk provisions required under the Circular to cover expected loss. Unexpected loss, on the other hand, must be provided for with capital la Caixa Annual Report 102

105 2010 Financial Report of the la Caixa Group Expected loss Expected loss is the result of multiplying three factors: exposure, probability of default and loss given default. These three factors provide an estimate of the expected loss through credit risk from each loan, customer or portfolio. Exposure at Default Exposure at Default (EAD) provides an estimate of the debt outstanding in the event of default by the customer. This measurement is particularly significant for financial instruments with a repayment structure that varies according to customer drawdowns (credit accounts, credit cards and any revolving credit product, in general). This estimate is obtained through observation of the Institution s internal default experience, and relates the drawdown levels upon default to the drawdown levels in the 12 preceding months. The relationships observed in terms of product type, term to maturity and customer characteristics are modelled for each transaction in order to provide the aforementioned estimate. Probability of default la Caixa has management tools in place to assist with predicting the probability of default (PD) associated with each borrower, covering virtually all of its lending business. These tools are either product or customer-oriented. Product-oriented tools take into account the debtor s specific characteristics in relation to the product concerned and are used basically in connection with the approval of new retail banking transactions. On the other hand, customer-oriented tools assess the debtor s probability of default on a general basis; however, the results for individuals may be differentiated according to product. Customer-oriented tools include behavioural scoring models for individuals and ratings for companies, and are implemented throughout the branch network as part of the ordinary credit approval tools. The accompanying charts illustrate the distribution by rating scale of the whole portfolio, separating legal entities (companies and SMEs) and retail segments (mortgages, consumer-related and cards). The credit risk rating tools were developed on the basis of the Institution s NPL experience and include the measurements needed to fine-tune the results to the business cycle and the projections for the next cycle, in order to provide ratings that are relatively stable in the long term which may differ from the default rates observed from time to time. BREAKDOWN OF ExPOSURE: CORPORATE (%) BREAKDOWN OF ExPOSURE: RETAIL (%) AAA / AA A BBB BB B CCC AAA / AA A BBB BB B CCC Non developer companies Property developers AAA-CCC: internal descending scale of credit-worthiness 2010 la Caixa Annual Report 103

106 2010 Financial Report of the la Caixa Group 4. Active risk management Credit risk management (cont.) The accompanying table illustrates the annual performance of default frequency (the percentage of customers or, regarding the retail segment, of contracts in the healthy portfolio at the start of the year that have defaulted at any time during the year) and shows an improvement in 2010 compared to the previous year. All the rating tools for companies are customer-oriented and vary considerably according to the customer segment. The rating process for micro-enterprises and SMEs is very similar to that for individuals. In this case a modular algorithm was developed, which rates three different sets of data: the financial statements, the information drawn from dealings with customers and certain qualitative factors. The ratings obtained are also adjusted to the economic cycle. The Corporate Rating function, which reports to the Credit Risk Analysis and Monitoring Division, has internal models in place to obtain ratings for the large companies segment. These are expert models and give greater weight to analysts qualitative opinion and were aligned with Standard Poor s methodology and, as a result, it has been possible to use the global default rates published by this rating agency, which made the methodology more reliable. The models were developed on the basis of data with sufficiently significant historical depth and, therefore, they include the cycle effect to a reasonable degree and ensure the stability of the measurements obtained. The results of all the tools are linked to a risk master scale which provides a standard classification for the lending portfolio, namely, it allows risk to be grouped according to a common expected NPL ratio. Loss given default Loss given default (LGD) is the percentage of debt that may not be recovered in the event of customer default. The Institution reviews the default recovery and default remedial procedures on an ongoing basis to minimise the impact of a potential write-off. The historical loss given default rates are calculated using la Caixa internal information, taking into consideration all of the cash flows associated with the contracts from the moment of default until the situation is either remedied or a write-off finally declared. This calculation also includes an estimate of the indirect expenses (office personnel, infrastructure costs and the like) associated with the process. In addition, work is being carried out on modelling loss given default in order to provide correct initial estimates, based on the collateral, the loan-to-value ratio, the type of product, the borrower s creditworthiness and, as required by current legislation, the recessionary phases of the economic cycle. In 2010 the Bank of Spain authorised the application of internal LGDs estimates for portfolios related to SMEs-Developers, together with those of Large Companies and Large Developers, when calculating the minimum regulatory capital requirements. As a result of the credit approval policies, of the requirement to provide collateral with a more favourable loan-to-value ratio, and of the active management of the default remedial procedures, and with the Improvement that this has on the levels of remedies and recovery in the event of default, the estimated loss given default rates for the portfolio are currently very low. Trend in NPL frequency Developers Companies 10.38% 14.81% 11.37% SMEs 5.12% 8.9 %.19% Non developers Companies 2.4 % 3. 0% 1.51% SMEs 3.48% 4.84% 3.11% Retail Mortgage 1.2 % 1. 5% 0.82% Consumption 1.89% 3.09% 2.24% Cards 0.70% 0.99% 0.50% The Trend in NPL frequency in the retail segment was calculated using contracts as universe of calculation, not customers. Risk master scale % expected NPL Scoring/Rating la Caixa Annual Report 104

107 2010 Financial Report of the la Caixa Group Risk-adjusted return la Caixa has a number of tools in place to assess the rate of return that may be expected from a contract/customer based on the coverage of the expected losses and an adequate return on the capital retained to meet the unexpected losses which might arise from the risks taken. The benchmark spread for companies indicates the cost of the risk taken in each customer s outstanding loans in the last year-on-year period. This cost is compared with the Risk-Adjusted Spread, which indicates the customers overall rate of return, net of the finance and operating costs, and ultimately determines the Customer s Added Value. Unexpected loss and economic capital The measurement of expected loss ensures that credit risk can be properly controlled in normal market conditions. In fact, expected loss can be considered an additional cost of the business. However, actual losses may occasionally exceed expected losses as a result of sudden changes in the cycle, or in the risk factors specific to each portfolio, and of the natural correlation among the credit risks of the various debtors. In fact. Pillar 1 of Basel II provides for certain minimum capital requirements specifically to cope with potential unexpected losses. If an internal ratings-based methodology such as the one used by the la Caixa Group is adopted, the relevant formula for each business segment should be used, which takes into account the influence of the probability of default, the proportional impact of the loss given default, the adjustment for the term to maturity of the transaction concerned and certain established correlations, whether fixed or in inverse proportion to the probability of default, depending on the business segment in question. The variability of expected portfolio losses constitutes the unexpected losses, which represent the potential unforeseen losses. These losses are calculated as the loss associated with a sufficiently high confidence level of the loss distribution, less the expected loss. The aim of the Institution is to have sufficient own funds or capital to meet unexpected losses. Two concepts have traditionally been distinguished: Economic capital is the capital that an institution should have in order to assume the unexpected losses which might be incurred and which might jeopardise the Institution s continuity. It is an internal estimate which is gradually adjusted according to the Institution s own level of risk tolerance, volume and business activity. Regulatory capital is the mandatory capital to be maintained by the entity as required by the supervisory body. Economic capital is not a substitute for regulatory capital but a supplement thereto which is used to achieve greater alignment with the actual risk profile assumed by the Institution and include risks not foreseen, or only partially considered, in the regulatory requirements. The level of capitalisation of an institution (not necessarily in regulatory terms) and the risk profile assumed, measured in terms of capital requirements, define an institution s capital adequacy, i.e. its creditworthiness. Appropriate capital management is and will be a differentiating factor among the most advanced and competitive entities. A management approach based on the measurement of economic capital makes it possible to measure and manage risk, while identifying the riskier transactions or lines of business and also those which 2010 la Caixa Annual Report 105

108 2010 Financial Report of the la Caixa Group 4. Active risk management Credit risk management (cont.) generate the highest economic value according to the measurements of return on capital. la Caixa therefore has an integrated model in place that, using its own standards, measures the integrated risk on the credit portfolio and on the equity portfolio. This internal economic capital model is undergoing continual improvement to ensure that it incorporates industry best practices in this area and includes the Group s risk profile as accurately as possible. Internal validation The New Basel Capital Accord is geared towards determining the minimum capital requirements of each entity in accordance with its risk profile. In the area of credit risk it enables entities to use internal rating models and their own estimates of risk parameters to determine their capital requirements. Until 2010 the reviews made by Internal Validation were limited to credit risk. This year, following the regulator s guidelines the area covered has been extended to market risk. In the last quarter, a definition was drawn up of the framework for validation in this area and this will be developed in The importance of the process for determining capital requires adequate controls to be in place which guarantee the reliability of the estimates, both from a quantitative and from a qualitative perspective. The control environment must also be sufficiently specialised and ongoing, supplementing the traditional control functions (internal audit and monitoring). The Bank of Spain establishes internal validation as an essential prerequisite to validation by the supervisory authority, and it must be performed by a specialised independent department within the Institution. The validation function is carried out by the Internal Validation Unit, which falls under the General Division of the Validation and Technical Secretary s office, the latter reporting directly to the Senior Executive Vice-President s office in charge of Risks, and is independent of the model development team and the team in charge of defining policies and procedures. The main goals of the Validation Unit are to issue an opinion on whether the internal models are adequate for regulatory purposes, identifying all the important uses thereof, as well as assessing whether the risk management and control procedures are aligned with the Institution s strategy and risk profile. In addition, it must provide support to the Executive Management (particularly to the Global Risk Management Committee) in their responsibilities regarding approval of the use of internal models and coordinate the supervisory validation process with the Bank of Spain. The Internal Validation work methodology is based on drawing up annual plans which include the reviews to be made throughout each year. These reviews are grouped into Validation Cycles and specific Tests. Validation cycles are a set of periodical reviews which enable the annual analysis of each IRB model, its performance and its integration into the risk management processes. The specific tests consist of thorough reviews, which may occur due to the approval and introduction of internal models or the updating of the risk parameters, to reviews initiated by Internal Validation due to signs detected in the validation cycles or to reviews requested by the supervisor or divisions affected. Quality of data Follow-up report on variables validation cycle Management integration map and report Follow-up report on the model 2010 la Caixa Annual Report 106

109 2010 Financial Report of the la Caixa Group Additionally, in its specific duties as controller, Internal Validation carries out reporting functions, of particular note amongst which is coordinating the drawing up of the IRB Monitoring Dossier, a document which is requested by the supervisor for each internal model approved for regulatory use. Also, as part of credit risk, following years of experience validating and monitoring models, the aim is to broaden the reach of reviews to the field of integrating them into management, in order to provide support for Executive Management and add value in this respect to the remaining areas of the Institution (Methodologies, Policies, Systems, etc.). Investee Portfolio The risk relating to the la Caixa Group s investee portfolio is the risk associated with the possibility of incurring losses as a result of fluctuations in market prices and/or default on the positions making up the equity portfolio within a mid- to longterm time horizon. At 31 December 2010, the market value of the listed investee portfolio amounted to EUR 18, 85 million, including pre-tax unrealised gains amounting to EUR 2,709 million. The Global Risk Management Division, with the support of Criteria CaixaCorp, measures the risk of these positions, both from the standpoint of the underlying risk in terms of market price volatility, applying VaR models (a statistical estimate of the maximum potential losses by reference to historical data on changes in prices) to the return spread in relation to risk-free interest rates as indicated in Basel II, and also from the standpoint of the uncertainty of default, using models based on the PD/LGD approach, also following the guidelines contained in Basel II. These indicators are monitored on an ongoing basis to ensure that the most appropriate decisions are always adopted on the basis of the past and projected performance of the markets and of the la Caixa Group s strategy. These measurements and the related developments are necessary to monitor management of the investee portfolio and enable strategic decisions to be made on the composition of the portfolio by senior executives of the la Caixa Group. The Global Risk Management Division has an Investee Risk Control unit, the main objective of which is to optimise the risk/ return ratio on this portfolio and monitor and, once investments or divestments have been made, follow up on the risk relating to the asset positions held by la Caixa in investees. The risk relating to the asset positions comprises two factors: the ownership interest and the risk granted to investees. The principle guiding the work of this unit is to apply a holistic approach to risk, so that the equity investments of la Caixa are considered within a broad risk assessment context. Analysis of these positions provides a dynamic overview of the effects of the diversification and concentration of the Group s global portfolio. The work carried out by this unit is designed to provide management with a global analysis of the risk associated with the interests in investees, comparing them with the investments in other assets. In addition, the Market Risk Control Division, in conjunction with Criteria CaixaCorp, includes in its risk monitoring process the risk arising from derivatives and the foreign currency risk associated with the investee portfolio, and also performs an ongoing follow-up of the risks relating to the financial market transactions associated with the financial investees la Caixa Annual Report 107

110 2010 Financial Report of the la Caixa Group 4. Active risk management 4.3. Managing the risk of balance sheet positions Management of balance sheet interest rate risk Interest rate risk, which is inherent to all banking activities, arises when changes in the structure of the market yield curve affect assets and liabilities and cause them to be renewed at rates other than those set previously, thereby affecting their economic value and net interest income. This risk, also known as structural interest rate risk, is managed and controlled directly by management of la Caixa through the ALCO. The la Caixa Group manages interest rate risk pursuing a twofold objective: to reduce the sensitivity of net interest income to interest rate fluctuations and preserve the economic value of the balance sheet. To attain these two objectives, the Group actively manages interest rate risk by taking out financial market hedges in addition to the natural hedges generated in the Group s own balance sheet as a result of the complementary nature of the sensitivity to interest rate fluctuations of the deposits and lending transactions arranged with customers. The General Markets Division is responsible for analysing interest rate risk and proposing hedging transactions aligned with the above objectives to the ALCO. To carry out this task, various measures are used to evaluate the risk: I. Static gap analysis provides a breakdown of maturities and interest rate resets, at a given date, of sensitive items on the balance sheet. The sensitivity to interest rates and the expected term to maturity, based on past experience of customer behaviour, are analysed for items without a contractual maturity date (e.g. demand deposits), while taking into account the likelihood of customers withdrawing the funds from these products. Internal models are used for the early repayment or termination assumptions which include behavioural variables of customers, products, seasonality and macroeconomic variables, in order to infer the customers future performance. II. The sensitivity of net interest income shows the impact upon the review of on-balance-sheet transactions caused by changes in the yield curve. This sensitivity is determined by comparing a net interest income simulation by reference to various interest rate scenarios. The most likely scenario, which is arrived at using underlying market rates, is compared against other scenarios of rising or falling interest rates and changes in the slope of the MINIMUM ExPOSURE TO RISK FROM INTEREST RATES ON THE BALANCE SHEET THROUGH NATURAL HEDGING AND FINANCIAL MARKETS HEDGING curve. The two-year sensitivity of net interest income to sensitive on-balancesheet assets and liabilities, taking into consideration scenarios of rises and falls in interest rates of 150 basis points each and distributing the rate fluctuation over the two years is approximately 0.39% in the rising scenario and 0.7 % in the falling scenario. III. The sensitivity of asset/liability values to interest rates measures the potential effect on balance sheet present value in the event of interest rate fluctuations. The sensitivity of net interest income and equity value are measures that complement each other and provide an overview of structural risk which is more focused on the short and medium term, in the case of net interest income, and on the medium and long term in the case of equity value. IV. VaR measures are used following the treasury-specific methodology (see the next section). Matrix of maturities and repricings in the sensitive balance sheet (static gap) of la Caixa at 31/12/2010 (Figures in millions of euros) 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS > 5 YEARS Assets 182,899 5,904 3,185 4,222 4,919 3,139 Mortgage collateral 11, Other guarantees 58,295 4,852 2, ,475 Debt securities 8, ,520 4, Liabilities 132,520 21,136 12,918 10,534 5,144 22,016 Customer funds 92,400 17,319 7,718 5,905 2,503 8,983 Issues 32,459 3,81 5,200 4, 29 2, 38 13,022 Net monetary market 7, GAP 50,379 (15,232) (9,733) (6,312) (225) (18,877) HEDGES (34,345) 5,768 5,175 7,715 2,814 12,873 TOTAL GAP 16,034 (9,464) (4,558) 1,403 2,589 (6,004) 2010 la Caixa Annual Report 108

111 2010 Financial Report of the la Caixa Group V. EaR (earnings at risk) measures are used to establish, with a given confidence level (99%), the maximum expected loss in net interest income for the next two years, considering a given level of balance sheet growth. This analysis also enables the possible worst or best scenarios to be identified in all the simulated scenarios and thus obtain maximum risk levels. In keeping with current legislation, the la Caixa Group does not consume capital as a result of the structural interest rate risk taken, due to its low balance sheet risk profile. Although the balance sheet interest rate risk taken by la Caixa is substantially below levels considered significant (outliers), in keeping with the proposals of Basel II, a series of steps continue to be taken at la Caixa towards more intense monitoring and management of balance sheet interest rate risk. Management of the market risk of treasury positions The Market Risk Control Division is responsible for monitoring these risks and assessing counterparty risk and the operational risk associated with the activity in the financial markets. To fulfil its duties, each day this division monitors the contracts traded, calculates how changes in the market will affect the positions held (daily result of marking to market), quantifies the market risk taken, monitors compliance with the limits and analyses the ratio of actual return to risk taken. As a result of its front office activities in financial markets, the la Caixa Group is exposed to market risk due to adverse changes in the following risk factors: interest and exchange rates (caused by the treasury positions taken), share prices, commodity prices, inflation, volatility and changes in the credit spreads on private fixed-income positions. The two most commonly used risk measures are Sensitivity and VaR (Value at Risk). Sensitivity calculates risk as the impact on the value of positions of a minor change in the risk factors, as follows: For interest rate and inflation risk, a calculation is performed of the change in the present value of each of the future flows (actual or forecast) in the event of a one basis point (0.01%) change at all stages of the curve. For foreign currency risk, a calculation is performed of the change in the counter value of each of the foreign currency flows in the event of a one percent (1%) change in the exchange rate. For the price risk on shares or other equity instruments arranged by the front office, and for commodity price risk, a calculation is performed of the change in the present value of the position or portfolio in the event of a one percent (1%) change in the price of its components. For the volatility risk (interest-rate or price fluctuations) associated with options transactions (interest-rate caps and floors and currency or equity options), a calculation is performed of the change in the present value of each of the future flows in the event of volatility changes in quoted exchange rates at all stages of the curve, in exchange rates and/or in asset prices. For the correlated activities risk (dependency between prices) contracted by the front office activity, the variation of the current value of the portfolio stake is calculated against a variation in the correlation of one percentage point (1%) of the prices of its composition. This risk is only found in unusual exotic equity options. POSITIONING BASED ON A MARKET SCENARIO THAT PREMIUMS LOW RISK ABOvE RETURNS DISTRIBUTION OF THE DAILY RESULTS OF THE FRONT OFFICE TRADING ACTIvITY IN 2010 (Frequency: number of days) Millions of euros < 4 4/ 3 3/ 2 2/ 1 1/0 0/1 1/2 2/3 3/4 4/5 5/ > la Caixa Annual Report 109

112 2010 Financial Report of the la Caixa Group 4. Active risk management 4.3. Managing the risk of balance sheet positions (cont.) These sensitivity analyses provide information on the impact on the economic value of positions of a rise in interest rates, exchange rates, prices or volatility, but do not provide any assumptions regarding the likelihood of this change. In order to standardise risk measurement across the entire portfolio, and to provide certain assumptions regarding the extent of changes in the market risk factors, the VaR methodology is employed (VaR: a statistical estimate of the potential losses by reference to historical data on changes in prices), using a one-daytime horizon and a statistical confidence level of 99%. In other words, 99 times out of 100 the actual losses sustained will be less than the losses estimated under the VaR method. In 2010 the average VaR in the front office trading activity was EUR 5.3 million. The highest consumption levels, up to a maximum of EUR 9.3 million, were attained in May, mainly as a result of the widening and destabilising of exchange rate fluctuations between Germany s public debt and that of its neighbouring countries, caused mainly by contagion of the financial crisis in Greece. Two methodologies are used to obtain this measurement: The parametric VaR technique, which is based on the statistical treatment of parameters such as volatility and matching fluctuations in the prices and interest and exchange rates of the assets composing the portfolio. According to the recommendations of the Basel Committee on Banking Supervision, it is applied using two time horizons: 75 days, giving more weight to recent observations, and 250 days, giving equal weight to all observations. Historical VaR calculates the impact on the value of the current portfolio of historical changes in the risk factors; the changes over the last 250 days are taken into account and, with a confidence level of 99%, VaR is taken to be the third worst impact on the value of the portfolio. A drop in the credit rating of asset issuers can also give rise to adverse changes in quoted market prices. Accordingly, the Market Risk Control Division completes the quantification of market risk with an estimate of the losses arising from changes in the volatility of the credit spread on private fixed-income positions (Spread VaR), which constitutes an estimate of the specific risk attributable to securities issuers. This calculation is performed with a given stress component, assuming that the daily change in credit spreads may result in a change equal to that historically experienced over a one-week time horizon (taking into account, when doing so, the potential lower liquidity of these assets) and a confidence level of 99%. At 31 December 2010, the la Caixa Group s exposure to structured credit, which is included under Financial Assets and Liabilities Held for Trading, is residual and is measured at market price. The Market VaR (arising from fluctuations in interest rates, exchange rates and the volatility of both) and the Spread VaR are aggregated on a conservative basis, assuming zero correlation between the two groups of risk factors. In the table VaR by risk factors there is an estimate of the average VaR amounts attributable to the various risk factors. As may be noted, consumption levels AvERAGE var 2010: EUR 5.3 MILLION RISK OF THE FRONT OFFICE TRADING ACTIvITY IN 2010 Daily performance of VaR (in thousands of euros) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. var by risk factors (Thousands of euros) AvERAGE var 2010 INTEREST RATE 2,466 E CHANGE RATE 89 SHARE PRICE 324 INFLATION 81 COMMODIT PRICE 14 INTEREST-RATE VOLATILIT 118 E CHANGE-RATE VOLATILIT 18 CREDIT-SPREAD VOLATILIT 3,361 SHARE-PRICE VOLATILIT 95 COMMODIT VOLATILIT 0 SHARE PRICE CORRELATION la Caixa Annual Report 110

113 2010 Financial Report of the la Caixa Group are moderate and basically relate to yield curve and credit spread risks. The volatility, commodity price and inflation risk amounts are of very marginal significance. To confirm the suitability of the risk estimates, daily results are compared against the losses estimated under the VaR technique (backtest). As required by banking regulators, two validations are made of the risk estimate model: a) Net backtesting, which relates the portion of the daily result of marking to market for open transactions at the close of the previous session to the estimated VaR over a time horizon of one day, calculated on the basis of the open positions at the close of the previous session. This validation is the most appropriate means of performing a self-assessment of the methodology used to quantify risk. b) Gross backtesting, which involves an assessment of the total result obtained in the day (therefore including any intraday transactions) by comparing this result against the VaR over a time horizon of one day calculated on the basis of the open transactions at the close of the previous session. This provides an assessment of the importance of intraday transactions in generating profit and calculating the total risk of the portfolio. Lastly, two stress testing techniques are used on the value of the treasury positions to calculate the possible losses on the portfolio in situations of extreme stress: 1. Systematic stress testing: this technique calculates the change in value of the portfolio in the event of a specific series of extreme changes in the main risk factors. The following factors are considered: parallel interest rate shifts (rising and falling); changes at various points of the slope of the yield curve (steepening and flattening); increased and decreased spread between the instruments subject to credit risk and government debt securities (bond-swap spread); shifts in the euro-us dollar curve spread; higher and lower volatility of interest rates; the appreciation and depreciation of the euro versus the dollar, the yen and sterling; higher and lower volatility of exchange rates; rising and falling stock and commodity prices and, lastly, the increased and reduced volatility of stocks and commodities. 2. Historical scenario analysis: this analysis addresses the potential impact of actual past situations on the value of the positions held, such as the collapse of the Nikkei in 1990, the US debt crisis and the Mexican peso crisis in 1994, the 1997 Asian crisis, the 1998 Russian debt crisis, the growth and collapse of the technology bubble in , the terrorist attacks that have caused the most severe effects on the financial markets over recent years, the credit crunch of summer 2007, the liquidity and confidence crisis triggered by the failure of Lehman Brothers in September 2008, or the increase in credit gaps in the surrounding euro zone due to contagion from the debt crises of Greece and Ireland in To complete these analyses of risk under extreme situations, the worst-case scenario is determined, which is the state of the risk factors in the last year that would cause the heaviest losses in the current portfolio. This is followed by an analysis of the distribution tail, i.e. the size of the losses that would arise if the market factor movement causing the losses is calculated on the basis of a 99.9% confidence level. As part of the required follow-up and control of the market risks taken, management approves a structure of overall VaR and sensitivity limits for the front office activity. The risk factors are managed by the General Markets Division on the basis of the return/risk ratio determined by market conditions and expectations. The Market Risk Control Division is in charge of monitoring compliance with these limits and the risks taken, and generates a daily report on position, risk quantification and the NET BACK TEST 2010 (In thousands of euros) 20,000 15,000 10,000 5, ,000 10,000 Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. GROSS BACK TEST 2010 (In thousands of euros) 20,000 15,000 10,000 5, ,000 10,000 Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. VaR + VaR Profits and losses VaR + VaR Profits and losses 2010 la Caixa Annual Report 111

114 2010 Financial Report of the la Caixa Group 4. Active risk management 4.3. Managing the risk of balance sheet positions (cont.) utilisation of risk limits which is distributed to management, front office executives and the internal audit division. Therefore, the market risk of the la Caixa Group s treasury positions is managed in accordance with the methodology and monitoring guidelines proposed by Basel II. Control of the risks taken in financial market operations must be supplemented by a calculation and monitoring of the losses that could arise as a result of default by the counterparty due to insolvency or inability to meet the payment obligations. The maximum authorised exposure to credit risk with a counterparty is determined on the basis of a calculation, approved by management, which is based primarily on ratings for the entities and on the analysis of their financial statements. Additionally monitoring is conducted on both the market value of shares and Credit Default Swaps (CDS) of the counterparties to detect any decrease in their solvency. The exposure of the la Caixa Group vis-a-vis credit institutions amounted to EUR 9,025 million at 31 December Nearly all the exposures arising from front office activities are undertaken with counterparties based primarily in European countries and the United States. In addition, the distribution by rating reflects the significance of the operations with counterparties rated as investment grade, i.e. those which the international credit rating agencies have considered to be safe due to their high payment capacity. The Global Risk Management Division has responsibility for integrating those risks within the Group s overall exposure management framework, although the specific responsibility for managing and monitoring the exposure to the counterparty risk arising from the front office activity lies with the Risk Analysis and Approval Division, which prepares the proposals for approval of risk lines and monitors the use of such lines. The la Caixa Group controls counterparty risk by means of an integrated, real-time system which provides knowledge of the limit available to any counterparties, by product and term, at all times. The risk is measured with reference to both present market value and future exposure (value of the risk positions taking into account future changes in the market factors underlying the transactions). Furthermore, the Risk Analysis and Approval Division, together with the Legal Advisory Division, as part of monitoring the credit risks assumed by the market operations, actively manage and monitor the adequacy of the related supporting contractual documentation. With the aim of mitigating its exposure to counterparty risk, la Caixa maintains a solid base of guarantee contracts; virtually all the risks assumed in connection with derivative instruments are covered by ISDA and/ or CMOF standardised contracts, which provide for the possibility of offsetting the flows of outstanding collections and payments between the parties for all the transactions covered by these contracts. The la Caixa Group has entered into collateral agreements with most counterparties, which guarantee the market value of derivative operations. The percentage of derivative collateralisation with financial institutions at la Caixa exceeds 98%. BREAKDOWN OF RISK BY COUNTERPARTY RATING (%) Balance at 31/12/ AAA AA+ AA AA A+ A A BBB+ BBB BBB BB+ BB BB 2010 la Caixa Annual Report 112

115 2010 Financial Report of the la Caixa Group 4.4. Managing liquidity risk The la Caixa Group keeps excellent liquidity levels with careful monitoring of natural hedging on the balance sheet and active management of financing sources. The Balance Sheet Risk Analysis Division, which reports to the General Markets Division, is in charge of analysing liquidity risk. The la Caixa Group manages liquidity risk so as to ensure that it is always able to meet its obligations on a timely basis and never see its investment activities suffer from a lack of lendable funds. This objective is achieved by actively managing liquid assets, through ongoing monitoring of the balance sheet structure, on the basis of maturities and early detection of potentially undesirable structures of short- and medium-term liquid assets, while adopting a strategy that stabilises financing sources. Also, la Caixa has a Liquidity Risk Contingency Plan, in which analyses are made under both ordinary market conditions and crisis situations, and in which various systemic and combined crisis scenarios are considered, entailing various loss given default assumptions in terms of reduced liquidity. Five categories of crisis scenario are analysed: three systemic crisis scenarios (macroeconomic crisis, upsets in the capital markets and alterations in payment systems), a specific crisis scenario (reputational crisis) and a combined crisis scenario considered as a worst-case scenario. These scenarios address various timeframes and loss given default levels based on the nature and depth of the crisis analysed. For each of the crisis scenarios, survival periods are calculated (defined as the ability to fulfil acquired commitments), together with sufficient liquidity levels to cope successfully with the crisis situations considered. These analyses are used to prepare the Liquidity Risk Contingency Plan which contains an action plan for each of the crisis scenarios established (systemic, specific and combined) and gives details on measures to be taken on a commercial, institutional and communications level to deal with this type of situation. The Plan also includes the possibility of using a series of spare reserves or extraordinary financing sources. The ALCO monitors medium-term liquid assets on a monthly basis by analysing forecast time lags in the balance sheet structure and verifies compliance with the limits and operating lines of action approved by the Board of Directors. The ALCO makes proposals to the Board of Directors on the optimum issues or financing or investment programmes to suit market conditions and the instruments and terms needed to support the growth of the business. The ALCO periodically monitors a series of indicators and warnings in order to anticipate a liquidity crisis and take the corrective measures, as laid down in the Liquidity Risk Contingency Plan. In addition, a monthly analysis is performed of the potential liquidity levels under each of the hypothetical crisis scenarios. Short-term liquid assets are managed to ensure that liquid assets are available on the balance sheet at all times, i.e. minimising the structural liquidity risk inherent to the banking business. To assist with this management process, a daily breakdown of liquid assets by maturities is made available by preparing projections of future flows, which provides information on the time structure of liquid assets at all times. As part of this approach to managing liquidity risk, so that it can anticipate potential needs for lendable funds, the la Caixa Group has a variety of ordinary financing programmes that cover the ACTIvE MANAGEMENT OF THE BALANCE SHEET TO GUARANTEE ADEQUATE LEvELS OF LIQUIDITY AND STABLE AND DIvERSIFIED FINANCING SOURCES TOTAL LIQUIDITY (Millions of euros) 21,208 19, % of Group Assets 2010 la Caixa Annual Report 113

116 2010 Financial Report of the la Caixa Group 4. Active risk management 4.4. Managing liquidity risk (cont.) various maturity periods to ensure that it has adequate liquidity levels at all times: The Note Programme, with a principal amount of EUR 12,000 million, provides access to short-term funds. Renewal and extension of the Simple Fixed-Income Securities Issue Framework Programme, which ensures the availability of long-term funds. The principal amount of this issue is EUR 25,000 million, of which EUR 21,808 million were available at 31 December In addition, as a prudent measure to prepare for potential stress on liquid assets or market crises, i.e. to cope with the contingent liquidity risk, the la Caixa Group has placed a series of guarantee deposits with the European Central Bank (ECB) through which high levels of liquid assets can be made available at short notice (ECB facility), currently standing at EUR 15,992 million. The finance obtained from the European Central Bank through the various monetary policy instruments was nil at 31 December In short, the la Caixa Group takes advantage of the existing mechanisms on financial markets to ensure that it has adequate levels of liquid assets to meet its strategic objectives, while taking into account a balanced distribution of the maturity dates of issues, thereby avoiding concentration and diversifying the financial instruments. OUTLINE OF LIQUIDITY RISK MANAGEMENT There is a continuum of possible situations involving the need for liquidity in the activities of la Caixa Severity Daily Minor systemic Serious reputational operations crisis and systemic crisis + Severity + Probability of occurrence Seasonality Serious systemic crisis Serious reputational crisis Probability of occurrence ORDINARY CONDITIONS SYSTEMIC CRISIS PROBABILISTIC DISTRIBUTION OF THE SEVERITY OF LIQUIDITY RISK: Three severity or stress levels SPECIFIC CRISIS COMBINED CRISIS SCENARIOS LIQUIDITY RISK SOURCE OF FUNDS + Severity Serious or very serious crisis Minor or moderate crisis SPECIFIC OR S STEMIC CRISIS CONTINGENT RIS ECB FACILIT SPARE RESERVES Ordinary conditions ORDINAR CONDITIONS STRUCTURAL RIS ORDINAR FINANCING Likelihood la Caixa Annual Report 114

117 2010 Financial Report of the la Caixa Group 4.5. Managing operational risk Operational risk management is based on specially qualified personnel, and the procedures, systems and controls in place. Operational risk includes all the events that could give rise to a loss caused by shortcomings in internal processes, human error, malfunctioning of information systems and/or external events. This risk is inherent to all business activities and, although it can never be wholly eliminated, it can be managed, mitigated and, in some cases, insured. Operational risk has become increasingly important as a result of the greater dependence of the banking business on such factors as the intensive use of information technology, outsourcing and complex financial instruments. Management of this risk takes place at the highest level. Management and the Global Risk Committee define the strategic lines of action and monitor the operational risk profile, the main loss events and the actions taken to mitigate them. There are two main lines of action: training employees so that they have the skills and information required to carry out their functions and systematic recurring reviews of the business and operating processes, putting improvements and new controls in place. In addition, where necessary, la Caixa transfers the risk to third parties by taking out insurance policies. The la Caixa Group is also developing a strategic project, promoted by management and in keeping with Bank of Spain proposals and regulations, for the implementation of a single comprehensive operational risk measurement and control model at the la Caixa Group. Management at Group level covers all the companies included in the scope of application of Bank of Spain Solvency Circular 3/2008. The la Caixa Group applies the standard method to calculate the regulatory capital for operational risk, with the intention of progressing towards the advanced model which will be applied once the right conditions arise for its use and when authorised by the Bank of Spain. In this regard, la Caixa has an Operational Risk Management Framework which defines the Group s operational risk objectives, policies, management model and assessment methods. The la Caixa Group s overall objective is to improve the quality of business management based on information on operational risks, aiding decision-making to ensure the long-term continuity of the organisation and improving processes and the quality of customer service, while also complying with the established regulatory framework and optimising capital consumption. MINIMISE THE OPERATIONAL RISK INHERENT TO ALL BUSINESS ACTIvITIES, BY MONITORING THE MAIN RISKS USING QUALITATIvE AND QUANTITATIvE TECHNIQUES OPERATIONAL RISK MANAGEMENT MODEL AT THE LA CAIxA GROUP Management Assessment 3.9% 52.2% Identification DISTRIBUTION OF OPERATIONAL RISK EvENTS IN THE LA CAIxA GROUP IN 2010 BY RISK TYPE 0.8% 5.0% 8.7% 6.6% Process performance, delivery and management Internal fraud Impairment of tangible assets Labour relations and safety at work 22.8% Practices with customers External fraud System failures 2010 la Caixa Annual Report 115

118 2010 Financial Report of the la Caixa Group 4. Active risk management 4.5. Managing operational risk (cont.) The organisational model is based on the following: Business and support divisions and subsidiaries: responsible for the identification, assessment, management, control and reporting on the operational risks relating to their activities. Operational Risk Unit: responsible for the definition, implementation and standardisation of the operational risk management, measurement and control model at the la Caixa Group. It provides support to the divisions and subsidiaries and consolidates the information for management reporting purposes. It forms part of the Credit Risk Methodology and Models Division within the Global Risk Management Division. Internal Audit Division: responsible for supervising compliance with the Management Framework and implementation of established operational risk assessment, control and management procedures. The operational risk management model and policies establish an ongoing process based on the following: Identification and detection of all current and potential operational risks, based on qualitative techniques (the opinion of process experts and risk indicators) and procedures for the management of operational risks, in order to define the la Caixa Group s operational risk profile. uantitative assessment of operational risk based on actual data on losses recorded on the database of operational events. Active management of the Group s risk profile, which implies establishing a reporting model at all levels of the organisation to assist with decisionmaking aimed at mitigating the risk (setting up new controls, developing business continuity plans, reengineering processes, taking out insurance against potential contingencies and others), while anticipating potential causes of risk and mitigating their economic impact. In 2010, the new process for qualitative identification of risks through selfappraisals was extended to most of the Group s divisions and subsidiaries. In addition, in 2010 the implementation of risk identifiers ( RIs) was consolidated, thus establishing periodical communication with the divisions and subsidiaries so as to compare the information they provided. The Operation Risk Management Framework was also updated to simplify its structure, but retaining the management principles contained therein. Progress also continued to be made in building the loss events database and recognising and monitoring operational losses, especially those classified as significant (operational events with the biggest economic impact), to be used, together with the qualitative information, for proactive operational risk management, so as to anticipate the possible causes of risk and reduce its financial impact, with the resulting adjustment of capital requirements. EvENT CAPTURE PROCESS Manual input of significant operational events Automatic collection of recurring loss events Loss events database Accounting reconciliation / identification process Accounting records 2010 la Caixa Annual Report 116

119 2010 Financial Report of the la Caixa Group 4.6. Regulatory compliance risk management The regulatory compliance policy of the la Caixa is based on the principles of integrity and ethical conduct, which form the cornerstones of the la Caixa Group s activities. In addition, following transposal into Spanish law of the Markets in Financial Instruments Directive (MiFID), the regulatory compliance function appears as a legal requirement for financial institutions in the following legislation: Securities Market Law 47/2007, of 19 December, amending Law 24/1988, of 28 July. Royal Decree 21 /2008, of 15 February, on capital of financial institutions. RD 217/2008, of 1 February, on investment services companies. The mission of the regulatory compliance function The mission of the la Caixa Group s regulatory compliance function is geared towards managing the risk of penalties imposed by laws or regulations and financial, material or reputational losses which may be suffered by the la Caixa Group upon violation of laws, regulations, regulatory standards or codes of conduct. IMPROvEMENT MEASURES This mission involves carrying out a series of activities including most notably: creating, disseminating and implementing a compliance culture at all levels of the la Caixa Group; advising senior management on regulatory compliance issues, preparing and/or promoting internal standards and codes or, where necessary, improving them; and defining effective procedures and proposing appropriate controls. In this regard, any risk of noncompliance must be detected and, where necessary, proposals for improvement drawn up and monitored, and any potential deficiencies with respect to professional ethics must be examined. To attain these objectives, the Regulatory Compliance Division issues regulatory compliance reports, monitors improvements and carries out the activities set out in the Internal Rules of Conduct of the Securities Market. These improvements are monitored on a monthly basis until their resolution. It should be noted that the regulatory compliance function is universal in nature and includes all of the business activities of the la Caixa Group. COMPLIANCE REPORTS Regulations reviewed Internal regulations reviewed Compliance obligations analysed Business divisions / Head office contacted Internal Rules of Conduct of the Securities Market In October 2008 the Board of Directors approved a new version of the Internal Rules of Conduct (IRC) regarding the Securities Market to bring them into line with the latest changes in legislation and, in this respect, various activities were carried out in 2010 to comply with the code: Additions were made to the contents of the dedicated intranet website on regulatory compliance which contains information on the rules and codes of conduct of la Caixa and on all activities carried out in the area of regulatory compliance and other issues of interest to all employees. The Inventory of Separate Divisions (departments or work groups which, due to the nature of their duties, may have access to privileged information) was updated and periodical tests carried out on the functioning of their barriers (physical and logical) to prevent undue transfer of privileged information. A policy regarding conflicts of interest in la Caixa was applied, and CECA methodology was introduced for managing conflicts of interest and detecting scenarios of potential conflicts of interest in each Division Integrity Securities market MIFID Pending legal/administrative definition Planned Products and services to customers Prevention of money laundering and financing of terrorism Personal data protection Not yet started In progress Corporate governance and capital adequacy Others Under examination Completed Training activities related to the IRC: Detecting and reporting stock market transactions suspected of being unlawful were carried out for employees (Intranet Regulatory Compliance, Training section) la Caixa Annual Report 117

120 2010 Financial Report of the la Caixa Group 5. High financial strength 5. High financial strength 5.1. Excellent liquidity levels The Group s excellent liquidity position enables it, with prudent management, to guarantee the growth of the business and respond to customers credit needs. Conservative proactive management of liquidity levels has always been one of the distinguishing features of the la Caixa Group, enabling it to ensure the growth of the Group s business and respond to its customers credit requirements. Prudent liquidity management, coupled with the objective of maximising returns, is the reason behind the increase in the investments in assets with the highest solvency, which may be turned into cash immediately, while also reducing exposure in the interbank markets. The la Caixa Group maintained very high liquidity levels in 2010, to reach EUR 19, 38 million at 31 December, including the credit facility with the European Central Bank amounting to EUR 15,992 million. The finance obtained from the European Central Bank through several monetary policy instruments was nil at 31 December Total liquidity accounts for.9% of the la Caixa Group s total assets, comfortably exceeding the objective set in the Strategic Plan of maintaining a minimum level of 5%. Liabilities to customers account for 70% of the Group s sources of financing, providing it with considerable stability and reflecting our customers trust in us, deposits from credit institutions account for 9% and institutional issues for the remaining 21%. In addition, dependence on international institutional markets is very limited since la Caixa actively manages the issues, distributing maturities and avoiding significant concentrations in particular years. Proof of this are the maturities scheduled for 2011 and 2012, totalling EUR 7,288 million and EUR 4, 4 million, respectively. Therefore, in 2010, in the context of a global financial crisis and a climate characterised by a general lack of confidence similar to the previous year, the la Caixa Group demonstrated its considerable capacity to attract the interest of domestic and international investors, obtaining up to EUR 5, 52 million on the capital markets. MAINTAIN HIGH LIQUIDITY LEvELS TOTAL LIQUIDITY (Millions of euros) DIvERSIFIED THIRD-PARTY FINANCING SOURCES At 31 December % 21,208 9% 19, Liabilities to customers Deposits from credit institutions 6.9% of Group assets 70% Institutional issues 2010 la Caixa Annual Report 118

121 2010 Financial Report of the la Caixa Group 5.2. Excellent capital adequacy levels The la Caixa Group s sound capitalisation The own funds attributable to the Group amounted to EUR 17,421 million, up 4.3% on The balance was increased in 2010 as a result of the profit attributable to the Group (EUR 1,307 million) and reduced mainly by the portion of 2009 profit allocated to Welfare Projects for In addition, the la Caixa Group s equity, which includes attributable own funds, non-controlling interests and valuation adjustments, amounted to EUR 21,980 million at 31 December 2010, up 2.7% on December The la Caixa Group s eligible capital at 31 December 2010, calculated in accordance with the guidelines established by Bank of Spain Circular 3/2008, of 22 May, in addition to own funds (less the contribution to be made to Welfare Projects in 2010), includes other items such as non-controlling interests (EUR 2,524 million), preference shares (EUR 4,948 million) and subordinated debentures (EUR 5,938 million), subject to the limits set forth in the Circular. However, eligible capital excludes intangible assets, consolidation goodwill, significant investments in unconsolidated financial institutions and insurance entities, as well as any excess amounts in qualified investments in non-financial entities. Risk-weighted on-balance-sheet assets fell considerably with respect to total assets. At 31 December 2010, after each balance sheet item had been weighted according to its exposure to risk pursuant to Basel II, the figures showed an estimated total reduction of 54% and of 93% in the memorandum items. In 2010 risk-weighted assets (BIS II) increased by 3.8%. The required minimum capital level is calculated by reference to credit and counterparty risk, currency risk, the risk associated with financial assets and liabilities held for trading, the risk associated with the investee portfolio and operational risk. Practically all the Group s capital requirements are to cover credit and counterparty risk. Basel II The application of the Basel II Accord, transposed to Spanish legislation by Bank of Spain Circular 3/2008, has had a significant positive effect on the management of the la Caixa Group s capital adequacy levels. The regulations are structured around three pillars. With respect to Pillar 1, minimum capital requirements, the la Caixa Group has been applying internal models to calculate market risk since December 2007 and, with respect to credit risk, to the main asset categories since June 2008, following the required authorisations by the Bank of Spain. The la Caixa Group continues to strengthen its risk and capital adequacy management processes and tools (see section 4. Active risk management). In accordance with the guidelines of Pillar 2, the supervisory review process, the la Caixa Group has designed a capital self-assessment process which aims to ensure an appropriate relationship between its capital and its risk profile. The results of the capital self-assessment process were included in the yearly capital self-assessment report and confirmed the la Caixa Group s high level of capital adequacy, both in regulatory and economic terms. As regards Pillar 3: market discipline, the la Caixa Group publishes annually, as laid down by Circular 3/2008, the document entitled Information of Prudential Relevance, which contains KEEP CAPITAL AT A LEvEL ENSURING SUSTAINABLE GROWTH OWN FUNDS (Millions of euros) 15, , WEIGHTED RISK AT 31/12/10 100% 100% 46% 17, % On-balance-sheet assets Memorandum items Risk-weighted assets and memorandum items Risk reduction resulting from weighting 2010 la Caixa Annual Report 119

122 2010 Financial Report of the la Caixa Group 5. High financial strength 5.2. Excellent capital adequacy levels (cont.) information on capital, exposures to risk and risk assessment processes at the la Caixa Group, and aims to provide market players with an assessment of the Group s capital adequacy. Self-financing of organic growth Core capital stands at 8.6%. Core capital (capital and reserves, net of goodwill and other intangible assets) stood at EUR 14,03 million, with a ratio of 8. %. Tier 1 capital totalled EUR 1,239 million, representing 9.9% of riskweighted assets. The la Caixa Group s eligible capital totalled EUR 19,198 million at 31 December 2010, which gives a capital ratio of 11.8%, with an estimated excess of EUR,130 million over and above the minimum capital requirement of 8%. In order to strengthen its high capital adequacy level and maintain its position among the best in the industry, the la Caixa Group launched one issue in the first half of 2010, totalling EUR 3,000 million of subordinated debt. The capacity to generate profits throughout 2010 enabled the Group to finance in full the additional capital requirements arising out of the evolution of the la Caixa Group s recurring business, the acquisition of Adeslas and the absorption of Caixa Girona. CAPITAL RATIO (BIS II RATIO) 11.8% 9.9% 8.6% 10 Core capital Tier 1 Tier 2 SURPLUS CAPITAL: EUR 6,130 MILLION CORE CAPITAL EvOLUTION IN 2010 (%) (0.4) 8.7 (0.3) 8.6 Selffinancing Organic growth Purchase Adeslas Caixa Girona Dec Subtotal Dec Capital adequacy - BIS II Ratio (Amounts in millions of euros) 31/12/2010 (*) 31/12/2009 CHANGE Core capital 14,036 13, % Ratio 8.6% 8.7% (0.1) Preference shares 4,948 4,898 Tier 1 capital 16,239 16,349 (0.7%) Ratio 9.9% 10.4% (0.5) Tier 2 capital 2, Total eligible capital 19,198 17, % Ratio BIS 11.8% 11.0% 0.8 Minimum capital requirement (8% ratio) 13,0 8 12,584 Surplus capital 6,130 4,667 Ratio 3.8% 3.0% 0.8 Risk-weighted assets 163, , % ( ) Estimated figures la Caixa Annual Report 120

123 2010 Financial Report of the la Caixa Group 5.3. la Caixa Group very good ratings The la Caixa Group s credit ratings remain high, despite the adverse economic climate in Spain, which highlights the Institution s strong market positioning, its capacity to generate recurring profits and its financial strengths. Moody s Aa2 long-term and P 1 short-term, Standard & Poor s A long-term and A 1 short-term, Fitch A long-term and F1 shortterm. The agencies rate very highly the success of the Group s strategy and its sound management, and particularly emphasise its commercial strength due to the excellent positioning of la Caixa in Spain, which secure the good performance of the banking business. The quality of the Institution s assets and its financial strengths, together with the high liquidity and capital adequacy levels, are highlighted by the agencies as fundamental factors explaining the Group s very good ratings. As part of the la Caixa Group s reorganisation process, the ratings of the three agencies are currently on review. very GOOD RATINGS DESPITE COMPLEx ECONOMIC CLIMATE SHORT LONG la Caixa TERM TERM Moody s P 1 Aa2 Standard & Poor s A 1 A+ Fitch F1 A+ As of March la Caixa Annual Report 121

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125 Report on la Caixa Corporate Responsibility Executive Summary With people and their projects Sustainability Excellence in service Commitment to society

126 With people and their projects Dialogue with stakeholders It is essential for la Caixa to ascertain the expectations of the people and institutions it deals with and thus lead the way in its Corporate Responsibility policies. In the 2010 Corporate Responsibility Report, the Institution features the main progress made in the year in addition to including the priority issues for its stakeholders. To determine the nature of these issues, the methodology established by the AA1000 standard was used to conduct interviews and surveys with employees from the Institution, corporate responsibility experts in Spain and representatives of the la Caixa stakeholders. The issues which emerged from this consultation process are included in the following diagram: High IV Labour practices III Solvency Anti-crime measures Welfare Activity Financing for customers Innovation of Products and Services Codes of Conduct / Ethical Behaviour Maturity of the theme General Emerging Satisfaction and Service for Customer Necessary Urgent Low I Low Importance for stakeholders II High The issues that appear in this diagram are covered in greater detail in the 2010 Corporate Responsibility Report. A more extended version may be consulted at: la Caixa Annual Report 124

127 With people and their projects A sound institution la Caixa is one of the most solvent financial institutions in Spain and Europe. The European Banking Supervisors Committee (EBSC) stress test confirmed the soundness of la Caixa, even in the most adverse macroeconomic scenario. The main rating agencies maintained high ratings for la Caixa in The level of liquidity stood at 19,638 million euros with practically the whole amount being immediately available. la Caixa boasts a high level of solvency, with core capital totalling 8.6% Having this high level of liquidity has enabled the institution not only to confront the growth of its business with security and improve its position compared to rivals but also to its customers financing needs. Solutions in a complex economic environment la Caixa managed to keep up its support for the country s productive fabric and strived to provide solutions for customers in a year marked by an unfavourable climate. The credit portfolio for customers was up 11,520 millions (+6.5%), reaching 189,546 millions with 939,463 operations in the last 12 months and 99,491 million euros in loans were granted. With the individual customers la Caixa has an Aid Plan for Individuals and families with mortgages who are experiencing temporary situations of low incomes. In 2010 the total volume of contracts signed in one of the Plan s options stood at 27, million customers trust the la Caixa management model and are a stimulus to keep on working to provide them with a better and more comprehensive service Support for entrepreneurs In 2010 la Caixa strived to provide a response for the financial needs of selfemployed professionals and companies: la Caixa was ranked the third largest institution to collaborate with the Official Loan Institute (ICO), granting over 40,000 loans to companies and self-employed professionals worth 1,579 million euros. la Caixa boasts 820 expert managers to attend to SMEs and 83 company centres to provide service to medium and large-size companies. la Caixa accompanies business customers in their expansion abroad and has 3 operating branches and 5 representation offices in Europe, Africa and Asia. In 2010 representation offices were opened in Dubai and New Delhi. la Caixa carries out an array of support and financial activities, accompanying new company initiatives with a potential to grow. Through Caixa Capital Risc la Caixa foments innovative projects using venture capital tools. In 2010, the committed investment stood at 7.5 million euros. The EmprendedorXXI initiative has several programmes to set up companies in specific sectors, to aid researchers and experts to successfully launch their business project. la Caixa has created the EcoEmprendedorXXI Programme to facilitate the founding and consolidation companies in the clean technologies sector. Main challenges for 2011 To maintain the levels of financing for individuals, self-employed professionals and companies. To open new representation offices in Algeria, Singapore and Egypt to support companies expanding abroad. To increase the number of accompanied companies through the various EmprendedorXXI initiatives. To set up a new programme titled EmprendedorXXI.net, specialised in information technologies and Internet. Further information at: / la Caixa Annual Report 125

128 With people and their projects MicroBank From when it was set up in 2007 to the end of 2010, MicroBank, the benchmark in Europe s microloan sector, has financed a total of 93,897 entrepreneurial and family projects. MicroBank aims to promote financial inclusion and social cohesion by granting microloans. This is aimed at self-employed professionals, small employers and entrepreneurs to set up, expand or consolidate their projects, together with people and families with low incomes or with difficulties to use the traditional loan systems, and is found in over 5,400 branches of la Caixa. Since 2010, small companies have also been able to use this form of financing. Since it began its activity million euros have been invested. To conduct its activity, it receives support from the European Investment Fund and the Council of Europe s Development Bank. MicroBank Ethical Fund MicroBank works to promote Socially Responsible Investments as a tool to contribute to sustainable development. In 2010, the MicroBank Ethical Fund was set up as an ethical cooperation investment fund which evolved from the merger of FonCaixa Europe Socially Responsible Cooperation and FonCaixa Private Active Ethical Fund. This fund includes ethical, social and environmental principles when selecting assets for its portfolio, which are determined by an Ethics Committee made up of independent experts. 25% of the commission to manage the assets is allocated to aiding projects by NGOs and not-for-profit institutions designated by the contributors The la Caixa Foundation contributes an equivalent amount to that granted by the fund to charities every year. Microloans benefit labour inclusion and, since 2007, MicroBank is estimated to have contributed to creating or consolidating over 30,000 jobs. Main challenges for 2011 To grant microloans worth 550 million euros in the next two years. To achieve 85,000 microloans in portfolio in 2011 with an investment of 425 million euros. To foment Socially Responsible Investment through the MicroBank Ethical Fund. MICROLOANS GRANTED 32, , , Microloans granted Amounts paid out in millions of euros Further information at: la Caixa Annual Report 126

129 Sustainability Sustainable investment and financing la Caixa considers the social and environmental implications of its activity as part of its social commitment Sustainable financing la Caixa believes that the projects it finances should not only be economically viable but also sustainable from a social and environmental viewpoint. Since joining the Equator Principles in 2007, approving finance projects worth over 10 million dollars requires a previous positive assessment, which includes social and environmental factors in the analysis. In 2010 la Caixa participated in 55 finance projects worth a total of 9,980 million euros. la Caixa passed a loan investment policy related to the weapons sector, in pursuance of which it will not finance the production or exporting of weapons. Nor will it establish commercial relationships with companies related to the production or sale of antipersonnel mines and/or cluster bombs. la Caixa promotes projects that respect the environment as a way to encourage long-term environmental sustainability. FINANCE PROJECTS/SECTOR In 2010 la Caixa financed 20 renewable energy projects in conjunction with other institutions, worth a total of 2,458 million euros. Investing responsibly la Caixa markets the SAM Sustainable Climate fund, which promotes renewable energies and focuses on fighting climate change. The la Caixa employee pension fund, which has adhered to the United Nations Principles of Responsible Investment (PRI) since 2008, has invested 80,18 million euros in socially responsible funds (3,28% of the total amount invested and 8,05% of the total equity). Main challenges for 2011 To apply a procedure to assess social and environmental risks of syndicated operations for amounts over 7 million euros. To raise awareness and boost the market penetration of Socially Responsible Investment in collaboration with InverCaixa and Private Banking. Type B Energy Real estate 0 Type C Infraestructure business 2010 la Caixa Annual Report 127

130 Sustainability Environmental policy and management The commitment of la Caixa to respect the environment encompasses all its projects, services and products in addition to the Welfare Projects programmes and boasts the involvement of employees, subsidiaries and collaborating companies. The la Caixa environmental policy and management is coordinated by the Environmental Committee, which works to lower the Institution s direct and indirect impact on the environment. Electricity consumption was 7.01% lower thanks to several initiatives. Among these were awareness-raising campaigns for employees, automatic standby of computer equipment and installing light sensors in rooms which house the Data Processing Centres (DPC). In 2010, the number of branches managed remotely reached 1,900. This involved a one-switch operation to avoid the use of electricity outside work hours. Teleconference systems together with other systems enabled us to reduce the distance travelled by 1,311,314 km, which represented a saving of tonnes in CO 2 emissions. 99.1% of the paper used was recycled material and lowered the total use of paper by 5.2%. In 2010, the number of customers with digitalised mail reached 2.85 million and the number of letters sent was reduced by 48.2 million compared to those sent in The EcoCaixa space provides the general public with advice on the environment and enables them to check the main initiatives of la Caixa in terms of sustainability. Main challenges for 2011 To promote new initiatives for employees regarding good environmental practices. To reduce the use of paper by 5%, the use of electricity as a whole and CO 2 emissions in journeys. To continue the process of building new, more efficient DPC (Data Processing Centres) which use less energy. Further information at: la Caixa Annual Report 128

131 Excellence in service Innovative, more accessible and secure la Caixa works to guarantee excellence in service and believes in continuous innovation, which has enabled it to develop new ways to access its products and services in addition to guaranteeing security in transactions. Closeness and accessibility la Caixa provides access to its products and services through an array of channels which include an extensive network of branches and cash machines and works so that these channels can be used by the largest number of people as possible. The largest network of branches in Spain, with branches in at least 100% of towns with over 20,000 inhabitants. At the close of the year la Caixa had 5,409 branches, 83 more than in la Caixa has a full range of services available 24 hours a day through channels such as the internet, mobile telephone, digital television and several pioneering applications for products such as ipad and iphone. TRANSACTIONS MADE THROUGH ELECTRONIC CHANNELS 23% million 3% 77.5 million 74% 1,729.1 million In 2010, the AQmetrix consulting company rated la Caixa as the financial institution with the best level of service provided via internet in Spain. la Caixa continued to work to promote accessibility and, in 2010, adapted 33 branches and eliminated architectural barriers for people with reduced mobility. The Serviticket website and operations have been adapted for the visually impaired. Innovation and security la Caixa is committed to on constant innovation to provide its customers with new solutions and develop more efficient processes. Through its CaixaProtect system, used by 6 million customers, over 8 million free alerts were sent to customer mobile phones, informing them about any operations featuring large quantities of money. la Caixa conducted a pilot payment scheme in retail outlets via mobile telephone based on radio frequency communications, a technology which provides a faster purchasing process for customers and businesses. la Caixa has its own online shop, CaixaMóvil Store, the first with banking applications for mobile telephones in the world, enabling its customers to download over 36 free applications. la Caixa works to constantly improve its Línea Abierta and has implemented over one hundred of the best suggestions submitted by customers. la Caixa invested a total of million euros in technology, of which million were spent on R&D and innovation. Main challenges for 2011 To increase the number of operations and sign languages available in videos to aid deaf and mute persons at cash machines and with the Línea Abierta. To consolidate the INREDIS project (Interfaces of links between the Surroundings and Handicapped Persons) in collaboration with the ONCE. To be first in the AQMetrix ranking, which measures the quality of the service, in internet banking and mobile banking. Línea Abierta CaixaMóvil Cash machines Further information at: la Caixa Annual Report 129

132 Excellence in service Better service every day la Caixa works through personalised management and quality to guarantee excellence in service and maintain trust and leadership, which constitute, together with social commitment, its corporate values. Quality Improvement Plan With the aim of improving the rating received by branches in terms of quality, la Caixa developed a Quality Improvement Plan in 2009 which was implemented in In 2010 the Active Quality Portal was set up on our corporate intranet with the aim of collecting information related to quality in one single space and to share good practices among employees. Quality workshops were held where branches, rated the best by their customers according to the satisfaction surveys conducted, supervise branches which need more improvement. A faster, more effective service and the wide range of electronic channels have enabled a reduction in waiting time by 44%. In 2010 customer complaints fell by 35% compared to the previous year Main challenges for 2011 To adopt general measures to raise the effectiveness of managing suggestions received: from 2011 branches may check online the quality of response to suggestions made regarding improvements. To upgrade the la Caixa anticorruption and anti-bribery policy. SATISFACTION RATE OF CUSTOMERS SATISFACTION SURVEYS To pass a new commercial communications policy. Individuals Companies Cash machines area Cash machines Línea Abierta 2010 la Caixa Annual Report 130

133 Commitment to society A great team la Caixa applies personnel policies on based on fomenting equality and diversity, work-life balance, training and professional development to stay as leader as a source of attracting talent NUMBER OF EMPLOYEES IN THE LA CAIXA GROUP AND LA CAIXA 27,818 28,651 26,056 24,944 27,505 25,288 PERCENTAGE OF WOMEN ON THE MANAGEMENT TEAM The 28,651 people who work in the la Caixa Group constitute its main asset, and the Institution works to guarantee its labour policies promote employees personal development and welfare. In 2010 la Caixa incorporated personnel from Caixa Girona in the workforce with the premise to conserve jobs by implementing relocations and early retirement when possible. la Caixa remained at the top of the list in the employees ranking of the Merco Marcas Financieras Award 2010, particularly highlighting its talent management. In 2010 a skills appraisal process was set up for people in a management post. The Protocol to Prevent, Deal with and Eliminate Sexual Harassment and Mobbing came into force by means of a free telephone service and an box which collects queries and complaints. Virtaula, the la Caixa distance learning community, managed to generate over 500 blogs, 300 forums, 286 videos and a library with over 3,500 documents, most created by its employees la Caixa la Caixa Group The Másfamilia foundation accredited la Caixa as a Family Responsible Company (FRC). acknowledging its aim to foster work-life balance and equality for its employees. Safety and health la Caixa boasts a Safety and Health Management System certificate in compliance with the OSHAS international standard which certifies the excellence of its preventive system. The instruction was implemented to assess and act in situations of holdups and violent acts and to protect particularly sensitive employees and maternity and breast feeding Main challenges for 2011 To progress in applying the profiles of workplace skills to cover most of the workforce. To create a Leadership Centre to foment managers professional development. To pass an Equality Plan to be applied generally. To spread the Corporate Responsibility course among employees la Caixa Annual Report 131

134 Commitment to society Welfare projects, closer to people la Caixa kept up its commitment to society by allocating 500 million euros to its Welfare Projects, of which 67% were aimed at social and care programmes. In 2010, the Welfare Projects were aimed mainly at programmes which seek to contribute to improving peoples living conditions and facilitate both their integration and development as a way for society to progress. The CaixaProinfancia programme, aimed at comprehensive promotion and development of children, has helped over 165,000 children under 16 years old at risk or in a situation of social exclusion, since it was set up until the end of The accumulated investment reached 100 million euros. The programme for the Elderly is the oldest of the Welfare Projects. Its aim is to contribute to healthy ageing and prevent situations of dependency. In two years the programme to provide Integrated Care for Very Ill People attended 15,342 patients and 24,896 families with support provided by 30 multi-disciplinary teams. la Caixa kept up its commitment with GAVI Alliance, the international alliance which fights child mortality in the most underdeveloped countries. The Institution has contributed 11 million euros over three years, which has enabled 1.2 million children to be vaccinated. la Caixa set up its Intercultural Community Relations Programme, to which it allocated 3 million euros with the aim of creating a model of community involvement as a reference to manage cultural diversity. Through its Affordable Housing programme it worked to attend the needs of groups with difficulties to afford a home. In late 2010 there were over 1,846 houses managed and 940 more under construction. Main challenges for 2011 To promote commitment to the needs of society in terms of overcoming exclusion and creating job opportunities for underpriviledged groups, through Incorpora. To foment social cohesion and coexistence in the community through the new Intercultural Community Relations Programme. To have, at the end of 2012, over 2,800 managed affordable rent houses for the young and elderly. To provide 955 houses awarded to and managed for families with low incomes by late To consolidate both its research and training programmes and projects to benefit knowledge and spread culture. DISTRIBUTION OF INVESTMENT BY PROGRAMME 13% 6% 14% 67% Welfare programmes Cultural programmes Environmental and scientific programmes Educational and research programmes Further information at: la Caixa Annual Report 132

135 Commitment to society Promoting Corporate Responsibility la Caixa believes that spreading responsible principles and practices in its enviroment forms part of its social commitment to make headway together towards progress in social and environmental terms. Among employees la Caixa boasts a Corporate Volunteers Programme which channels all the interest in aid projects shown by its employees. Our 3,286 volunteers carried out 1,546 actions, which reached 83,659 beneficiaries. la Caixa invested 328,100 euros in the programme. In 2010, in collaboration with the Institution s customers, tonnes of food were collected for the underprivileged and 81,000 books for education projects in Latin America. Through the Espacio Solidario over 1,000 employees contributed over 78,500 euros to four aid projects. Among customers and society in general la Caixa customers may take part in several aid projects: Through the Aid Deposits which allow customers to choose the percentage of net interest they wish to donate to four NGO projects. By donating Puntos Estrella, 551,000 euros were allocated this way for aid projects in The Institution offers Spanish companies several projects concerned with Corporate Responsibility, such as the Business Alliance for Child Vaccination. 26 companies donated over 166,000 euros in The la Caixa subsidiaries presented its first Communication on Progress in 2010, which summarises the progress made regarding the principles of the UN Global Compact. la Caixa joined the National Financial Education Plan promoted by the Spanish Securities and Exchange Commission (CNMV) and the Bank of Spain to contribute to improving financial knowledge among the population. Among suppliers la Caixa extended its commitment to corporate responsibility to its supply chain. In 2010 a Master Plan was defined to control suppliers with the aim of improving transparency and rigour in contracts, which will be implemented in The total amount of purchases from suppliers reached 1,078.4 million euros, with 90.87% complying with the agreed payment period. PromoCaixa carried out auditing on manufacturers of items made in China that are used in important campaigns, except when these were suppliers of renowned brands, with no incidents worthy of comment. At the close of 2010, over 13,600 companies were collaborating with the Incorpora Programme for Labour Integration, which has contributed to finding jobs for 38,821 people at risk of social exclusion. Main Challenges for 2011 To spread the Business Alliance for Child Vaccination among companies in Spain. To increase the chance to collaborate in the Espacio Solidario projects in all society. To improve the control of suppliers through a new process of registration and standards, fomenting respect for the principles of the UN Global Compact la Caixa Annual Report 133

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139 Annual Report la Caixa Welfare Projects Social Programmes Educational Programmes Science, Research and Environment Programmes Cultural Programmes 2010 Data of la Caixa Welfare Projects

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141 Social Programmes Introduction Intercultural Community Relations Fighting Child Poverty Integration of disadvantaged groups into Society and Work Integrated Care for Very Ill People Active and Socially Integrated Elderly People International Division: commitment beyond our borders Affordable Housing Aid for projects of social organisations to assist disadvantaged groups

142 Social Programmes Social Programmes The most defining feature of la Caixa has been its commitment to people since it was first established over one hundred years ago. This became even more important in 2010, a year that was marked by an adverse economic environment. The Welfare Projects have increased their efforts to contribute to meeting the most pressing needs. As a result of this, the Institution devoted a total of 326 million euros to its social programmes, 71% of its overall budget of 463 million euros. Main lines of action in 2010 Unemployment, the economic climate, health and ageing are just four of the main concerns quoted most frequently by our citizens. Thus in 2010, the Welfare Projects devoted a large proportion of its resources trying to respond to each of these. Hence, the Incorpora project, aimed at promoting employment among groups with difficulties, including training prisoners, and the CaixaProinfancia project to improve opportunities for children in a situation of poverty, are two of the Institution s most important initiatives. Care for patients with serious illnesses is also one of the most innovative ambits of work, as well as promoting the active ageing of our elderly, to which the Institution has paid special attention since its origins. In addition to these four strategic areas of action, Welfare Projects offers a wide range of social initiatives aimed at providing solutions to some of today s most pressing problems. The search for greater social cohesion encouraged the launch of a new Intercultural Community Relations programme, aimed at promoting harmony in seventeen towns and neighbourhoods with a high concentration of cultural diversity. The building of affordable rented housing for the young and elderly received a new boost in 2010 with the resumption of developments which had stopped due to the crisis, by turning them into affordable family housing with rents considerably lower than market prices. Granting microloans also generates opportunities for entrepreneurs with funding difficulties. Each loan is estimated to generate an average of 2.5 jobs. Support for social and economic development in low income countries and promoting infant vaccinations, with over one million children vaccinated to date, is promoted through the International Division, the Institution s commitment beyond our borders. As part of these objectives, ISGlobal Barcelona, promoted by the Welfare Projects in 2010, has as one of its main aims to improve the health of the most vulnerable groups and break the vicious circle of illness and poverty in which they are trapped. With these programmes, the Institution aims to have an impact on some of society s most pressing problems today. Vocation for cooperation In addition to providing an answer to problems that have arisen in society in recent years, la Caixa Welfare Projects also has other, more long-standing programmes. In operation since 2005, the programme to support and foster Volunteer Work encourages the involvement of all the employees of the la Caixa Group in Welfare Projects and contributes to optimising human resources, materials For years Moisés has been a volunteer of la Caixa and has organised activities for the mentally disabled, such as Rocío, who enjoys being able to walk the Camino de Santiago. Pablo has followed in his father s footsteps and also devotes his time to helping others la Caixa Annual Report 140

143 Social Programmes and management systems of social entities working with volunteers. Within this Corporate Volunteer Work Scheme, 3,286 current and early-retired employees of la Caixa, along with family members and friends, work actively in solidarity initiatives. Currently this figure is over 13% of the total staff of the Institution. At present la Caixa has 42 provincial associations of volunteers. Among the most noteworthy actions promoted is the collection of over 205 tonnes of food for the most underprivileged in late November. The Let s talk about drugs initiative received the Queen Sophia Prize for the fight against drugs in 2010, awarded by the Red Cross Foundation for Care to Drug Addicts (CREFAT). This was awarded to the project which aims to prevent the consumption of these substances, particularly among the young and public in general. This project has several lines: a travelling interactive exhibition that offers innovative resources and information for understanding the effects of drug consumption on the brain, behaviour and health in general; an awareness-raising campaign aimed at families, including a prevention guide, a free telephone hotline, educational material for working on prevention at school from a scientific perspective; and a campaign of training and updating professionals working in Health Centres. Since this project was set up, it has provided assistance to 4,240 families. Violence: zero tolerance, set up in 2005, supports psycho-social care and the reintegration into society of victims of gender violence, as well as promoting the prevention of violent behaviour and generally raising awareness of this problem. This initiative consists of an awareness-raising campaign aimed at both secondary school students and teachers and undergraduates and a line of training future specialists. In addition, it is aimed at women who are victims of gender violence through lines such as projects jointly promoted by the Red Cross and COCEMFE. Welfare Projects is also present in hospitals. To minimise the impact of a hospital stay for both children in hospital and their family members, la Caixa Welfare Projects has created 66 educational-play spaces in children s hospitals. These are part of the Hospital CiberCaixa, which reinforces the humanisation of the health system by creating a happy environment full of friendly interchanges in hospitals, which has positive repercussions on children s welfare. In promoting activities organised in these CiberCaixa, la Caixa volunteers and as well as older people from the healthy and active programme and members of other hospital volunteer associations work together. CiberCaixa has material such as Hospital KitCaixa that makes children more aware of their new situation and softens the impact of their illness. With this same idea, but located in civic centres or schools, the Welfare Projects has a network of CiberCaixa Let s meet after class, These are educational areas where pedagogic activities are conducted both out of school hours and in holiday periods, so as to provide a work-life balance for families in which both parents work. The CiberCaixa network of facilities are complemented by those set up by the Welfare Projects in six prisons designed to provide prisoners with access to new technologies and are helped by elderly volunteers who, besides their knowledge, also convey to participants their life experience and values. As regards thought, Welfare Projects promotes the Collection of Social Studies, designed as a platform of analysis and debate on social changes, the environment, technology and public health in modern society. In 2010, three new studies were published: Caring for others. A challenge for the 21st century, School Failure and Dropouts in Spain and Childhood and the Future. New realities, new challenges. Volunteer with patients at one of the CiberCaixa Hospitals 2010 la Caixa Annual Report 141

144 Social Programmes Intercultural Community Relations In 2010, la Caixa Welfare Projects implemented a new programme of Intercultural Community Relations. This is a pioneering initiative whose purpose is to generate a leading model of community relations in cultural diversity management which promotes harmony and social cohesion. This programme was implemented in 17 neighbourhoods and towns in Spain which are characterised for having high cultural diversity. Intercultural Community Relations Definition The Intercultural Community Relations programme is a pioneering initiative whose purpose is to generate a leading model of community relations in cultural diversity management. Cooperation is provided for community representatives in each area to promote the possibilities each has to offer as regards intercultural harmony. Action To promote processes to favour local development and improve living conditions for all who live there; to prepare citizens in general to face the opportunities, challenges and problems of this new situation; to prevent and redirect situations of social conflict towards intercultural harmony. Ambit 17 neighbourhoods and towns throughout Spain. Groups prioritised Infants, the young and families. The la Caixa Welfare Projects Intercultural Community Relations programme was set up to foment social cohesion in areas with high cultural diversity. The programme, both on a national, regional and local scale constitutes the main core of social action in a new intercultural context, since it articulates exercising shared responsibility and highlights the value of the huge background of experiences carried out by community representatives in our country and constitutes a guarantee of sustainability. This programme has been implemented in 17 neighbourhoods and towns in Spain, which are characterised for having high cultural diversity, through social entities and with the cooperation of the public administration and existing resources in each area, under expert management. The aim is to cooperate with local agents to promote the possibilities each area has to offer a regards intercultural harmony. This programme is aimed at infants, the young and families. Through competitions open to not for profit organisations (the charities sector), seventeen areas were chosen to roll out the programme in collaboration with local entities in each area. To make this selection, the area where the action was carried out, the previous experience of the social entity, its relationship with the area represented and the proposal made by the team and intercultural community relations were taken into account. This initiative is currently being carried out in the following areas: the neighbourhoods of el Clot, the northern area of Nou Barris and el Raval in Barcelona, Daimiel, Elche, El Ejido, Getafe, Granada, Jerez de la Frontera, Leganés, Logroño, Pueblo Nuevo in Madrid, Paterna, Salt, San Bartolomé, Tortosa and Saragossa. In each of these seventeen areas, comprehensive action is being conducted through multidisciplinary teams which act as reference points and the driving force of harmony in three priority ambits: social and educational, community health and social relations. Work is done in these ambits of action because of their considerable importance in local everyday life and the substantial impact these three ambits have on the community. The seventeen teams are formed by people with experience in intercultural community relations, many of whom have qualifications in social sciences. Teamwork, coordinating with other resources and the capacity to make the community respond are essential to this programme, which does not aim to be just another resource but to reinforce the existing ones. This means providing the social agents working in the area with the possibility to provide answers to the 2010 la Caixa Annual Report 142

145 Social Programmes challenges and problems of this new social situation. The seventeen entities are coordinated by the la Caixa Foundation, which in turn receives cooperation from the Autonomous University of Madrid s Institute of Migration, Ethnicity and Social Development. This initiative aims to become a leading reference as regards a model and methodology of action, by providing ideas and analysis that can contribute to the debate in the field of intercultural aspects and social cohesion. It is a preventive model which fosters the integration of all citizens, contributes to social cohesion and, in short, prepares citizens in general to face the challenges and overcome the processes and situations of social marginalisation in communities with a high degree of diversity. As the main part of its development and organisation, the Intercultural Community Relations programme includes the ongoing interpretation of the results obtained, particularly on a qualitative and quantitative level, and their assessment. In this regard, an initial study is carried out on the level of harmony and a survey and representative sample of the population in each of the seventeen areas and in six control areas which will be repeated each year. These are qualitative and quantitative strategies which complement each other to strengthen reflection, the programme s thoroughness and, in short, the scientific basis of intercultural community relations. These programme last approximately three years in each area, after which contribution will have been made to transform the existing dynamics in these areas, after establishing mechanisms of coordination and participation to enable the community representatives in the area to be able to respond to the opportunities and challenges arising from cultural diversity. To aid the development of the programme in the chosen towns, the la Caixa Foundation and the Spanish Federation of Towns and Provinces (FEMP) signed a cooperation agreement that will enable joint actions to be carried out to promote, spread and implement this initiative. As regards this, the la Caixa Foundation also cooperates with the Ministry of Employment and Immigration to roll out this programme. Thus, the allocation provided by the Ministry of Employment and Immigration for the programme, through the Secretary of State for Immigration and Emigration, is focused on technical guidance based on the Strategic Social and Integration Plan passed by the Council of Ministers in February Wei Lin participates in activities to get young people together in Tortosa and attends language classes. Her teacher, Irene, is quite pleased to have helped her, and also happy to participate, along with other professionals and neighbours, in a project to improve harmony in the neighbourhood la Caixa Annual Report 143

146 Social Programmes Fighting Child Poverty According to several international bodies, Spain is one of the developed countries with the highest rate of child poverty. In response to this problem, la Caixa Welfare Projects set up CaixaProinfancia, a programme designed to promote social and educational development for children in situations of poverty providing comprehensive attention for all the family. For the last three years CaixaProinfancia has worked to open the door to a better future and provide equal opportunities for minors at risk of or in a situation of social marginalisation in Spain. As part of this initiative, highlighting the educational aspect, the programme CiberCaixa Let s meet after class! provides these minors with a non-formal pedagogic environment outside school hours and during holiday periods. CaixaProinfancia Definition Social, educational and economic resources aimed at families with children at risk of social marginalisation, with the aim of improving their welfare and breaking the circle of hereditary poverty. Action The financial institution provides assistance aimed at educational and psychological support, and periods spent at open centres and summer schools and camps; also included in this assistance is the provision of basic goods (food, hygiene products, school equipment, glasses and hearing aids). Ambit Madrid, Barcelona, Valencia, Seville, Malaga, Saragossa, Murcia, Bilbao and their metropolitan areas, and also the Canary Islands and Balearic Islands. Beneficiaries Families with minors aged 0 to 16 in a situation of or at risk from social marginalisation. Collaborating 358 social entities. Figures ,328 children assisted. 520,279 assistances given. In 2010, la Caixa Welfare Projects spent over 45 million euros on the CaixaProinfancia programme, which is designed to promote the development of the children and families in our country that have the fewest resources. The project has functioned since 2007 with the aim of strengthening the welfare and development of vulnerable children by providing services and economic assistance that favour the social integration of children and provide them with opportunities to build a better future. Beneficiaries are families with a minimum established income and with children aged 0 to 16, who are in process of social integration or could enter such a process. Around half the families receiving benefits from this project (45%) were single parent families. This means that children are looked after by only one parent (usually the mother). Large families, those with three or more children, are another of the main groups assisted by CaixaProinfancia. Most of these minors were born in Spain (80%), followed by those from countries such as Morocco, Ecuador or Bolivia. la Caixa Welfare Projects is the promoter of this programme while 358 social entities are in charge of implementing CaixaProinfancia throughout Spain. These organisations work under the premise that today s children are the adults that will shape tomorrow s society, thus caring for Since Esther has been helped by CaixaProinfancia she feels she has more support and is calmer at a difficult time in her life. Her son has everything he needs to grow and her daughter attends extra classes after school. In addition, since Ofelia, a social worker, has participated in this programme she has more resources to help other families in the same situation la Caixa Annual Report 144

147 Social Programmes their childhood is not only important to achieve their welfare, but also to build a better future society. These organisations and the Public Administration identify those children and families who are most likely to benefit from this programme, and then conduct an overall assessment of the minor s needs and monitor him/her through a family work-plan. CaixaProinfancia tackles child poverty in an integrated way, promoting children s social and educational development and providing them, when it is necessary, with material assistance. The activities of the programme include: Psycho-social care: psychological help and family therapy, educational back-up, activities at open centres and summer camps and schools. Help for babies: food and child hygiene products, school equipment, glasses and hearing aids. This assistance is made available through the CaixaProinfancia cheques, which can be exchanged for the different services and basic goods offered by the programme in the establishments and entities belonging to it. CiberCaixa Let s meet after class! Definition Social and educational spaces for reception out of school hours and in school holidays of children aged between 3 and 12, whose families find it difficult to look after them. Action Resources and activities that strengthen the children s cognitive, emotional and social development. The activities promoted at these facilities are aimed at encouraging positive attitudes and values for their future such as those related to family relationships, the habit of study, cooperation playing together, free time and environmental education. Ambit Madrid, Barcelona, Badalona, Valencia, Malaga, Palma de Majorca, Las Palmas de Gran Canaria, Valladolid and La Laguna. Beneficiaries Children aged between 3 and 12 from families that find it hard to reconcile their job and child care and/or are in an especially vulnerable situation. Figures CiberCaixa in operation. 9,264 beneficiaries. The programme CiberCaixa Let s meet after class! is designed for children between 3 and 12 years old and takes place in several public buildings (schools, civic or social centres, etc.) which remain open after school hours or during holiday periods with the aim of accompanying minors while they grow up and become socialised, acting as a support for the work of the family and school. The children receive informal training and do educational activities in an informal context. Trained staff work on the children s social, emotional and cognitive development. In line with the overall strategy of overcoming child poverty promoted by la Caixa Welfare Projects, the CiberCaixa programme Let s meet after class! fosters the social and educational advance of children with very few opportunities. The initiative is designed for those children who are particularly vulnerable and those who live in homes where the parents find it hard to reconcile their work and family life. The activities focus on three areas: Computer space, in which children can relate to each other through new technology. Reading and audiovisual space, with various learning materials. Infants space, equipped with the furniture, games and specific resources for the very young. In 2010, 3,481 children benefited from this programme in the 51 CiberCaixa programmes Let s meet after class! which are already in operation. Students in the programme CiberCaixa Let s meet after class! 2010 la Caixa Annual Report 145

148 Social Programmes Integration of disadvantaged groups into Society and Work Having a proper job is basic for a person to be able to look at their future with hope. Based on this principle, the la Caixa Welfare Projects Incorpora programme helps promote the hiring of those people at risk of marginalisation or already suffering it with the aim of helping them to join society. In parallel, the scholarships for prison inmates awarded by Welfare Projects provide training for prisoners, with a view to facilitating their reintegration into work and society when they complete their sentences and are released from prison. la Caixa Welfare Projects Incorpora with integration into work Definition Programme of intervention for jobs that encourages the integration into normal companies of people who have difficulties in entering the world of work, as a mechanism to include them in the job market. Action Joint work of companies, social organisations and job developers to assist the hiring of people from disadvantaged groups. Ambit All of Spain and Morocco. Beneficiaries People with special difficulties to enter the world of work: disabled people, people with mental disorders or people in a situation of social marginalisation or at risk of it (young people, the over-45s, immigrants and women affected by domestic violence). Collaborating 13,626 companies have hired beneficiaries. 248 social entities. 369 job developers. Figures ,740 vulnerable people hired. 58 Incorpora courses for Job Developers in 26 Spanish universities in which 1,451 experts from 813 social entities have taken part. The Incorpora programme, set up in 2006, received funding of 12.3 million euros for The close collaboration between the two main cornerstones of this programme is its most distinctive feature, which allows it to provide quality service to all those involved. The full consolidation of this model and the experience gained over the last five years allowed it to confront the effects of the crisis. The number of people attended by the programme stood at 32,740, almost 10,000 more than in Despite the economic crisis, the number of companies collaborating with the programme grew considerably, rising from 9,542 in 2009 to 13,626 in The number of social entities specialised in labour integration and linked to the programme grew to 248, distributed among the Incorpora Groups set up in each autonomous community, compared to 236 at the end of This means that organisations that previously worked independently now have a integration network to work together with the aim of rationalising resources and sharing knowledge and methods. The job developer is one of the key elements in Incorpora. Through job developers, Incorpora builds a bridge between the social organisations that operate to integrate people into work and companies. The 369 job developers in the programme, who receive ongoing training from Welfare Projects, research the preferences of the companies in their area with the aim of offering them the profiles that best match their requirements. They also monitor the future employee s training process, support those who have found work and mediate in any possible conflicts that might arise in the labour relationship. Scholarships for prisoners allow their reintegration into society and the job market 2010 la Caixa Annual Report 146

149 Social Programmes This support at work for those in or at risk from social exclusion is one of the features best rated by companies, which see it as Incorpora s main added value. Thus, the member companies participate in a programme of Corporate Social Responsibility in Job Integration which provides them with the opportunity to include values of social and economic commitment to their management, while favouring the company s competitiveness and fostering sustainable development. Thanks to the mediation work carried out by Incorpora in the last three years, we have managed to bring businessmen and the underprivileged together, favouring reciprocal benefit and leaving mutual distrust to one side. In November 2010, the presentation ceremony of the III Incorpora Awards took place. This Award recognises the best actions in the field of employing people who are socially excluded or at risk of social marginalisation. The prizewinning companies were: Perfumerías y Droguerías Ana Pilar (small company category); Expoclean (medium-sized company category); CLN Servicios Integrales (large company category); and Carrefour (work on the web category). As part of the Incorpora programme, and in collaboration with universities from all over Spain, courses are organised for Job Development Experts coordinated by the Observatorio de la Economía Solidaria (OES). Since the start of the programme, over 1,000 job developers have been trained. Scholarships for prisoners Definition Training scholarships for prisoners in order to give them access to knowledge and professional skills that permit their reintegration into society on completing their sentences. Action Professional training courses in trades in high demand on the job market outside prison, taught in collaboration with the Catalan government s Department of Justice in Catalonia and with the Ministry of the Interior in the rest of Spain. Ambit Throughout Spain. Beneficiaries Prisoners in the second and third levels of their sentences. Collaborating 78 educational centres. Figures ,432 scholarships awarded. 4,700 euros on average for each scholarship. Beneficiaries taking part: 1,432. Beneficiaries gaining diplomas: 1,365. The Scholarships for prisoners programme of la Caixa Welfare Projects offers an opportunity to improve the future of the prison population. Through these scholarships, prisoners serving the second and third levels attend professional training courses at centres outside the prison, in order to acquire knowledge that will enable them to tackle their future reintegration into society with a guarantee of job stability. This programme highlights the coupling of prisoners social and labour skills both during the final stages of their sentence and after their release. The aim is to foster their continued training and provide them with necessary, useful skills for their reintegration into society and the labour market. This pioneering scholarship programme in Spain was set up in Catalonia in 2005 and has now been extended to all the autonomous communities throughout Spain. This initiative is the result of an agreement signed in 2006 with the Ministry of the Interior, and has been renewed annually. Between 2005 and 2010, la Caixa Welfare Projects financed a total of 4,292 scholarships in Spain, with a total investment of 27.2 million euros. Carmen suffers from osteosclerosis but this does not prevent her from working at the Special Employment Centre in Caspe, where she attends the public and also passes on her good humour to her colleagues. Her father is happy to see her work la Caixa Annual Report 147

150 Social Programmes Integrated Care for Very Ill People The aim of this programme is to improve the quality of life for those who are suffering from serious illnesses by providing both patients and relatives with suitable emotional, spiritual and social care, and accompanying them in the final stages of life. To achieve this objective the programme also uses professional healthcare and social workers who care for the serious ill to aid them in their endeavour. Integrated Care for Very Ill People Definition Programme of Integrated Care for the Very Ill People, aimed at improving their quality of life and complementing the current model of care with psychological and social care. Action Integrated care focusing on: providing emotional, social and spiritual support for patients, handling of grief, support for families and for palliative care professionals; raising awareness in society about the end of life; promotion of volunteer work. Ambit All autonomous communities. Beneficiaries Persons who are very ill and their families. Professionals and volunteers in the area of palliative care. Figures Over 6 million euros allocated to the programme. 8,398 patients and 13,933 relatives attended. 29 multidisciplinary teams offering psychological and social support. The programme of la Caixa Welfare Projects to care for the very ill was proposed in 2008 as a complement to the current model of healthcare for these patients, with an intervention that also took into consideration the spiritual and psychological well-being of the patient and his/her carers. In 2010 la Caixa attended 22,331 people, both patients and relatives. Since the programme was set up, in 2009, a total of 15,342 patients and 24,896 relatives have been provided with support. The programme, backed by the Ministry of Health and the World Health Organisation, has 29 multi-disciplinary teams from non-profit organisations throughout Spain, selected and trained by Welfare Projects in a 250-hour postgraduate course, and consist of 120 professionals psychologists, social workers, nurses and volunteers working throughout Spain in 61 hospitals and social-health centres and at patients homes. This new model of support for the very ill includes the following facets: Spiritual, emotional and social help for patients and their families: facilitating the expression of emotions and feelings, reinforcing the value of positive experiences in this adverse situation, helping to adapt steadily to the illness, supporting carers in giving care to the patient. Inmaculada is in charge of the Unit of Palliative Care at the Virgen de la Salud Hospital in Toledo. Patients receive her care every day; relatives, her support, and the members of her team and hospital volunteers share their experiences with her la Caixa Annual Report 148

151 Social Programmes Treating families grief: diagnosing a person s stage in the grieving process, assisting them to become aware of the situation, helping them to search for meaning in the experience of loss. Support for the healthcare and social teams that look after the very ill, helping them in their work and reducing the risk of burn-out. In addition, the programme for the Integrated Care for Very Ill People includes ongoing assessment and interpretation of the results obtained both quantitatively and qualitatively. In 2011, it is planned to present the results of this scientific assessment so as to appraise the importance of psychosocial factors and the need to include and develop them within a new socialhealthcare model of integrated care for the very ill. The aim is to go beyond the limits of the programme and set a scientific precedent, exporting this model of integrated care and opening up new research pathways. An assessment of results from 2010 indicates that all patients improve in the following areas: mood, anxiety, discomfort, adaptation to emotions and suffering. Patients also make headway in their ability to relate to others and the degree of accepting their illness in a context in which, due to the circumstances, it would be normal to witness a worsening of these attitudes. The programme also collaborates, through publicity activities, in making society as a whole more aware of the end of life and palliative care. During 2010, the programme took part in the following conferences: Seminar on Brain Damage and Palliative Care, organised by the Instituto San José in Madrid (Order of Saint John s Hospital). III seminar on End of Life, organised by the University of Vic. Summer course Psycho-oncology: psychological and social aspects in cancer, organised by the General Foundation of the Complutense University in Madrid. II seminar in Castile-La Mancha on Palliative care, organised by the Castile-La Mancha Association of Palliative Care. VII Ethical and Ageing Forum, organise by the Geriatric and Gerontology Society of the Principality of Asturias. Seminar on Grief and Death, organised by the Castile & Leon Society of Palliative Care. Seminar Caring for and accompanying the end of life by the community organised by the Red Cross in Granollers. 15th National seminar on Humanising Health, organised by Los Camilos. Seminar on Integrated Care for Palliative Patients, organised by AECC Galicia. 10th seminar on Living or Dying with Dignity organised by SAR Andalusia. Seminar on Innovation in Palliative Care: psychological care, results and assessment, organised by the Matia Foundation (Donostia). In 2010 la Caixa attended 22,331 people, both patients and relatives 2010 la Caixa Annual Report 149

152 Social Programmes Active and Socially Integrated Elderly People la Caixa Welfare Projects develops care programmes for the elderly, aimed at improving their quality of life and encouraging personal autonomy. The Elderly People programme promotes active and healthy ageing, with activities encouraging ongoing training, personal development, healthy lifestyle, stimulation of skills and abilities and the social integration of the elderly. It is complemented by the Prevention of Dependency programme, which assists old people starting to find difficulties in conducting their day-to-day life. The participation of elderly people in volunteer tasks that reinforce their contribution to society is another of the programme s main features. As such, the Solidarity CiberCaixa stand out as spaces where elderly people and vulnerable groups interrelate. Through these programmes, elderly people not only add years to their lives but, above all, life to their years. Palmira is a volunteer in the CiberCaixa at the prison in Picassent, where she teaches the prisoners computer technology, such as Maite and Cristina, who have extended their knowledge. Her encouragement and enthusiasm are contagious even outside her classes... Elderly people Definition Complete programme based on volunteer work, work within associations, getting to know the new information and communication technologies and ongoing education, in order to develop elderly people as active and fully integrated members of society. Action Computers and Communication programme; courses and workshops in new technology; talks and debates on questions of interest to the elderly; reading workshops; inter-generational workshops; volunteer activity. Ambit Throughout Spain. Figures own centres and centres under agreement with government bodies. 529 CiberCaixa in centres for the elderly. 6 CiberCaixa in prisons. 724,281 beneficiaries. The Elderly People programme of la Caixa Welfare Projects is held in 607 centres, 68 of its own centres and 539 centres in agreements with government bodies and associations for the elderly. A wide range of courses and workshops of different programmes take place in them: The Computers and Communication programme helps elderly people to find out about Information and Communication Technology (ICT), avoiding their isolation from the world of new technology and giving them the chance to use this new knowledge in their daily lives. In addition, it fosters volunteer work by the elderly people who are most experienced in the subject as teachers of new students of ICT. It also promotes the CiberCaixa rooms in elderly persons centres where the classes are given as platforms for social participation. A wide range of activities are included within the framework of the Health and Welfare programme, from talks on contemporary issues to workshops favouring personal development, the desire to learn and keeping up-todate by introducing healthy habits to improve the quality of life. Another of the programmes, Older Readers, organises workshops to promote reading that encourage personal autonomy. Encouragement of volunteer work is another of the main features of this programme. For this reason, Welfare Projects supports associations of volunteers consisting of elderly people (66 Elderly People Associations that manage their own centres, 16 Associations of computer volunteers and 1 Association of Volunteers that conducts solidarity actions on social issues, science, culture and computers). Another relevant part of this programme are the intergenerational activities designed to encourage links and exchanges of experience between children and the elderly la Caixa Annual Report 150

153 Social Programmes Solidarity CiberCaixa Definition Volunteer programme for elderly people who bring new technology to disadvantaged groups. Action Workshops to bring new technology to new residents, prison inmates and people marginalised in society, which are held in the CiberCaixa of centres for the elderly or in prisons. Ambit Throughout Spain. Beneficiaries Prisoners, immigrants, people suffering a mental or physical handicap, etc. Figures ,656 beneficiaries of CiberCaixa centres for the elderly. 346 beneficiaries of CiberCaixa in prisons. In the Solidarity CiberCaixa, elderly people who have started to understand new technology become the support group for other vulnerable social groups. Prevention of dependency and support for the family carer of dependent persons Definition The Challenge of Autonomy Programme to encourage the autonomy of elderly people. One Carer. Two Lives Programme aimed at non-professional family carers for dependent persons. Action The Challenge of Autonomy : psychosocial care workshops; service of free adapted transport to facilitate attendance at the workshops; KitCaixa; exercise guide and a DVD. One Carer. Two Lives : KitCaixa with two consultation guides; classroom workshops for family carers; permanent phone line service. Ambit Throughout Spain. Beneficiaries Elderly people starting to find their day-to-day activities difficult and nonprofessional carers of dependent persons. Figures The challenge of autonomy 1,922 workshops organised in 343 centres for the elderly. 28,854 beneficiaries. 82 minibuses for adapted transport. One carer. Two lives 284 workshops. 5,307 beneficiaries. 7,032 telephone calls. 197,666 guides distributed. Dependency Prevention programme. The Challenge of Autonomy The programme encourages fragile elderly people to include healthy habits in their lifestyles, with the dual objectives of increasing their autonomy and delaying the loss of capacity caused by ageing. The workshops are held for free in the la Caixa Welfare Projects centres for the elderly, jointly with various local Government Bodies throughout Spain. The workshops last for three months. They are given by professional course leaders in small groups in two weekly sessions lasting 90 minutes each. la Caixa Welfare Projects organises an adapted transport service that brings the elderly with mobility problems or reduced mobility to the centres for the workshops. Programme of Support for Family Carers. One Carer. Two Lives la Caixa Welfare Projects promotes the workshops One Carer. Two Lives for non-professional family carers of dependent persons, which are held in conjunction with local government bodies and various federations and confederations with the aim of recognising and providing support for the great work they do and to provide resources and practical knowledge which help to improve the quality of life. Family carers take part in workshops that offer techniques and advice to enable them to look after themselves better and improve both their own quality of life and that of the dependent person they are responsible for. Carers also have a kit that provides information on all the resources and services within their reach. There is also a free 24-hour care line. The workshops are directed by a professional and are organised in small groups during four sessions of two and a half hours each. Dependency prevention workshop 2010 la Caixa Annual Report 151

154 Social Programmes International Division: commitment beyond our borders Since 1997 la Caixa Welfare Projects has conducted its International Cooperation Programme aimed at contributing to wipe out extreme poverty in developing countries of Africa, Latin America and Asia through social and economic projects, emergency and humanitarian aid and by training social leaders and local NGOs. Through its Child Vaccination programme, Welfare Projects contributes to improving the health of the population most in need in the most vulnerable areas of the planet. In these countries both the lack of resources and disease are closely linked and health thus becomes an important feature in the fight against poverty. Additionally, the programme is also conducted in Spain, fostering the culture of cooperation with awareness-raising and training activities. la Caixa leads Spain s first Business Alliance for Child Vaccination International Cooperation Definition Programme of support for initiatives to help improve living conditions and promote sustainable development for the population most in need in developing countries. Action Basic lines: social and economic development; creating social capital in Africa; Crisis and humanitarian action; CooperantesCaixa Programme; training for international cooperation workers and managers; awareness activities. Ambit Developing countries of Africa, Asia and Latin America and throughout Spain. Figures ,718 beneficiaries of awarenessraising and training activities in Spain. 629,058 beneficiaries of international projects. 39 international development and humanitarian action projects in 2010: Guinea Conakry, Peru, Uganda, Niger, Chad, India, Ethiopia, El Salvador, Bolivia, Nicaragua, Mali, Democratic Republic of Congo, Ecuador, Dominican Republic, Burkina Faso, Guatemala, Morocco, Haiti, Cameroon, Equatorial Guinea, Madagascar, Mozambique, Senegal, Ghana, Kenya, Nigeria, Tanzania and Gambia. The main lines of actions are: Training social capital in Africa: this prepares professionals (medical and teaching staff, scholarships for women entrepreneurs, among other things...) to improve the basic social services in Africa. Emergencies and humanitarian action: promoting protection and aid to victims of natural disasters and armed conflicts. Donations from the general public, the Estrella Solidario Deposit Account and resources from the ethical and solidarity investment fund of la Caixa, FonCaixa Cooperation, are also allocated to this initiative. All of these financial products are from la Caixa. In this respect, of note are the emergency actions set up following the earthquake that affected Haiti in January The la Caixa Foundation collected 3 million euros, in addition to the 800,000 donated by the Institution. Part of the cooperation donations were allocated to projects directed by Doctors Without Borders and Intermón Oxfam. The programme is preparing an exhibition on the disaster for In the field of training, we promote professionalising aid workers by training NGO volunteers, technicians and managers. The work of raising society s awareness, dialogue, social debate and promotion of solidarity is carried out through the lectures, seminars, exhibitions, publications and school and family workshops promoted by the programme. In 2010 the following exhibitions were held: Infancy. Photographs by Isabel Muñoz; Cambodia, Land of Hope; Fair Trade, one product, one story; Maternities; Chasing the Dream, and, lastly, Refugees. Lives in Transit. Since this programme was set up twelve years ago, Welfare Projects has devoted over 56 million euros to promoting 437 projects in 62 countries around the world. As regards international alliances, the la Caixa Foundation signed an agreement with the Inbursa Foundation, through which it aims to ratify its commitment to the citizens of Mexico and the rest of Central and South America. To date, two lines of cooperation have been established between both institutions regarding caring for people with serious illnesses and drug consumption prevention la Caixa Annual Report 152

155 Social Programmes Child Vaccination Definition Agreement with the GAVI Alliance to encourage the vaccination of children in low-income countries. Action Collaboration with the GAVI Alliance, as the main private partner of la Caixa in Europe, in the distribution of vaccines. Promotion and channelling of Spanish companies contributions through the Business Alliance for Child Vaccination, a Corporate Social Responsibility initiative promoted and led by la Caixa. Ambit The GAVI Alliance operates in countries with an average annual income per head of under 1,000 dollars (72 countries at present). Beneficiaries Children under five. Figures million euros in funding from la Caixa Welfare Projects. 166,200 euros donated by 26 companies forming the Business Alliance for Child Vaccination. In 2010, la Caixa Welfare Projects renewed its contribution to the GAVI Alliance to encourage child vaccination in low-income countries, strengthening its position as GAVI s leading private partner in Europe. la Caixa also leads Spain s first Business Alliance for Child Vaccination, set up in 2008 to encourage Spanish companies to join and collaborate in the social task of collecting funds for child vaccination. 141 companies have joined this project. ISGlobal Barcelona Definition The Institute of Global Health in Barcelona (ISGlobal) is a new initiative that links the public and private sectors, in addition to academic context. Action The main goal of ISGlobal is to improve the health of the most vulnerable and to break the vicious circle of disease and poverty in which they are trapped. The goals coincide with the Millennium Development Goals, specifically those related to health: reducing child mortality, reducing maternal mortality at childbirth, improving health and the fight against HIV, malaria, tuberculosis and other diseases which affect the development of the poorest countries. Ambit The ambit of work is global, seeking new solutions for the main health challenges in the poorest countries and with the most vulnerable people through research and development, technical assistance, training experts and having an impact on policies and the main international representatives in Global Health. Created in June 2010, ISGlobal is an initiative promoted by the government of Spain (through the Ministry of Foreign Affairs and Cooperation and the Ministry of Health and Social Policy), the regional government in Catalonia, the la Caixa Foundation, the University of Barcelona and the Hospital Clinic in Barcelona, and is also aided by the Carlos Slim Health Institute (Mexico), the Bill & Melinda Gates Foundation and the Nelson Mandela Children s Fund. The Global Health Institute of Barcelona promoted a new debate and thought forum on global health titled Tribuna ISGlobal, inaugurated with a talk by the president of Mozambique, Armando Emilio Guebuza. Mariana lives in the district of Manhiça, in Mozambique. She has worked the land all her life and is a member of an association of peasant women who grow food to feed their families. All the members of the association share a strong feeling of being united and a great capacity for hard work. Mariana s grandchildren, who live with her, can go to school every day 2010 la Caixa Annual Report 153

156 Social Programmes Affordable Housing For the last six years, the Affordable Housing programme belonging to la Caixa Welfare Projects has provided emancipation for young people, decent housing for elderly people and makes affordable housing available for families in response to the current economic climate. This initiative, in which the Institution has invested 720 million euros, received over 93,000 applications from all over Spain. Affordable Housing Definition To develop housing with rents below those established by the official subsidised housing regime and aimed mainly at three of the groups with most difficulty to find housing: the young, the elderly and families. Action Constructing housing in provincial capitals and metropolitan areas with a deficit of rented flats and thus offering housing at prices below those of the official subsidised housing market. Ambit Provincial capitals of Catalonia, Madrid, Andalusia, Valencia and the Basque Region and their respective metropolitan areas. Beneficiaries Young people between 18 and 35, people over 65 and families. Figures ,846 houses and flats delivered. 1,176 houses and flats under construction. Flats for the young and elderly In 2004, la Caixa Welfare Projects set up the Affordable Housing programme with a commitment to build 3,000 flats by 2012 for the young and elderly, who are considered the two sectors of society with the greatest difficulties to enter the housing market due to high purchase and rental prices. The flats have one or two bedrooms and net surface areas of between 45 and 55 m². The conditions and requirements for access to these are as follows: To be aged between 18 and 35 or 65 and over. To have incomes not higher than 4.5 times the weighted value of IPREM (Public Indicator of Income and Multiple Effects). To prove they have a minimum income or provide a bank guarantee. Not own any house. The flats will be adjudicated by a draw held before a notary for all the applicants who fulfil the conditions established by the rules for each development. The period of lease is five years and can be extended providing the tenant continues to fulfil the regulations for the official protection regime. Once the period of official protection expires they will be offered the chance to purchase the flat. Flats aimed at families In April 2009 and as a result of the economic and property crisis, la Caixa increased the number of flats in the programme by 1,000, building a total of 4,000 flats. The aim of this extension is to reactivate the building sector, resuming developments which had stopped due to the crisis and in response to the need of housing for families. The flats have two or three bedrooms with surface areas of between 60 and 90 m². The housing for families, the conditions and access requirements are as follows: To be of legal age. To have incomes not higher than 4.5 times the weighted value of IPREM (Public Indicator of Income and Multiple Effects). To prove they have a minimum income or provide a bank guarantee. Not own any house. The flats will be adjudicated by a draw held before a notary for all the applicants who fulfil the conditions established by the rules for each development. The period of lease is five years and can be extended providing the tenant continues to fulfil the regulations for the official protection regime. In all cases, once the period of official protection expires the customer will be offered the chance to purchase the house. Developments of homes under construction The Affordable Housing programme has already adjudicated 2,414 flats and houses or flats for the young and elderly are scheduled to be handed over until they reach the planned figure of 3,000 between 2011 and In 2010, the following developments have been arranged: Sentmenat, Vila- Seca, Terrassa, Olot, Tarragona, Bilbao, Sant Just, Barcelona, Vitoria, Santander, Pinto, Cordoba, Badalona, Banyoles and l Hospitalet de Llobregat, all of them aimed at families. Most of these 1,100 homes are expected to be delivered between , although a few will be delivered in Affordable Housing development in Hospitalet de Llobregat 2010 la Caixa Annual Report 154

157 Social Programmes Aid for projects of social organisations to assist disadvantaged groups la Caixa Welfare Projects aims mainly to support entities that work in solidarity to improve the quality of life of vulnerable groups. la Caixa Welfare Projects calls for various bids from non-profit social organisations for help in developing projects designed to meet the needs of the most socially disadvantaged, adapted to the specific deficits and requirements of each area. Social Assistance Projects Definition Programme to help social initiatives undertaken by non-profit organisations in Spain. Action Funding projects to integrate people with a disability into society and work, to fight poverty and social marginalisation, to support temporary accommodation encouraging social integration, to foster intercultural relations and social cohesion, and to encourage volunteer work, social action and cultural activities with a social impact. Ambit Throughout Spain. Beneficiaries Non-profit social organisations that carry out projects in benefit of the most needy. Figures Support for 1,145 projects: 244 projects to integrate disabled people into society and work. 305 projects to fight poverty and social marginalisation. 73 projects to support temporary accommodation encouraging social integration. 63 projects to foster intercultural relations and social cohesion. 166 projects encouraging volunteer work. 256 social action projects. 38 projects of cultural activities with a social impact. Integration of disabled people into society and work: initiatives to promote personal autonomy and to give psychological and social support to the families of beneficiaries, and projects to promote routes for integration into ordinary jobs and into the specific job market. Fight against poverty and social marginalisation: projects that offer services that cover the basic needs of people at risk of social marginalisation or who are already marginalised, that promote these people s participation and integration into society and that favour routes of integration into work in order to overcome marginalisation. Support for temporary accommodation encouraging social integration: projects that offer temporary accommodation to people on their own and without social relationships, women victims of gender violence and people with serious social or family problems. In addition, each case is monitored in order to assist beneficiaries to overcome difficulties. Intercultural relations and social cohesion: projects favouring relationships between people from different cultures and offering intercultural mediation. Encouraging volunteer work: projects that welcome, train and integrate volunteers into social organisations and to improve the management of groups of volunteers. Social action projects: initiatives to promote health, gender equality and education in values; and to improve the quality of life of people with physical or mental health problems. Help for cultural activities with a social impact: initiatives to promote activities linked to the plastic arts, photography, music, literature and drama as resources for personal development and social integration; and to foster the active involvement in social action of participant groups and of professionals from the world of culture. In 2010, la Caixa Welfare Projects promoted 1,145 social projects 2010 la Caixa Annual Report 155

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159 Educational Programmes Introduction A wide range of scholarships which back talent to encourage social progress

160 Educational Programmes Educational Programmes The commitment of la Caixa Welfare Projects to education and training people is evident in its full range of initiatives. Knowledge and values are two of the most important tools for personal growth and, therefore, all the Institution s actions are clearly educational. From caring for children in hospital to workshops that bring new technologies closer to the elderly and the drug awareness and prevention project, to mention just three examples, the presence of an educational focus is clear. As part of the work in this area, the Welfare Projects close relations with schools are especially important. Projects such as CaixaEscena, which fosters the use of theatre in schools; The Art of Educating, which conveys pedagogic thought during school visits to the Prado museum presented through the Welfare Projects initiatives; school concerts and visits to the CosmoCaixa and CaixaForum centres highlight the involvement of la Caixa with schools. Projects such as Art in the Street aim to break down the barriers that exist between contemporary art and citizens by installing sculptures such as those created by Rodin in streets and squares in the largest cities. The la Caixa in Favour of the Sea initiative, related to the environment, makes people aware of the importance of conserving our marine biodiversity through workshops and visits to the project s science schooner. Intergenerational activities promote social harmony among the elderly and youngest during school holidays. In the end, education can overcome all. In this respect, one particularly valuable example is the KitsCaixa Values, an educational aid for primary school teachers and students aged between 8 and 12 which the Foundation has distributed throughout resource centers and which is available for use by schools with the aim of promoting ethical values and harmony. These materials seek to assimilate civic values based on three cornerstones: Identity, Social Harmony and Responsibility. Since the project began, Welfare Projects has distributed 398 kits to schools, and these have been used by 575,000 schoolchildren. In parallel to the above, all the social initiatives promoted by the Foundation use education as a reference point. This is the case of the CaixaProinfancia project which fights child poverty and regards learning support as one of most efficient ways to combat the perpetuity of situations of marginalisation in which minors in low-income families are trapped. Also noteworthy is the project offering vocational training scholarships for prisoners who are in the last stages of their sentences. For them, acquiring skills and knowledge required by trades that are in high demand, such as gardening, the hotel and catering business or geriatric assistants, constitute an opportunity for their reintegration into work and a return to normality in their lives once they are released from prison. In addition to the above are the innovative projects committed to training professionals in pioneering areas such as the methodology of work carried out and implemented through the Foundation s projects coupled with the projects Integrated Care for Very Ill People or Intercultural Community Relations. Finally it is worth noting one of the core activities carried out by the la Caixa Foundation in the area of education: its scholarship project. For over thirty years thousands of young Spanish students have been given the opportunity to study at the best schools and universities in the world thanks to these scholarships. Additionally, since 2008, the la Caixa Foundation has promoted an international scholarship for PhDs in biomedicine, thanks to which four Spanish research centres have recruited young gifted students from around the world in their PhD projects. Presentation of scholarships to study PhD courses abroad (2009) 2010 la Caixa Annual Report 158

161 Educational Programmes A wide range of scholarships which back talent to encourage social progress Investing in education is one of the main pillars for improving a country s levels of progress and social welfare. This is why, since 1982, la Caixa has been offering scholarships to help students extend their university education in the best universities of Spain and other countries. The objective of the la Caixa Welfare Projects Scholarship programme is to collaborate in training top scientists and professionals, which is of benefit to society as a whole. The funding on offer, the number of scholarships, the services provided for students before, during and after the scholarship and the diversity of subjects subsidised mean that the Scholarship programme of la Caixa is one of the best in the world. In 2010 the following were awarded: 100 scholarships for Master s degrees in Spain. 117 scholarships for postgraduate studies in other countries. 15 scholarships for journalism placements. 40 scholarships for PhDs in Biomedicine. Scholarships for postgraduate studies in other countries Definition Programme of scholarships for postgraduate studies at any university or centre of higher education in the United States, Europe or Canada and Business Management studies in China or India. Action To encourage mobility and give a first opportunity to do postgraduate work in leading foreign universities and centres. Funding given Return air ticket, university registration fees, monthly income, initial funds for settlement costs, health insurance, academic guidance course, cost of applications to the country s universities and visa costs. Number of scholarships awarded in Countries United States: 40 scholarships. Germany: 20 scholarships. France: 20 scholarships. Great Britain: 20 scholarships. Rest of Europe: 5 scholarships. Canada: 5 scholarships. China: 5 scholarships. India: 2 scholarships. Scholarships for Master s degrees in Spain Definition Programme of scholarships to take an official Master s degree at any university or centre of higher education in Spain. Action To encourage mobility and give the support necessary for students to take the Master s degree that best suits their abilities and potential and to derive the maximum benefit from it. Funding given Registration fees, monthly income and initial funds for travel and settlement costs. Number of scholarships awarded in Mr. Fainé presenting one of the scholarships for PhD studies abroad 2010 la Caixa Annual Report 159

162 Educational Programmes Scholarships for studying a PhD in Biomedicine Definition Programme of scholarships for students from all round the world to study their doctorate in biomedical research at four leading Spanish biomedical research centres. Action To favour the settlement among Spain s scientific community of top young international researchers and give them the chance to do research as scientists at four of the leading international centres in Biomedicine. Funding given Monthly income, annual grant equivalent to a monthly payment for travel, settlement and seminar costs. Number of scholarships Scholarships for journalism placements Definition Programme of scholarships for students in the final year of Information Sciences (Journalism branch) for two-year training placements. Action Placement work in offices of the Efe Agency in the autonomous communities for the first year and at its international offices for the second. Funding given Monthly income and travel allowance. Number of scholarships In 2010, and for the third year, la Caixa Welfare Projects awarded 40 scholarships to international students taking part in this programme, thanks to which four Spanish centres received ten young researchers: the National Centre for Cancer Research (CNIO), the National Biotechnology Centre (CNB-CSIC), The Genom Regulation Centre (CRG) and the Institute for Biomedical Research (IRB). These scholarships, lasting four years, are aimed at students worldwide. In 2010 there were 120 post-doctorate researchers in this programme. The amount of funding given and the scientific excellence of the Spanish centres where the doctorates are taken mean that this programme can compete with the world s best in the field of biomedicine. Thanks to this programme, the four centres can integrate young trained researchers from all over the world into their teams. This stimulates scientific exchange, opens up new research horizons, favours the involvement of Spanish scientists in international research and reinforces the role of Spanish biomedical science as an international leader in the field. Enric received a scholarship to study a master in Biomedical Engineering at Columbia University in New York. Thanks to his training he now works at the International Health Research Centre in Barcelona and the Centro de Investigação em Saúde in Manhiça (Mozambique), backing the work of other researchers, such as Quique, to improve health in developing countries 2010 la Caixa Annual Report 160

163 Science, Research and Environment Programmes Introduction Science Research Environment

164 Science, Research and Environment Programmes Science, Research and Environment Programmes Welfare Projects generally aspires to improve quality of life and welfare of citizens. Advancing scientific knowledge, spreading such knowledge among a widest possible public and conserving and improving the environment are therefore very important areas of work. Promoting sustainable habits among citizens, spreading science and scientific knowledge, making breakthroughs in biomedical research and caring for and conserving our natural heritage are the main focuses of the scientific, research and environmental programmes. In 2010, the Institution devoted 59 million euros to these initiatives. The research support programme was backed by the launching of ISGlobal, the Global Health Institute in Barcelona, the opening of the la Caixa Molecular Cancer Therapy Unit in the Vall d Hebron Hospital and holding the first competition of RecerCaixa, a project developed jointly with the Catalan Association of Public Universities, three of its most notable events. In 2000, the UN set as one of its Millennium Development Goals, three challenges directly related to global health: reducing child mortality, reducing the mortality of mothers and improving health and the fight against HIV, malaria, tuberculosis and other diseases that plague development in the poorest countries. In line with these objectives, ISGlobal Barcelona, promoted by Welfare Projects in 2010, has as its main objective the health of the most vulnerable people and breaking the vicious circle of disease and poverty in which they are trapped, thus complementing, beyond our borders, the commitment to child vaccination within the International Cooperation Programme. RecerCaixa aims to take the quality and scope of research in Catalonia one step further, as well as economic and technological expertise in Catalan society. This programme is promoted jointly by la Caixa Welfare Projects and the Catalan Association of Public Universities, which chose the winning projects for its first edition, held in The la Caixa Molecular Cancer Therapy Unit directed by the prestigious oncologist Josep Baselga and inaugurated in June, will focus its activity on designing and searching for new ways to treat cancers through clinical tests with new therapies to fight tumours. These projects are part of the numerous research centres backed by la Caixa among which worthy of mention are IrsiCaixa, international leader in the fight against AIDS, the WIDER endoscope surgery centre and the National Cardiovascular Research Centre. The discoveries derived from the support provided for research offer new perspectives for science. Aware of the fact that this increasingly forms part of our lives, Welfare Projects provides support for popularising science. The CosmoCaixa Museums of Science in Madrid and Barcelona, where meetings, talks and shows are held that range from palaeontology to climate change, are forums serving to spread science. The contents of these areas are complemented with travelling exhibitions around the country. Once upon a time... Speech!; Origins; Technorevolution and Neuronal landscapes are just some of the titles. As regards protecting the environment, the programme Conservation of natural spaces and reintegration into society contributes to preserve the most valuable ecosystems in Spain by conserving the environment which, additionally, prioritises hiring people from disadvantaged groups to do this work. In 2010, Welfare Projects promoted 417 initiatives as part of this project. The innovative initiative set up jointly with the Catalan Institute of Climate Sciences Foundation (IC3) to install a network of stations capable of measuring and studying the impact of climate change, adds to the environmental commitment of la Caixa. la Caixa in Favour of the Sea, focuses on promoting the importance of protecting marine areas. In addition, the la Caixa Foundation is working on the publication of the Sustainability Report. To prepare this it uses the international standard methodology GRI-G3 of the Global Reporting Initiative. It aims to provide an accurate, reliable, transparent and periodical view of the Foundation s economic, environmental and social development, thus improving the accountability of the Institution s activities for the Foundations stakeholders. Vell Marí. la Caixa in Favour of the Sea 2010 la Caixa Annual Report 162

165 Science, Research and Environment Programmes Science The science programme aims to popularise scientific and environmental knowledge and bring them closer to the public at a time when science is increasingly more present in our lives. This is conducted through a series of exhibitions and activities designed for the public in general. CosmoCaixa Barcelona Details Inaugurated in ,000 m 2 2,128,453 visits in ,337 visitors in Location Isaac Newton, 26, Barcelona. Facilities 4 halls for temporary exhibitions. 7 multipurpose rooms and halls. Auditorium. Agora. Science Plaza. Permanent exhibitions and spaces Drowned Forest. Geological Wall. Hall of Matter. Planetarium and Meteorological Station. Click and Flash. Bubble Planetarium. Touch, touch! CosmoCaixa Barcelona, belonging to la Caixa Welfare Projects, is an international benchmark. It offers an extensive scientific programme of temporary and permanent exhibitions, workshops, lectures, courses and debates on the latest events in science, research and the environment explained by researchers, making it an international point of reference. Its activities change every four months and are organised around scientific events. Opened in 2004, this Science Museum of la Caixa Welfare Projects brings scientific knowledge closer to the public in all its age-groups elderly people, families, young people, children, and at all educational levels. The facilities are adapted for all types of people with different handicaps. CosmoCaixa s educational programme is based on constant innovation in the teaching resources and formats of its activities with the aim of informally complementing educational subjects. As well as guided tours, the centre puts on workshops, itineraries, science classes, scientific theatre and talks for school students, initiatives that are highly valued by teachers. CosmoCaixa Barcelona is a museum where visitors use all their senses, participate, play, learn and, above all, enjoy themselves. Temporary exhibitions Let s talk about drugs. From 15 January 2009 to 31 January Darwin, the observer. From 21 October 2009 to 15 November Abracadabra, conjuring and science. From 19 November 2009 to 9 January Recycling. From 4 June 2010 to 7 June Air. Breathing and children s health. From 15 October 2010 to 16 October Cycles of Talks, Debates and Courses to Popularise Science Cycle of talks Talk today Science and Citizens, jointly with the Catalan Association of Public Universities (ACUP), with the lecturers Enric Carreras and Eudald Carbonell. From waste to raw material. The roots of tomorrow s consumer products, cycle of talks in conjunction with Unescocat. Scientific seminar. Cancer, towards personalised medicine, with lectures by J. Michael Bishop, Nobel Prize for Medicine and Laura Van t Veer. Josep Marlés is a teacher of biology and has taken his students several times to CosmoCaixa. Each visit turns into an experience for the children, which in turn makes them more interested in learning and getting closer to the world of science la Caixa Annual Report 163

166 Science, Research and Environment Programmes CosmoCaixa Madrid Details Opened in ,000 m 2. 1,378,261 visits in ,541 visitors in Location Pintor Velázquez, s/n, Alcobendas (Madrid). Facilities 3 Exhibition Halls. 4 multipurpose rooms and halls. Conference room/ Auditorium. Popularising scientific and environmental knowledge and bringing them closer to the public in a simple, entertaining way, carried out by those who make it possible, is one of the main aims of the la Caixa Welfare Projects Science Museum in Madrid. This museum is mostly interactive, based on visitors participating and experimenting with the scientific concepts being passed on. Since it opened in Alcobendas in 2000, CosmoCaixa Madrid has become a meeting place for science and society. Its exhibitions, talks and workshops for the general public focus on research, astronomy and the environment, highlighting current events and general interest. In 2010 CosmoCaixa Madrid received a total of 348,541 visitors. The most popular exhibitions were Dinosaurs. Treasures from the Gobi Desert, Let s talk about drugs and Understanding to survive: the climate. Also cycles of talks and workshops were held on the relationship between science and magic, exploring space, the world of dinosaurs and the importance of biodiversity in which the best national and international experts took part. Temporary exhibitions Long Live difference! The most valuable treasure in the last one thousand million years (November January 2010). Understanding to survive: the Climate (June March 2011). Dinosaurs. Treasures from the Gobi Desert (March January 2011). Let s talk about drugs (March May 2011). Cycles of talks, debates and courses to spread scientific knowledge Seminar Webvolución 2.0: digital tools for teachers in the 21st century. Cycle of talks From Earth to space. The technology of the final frontiers. Cycle of talks Dinosaurs! Five windows to the most famous (almost) extinct beings. Beginner s course in astronomy. CosmoCaixa Madrid 2010 la Caixa Annual Report 164

167 Science, Research and Environment Programmes Research Since 1995, la Caixa Welfare Projects has promoted scientific research in order to find answers to developments in the field of life sciences and health for the welfare of people. In 2010 it renewed its efforts and extended its range of activities. For over 15 years Welfare Projects has promoted research through alliances formed with institutions and Public Authorities. In 2010 RecerCaixa, a new pioneering programme in Catalonia, was set up, the result of cooperation between la Caixa and the Catalan Association of Public Universities (ACUP), to boost and aid research. Research scholarships is an annual programme funding the best research projects and research centres in Catalonia in specific fields of social sciences and health. The investment made by la Caixa for this project will amount to 9 million euros until One of the first laboratories in which the Institution invested 1.3 million euros in 2010 was IrsiCaixa at the Germans Trias i Pujol Hospital in Badalona, which has become an international benchmark in AIDS research. In line with this action, the Pasqual Maragall Foundation and the Research Programme of Early Diagnosis of Alzheimer (EDOA) received funding from both la Caixa and the Catalan regional government as part of the BarcelonaBeta Project. This new pioneering initiative focuses on conducting a national study aimed at diagnosing and treating neurodegenerative diseases at an early stage. la Caixa Welfare Projects will allocate 3.4 million euros to this project until la Caixa Welfare Projects, as sponsor of the Vall d Hebron Institute of Oncology Foundation (VHIO), created the first Research Unit of Molecular Cancer Therapy in Europe, directed by Doctor Josep Baselga. Its aim is to speed up the transfer of scientific discoveries to clinical practice to benefit patients suffering from cancer. la Caixa Welfare Projects will invest a total of 7 million euros in this new project. In addition, la Caixa provides support for institutions such as the National Cardiovascular Research Centre in Madrid (CNIC), directed by Doctor Valentí Fuster, and the Cardiovascular Genetics Programme, directed by Doctor Ramon Brugada, at the Biomedical Research Institute in Girona (IDIBGI). Also, thanks to its alliances with other institutions, la Caixa provided funding for the WIDER-Barcelona Centre (World Institute for Digestive Endoscopy Research in Barcelona), directed by Doctor Josep Ramon Armengol-Miró, part of the University Hospital Research Institute Foundation at Vall d Hebron (FIR-HUVH), with a total investment amounting to 9.9 million euros. Its aim is to promote advances in endoscopic surgery by using the body s natural orifices to aid a faster and less painful recovery. RecerCaixa, a pioneering programme in Catalonia encouraging research 2010 la Caixa Annual Report 165

168 Science, Research and Environment Programmes Environment The Environment programme promotes actions to conserve and improve natural spaces both on land and sea and encourages respect for biodiversity. Conservation of natural spaces and reintegration into society Definition This programme, the result of agreements with the autonomous communities and regional councils, has a dual objective: to contribute to improving and maintaining natural spaces and to promote the placement in work of disadvantaged people. Action Promoting work which helps to reduce the effects of climate change, such as planting trees or aimed at the use of renewable energies and reducing CO 2 emissions are lines of action that have been strengthened in the latest agreement. Work also continued on restoring forests following fires, fire prevention and improving natural habitats and landscapes; conserving biodiversity, encouraging and publicising research into environmental values; strengthening the economic fabric and the in-job training of the local population in towns within natural spaces. Ambit Throughout Spain. Beneficiaries People at risk of social marginalisation, preferably with a physical or mental disability, the mentally ill, former prisoners, former drug addicts, immigrants, the long-term unemployed and women in an extreme situation. Collaborating All the autonomous communities and Catalan and Basque regional councils. Number of beneficiaries in ,860 people at risk of marginalisation Number of projects in Conservation of natural spaces and reintegration into society The programme of Conservation of natural spaces is la Caixa Welfare Projects commitment to improving nature faced with the loss of biodiversity on planet Earth and people s concern on issues such as managing the environment. The programme also offers people belonging to disadvantaged groups the chance to integrate in society and to work by carrying out actions to protect and conserve the most valuable natural spaces in our country. This year efforts were reinforced to minimise the effects of climate change and install renewable energy as a source of clean, sustainable energy. This initiative was set up in 2005 with the signing of a first agreement with the Barcelona Regional Council. The good results led to this being implemented throughout Spain. Currently Welfare Projects has signed agreements with all the autonomous communities in Spain. It should be emphasised that these years have seen action in most of Spain s national and natural parks. Lines of action focus on promoting initiatives to reduce the effect of climate change, the conservation of our natural surroundings (forest habitats, use of renewable energies, restoring degraded areas, eliminating foreign plants, etc,) but also conserving biodiversity and making spaces accessible to the disabled la Caixa Annual Report 166

169 Science, Research and Environment Programmes To cite just some of the initiatives carried out as part of the programme to conserve natural spaces, Welfare Projects supported last year: Study of the effects of climate change on marshlands in the province of Álava. Restoration of the public woods affected by the fire in Sierra Nevada (Granada), in Adapting a stretch of the trail for disabled people in the Ordesa National Park (Huesca). Pilot scheme to plant marine eelgrass (a plant belonging to the phanerogram family), as a way to absorb CO 2, in Asturias. Restoration of forests in Ibiza due to the fire there in the summer of Comprehensive management to improve habitats and prevent fires in el Garraf Nature Park (Barcelona). Fitting a biomass boiler in the Toki-Alai interpretation centre, in the Nature Park of Urkiola (Basque Country). Restoration of forest in La Palma (Canary Islands) due to the fire in Eliminating foreign invasive plants in the Bay of Santander, Cantabria. Recovering the natural surroundings of the Altillo Chica open lagoon (Toledo). Restoration of the stretch of the Camino de Santiago trail in Palencia, Castile-Leon. Project to protect, restore and assess peat bogs in the eastern part of Extremadura. Conserving and encouraging local vegetation in the ecosystems of dunes in the National Park of the Atlantic Islands (Pontevedra). Creating a forest mosaic to improve biodiversity and fight against forest fires in els Ports Nature Park (Tarragona). Adapting and improving access to La Fageda d en Jordà Nature Park in the volcanic area of La Garrotxa (Girona). Restoring and managing farmland for pastures in the Pagoeta Nature Park (Guipúzcoa). Planting trees to absorb CO 2 in Natural Areas of the La Rioja region. Actions in forests to prevent fires in the public estate of Bonrepòs (Lleida). Identification improvement study in swamps to promote biodiversity and mitigate the negative effects of climate change in the Madrid region. Project to restore the Vía Verde forest in Caravaca de la Cruz (Murcia). Constructing a fire break in the Community Place of Interest of Arabarko (Navarre). Actions to improve environmental links in the Area of Natural Interest of the mountains of Tivissa (Tarragona). Fitting solar panels in El Hondo Nature Park Visitors Centre, in El Hondo (Valencia). Andrés suffers from Ménière s disease, a disorder which affects his inner ear and prevents him from following his career as framing carpenter. Now he works to recover natural spaces in Cantabria. As a job developer, María José feels fulfilled for having helped Andrés to believe in himself once more. Andrés family has noticed this change la Caixa Annual Report 167

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171 Cultural Programmes Introduction CaixaForum Barcelona CaixaForum Madrid CaixaForum Palma, Lleida, Tarragona and the la Caixa Foundation in Girona New CaixaForum centres in Seville and Saragossa Exhibitions Music

172 Cultural Programmes Cultural Programmes Culture is the driving force of social and personal development. Based on this belief, Welfare Projects dedicated 50 million euros in 2010 to developing cultural initiatives. The aim of these is to foster habits of cultural consumption which help people to grow. The range of initiatives promoted by the Institution therefore aim to bring people from all backgrounds, ages and education closer to art, music, theatre and humanities, particularly those who do not have the chance or habit of frequenting museums, theatres or concert halls. In line with this spirit, la Caixa promotes the CaixaForum network of social and cultural centres, free facilities open to all which host activities related to different areas of culture. The range of cultural projects offered by la Caixa Welfare Projects is generally built around four large areas: exhibitions, humanities, music and theatre. The exhibition programme that presented such events as the retrospective exhibition featuring works by Miquel Barceló, the tribute to genius filmmaker Federico Fellini, the poetical photography of Jacques Henri Lartigue or a look back at the technique of engraving through the From Dürer to Morandi project were especially noteworthy. The humanities project also included classical and modern thought, literature, cinema, history, art and scenic arts with the aim of getting to the roots of culture and promoting debate on great social changes. support for teachers who regard acting as a tool to motivate creativity and teamwork in their students. In 2010, the programme was carried out throughout Spain with 634 school theatre groups taking part, with a total of 11,332 students, 488 performances and 83,666 beneficiaries in the education community. Recovering heritage is another of the priorities in the area of culture and the Open Romanesque project, developed jointly with the regional government of Catalonia, is its most irrefutable expression. Great alliances One of the main actions promoted in 2010 by la Caixa Welfare Projects as part of its Cultural programme was its commitment to consolidate its policy of creating alliances with leading international museums and cultural centres. Thus, the exhibition Roads to Arabia. Archaeological treasures from the Kingdom of Saudi Arabia was shown in CaixaForum Barcelona, through the cooperation agreement signed in 2009 with the Louvre, which will enable exhibitions of works from this French museum to be held in the coming years in the various CaixaForum centres. Additionally, in 2010 the la Caixa Foundation signed a cooperation agreement with the MACBA Foundation (Museum of Contemporary Art in Barcelona) with the aim of managing the modern art collections belonging to both foundations. This agreement will create a common collection totalling 4,450 works of art worth around 160 million euros, making it one of the most important collections in Spain and Europe from periods spanning the second half of the twentieth century to the present. This agreement will be seen in exhibitions prepared by the joint large exhibition projects in each of the institutions centres and in foreign museums from In parallel to this, the project includes developing educational, research, social cohesion and specific art projects. In addition to these two agreements, Welfare Projects also runs the Art of Educating project jointly with the Prado Museum. The Welfare Project s music programme is committed to generating social cohesion and promoting intercultural activities. And theatre has come to life through CaixaEscena, a programme of aid and Open Romanesque project. Church of Sant Joan in Boí 2010 la Caixa Annual Report 170

173 Cultural Programmes CaixaForum Barcelona CaixaForum Barcelona Details Opened in ,000 m 2. 1,552,110 visits in ,945 visitors in Location Avinguda de Ferrer i Guàrdia, 6-8, Barcelona. Facilities Five exhibition halls. Auditorium holding 341 people. Three halls for courses, talks and other activities. Arts Laboratory for educational activities. Media library. The range of activities and exhibitions held at the CaixaForum Barcelona received over one and a half million visits in Located in the former Casaramona factory (designed by Puig i Cadafalch), a jewel of industrial Art Nouveau architecture, CaixaForum has become one of the city s busiest and most dynamic cultural spaces. The main objective of the initiatives and activities held at CaixaForum Barcelona is to bring culture closer to society. In 2010, the centre put on an extensive programme of activities for every kind of public, including exhibitions of art from various periods and civilizations and in different categories (painting, architecture, photography...). Around these, CaixaForum organised complementary activities, debates and talks, cycles on literature and thought, films, multimedia activities, courses, workshops, family programmes, guided tours for the general public and tours booked beforehand for groups and geared towards schools, as well as prepared visits for people with hearing difficulties and the visually impaired and coffee discussions for the elderly. The humanities, music, international cooperation, educational and family activities and multimedia programmes put on a great many events in several formats: concerts, theatre shows, debates and talks, film shows, courses and workshops. The CaixaForum Media Library [Media Art space], a centre that specialises in new art forms, increased its number of visitors together with its collections of books and films, documentaries, photography, music, video art, etc. in It also added services and resources to provide support for teaching and research within its ambit of subjects and for different levels of education: secondary education, undergraduates and postgraduates. Of all the exhibitions held, the most popular in 2010 was the one dedicated to Majorcan artist Miquel Barceló, which attracted over 228,000 visitors. Also popular were the retrospective exhibitions dedicated to French photographer Jacques Henri Lartigue and filmmaker Federico Fellini, and the latest exhibition of la Caixa Welfare Projects FotoPres 09, each of which attracted well over 100,000 visitors. Noteworthy were the exhibitions featuring works from the la Caixa Foundation s Modern Art Collection, one of the largest in Spain, which were visited by over 340,000 people. Thus, the exhibition entitled Declassified Objects was the second most popular of the year in CaixaForum Barcelona with almost 136,000 visits. CaixaForum Barcelona Exhibitions The worlds of Islam in the collection from the Aga Khan Museum Cambodia, land of hope Federico Fellini. The circus of illusions FotoPres la Caixa 09 The style of an artist: Luis Gordillo. Dogmatic cosmetics. The la Caixa Foundation s Collection of Modern Art Declassified objects. The la Caixa Foundation s Collection of Modern Art Childhood. Photographs by Isabel Muñoz A floating world. Photographs by Jacques Henri Lartigue ( ) Miquel Barceló La solitude organisative Athletics. The most human sport of all Roads to Arabia. Archaeological Treasures from the Kingdom of Saudi Arabia Human, too human. Spanish art from the 1950s and 1960s. Collection of Modern Art Windows to the world. Documentaries from another perspective The temptation of the earth (Qiu Anxiong Humanities Cycles of talks German romanticism, Schumann s lieder and romantic poets 2010 la Caixa Annual Report 171

174 Cultural Programmes Catalan thinkers: Balmes, Pi i Margall, Joan Maragall, Lerroux, Vicens Vives Narrating in the era of pictures From poem to poem. Poems from Spanish literature commented by today s poets Nino Rota. Music, feeling and image Art and Greek-Latin antiquity The publishing trade. From Carles Barral to our times Writing from today s world Franco s regime, 35 years on. A new historical account Cycles of talks and film shows Forgotten Spanish explorers Barceló s sea Cycle of cinema Photographer before the lens Fellini: the infinite show Seminar Athletics and its infinite subtleties Art mornings New formats and channels for documentary photography International cooperation Cycle of cinema Childhood Cambodia which were Trevor Pinnock, Hopkinson Smith, Avaye Doust, A Filetta, Xavier Sabata and Forma Antiqva, the Chamber Group of the Baroque Orchestra of Catalonia, Fargana Qasimova and the Daud Khan Ensemble. Filmed music Verdi Sounds, rage, echoes. Filming music and musicians of the 20th century Electronic music Electronic music linked to the cycle Electronic cinema Experimental music in CaixaForum Summer nights Concerts (gospel, jazz, rumba, fado, tango, congolese, celtic, brazilian music...) Performances, contemporary dance and video Recital of poems Family activities Family concerts Family cinema Street arts. Even if it rains! Scenic arts Art in the labo Art in play (independent activities: the CaixaForum backpacks, mural by Sol LeWitt: variations on a theme, wrack your brains at CaixaForum) Workshops Educational area Exhibition presentations for all the family Games with clues Educational activities Arts workshops International Cooperation workshops Music workshops Lively guided visits in the exhibitions Concerts Scenic arts Multimedia activities Concerts Media Library Channel projections Eulalia has taken part in a family workshop at CaixaForum and had fun, just like her sister. Their parents are delighted their children can get so close to culture and this can have a positive effect on their development. Mónica enjoys working as a teacher Cycles of talks and round tables Meetings with commitment The response by NGOs to the emergency in Haiti: actions, learning and challenges Assessing humanitarian actions. Why is it so important? Music Concerts of Antiqva Concerts from the CaixaForum Season of Music: 12 concerts featuring renowned celebrities and groups of ancient music, music from around the world and further styles, notable among 2010 la Caixa Annual Report 172

175 Cultural Programmes CaixaForum Madrid CaixaForum Madrid Details Opened in ,000 m 2. 1,445,045 visits in ,028,310 visitors in Location Paseo del Prado, 36, Madrid. Facilities Two exhibition halls. Auditorium holding 330 people. Five educational and/or multipurpose spaces. Cafeteria-restaurant. Shop/bookshop. Since opening its doors in February 2008, CaixaForum Madrid has become a reference point in Spain s capital which has extended and diversified the social and cultural activities on offer, both through la Caixa Welfare Projects and by holding events organised by leading institutions and entities. The 1,028,310 visitors have turned it into a living, active and dynamic centre on offer to the public in general, a platform to spread knowledge coherent with society s current concerns and needs. CaixaForum Madrid is a meeting point in the city s life which generates knowledge and personal development through exhibitions featuring ancient, modern and contemporary art which it has displayed, as well as concerts, scenic arts, cycles of cinema and literature, educational and family workshops plus scientific and environmental meetings. Photography as a tool of social commitment has been the focus of most of the CaixaForum s programmes this year with exhibitions such as FotoPres 09, Maternities and Childhood. Photographs by Isabel Muñoz. The centre also housed the first great retrospective exhibition organised in Spain featuring works by artist Miquel Barceló which covers the main landmarks and stages of his art work from the early days to the present. Its halls have also shown a previously unseen view of the personal, intellectual and artistic links forged in the Residencia de Estudiantes between painter Salvador Dali and poet and playwright Federico García Lorca as part of the international avant-garde movement. As regards attendance, exhibitions are the core of the activities organised at CaixaForum Madrid, followed by educational and family activities, concerts and cycles of humanities and social projects. Exhibitions Palladio, the architect ( ) Hannah Collins. Ongoing history Films and photographs Maternities. Photographs by Bru Rovira Miquel Barceló La solitude organisative FotoPres la Caixa 09 Contemporary masterpieces from Turkey Fair trade. One product, one story Federico Fellini. The circus of illusions Childhood. Photographs by Isabel Muñoz Dali, Lorca and the Residencia de Estudiantes CaixaForum Madrid 2010 la Caixa Annual Report 173

176 Cultural Programmes Humanities Cycles of talks Barceló and his works FotoPres. Visions of war and conflicts. Violence and human conditions Fellini: the infinite spectacle Tradition and modernity in the Residencia de Estudiantes ( ) 70 years without Freud. New perspectives in psychology and psychiatry Dialogues with Africa Lifelong Companion, companion! 100 years with Miguel Hernández Modern images of the ancient world Narrating in the era of image Meetings with commitment Putting yourself in the other s shoes The child soldiers of Sierra Leone Cycles of discussions The keys to success in the campaigns and political action of NGOs Sate Conference on Responsible Consumerism Cycles of cinema Arty cinema: the cinema of Terence Davies Cinema and social commitment Singing from the soul. The voice and singing in human expressiveness Music Music courses Chopin-Schumann. The bicentennial of two great composers Concerts in the CaixaForum music season Music concerts in the summer nights Jazz concerts on the Sleepless Night Experimental music Exhibition in one of the halls at CaixaForum Madrid 2010 la Caixa Annual Report 174

177 Cultural Programmes CaixaForum Palma, Lleida, Tarragona and the la Caixa Foundation in Girona CaixaForum Palma Details Opened in ,000 m ,417 visits in ,104 visitors in Location Plaza Weyler, 3, Palma de Mallorca. Facilities 5 exhibitions halls. Auditorium holding 163 people. 3 educational and/or multipurpose areas. Exhibitions: Zones of risk. la Caixa Welfare Projects Modern Art Collection; ; Salvador Dali and magazines; German expressionists in Henri and Eske Nannen s collection; Neuronal landscapes; Anglada- Camarasa, from his drawings. la Caixa Foundation s collection of works by Anglada-Camarasa ; Women. Reflection of cultures; The forest; A floating world. Photographs by Jacques Henri Lartigue ( ); Fair trade: one product, one story; Anglada-Camarasa collection (permanent exhibition). Humanities: Cycles of talks: An approach to German expressionism; The skills of dialogue. Linked peninsular styles of literature; Architecture and cultural identity; Four days with Dante and the Divine Comedy ; Meetings with commitment; An approach to human pain and suffering; Violence and the young. Cycles of cinema:the rock cultures.courses: 14th course on classical thought and culture: The world of muses: reading classical poetry; 15th course on thought and culture: Conversing with the classics: a way towards thought. Science and the environment: Cycles of lectures: Science and beauty. Aesthetics, art and pleasure, as seen by science; Mysteries of the cosmos. 6 unanswered questions on the Universe. Music: Concerts in the spring and autumn seasons at CaixaForum; Educational and family concerts. Filmed music: The voices of Allah. The musical dimensions of Islam; Musical afternoons: Let s talk about the piano. Bicentenary of the birth of composers Schumann and Chopin. Educational and family activities: Workshop, dramatised visits to exhibitions, theatre and lectures. CaixaForum Palma 2010 la Caixa Annual Report 175

178 Cultural Programmes CaixaForum Lleida Details Opened in ,835 m 2. 96,129 visitors in ,312 visits in Location Avinguda Blondel, 3, Lleida. Facilities 1 exhibition hall. Auditorium holding 230 people. 2 educational and/or multipurpose areas. CaixaForum Tarragona Details Opened in ,429 m 2. 87,248 visitors in ,425 visits in Location Cristòfor Colom, 2, Tarragona. Facilities 1 exhibition hall. Auditorium holding 177 people. 2 educational and/or multipurpose areas. la Caixa Foundation in Girona Details Exhibition hall under construction. Narcís de Carreras Auditorium. Workshop Room. 17,040 visitors in ,502 visits in Location Carrer Santa Clara, 11, Girona. Facilities Auditorium holding 220 people. 2 educational areas. Exhibitions: Women. Reflection of cultures; Alphonse Mucha ( ). Seduction, modernity and utopia; Dali and magazines; Chasing the Dream. The 8 Millennium Development Goals; Cambodia, land of hope; Kaüpunke Fito Conesa. Cycles of lectures: Wisdom in Ancient Greece; Historical biography: Spanish Moors on the 4th centenary of their expulsion; the great tapestry of humanist culture in 16th century Europe; About emotions; The Civil War through posters; Let s talk about the piano. Bicentennial of the birth of composers Schumann and Chopin; Science afternoons; Dialogues with Africa; Meetings with commitment. Cycles of cinema: Personal opinions; D+D: Documentary plus Debate; Music from Central Asia. Music: CaixaForum music season; Diversons; Listen, discover and create your own music! Music workshop and concert for the mentally handicapped. Scenic arts and dance: In search of the myth; Mythological loves. Multimedia Programme for families Activities for summer schools and camps Exhibitions: Alphonse Mucha ( ). Seduction, modernity and utopia; Chaplin in images, Dali and magazines; Cambodia, land of hope; Hidden Spain. Photographs by Cristina García Rodero. la Caixa Foundation s Collection of Modern Art; NÚM3ROS from a good family; Forever. Cycles of lectures: Art and Greek and Roman antiquity; Historical biography; Mozart; Women travellers; Difficult conversations; The Civil War through posters; Let s talk about the piano. Cycles of films and debate: D+D: Documentary plus Debate; Cinema matinees; Music in cinema. Cycles of scenic arts: In search of the myth; Mythological loves; Karromato. Music: Concerts of the CaixaForum music season. Educational activities in plastic arts, music, science, literature and theatre. Humanities: Cycles of lectures: Art and Greek and Latin Antiquity; Let s talk about the piano; Mendelssohn course; Science afternoons. Cycles of scenic arts: In search of myths; Mythological loves. Music: Diversons concerts. In 2010 la Caixa Foundation s Cultural and Social Centre in Girona conducted part of its cultural programme in various places in the city while work was being carried out to create CaixaForum Girona. This is in line with the concept of CaixaForum being a platform for culture in line with current social concerns la Caixa Annual Report 176

179 Cultural Programmes New CaixaForum centres in Seville and Saragossa CaixaForum Saragossa On 21 September 2010, the Chairman of la Caixa and la Caixa Foundation, Isidro Fainé, and the mayor of Saragossa, Juan Alberto Belloch, laid the first stone of the future CaixaForum Saragossa building. This event marked the beginning of the construction of CaixaForum Saragossa, scheduled to last some thirty months, after which the centre aspires to being an activity centre that serves people, where culture will be shown as an effective tool to promote social cohesion and integration. CaixaForum Saragossa, the new cultural, social and civic centre of la Caixa Welfare Projects, will be a new architectural reference point for the city, located within the Digital Mile project developed by the Town Council in Saragossa. The centre s architectural project is the work of the Estudio Carme Pinós, consisting of a four storey building with a singular structure, with two large exhibition halls measuring 810 and 430 m 2 suspended at different levels. The new building will be a great sculptural feature and will create a new public space on the ground floor, within the El Portillo Park. la Caixa Welfare Projects will promote the knowledge and personal growth of people of all ages, conditions and backgrounds at CaixaForum Saragossa, providing a wide range of activities which will include art exhibitions, music and poetry festivals, cycles of talks, social meetings, educational and family workshops and activities aimed at the elderly. CaixaForum Seville In 2010, work progressed to finish the architectural project to turn the city s Royal Dockyards which Alfonso X The Wise ordered to be built into the new cultural and social centre of la Caixa Welfare Projects in Seville. This project, awarded to the architects studio led by Guillermo Vázquez Consuegra to install the future CaixaForum Seville in this historical building, will require the building to be completely refurbished while preserving all its valuable architectural features. The future centre will highlight the most outstanding historical and architectural features of the Royal Dockyards complex. The aim is to turn it into the building which will house the future CaixaForum while restoring its cultural and historical wealth. Thus, most of the work will affect the upper structure of the building, so as to keep the area on the ground floor untouched. The project is also committed to constructing a sustainable, environmentally friendly building. Steel and wood, emblematic materials in the world of navigation, evoke the historical use of the Dockyards and will be the materials mainly used, coupled with glass. The mixing of these with bare brick walls will provide the palette of colours for the new building. With the objective of making it a public space open to all, the Royal Dockyard complex will be open to the city through a new public square. The future CaixaForum, located in the capital of Andalusia, will have similar features to those of the CaixaForum in Madrid and Barcelona, in which a wide range of activities to spread scientific, technical and cultural knowledge will be promoted. Architect s model of CaixaForum Saragossa Architect s model of CaixaForum Seville 2010 la Caixa Annual Report 177

180 Cultural Programmes Exhibitions Of all the cultural activities carried out by la Caixa Welfare Projects, exhibitions are one of the most important and have the greatest impact. In addition to the permanent exhibitions of the Contemporary Art Collection of la Caixa Welfare Projects, the Institution s own centres also host a wide range of exhibitions on various themes that are constantly renewed. Outside its centres, the Institution also organises travelling exhibitions throughout Spain to promote culture among all kinds of publics. The Burghers of Calais Travelling exhibitions la Caixa Welfare Projects travelling exhibitions are held in halls provided by local entities and in marquees housed in cities throughout Spain to allow free access to the exhibitions for the general public. These are exhibitions aimed at popularising photography and history which are often accompanied by complementary activities aimed at families and schools in the town where they are displayed. In 2010 la Caixa Welfare Projects held 73 travelling exhibitions. Through these, Welfare Projects contributes to making society aware of social matters, stimulating knowledge and creating areas in which to promote culture which become veritable meeting places. In 2010 a total of 16 different exhibitions were shown and held throughout Spain. As regards the cultural ambit, worthy of mention are those devoted to photography such as In search of silver; Andalusia imagined. Photographs ; Avelino Pi. Sports photography; The archaeological expedition of 1907 to the Pyrenees, and Athletics: values and emotion. In addition to the themed exhibitions and those devoted to history, such as Europe was the Route. Pilgrimage to Santiago in the Middles Ages; Iberians. Our civilisation before Rome, and The castles of Al- Andalus; and exhibitions concerning the arts, such as From Durero to Morandi. Engravings from the William Cuendet & Atelier de Saint-Prex Foundation; Salvador Dali and magazines; Designers due to a myth. A Tribute to Toulouse-Lautrec, and Women, the reflection of cultures; plus the exhibitions featuring works from the la Caixa Foundation Collection, such as New Crew for the Pequod. la Caixa Foundation s Collection of Modern Art and The skin of the real. Engravings by Antoni Tàpies. Also, last year la Caixa Welfare Projects organised an exhibition entitled The Tapestry Collection from the Old Cathedral in Lleida, one of the most notable events of the centenary of la Caixa in Lleida which, for the first time, enabled the restoration and bringing together all the tapestries from this collection dating from the 16th century in one exhibition. The Institution also cooperated in organising the exhibition Matisse and the Alhambra ( ), which commemorated the centenary of the French painter s visit to the site in Art in the Street The Art in the Street programme is a pioneering initiative of la Caixa Welfare Projects which began in 2007 with the aim of bringing art closer to the public and breaking down the barriers which occasionally separate them from modern art. The exhibitions are held in the street, in emblematic areas provided by various cities to achieve a closer, more enriching link between the works exhibited and their viewers. This project brings the public closer to large works by renowned artists with the aim of establishing a dialogue between the works and the architecture of the place in which they are exhibited. In 2010, Welfare Projects continued this programme organising 4 exhibitions on Auguste Rodin in the cities of Barcelona, Saragossa, Las Palmas de Gran Canaria and Cadiz. This exhibition features seven monument-size sculptures from the Rodin Museum in Paris: The Thinker and six studies of the city leaders who feature in The Burghers of Calais la Caixa Annual Report 178

181 Cultural Programmes Music Sharing the experience of listening to music and taking part in it usually has positive social effects. la Caixa Welfare Projects devotes several programmes to popularising music, organises participative concerts with non-professional singers and promotes music seasons, school and family concerts and specialised courses. 15 years of participative concerts These concerts are a unique experience that brings together renowned professional musicians with amateur choral singers in a joint interpretation of one of the most famous and significant works of all times. Starting in Barcelona in 1995, this project had the dual objective of recognising and stimulating the social practice of singing and music that takes place in choral societies and promoting social participation in the area of culture. In 2010 la Caixa Welfare Projects celebrated its 15th edition and, throughout these years, over 24,000 participants / individuals have sung the choral parts of various works and over 235,000 people have attended the concerts. In 2010 over 44,000 persons attended the 18 participative concerts organised by the Institution. 11 participative concerts of Handel s Messiah were held in eight cities: Madrid, Barcelona, Seville, Saragossa, Santander, Palma de Majorca, Las Palmas de Gran Canaria and Lleida. In 2010 members of non-professional choral societies were also able to sing in the choral parts of Carmina Burana by Carl Orff for the second consecutive year in Madrid and for the first time in Oviedo. In addition, in 2010 la Caixa Welfare Projects scheduled new works in a participative format. One of these was Mozart s Requiem, performed by over 482 participants / individuals in the Auditori in Barcelona. The cities of Girona and Santiago de Compostela also held the participative concert of Mozart s The Coronation Mass. Diversons. Music for integration Welfare Projects runs the programme Diversons to spread knowledge of the traditional music of the countries of origin of many people now living in Spain, with the objective of developing closer links and cultural exchange between immigrants and the local population. The participants, selected through an annual contest, are traditional world music performers. 148 concerts all over Spain, attended by over 71,000 people, took place in School and family concerts This programme seeks to bring music into schools (infants, primary and secondary) as an activity that is both educational and playful. School and family concerts offer children the experience and pleasure of attending attractive and stimulating events. They also give teachers the opportunity to round off their pupils music education with an activity that can be carried out both in the classroom, with the teaching material that Welfare Projects makes available before the concert, and by attending the school concerts. In 2010 the following productions were performed: The Super-barber of Seville, The Collector of Landscapes, Metal and its colours, Cinderella, Sakapatú! A trip through Andean music, The Moussakis. Music from the Balkans, Within a suitcase and A glass of mint tea. Music from the Maghreb. Antiqva Through this programme, Welfare Projects promotes Ancient Music concerts that are held in the open air in well-known spaces in various Spanish cities. The objective of the programme is to bring Ancient Music to the general public, performed according to historical criteria and instruments, and to support musicians, selected through an annual contest, at the start of their professional careers. In 2010, 59 concerts by nine music groups were performed in 11 cities. Participative concert of Handel s Messiah 2010 la Caixa Annual Report 179

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183 2010 Data of la Caixa Welfare Projects Governing Bodies of la Caixa Welfare Projects Financial Statements of la Caixa Welfare Projects