Angles Memo11

51 52 ANNUAL REPORT 2011

53 ANNUAL REPORT 2011 INFORME ANUAL

54 Auditor’s Report page 56

Consolidated Financial Statements 58

Board of Directors and Management Team 92

Addresses of BancSabadell d’Andorra 93

55 AUDITOR’S REPORT Auditor’s reportAuditor’s

56 Auditor’s reportAuditor’s

57 Translation of consolidated ﬁ nancial statements originally issued in Catalan and prepared in accordance with the regulatory ﬁ nancial reporting framework applicable to the Group (see Notes 2 and 29). In the event of a discrepancy, the Catalan-language version prevails.

BANCSABADELL D’ANDORRA, S.A. AND COMPANIES COMPRISING THE BANCSABADELL D’ANDORRA GROUP

Consolidated balance sheets as of 31 december 2011 and 2010* (Notes 1, 2 and 3) (ﬁ gures in thousands of euros)

ASSETS 2011 2010*

Cash on hand and deposits with OECD central banks 5,295 5,292

Deposits with INAF (note 5) 210 6,220

Demand deposits held with ﬁ nancial intermediaries (note 6) 3,474 2,469

Loans and receivables (note 7) 449,555 451,070 Banks and credit institutions 50,106 60,774 Loans and advances to customers 392,352 385,948 Customer overdrafts 3,552 2,026 Customer bill portfolio 5,410 5,067 Less - Allowance for credit losses (1,865) (2,745)

Investment securities (note 8) 121,155 141,389 Consolidated Financial Statements Consolidated Bonds and other ﬁ xed-income securities 116,296 140,437 Less - Allowance for credit losses (527) (653) 58 Investments in Group companies 853 812 Other investments 136 77 Shares and other equity securities 727 589 Less - Allowance for impairment of investment securities (12) - Investment schemes 3,682 127

Intangible assets and deferred charges (note 9) 3,124 3,234 Intangible assets and deferred charges 11,694 10,580 Less - Accumulated depreciation (8,570) (7,346)

Tangible ﬁ xed assets (note 10) 18,239 19,060 Tangible ﬁ xed assets 28,481 28,262 Less - Accumulated depreciation (10,242) (9,202)

Prepayments and accrued income (note 19) 7,799 5,804 Uncollected accrued interest 7,760 5,733 Prepaid expenses 39 71

Other assets (note 19) 4,358 6,065 Current transactions 3,423 2,221 Inventories 765 - Other 170 3,844

TOTAL ASSETS 613,209 640,603

* Presented solely and exclusively for comparison purposes. The accompanying notes 1 to 29 are an integral part of the consolidated balance sheet at 31 December 2011. Translation of consolidated ﬁ nancial statements originally issued in Catalan and prepared in accordance with the regulatory ﬁ nancial reporting framework applicable to the Group (see Notes 2 and 29). In the event of a discrepancy, the Catalan-language version prevails.

BANCSABADELL D’ANDORRA, S.A. AND COMPANIES COMPRISING THE BANCSABADELL D’ANDORRA GROUP

Consolidated balance sheets as of 31 december 2011 and 2010* (Notes 1, 2 and 3) (ﬁ gures in thousands of euros)

LIABILITIES AND EQUITY 2011 2010*

Due to INAF (note 5) 39,272 31,472

Creditors 363,450 420,759 Deposits from banks and credit institutions (note 11) 4,612 3,101 Other ﬁ nancial intermediaries (note 11) 1,396 - Customer deposits (note 12) 357,442 417,658

Debt securities in issue (note 13) 134,905 126,849

Allowance for liabilities and charges (note 14) 131 127 Retirement beneﬁ t obligations 131 127

Allowance for general banking risks (note 15) 3,667 500 Financial Statements Consolidated

Accruals and deferred expenses (note 19) 5,499 5,534 59 Unpaid accrued expenses 5,062 5,064 Unearned revenue 437 470

Other liabilities (note 19) 10,592 4,120 Current transactions 2,338 2,091 Payable to suppliers and other creditors 8,254 2,029

Share capital (note 16) 30,068 30,068 Issued share capital 30,068 30,068

Reserves (note 16) 19,173 15,039 Voluntary reserves 8,292 3,465 Consolidation reserves 792 489 Revaluation reserves 2,583 2,583 Guarantee reserves 4,431 6,010 Legal reserves 3,075 2,492

Proﬁ t (loss) (note 16) 6,452 6,135 Consolidated proﬁ t (loss) 6,452 6,135

TOTAL LIABILITIES AND EQUITY 613,209 640,603

BANCSABADELL D’ANDORRA, S.A. AND COMPANIES COMPRISING THE BANCSABADELL D’ANDORRA GROUP

Consolidated memorandum accounts as of 31 december 2011 and 2010* (Notes 1, 2 and 3) (ﬁ gures in thousands of euros)

MEMORANDUM ACCOUNTS 2011 2010*

Contingent liabilities 26,459 24,652

Guarantees, bonds and sureties given 26,459 19,456

Documentary credits issued or received and conﬁ rmed to customers - 5,196

Contingent exposures and commitments 77,098 104,854

Operational exposures and commitments 64,288 91,094

Other commitments and contingent exposures (note 21) 12,810 13,760

Futures (note 20) 306,738 321,865

Open forward currency contracts 130,329 159,583 Consolidated Financial Statements Consolidated Financial futures transactions 176,409 162,282

60 Own securities and other assets held in custody 790,151 646,921

Securities and other assets held in custody (note 22) 707,061 536,898

Own securities and other assets held in custody 83,090 110,023

Other memorandum accounts held solely for administrative control purposes (note 23)) 169,125 169,610

Guarantees and commitments received 1,235 1,010

Other memorandum accounts 167,890 168,600

TOTAL MEMORANDUM ACCOUNTS 1,369,571 1,267,902

BANCSABADELL D’ANDORRA, S.A. AND COMPANIES COMPRISING THE BANCSABADELL D’ANDORRA GROUP

Consolidated income statements for the years ended 31 december 2011 and 2010* (Notes 1, 2 and 3) (ﬁ gures in thousands of euros)

INCOME STATEMENTS 2011 2010*

Interest receivable and similar income 20,375 14,722 On demand deposits held with INAF and fi nancial intermediaries 103 55 On loans and receivables 16,318 11,714 On bonds and other fi xed-income securities 3,954 2,953 Interest payable and similar charges (12,665) (4,771) On borrowings from INAF and fi nancial intermediaries (4,916) (232) On customer deposits (3,209) (4,208) On debt securities in issue (4,540) (331)

NET INTEREST INCOME 7,710 9,951 Net fee and commission income 12,804 8,980 Fees and commissions for services provided 13,921 10,087 Fees and commissions for services received (1,117) (1,107) Gains (losses) on ﬁ nancial assets and liabilities 4,733 1,640 Net additions to the allowance for impairment of investment securities (12) - Exchange gains (losses) 548 719 Financial Statements Consolidated Gains (losses) on securities 3,288 477 Share of proﬁ t (loss) of companies accounted for by the equity method 909 444 61 Other operating income 2 79

GROSS OPERATING INCOME 25,249 20,650 Staff costs (5,732) (5,909) Employees, directors and indemnities (4,216) (4,337) Social Securityl (659) (700) Other staff costs (857) (872) General expenses (5,462) (5,308) Materials (128) (110) Outside services (3,217) (3,246) Taxes other than income tax (2,012) (1,859) Other general expenses (105) (93) Allowance for depreciation and amortisation, net of recoveries (2,277) (2,341) Addition to the allowance for depreciation and amortisation (notes 9 and 10) (2,277) (2,341) Allowance for impairment losses, net of recoveries - -

NET OPERATING INCOME 11,778 7,092 Allowance for credit losses, net of recoveries (notes 7 and 8) 75 (803) Additions to the allowance for credit lossess (4,821) (2,047) Recoveries from the allowance for credit losses 4,896 1,244 Allowance for liabilities and charges, net of recoveries - - Additions to the allowance for general banking risks (note 15) (3,167) (200)

INCOME FROM ORDINARY ACTIVITIESI 8,686 6,089

Extraordinary income (loss) (note 8) (2,234) 46

CONSOLIDATED PROFIT (LOSS) FOR THE YEAR 6,452 6,135

BANCSABADELL D’ANDORRA, S.A. AND COMPANIES COMPRISING THE BANCSABADELL D’ANDORRA GROUP

Consolidated statements of changes in ﬁ nancial position for the years ended 31 december 2011 and 2010* (Notes 1, 2 and 3) (ﬁ gures in thousands of euros)

SOURCE OF FUNDS 2011 2010*

Cash fl ows from operating activities 11,026 8,987 Profi t (loss) for the year 6,452 6,135 Net additions to the allowance for credit losses - 762 Net additions to the allowance for impairment of investment securities 12 - Net additions to other allowances (pension allowance) 3,207 238 Depreciation and amortisation 2,264 2,296 Profi t (loss) from companies accounted for by the equity method (909) (444)

Increase in net debt 32,529 50,520 INAF (liabilities - assets) 13,810 8,091 Banks and credit institutions (liabilities - assets) 12,570 41,133 Other items (liabilities - assets) 6,149 1,296

Net increase in liabilities 8,056 9,530 Subordinated liabilities and debt securities 8,056 9,530 Consolidated Financial Statements Consolidated Net decrease in assets 20,448 1,631 Cash on hand - 1,631 62 Investment securities less equity investments 20,448 -

Cash ﬂ ows from ﬁ nancing activities 868 400 Dividends received from long-term investments 868 400

TOTAL SOURCES OF FUNDS 72,297 71,068

APPLICATIONS OF FUNDS 2011 2010*

Cash used in operating activities 1,042 - Uses of the other allowances (pension allowance, etc,) 1,042 -

Net decrease in liabilities 60,216 40,215 Deposits: customers 60,216 40,215

Net increase in assets 8,276 27,914 Cash on hand 3 - Loans and advances to customers 8,273 876 Investment securities less equity investments - 27,038

New long-term investments 1,392 1,438 Purchases of equity interests 59 - Purchases of ﬁ xed assets 1,333 1,438

Cash used in ﬁ nancing activities 2,001 1,501 Other 2,001 1,501

TOTAL APPLICATIONS OF FUNDS 72,927 71,068

BANCSABADELL D’ANDORRA, S.A. AND COMPANIES COMPRISING THE BANCSABADELL D’ANDORRA GROUP

Notes to the Consolidated Financial Statements for the year ended 31 December 2011.

1. Group description

BancSabadell d’Andorra, SA (hereinafter, “BancSabadell d’Andorra” or the “Bank”) is an Andorran company which was incorporated on 10 April 2000 and started operating on 3 June 2000. On 30 October 1998, the sponsor, called Entitat Promotora de la Constitució de l’Entitat Bancària BancSabadell d’Andorra, SA (the “Sponsor”), informed the Andorran government (Govern) that it wished to establish a new bank. This request was answered in Resolution 01/C/99 of 31 August 1999, which gave authorization to create the new bank on the terms stipulated by the law of 30 June 1998 on the creation of new banks in Andorra (and other relevant regulations). Through Resolution 7064/1999, dated 24 December 1999, the Andorran government authorized the creation of BancSabadell d’Andorra. On 9 November 2000, as a result of the creation of BancSabadell d’Andorra, the Sponsor was wound up and its assets and liabilities were transferred at their book value to the ﬁ nancial statements of the Bank. The Bank’s corporate purpose is the purpose attributed to banks in article 2 of the law regulating the

operations of companies operating in the Andorran ﬁ nancial system. The Bank is also authorized Financial Statements Consolidated to carry out ancillary activities that are complementary to and support the accomplishment of said purpose. 63 The Bank is the parent of the BancSabadell d’Andorra group (the “Group”). The companies included in the consolidated group as of 31 December 2011 are:

Company Country Activity Sabadell d’Andorra Inversions, Andorra Management of collective investment SGOIC, SAU schemes and management mandates Serveis d’Assessorament BSA, SAU Andorra Provision of services Assegurances Segur Vida, SAU Andorra Insurance

Sabadell d’Andorra Inversions, SGOIC, SAU is an Andorran company which was incorporated on 23 November 2000 with deed no. 5,227, under the name of Sabadell d’Andorra Inversions, Societat Gestora, SA. Its name was changed to the present one on 23 November 2010. The company’s operations are subject mainly to Law 10/2008 regulating collective investment schemes under Andorran law, Law 13/2010 on the legal regime of investment companies and collective investment scheme management companies, and the rest of the laws and regulations applicable in Andorra. The management company’s purpose is to carry out asset and liability management activities, administrative management activities, activities related to the distribution and representation of investment schemes and their assets, and the custody and administration of investment scheme units and, where applicable, the shares of the investment companies it manages. On 23 November 2010 the activities of discretionary and customized portfolio management and investment advice were included in its corporate purpose. Serveis d’Assessorament BSA, SAU (formerly Sabadell d’Andorra Borsa, SAU) is an Andorran company, incorporated on 23 November 2000. Since 13 May 2010 its principal activity has been the provision of other business services that are not part of the fi nancial system, aimed at supporting the activities of the Group made up of BancSabadell d’Andorra and its subsidiaries, including the management and operation of real estate assets belonging to the Group that are not used in the banking and fi nancial activity, and IT, security, cleaning and postal services, also for the Group, and any other non-banking, non-fi nancial services that may be provided within the Group. Assegurances Segur Vida, SAU is a life insurance company whose principal activity is the practice of insurance transactions under private law and in the life branches, in the capacity of insurer, representative and/or broker. The insurer operates exclusively in Andorra. The insurer was incorporated on 8 March 2004, although its activity did not start until July 2005 with the marketing of a savings insurance product with a risk component where policy holders assumed the investment risk inherent in various baskets of securities to be selected by the policy holder at the time of signing the policy.

2. Basis of presentation and consolidation principles

a) True and fair view The accompanying consolidated fi nancial statements, which were approved by the Board of Directors of the Bank and the sole administrators of the other companies comprising the BancSabadell d’Andorra Group (hereinafter the “Group”), have been obtained from the accounting records of the Group and are presented in accordance with the standards, principles, criteria and rules established in the Chart of Accounts (Pla Comptable) of the Andorran fi nancial system, approved by the Andorran government on 19 January 2000, so as to give a true and fair view of the state of affairs of the Group and of its profi t or loss and cash fl ows for the fi nancial year. These consolidated fi nancial statements will be submitted to the shareholders in General Meeting for approval and it is expected that they will be accepted without changes. The consolidated fi nancial statements for 2010 were approved by the General Meeting of Shareholders of the Bank on 20 May 2011. Consolidated Financial Statements Consolidated b) Accounting principles

64 The accompanying consolidated fi nancial statements have been prepared in accordance with the generally accepted accounting principles of the Andorran accounting system (see note 3). All the accounting principles that have a signifi cant impact on the preparation of these consolidated fi nancial statements have been applied.

c) Comparative information The information relating to fi nancial year 2010 contained in these consolidated fi nancial statements for 2011 is presented solely and exclusively for comparison purposes and so does not constitute the consolidated fi nancial statements of the Bank for 2010. In 2011, following the instructions of the Andorran National Finance Institute (hereinafter “INAF”), the Group classifi ed the losses incurred on exchanges of securities from the trading portfolio under “Extraordinary gains (losses)” in the income statement. During 2010 the losses incurred on these transactions, totaling €2,044 thousand, were recorded under “Gains (losses) on fi nancial assets and liabilities” in the income statement. Similarly, the gains on derivatives that are part of the debt securities on the liabilities side, which in 2010 were included in net interest income as a reduction in cost in the amount of €3,335 thousand, have been classifi ed under “Gains (losses) on fi nancial assets and liabilities” in the income statement for 2011. On the other hand, the margin deposits relating to said derivatives are recorded under “Loans and advances – Banks and credit institutions” in the balance sheet at 31 December 2011, whereas at 31 December 2010 they were recorded under “Other assets” in the balance sheet, in the amount of €3,789 thousand. Lastly, pursuant to INAF Communiqué no. 216/11 of 7 September 2011 and the related specifi cations issued by INAF, at 31 December 2011 the memorandum item “Securities deposits and other third-party securities held in custody” includes the depositary of the issues of debt securities, which was not reported in the memorandum accounts at 31 December 2010, so as to avoid duplication of information, as these issues were reported in the balance sheet liabilities in the amount of €126,849 thousand. At 31 December 2010 the depositary of the issues of debt securities was not reported in the memorandum account item “Third-party securities and other assets held in custody” in order to avoid duplication with the balance sheet. At 31 December 2011 this item does include these duplications.

d) Consolidation principles Companies in which the parent holds more than a 50% equity interest and whose principal activity is similar to that of the Bank, with which they form a single decision-making unit, are fully consolidated. Companies in which the Bank has a direct or indirect equity interest of between 20% and 50% are consolidated by the equity method. The equity method may also be used if the Bank’s interest in a company is in excess of 50% but the company’s activity is different from that of the Bank. In the case of fully consolidated subsidiaries, the book value of the investment and its associated cash fl ows is replaced by the assets, liabilities, equity, income and expenses of the subsidiary. In other words, the fi nancial statements of the parent and its fully consolidated subsidiaries are combined on a line-by-line basis by adding together like items of assets, liabilities, equity, income and expenses. Before the assets, liabilities, equity, income and expenses of the subsidiary are included in the parent’s fi nancial statements; timing and valuation differences and intragroup balances are eliminated. The equity method consists of replacing the book value of an investment by the Group’s share of the net assets of the investee. The profi t of equity accounted undertakings is integrated in the consolidated income statement. All material intercompany balances and transactions are eliminated on consolidation. Details of the consolidated companies at 31 December 2011 and 2010, in thousands of euros,

are given below: Financial Statements Consolidated

2011

Company Registered Activity % ownership Consolidation Capital Reserves Proﬁ t Interim Total 65 address direct method for dividend equity 2011

Sabadell d’Andorra Ctra. de l’Obac 12 Management of 100% Fully 300 568 1,064 (898) 1,034 Inversions, SGOIC, Ed. “El Forestal B” investment schemes consolidated SAU Oﬁ cina 4 and discretionary Andorra la Vella mandates Serveis Av. del Fener, 7 Provision of 100% Fully 60 14 0 -- 74 d’Assessorament Andorra la Vella services consolidated BSA, SAU Assegurances Ctra. de l’Obac 12 Insurance 100% Equity 602 210 909 (868) 853 Segur Vida, SAU Ed. “El Forestal B” company method Andorra la Vella At 31 December 2011 all three companies have been audited.

2010

Company Registered Activity % ownership Consolidation Capital Reserves Proﬁ t Interim Total address direct method for dividend equity 2010

Sabadell d’Andorra Ctra. de l’Obac 12 Management of 100% Fully 300 309 559 (300) 868 Inversions, SGOIC, Ed. “El Forestal B” investment schemes consolidated SAU (a) Oﬁ cina 4 and discretionary Andorra la Vella mandates Serveis Av. del Fener, 7 Provision of 100% Fully 60 14 0 -- 74 d’Assessorament Andorra la Vella services consolidated BSA, SAU (b) Assegurances Ctra. de l’Obac 12 Insurance 100% Equity 602 166 444 (400) 812 Segur Vida, SAU (a) Ed. “El Forestal B” company method Andorra la Vella (a) Audited company. (b) Dormant in 2010. 3. Accounting policies and valuation standards

The following accounting principles and valuation rules were applied in the preparation of the accompanying consolidated ﬁ nancial statements:

a) Accrual basis Revenues and expenses are recorded on an accrual basis and the interest method is used for transactions which take more than twelve months to complete. Nevertheless, in accordance with the principle of prudence and applicable law, interest earned on loans classiﬁ ed as past due, doubtful or very doubtful is recognized as income upon collection. Following the accruals principle, the accrual accounts show income earned but not yet received, expenses incurred but not yet paid, income received in advance, and expenses paid in advance.

b) Recording basis All the rights and obligations of the Group, including future or contingent rights and obligations, are recorded as they arise, either on the face of the balance sheet or in memorandum accounts, as applicable. In accordance with banking practice, transactions are recorded on the date they take place, which may differ from their value date, which is used for calculating interest income and expense.

c) Foreign currencies Assets, liabilities and memorandum accounts denominated in foreign currencies are translated to euros at the last mid-market exchange rates prevailing before the balance sheet date. The main euro exchange rates prevailing on the last business day of ﬁ nancial year 2011 are shown below:

Exchange rate Consolidated Financial Statements Consolidated

U.S. dollars 1.29865 66 Pound sterling 0.83490 Japanese yen 99.9800 Swiss francs 1.21425

In the case of balance sheet positions hedged with derivatives, throughout the life of these contracts any latent exchange gains or losses arising from the balance sheet positions and any gains or losses on the hedging instruments are recognized under “Gains (losses) on ﬁ nancial assets and liabilities” in the accompanying consolidated income statement.

d) Doubtful assets Loans and advances to customers, bonds and other fi xed-income securities and other receivables are classifi ed as doubtful when the likelihood of repayment is reduced due to a debtor’s perceived inability to meet contractual obligations. Assets (bills payable; loan, credit or lease payments receivable; matured and payable coupons, fi xed-income securities and other debts) are classifi ed as doubtful when principal or interest payments are overdue. In the case of doubtful loans with periodic payments, subsequent payments are classifi ed as doubtful on the date they fall due and interest is recorded in the memorandum accounts. When doubtful assets are considered irrecoverable or of negligible or improbable recovery value, they are derecognized and transferred to the memorandum accounts under the heading “Other memorandum accounts held solely for administrative control purposes – Other memorandum accounts” (see Note 23).

e) Allowance for credit losses The allowance for credit losses is intended to cover losses on loans and receivables and other exposures. This allowance is increased by provisions charged to income and decreased by charge- offs of loans considered uncollectible and recoveries of amounts previously provided. The allowance for credit losses comprises a specifi c allowance and a general allowance. Under the Andorran accounting system, the allowance for credit losses is calculated as follows: • The specifi c allowance, which relates to all classes of assets and memorandum accounts, is determined based on individual studies of specifi c exposures to the main debtors and borrowers, based mainly on the collateral available and the length of time past due, using prudent and conservative criteria. • The general allowance establishes a provision of 0.5% of net loans and advances to banks and fi xed-income bank deposits and 1% of the rest of net loans and advances to customers and fi xed-income customer securities, except for the part covered by pledged monetary guarantees and exposures secured by pledged listed securities (up to the limit of the market value of said securities), mortgage loans or securities issued by OECD central governments or expressly guaranteed by such governments. With reference to the specifi c allowance for mortgage-backed transactions, the bank renews the valuations in accordance with applicable laws and regulations, recalculating the additional provisions for credit losses that are needed based on the results of those valuations. f) Unused credit facilities Credit facilities granted to customers are recorded in the balance sheet at the amount used and the undrawn amounts are recorded in the memorandum accounts under “Contingent exposures and commitments -- Operational exposures and commitments” g) Investment securities Fixed-income and equity securities are classifi ed, according to their purpose, as either fi nancial assets held for trading, held-to-maturity investments, ordinary investments or long-term investments. a) Financial assets held for trading include listed securities and investment scheme units held in order to benefi t from short-term price fl uctuations. They are recorded at their market value. Any gains or losses arising from changes in the value of these securities are recorded net under “Gains (losses) on fi nancial assets and liabilities -- Gains (losses) on securities” in the Financial Statements Consolidated accompanying income statements. Coupons that mature after fi xed-income securities have

been purchased are recorded under “Interest receivable and similar income – Bonds and 67 other fi xed-income securities”. The margin obtained on the sale to customers of structured products and fi xed-income securities included in this portfolio is recognized under “Net fee and commission income – Fees and commissions for services provided” in the accompanying income statement. b) Held-to-maturity investments include fi xed-income securities which the Group has decided to hold to maturity. These securities are stated at amortized cost (the cost is adjusted monthly by spreading the difference between cost and redemption value over the remaining life of the security). The result is recorded, together with matured coupons, under “Interest receivable and similar income – Bonds and other fi xed-income securities” in the accompanying consolidated income statement. Any losses on disposal are taken to “Extraordinary income (loss)” in the accompanying consolidated income statement, while any gains are released on a straight-line basis over the residual life of the security sold, with a corresponding entry in “Gains (losses) on fi nancial assets and liabilities” in the accompanying consolidated income statement. For this type of portfolio there is no need to provide an allowance for impairment of investment securities due to differences between market value and adjusted acquisition price. c) Ordinary investments comprise all other securities, including investment scheme units, and are measured at amortized cost. For fi xed-income securities, the difference between market value and amortized cost is calculated and the allowance for impairment of investment securities is increased through a provision charged to the income statement in an amount equal to the sum of the negative differences less the sum of the positive differences. Equity securities included in ordinary investments are recorded in the balance sheet at the lower of cost and market value. To recognize any losses on equity securities, an allowance for impairment of investment securities has been created which is deducted from assets in the accompanying consolidated balance sheet. d) Long-term investments include equity securities which are valued at the lower of acquisition price and market value. If the market value is lower than the cost, a provision is made to the allowance for impairment of investment securities to refl ect the depreciation. Transfers of securities from the trading portfolio to any other portfolio are done at market prices, less accrued interest where applicable. Transfers of securities from the ordinary investment portfolio to the held-to-maturity portfolio are done at the lower of market price and amortized cost, while any impairment losses are recognized in the income statement. Transfers of securities from long-term investments to other portfolios are done at net book value.

h) Tangible fi xed assets Tangible fi xed assets are stated at cost, net of accumulated depreciation, except for assets that have been revalued with prior authorization from INAF (see Note 16). Real estate acquired by application of other assets is valued at the lower of the book value of the assets applied to its acquisition (without taking related provisions into account), plus any legal, registry and tax expenses incurred and any interest receivable, and the market value of the acquired assets, taking account of any amounts payable to third parties for subrogation of obligations in application of the assets. The costs of any expansion, modernization or improvement that increases the productivity, capacity or effi ciency or lengthens the useful life of tangible fi xed assets are capitalized. The Group depreciates its tangible fi xed assets on a straight-line basis over the assets’ estimated useful life, as follows:

Estimated useful life (years)

Buildings 50 Furniture and ﬁ xtures 10

Consolidated Financial Statements Consolidated Vehicles 5 Computer equipment 5

68 Non-operating fi xed assets include land and buildings that are not directly used for banking activities. Such assets are stated at cost and are depreciated over their useful lives on the same basis as operating fi xed assets, except for foreclosed assets, which are expected to be sold in the short term. Assets acquired by foreclosure of problem credits that are not included in the bank’s functional fi xed assets or that are not sold within three years are depreciated from the initial date of recovery, based on the following percentages of accumulated depreciation:

Between 3 and 4 years 25% Between 4 and 5 years 50% Between 5 and 6 years 75% More than 6 years 100%

i) Intangible assets and deferred charges Intangible assets consist mainly of amounts paid to external suppliers for computer software. The cost of computer software is amortized on a straight-line basis over ﬁ ve years.

j) Pensions and similar obligations On 1 November 2006 the Group established a retirement plan to provide benefi ts complementary to and independent of those provided by the Andorran state pension system. The plan is open to employees who wish to become members and meet the conditions to become benefi ciaries stipulated in the plan regulations (more than 14 months’ service on the contribution date, which is in February each year). Each year, the sponsor contributes 1% of each member’s prior-year total gross earnings. The sponsor also contributes an additional 1% if the employee makes voluntary contributions to a group insurance plan, which is provided by an insurer unrelated to the Group. The sponsor’s contributions are used to acquire units in the collective investment scheme BSA Inversió, FI Compartiment Prudent, managed by Sabadell d’Andorra Inversions, SGOIC, SAU (related party). In addition, during 2006 the sponsor made a special contribution for members who joined the Group before 1 January 2005. This special contribution consisted of a lump sum based on the year the employee joined the Group. The amount of the abovementioned annual contributions is recognized in the balance sheets under “Allowance for liabilities and charges – Provisions for pension and similar obligations” (see note 14). The market value of the units in the collective investment scheme BSA Inversió, FI Compartiment Prudent are recorded under “Investment securities – Investment schemes” in the accompanying consolidated balance sheets (see note 8). The cost for the year is recorded under “Staff costs – Other staff costs” in the accompanying consolidated income statements (see note 14). The plan covers retirement, permanent and total disability, and death. If any of these events should occur, the benefi ciary will receive the corresponding benefi t, which will consist of the value of the investments in the abovementioned collective investment scheme. k) Futures The Group uses futures contracts mainly to hedge its exposures to customers. Futures contracts are recognized in the memorandum accounts at their face value (see Note 20). Transactions whose purpose and effect is to eliminate or substantially reduce the currency, interest rate or market risk associated with asset positions or other transactions are classifi ed as hedges. Gains or losses on hedging transactions are recognized in the income statement at the time the revenues or expenses relating to the hedged item are recognized. During the year, the Group did not carry out any non-hedging transactions (also known as trading transactions). Consolidated Financial Statements Consolidated l) Allowance for general risks The allowance for general risks includes the amounts that the Group deems appropriate to cover general banking risks and is used to cover risks inherent in banking and fi nancial activity. As of 69 31 December 2011, the allowance for general banking risks on the accompanying consolidated balance sheet totaled €3,667 thousand, of which €3,167 thousand was added in 2011 (see note 15). m) Interest accrual The Group uses the effective interest method (i.e., the internal rate of return) to allocate interest income and expense over the term of fi nancial assets and liabilities with maturities of more than twelve months. For fi nancial assets and liabilities maturing within twelve months, the Group may opt for either the effective interest method or the straight-line method. n) Indirect service tax The Law on the indirect taxation of banking services and fi nancial services, passed by the Andorran parliament on 14 May 2002, imposes a tax on banking and fi nancial services provided by banks and other fi nancial institutions. The tax liability is calculated using an estimate of the value of the services provided, based on economic and fi nancial indicators. Under Law 3/2005 of 21 February amending the rate of the indirect tax on banking and fi nancial services, the applicable tax rate was 12%. The accrued expense for the indirect service tax was €2,018 in 2011 and €1,802 thousand in 2010 and is recorded under “General expenses – Taxes other than income tax” in the accompanying consolidated income statement. This tax is paid during the fi rst quarter of 2012. 4. Required reserves

a) Required reserve ratio On 30 June 1994 the Andorran parliament passed a law regulating required reserves. On 9 December 2009 an amendment to the law regulating required reserves was approved. Under this law all deposit-taking institutions that use customers’ funds to make loans and other investments must invest a proportion of their funds in Andorran government debt securities. On 3 March 2010, within the framework of the Law regulating required reserves and by means of a decree of national and social interest, the Council of Ministers approved a €12,500 thousand program of preferential fi nance for startup companies and businesses, innovation, and restructuring of entrepreneurial projects. This program is intended to provide fi nancial support for company creation and new entrepreneurs, based on loans provided by banks with a government guarantee. On 16 March 2011, by means of a decree classifi ed as of national and social interest, the Council of Ministers approved a €24,000 thousand program of preferential fi nance for home renovation and the renovation of buildings for residential use. This program is intended to provide access to fi nancing for home renovation and the renovation of buildings for residential use, including measures to improve sustainability and energy effi ciency and the adoption of renewable energy in the Principality of Andorra. Credit granted by banks under this program is fully guaranteed by the government and classifi es as public funds for the purpose of compliance with the required reserve ratio. Government debt To meet this requirement, at 31 December 2011 the Bank held €11,570 thousand in Andorran government debt securities issued on 23 December 2009 (€11,570 thousand at 31 December 2010). These debt securities mature on 31 December 2013 and earn interest at the one-year

Consolidated Financial Statements Consolidated EURIBOR rate on the ﬁ rst business day of the year. The amount paid by the Bank for these securities is recorded under “Investment securities – Bonds

70 and other ﬁ xed-income securities” in the accompanying consolidated balance sheets (see note 8). The debt securities are classiﬁ ed in the held-to-maturity portfolio.

b) Guarantee reserves On 11 May 1995 the Andorran parliament passed a law on the reserves to be held against deposits and other operating liabilities by banks operating in the Andorran fi nancial system. Under this law banks operating in the Andorran fi nancial system are required to maintain an amount equal to 4% of their total investments, not taking account of investments made with own funds or banking revenues, as a minimum reserve against their banking liabilities. On 26 March 2003 the Andorran government issued a decree which changed the percentage used to calculate the guarantee reserves from 2.25% to 1.25% of total investments, not taking account of those made with own funds or banking revenues. This decree also changed the bases for the calculation, which were derived from banks’ balance sheets at 31 December 2002, and established the quantities to be held in reserve by fi nancial institutions with a value date of 31 December 2003. Lastly, on 2 February 2011 the Andorran parliament passed Law 1/2011 on the creation of a deposit and investment guarantee scheme for Andorran banking institutions. The purpose of the abovementioned law is to create a deposit and investment guarantee scheme to guarantee to each customer the recovery of cash and securities deposited in Andorran banking institutions belonging to the guarantee scheme. Based on European models, the maximum amounts guaranteed have been fi xed at €100,000 euros per depositor and €100,000 per investor, for each institution, with an overall limit for the scheme as a whole of €94.1 million, which will be increased by a system of annual contributions of 0.06% until the scheme’s net assets reach 1.5% of the calculation basis of the defi ned contributions, with an upper limit of €200 million. The law establishes that an amount equivalent to the guarantee reserve must be invested in safe, liquid assets and must be considered to meet the following requirements: a) Immediately available amounts or amounts with a maturity of no more than one month held at other Andorran credit institutions, credit institutions in OECD countries or other institutions that are subject to supervisory standards which INAF considers equivalent to those applicable in Andorra; b) Investment in Andorran government debt or in the government debt of OECD member countries; c) Other immediately available assets or assets with a maturity of no more than one month or that are easily convertible into cash and that INAF considers appropriate at any given time. At 31 December 2011 the amount of the guarantee reserves determined by INAF is €4,431 thousand. In accordance with the new law, this amount is held in a Spanish government debt security maturing on 31 January 2013, recorded under “Investment securities” in the accompanying consolidated balance sheet (see note 8). At 31 December 2010 the amount of the guarantee reserves had to be held in a deposit with the Andorran central bank, INAF. At that date the reserves and the deposits (see note 5) held by the Bank as guarantee reserves amounted to €6,010 thousand (which is the minimum amount per bank established in the law applicable at that date). The difference resulting from the change in the amount of the guarantee reserves, totaling €1,579 thousand, has been reclassifi ed to voluntary reserves (see note 16).

5. INAF

Details of the balances with the Andorran central bank, INAF, and ﬁ nancial intermediaries recorded in the accompanying consolidated balance sheets at 31 December 2011 and 2010 are as follows:

Thousands of euros

2011 2010 Financial Statements Consolidated

Assets Time deposits (*) 210 6,220 71 210 6,220 Liabilities and equity Demand deposits 496 1,116 Time deposits 38,776 30,356 39,272 31,472 (*) See note 4.b.

A breakdown of assets and liabilities by reference currency at 31 December 2011 and 2010 is given below

2011 2010

Assets Liabilities Assets Liabilities

By currency In euros 210 39,265 6,220 25,417 In foreign currency - 7 - 6,055 210 39,272 6,220 31,472

At 31 December 2011 the maturity of term liability positions ranged between one and twelve months.

6. Demand deposits at banks

Details of the demand deposits at banks recorded in the accompanying consolidated balance sheets at 31 December 2011 and 2010, by reference currency and type of account, are given below: Thousands of euros

2011 2010

By currency: In euros 2,806 1,015 In foreign currency 668 1,454 3,474 2,469 By type: Demand deposits Correspondent bank accounts 3,474 2,469 3,474 2,469 Demand deposits are any deposits that may be withdrawn at any time without notice or with notice of 24 hours or one business day.

7. Loans and receivables

A breakdown of loans and receivables at 31 December 2011 and 2010 by currency and sector, not taking account of the allowance for credit losses, is given below:

Thousands of euros

2011 2010

By currency: In euros 410,907 409,816 In foreign currency 40,513 43,999 Consolidated Financial Statements Consolidated 451,420 453,815 By sector: 72 Banks 50,106 60,774 Andorran public sector Central government 6,329 6,502 Local government 25,200 26,302 Private sector 369,785 360,237 451,420 453,815

A breakdown of loans and receivables by residual maturity at the consolidated balance sheet date, not taking account of the allowance for credit losses, is given in the following table:

Thousands of euros

2011 2010

By maturity: Matured 2,490 2,170 Up to 1 month 31,182 35,990 Between 1 and 3 months 22,917 36,637 Between 3 months and 1 year 62,475 69,365 Between 1 year and 5 years (*) 131,881 107,334 More than 5 years (*) 197,990 200,793 No speciﬁ ed maturity (**) 2,485 1,526 451,420 453,815

(*) At 31 December 2011 this item also includes the deposits pledged as collateral for derivatives transactions within the framework established by the ISDA agreements (see note 2.c). (**) Refers to customer overdrafts (excluding any overdrafts considered past due, doubtful or very doubtful, or any credit facility drawdowns beyond the credit limit). At 31 December 2011 this item also includes the deposits pledged as collateral for futures transactions. A breakdown of loans and receivables at 31 December 2011 and 2010 by type of collateral and degree of risk, excluding loans and advances to banks and not taking account of the allowance for credit losses, is given below:

Thousands of euros

2011 2010

By type of collateral: Security interest Mortgage 227,203 224,640 Cash 8,933 3,355 Pledged securities 73,878 66,899 Personal guarantee 91,300 98,147 401,314 393,041 By degree of risk: Normal 398,824 390,871 Due 122 31 Doubtful 2,368 2,139 401,314 393,041

The movements in the allowance for credit losses in 2011 and 2010 were as follows:

Thousands of euros

2011 2010

Speciﬁ c General Speciﬁ c General allowance allowance Total allowance allowance Total

Financial Statements Consolidated Opening balance 1,466 1,279 2,745 729 1,386 2,115 Additions: Net additions to allowance 4,282 499 4,781 1,555 261 1,816 73 Applications: Allowance for credit losses used (931) - (931) (41) - (41) Funds released (recoveries) (4,124) (606) (4,730) (777) (368) (1,145)

Closing balance 693 1,172 1,865 1,466 1,279 2,745

The balance of the Allowance for credit losses, net of recoveries account in the accompanying consolidated income statements relates mainly to movements in the allowance for credit losses shown in the preceding table, plus net additions to the general allowance for impairment of investment securities (see note 3.e and note 8).

8. Investment securities

Details of Investment securities in the accompanying consolidated balance sheets at 31 December 2011 and 2010, broken down by reference currency and not taking account of the allowance for credit losses or the allowance for impairment of investment securities, are given below:

Thousands of euros

2011 2010 By currency: In euros 113,233 127,067 In foreign currency 8,461 14,975 121,694 142,042 Details of Investment securities in the accompanying consolidated balance sheets at 31 December 2011 and 2010, broken down by type of security and listing status and not taking account of the allowance for credit losses or the allowance for impairment of investment securities, are given below:

Thousands of euros

2011 2010 By type: • Ordinary investments Equity 227 4 • Held to maturity Andorran and OECD government debt 16,124 11,570 Bonds and other ﬁ xed-income securities 100,172 128,867 •Held for trading Fixed-income securities 500 - Equity - 585 Investment schemes 3,551 - • Long-term investments Investments in group companies 853 812 Other investments 136 77 Investment schemes 131 127 121,694 142,042 By listing status: Listed 104,726 129,453 Unlisted 16,968 12,589 121,694 142,042

The criteria for assigning securities to the different portfolios are described in note 3.g. Consolidated Financial Statements Consolidated At 31 December 2011 the Group’s held-to-maturity portfolio includes a Spanish government debt security in the nominal amount of €4,430 thousand, maturing on 31 January 2013, in compliance with 74 Law 1/2011 of 2 February creating a deposit guarantee system for banking institutions (see note 4.b). In 2010 the held-to-maturity portfolio of Assegurances Segur Vida, SAU was transferred to the portfolio of BancSabadell d’Andorra at its book value at the date of transfer, in the amount of 42,227 thousand euros. These securities are not stated at amortized cost. During 2011, with prior approval from INAF, the Group proceeded to sell some securities from the held-to-maturity portfolio to increase the Group’s liquidity margin in the medium term. In addition, during 2011 the Group executed two swap transactions in relation to securities classiﬁ ed in the held-to-maturity portfolio. The resulting losses, in a total net amount of €2,317 thousand, are recorded in “Extraordinary gains (losses)” in the accompanying income statement. At 31 December 2011 the market value of the held-to-maturity portfolio, not including Andorran government debt, at the year-end exchange rate was €83,090 thousand, while that of the ordinary investment portfolio was €215 thousand. The value of the trading portfolio was €3,991 thousand. A breakdown of the held-to-maturity portfolio (bonds and other ﬁ xed-income securities and government debt) by residual maturity at 31 December 2011 and 2010 is shown below:

2011 2010

Bonds and other Government Bonds and other Government ﬁ xed-income debt (**) ﬁ xed-income debt securities (*) securities

Up to 1 month - - 222 - Between 1 months and 3 months 4,946 - - - Between 3 months and 1 year 1,495 - 8,186 - Between 1 year and 5 years 49,041 16,124 32,242 11,570 More than 5 years 30,988 - 70,962 - No speciﬁ ed maturity 13,702 - 17,255 - 100,172 16,124 128,867 11,570

(*) Some of the securities recorded under this heading may be called before maturity. (**) Andorra and OECD. “Investments in Group companies” shows the value of the shares of the equity-accounted investee Assegurances Segur Vida, SAU, equal to €853 thousand at 31 December 2011. At 25 March and 9 June 2011 Assegurances Segur Vida, SAU made two acquisitions of 100 shares of BancSabadell d’Andorra. At 31 December 2011 said company had acquired in total 200 shares of the Bank, valued at €26,444. In 2003 the Bank acquired a 0.238% interest in Semtee, SA for €62 thousand. During 2010 the Bank acquired further shares of Semtee, SA in the capital increase carried out by said company, increasing its stake to €77 thousand. Additionally, during 2011 the Bank acquired shares in the capital increase by Camprabassa, SAU, buying 1,700 shares for €59 thousand. These amounts are recorded under “Long-term investments – Other investments”. “Long-term investments – Investment schemes” includes €131 thousand relating to the units of the collective investment scheme BSA Inversió, FI Compartiment Prudent, associated with the Bank’s employee pension plan (see notes 3.j and 14). The movements in the general allowance for credit losses in 2011 and 2010 were as follows:

Thousands of euros

2011 2010

Opening balance 653 521 Additions: General additions to the allowance 40 231 Applications: Recoveries (166) (99) Closing balance 527 653 The movement on the allowance for impairment of investment securities during 2011 and 2010 was as follows: Consolidated Financial Statements Consolidated Thousands of euros

2011 2010 75

Opening balance - - Additions: General additions to the allowance 12 - Applications: Recoveries - - Closing balance 12 -

9. Intangible assets and deferred charges

The movements in intangible assets during 2011 and 2010 and the related accumulated amortization were as follows:

Thousands of euros

2011 Opening balance Additions Closing balance

Cost Computer software 10,580 1,114 11,694 10,580 1,114 11,694 Accumulated amortization Computer software (7,346) (1,224) (8,570) (7,346) (1,224) (8,570) Total 3,234 (110) 3,124 Thousands of euros

2010 Opening balance Additions Closing balance

Cost Computer software 9,427 1,153 10,580 9,427 1,153 10,580 Accumulated amortization Computer software (6,195) (1,151) (7,346) (6,195) (1,151) (7,346) Total 3,232 2 3,234

At 31 December 2011 the fully amortized intangibles included in Computer software amounted to €5,599 thousand. Neither in 2011 nor in 2010 were there any retirements or reclassiﬁ cations.

10. Tangible ﬁ xed assets

The movements in tangible ﬁ xed assets in 2011 and 2010 and the related accumulated depreciation were as follows:

Thousands of euros

Opening Additions Retirements Closing 2011 balance balance Consolidated Financial Statements Consolidated

Cost 76 Operating assets Land 4,224 - - 4,224 Buildings 11,598 - - 11,598 Furniture 1,363 7 - 1,370 Fixtures 5,659 67 - 5,726 Computer hardware and data processing equipment 3,486 131 - 3,617 Vehicles 123 28 (14) 137 Art collection 95 - - 95

Non-operating assets Buildings 707 - - 707 Land 1,007 - - 1,007 Subtotal 28,262 233 (14) 28,481

Accumulated amortization Operating assets Buildings (1,395) (232) - (1,627) Furniture (1,144) (51) - (1,195) Fixtures (3,764) (383) - (4,147) Computer hardware and data processing equipment (2,716) (349) - (3,065) Vehicles (56) (25) 14 (67) Non-operating assets Buildings (127) (14) - (141) Subtotal (9,202) (1,054) 14 (10,242)

Total 19,060 (821) - 18,239 Thousands of euros

Opening Additions Retirements Closing 2010 balance balance

Cost Operating assets Land 4,224 - - 4,224 Buildings 11,598 - - 11,598 Furniture 1,342 21 - 1,363 Instal·lacions 5,569 90 - 5,659 Computer hardware and data processing equipment 3,324 162 - 3,486 Vehicles 109 56 (42) 123 Art collection 95 - - 95

Non-operating assets Buildings 707 - - 707 Land 1,007 - - 1,007 Subtotal 27,975 329 (42) 28,262

Accumulated amortization Operating assets Buildings (1,163) (232) - (1,395) Furniture (1,056) (88) - (1,144) Fixtures (3,296) (468) - (3,764) Computer hardware and data processing equipment (2,350) (366) - (2,716) Financial Statements Consolidated Vehicles (76) - 20 (56) Non-operating assets 77 Buildings (113) (14) - (127) Subtotal (8,054) (1,168) 20 (9,202)

Total 19,921 (839) (22) 19,060

In 2011 and 2010 no interest expense or exchange differences relating to tangible fi xed assets were capitalized. At 31 December 2011 and 2010 the non-operating assets consisted of properties owned by the Bank which are let. At 31 December 2011 fully depreciated tangible fi xed assets totaled €4,848 thousand, consisting of €1,876 thousand in Fixtures, €2,083 thousand in Computer equipment, €866 thousand in Furniture and €23 thousand in Vehicles. During 2011 one vehicle in the amount of €14 thousand was retired. At 31 December 2011 there was no other material circumstance affecting the Group’s tangible fi xed assets.

11. Banks and credit institutions and other ﬁ nancial intermediaries

The details of the amounts owed to banks and credit institutions at 31 December 2011 and 2010, by reference currency and nature, are as follows: Thousands of euros

2011 2010

Other ﬁ nancial intermediaries By currency: In euros 1,396 - 1,396 - By type: Demand deposits 1,346 - Time deposits 50 - 1,396 - Banks and credit institutions By currency In euros 266 1,438 In foreign currency 4,346 1,663 4,612 3,101 By type: Demand deposits 506 1,441 Time deposits 4,106 1,660 4,612 3,101

Demand deposits are any deposits that may be withdrawn at any time without notice or with notice of 24 hours or one business day. A breakdown of the time deposits recorded in this section of the accompanying consolidated balance sheets by maturity, calculated from the balance sheet date at 31 December 2011 and 2010, is given below: Thousands of euros Consolidated Financial Statements Consolidated 2011 2010

Other ﬁ nancial intermediaries 78 By maturity: Between 1 month and 3 months 50 - 50 - Banks and credit institutions By maturity: Up to 1 month 2,831 350 Between 1 month and 3 months 1,148 1,236 Between 3 month and 1 year 127 74 4,106 1,660

12. Customer deposits

A breakdown of customer deposits at 31 December 2011 and 2010 by currency and type of deposit is given below: Thousands of euros

2011 2010

By currency: In euros 314,055 367,847 In foreign currency 43,387 49,811 357,442 417,658 By type: Demand deposits Current accounts 86,801 126,686 Savings accounts 411 296 Time deposits Certiﬁ cates of deposit 270,230 290,676 357,442 417,658 A breakdown of the customer deposits recorded in this section of the accompanying consolidated balance sheet by maturity, calculated from the balance sheet date at 31 December 2011 and 2010, is given below: Thousands of euros

2011 2010

Per maturity: Up to 1 month 33,834 65,433 Up to 3 month 73,040 89,601 Between 3 months and 1 year 163,356 135,642 No speciﬁ ed maturity (*) 87,212 126,982 357,442 417,658

(*) Relates to customer demand deposits.

13. Debt securities

A breakdown of debt securities at 31 December 2011 and 2010 by reference currency is given below: Thousands of euros

2011 2010

By currency: In euros 133,572 124,245 In foreign currency 1,333 2,604

134,905 126,849 Financial Statements Consolidated

This item contains issues of structured products which pay a variable coupon based on benchmarked 79 shares, interest rates or indices. The main structured products are classifi ed as follows: • Products that pay a variable quarterly coupon. The capital is guaranteed against the Bank’s ordinary portfolio. There is no early withdrawal option. • Products that pay a fi xed quarterly coupon. The customer receives a fi xed coupon and recovers 100% of the investment on maturity unless there has been a credit event linked to the underlying entity (bankruptcy, default or debt restructuring). These products are guaranteed against the Bank’s ordinary portfolio or hedged using appropriate fi nancial derivatives. • Products whose yield and/or the recovery of the capital depends entirely or in part on the performance of a share or a basket of shares. These products are hedged using appropriate fi nancial derivatives. This type of issue is marketed only to customers of the Bank who assume the counterparty risk of the issue. At 31 December 2011 the cash value of the structured products secured against the ordinary portfolio (bonds and other fi xed-income securities) was €33,897 thousand. In addition, at 31 December 2011, this item also includes repos on securities from the Bank’s portfolio in the amount of €9,622 thousand. A breakdown of debt securities at 31 December 2011 and 2010 by residual maturity is given below:

Thousands of euros

2011 2010

Per maturity: Up to 1 month 1,642 - Up to 3 month 12,184 7,685 Between 3 months and 1 year 46,576 27,704 Between 1 year and 5 years 62,417 80,277 More than 5 years 12,086 11,183 134,905 126,849 The movements in debt securities during 2011 and 2010 were as follows:

Thousands of euros

2011 2010

Opening balance 126,849 117,319 Additions: New issues 76,256 108,394 Less: Issues matured (68,200) (98,864) Closing balance 134,905 126,849

The average cost of the issues in 2011 and 2010 was 3.50% and 2.94%, respectively.

14. Provisions for liabilities and charges

As described in note 3.j), in 2006 a pension fund was set up for the Bank’s employees. In 2011 the Bank acquired additional units in the collective investment scheme BSA Inversió, FI Compartiment Prudent, the proceeds of which will be paid to the beneﬁ ciaries when needed (see note 8). The movements in the pension fund during 2011 and 2010 were as follows:

Thousands of euros

2011 2010

Opening balance 127 89 Additions:

Consolidated Financial Statements Consolidated Additions to the allowance 40 38 Uses: Allowance used (36) - 80 Closing balance 131 127

15. Allowance for general banking risks

The movements in the allowance for general banking risks during 2011 and 2010 were as follows:

Thousands of euros

2011 2010

Opening balance 500 300 Additions: dditions to the allowances 3,167 200 Uses: Allowance used - - Closing balance 3,667 500 The allowance includes the amount allocated by the Bank to cover general risks inherent in the banking business.

16. Changes in equity

A breakdown of the Group’s equity in 2011 and 2010 is given below: Thousands of euros

Share Legal Guarantee Revalua- Volun- Consoli- Consoli- Dividend Total capital reserve reserves tion tary dation dated proﬁ t reserve reserves reserves or loss for the period

Balance at 31 december 2009 30,068 1,976 6,010 2,583 319 401 5,252 - 46,609

Distribution of 2009 proﬁ t - 516 - - 3,146 88 (5,252) 1,502 -

Dividend ------(1,502) (1,502)

Proﬁ t for 2010 ------6,135 - 6,135

Balance at 31 december 2010 30,068 2,492 6,010 2,583 3,465 489 6,135 - 51,242

Distribution of 2010 proﬁ t - 583 - - 3,248 303 (6,135) 2,001 -

Dividend ------(2,001) (2,001) Reclassiﬁ cation of reserves (note 4,b) - - (1,579) - 1,579 - - - -

Proﬁ t for 2011 ------6,452 - 6,452

Balance at 31 december 2011 30,068 3,075 4,431 2,583 8,292 792 6,452 - 55,693

Share capital At 31 December 2011 the share capital shown in these consolidated ﬁ nancial statements is that of BancSabadell d’Andorra, SA It consists of 500,305 issued and fully paid shares with a nominal value of €60.10 per share. The shares are divided into two series, A and B, consisting of 255,000 and 245,305 shares, respectively. The A-series shares (50.97% of the Bank) belong to Banco de Sabadell, SA, while the B-series shares (49.03% of the Bank) belong to Andorran minority shareholders. Financial Statements Consolidated The A- and B-series shares are freely transferable provided the transfer is permitted by company and ﬁ nance law and the acquirer meets the same legal requirements. 81 At 31 December 2011 the Group company Assegurances Segur Vida, SAU had acquired 200 B-series shares of the Bank, which were valued at €26,444 (see note 8).

Reserves

Legal reserves Under Law 20/2007 of 18 October on Public Limited Companies, published on 21 November 2007, companies that obtain a profi t in the fi nancial year must create a legal reserve in a minimum amount equivalent to 10% of the profi t for the year until the reserve is equal to 20% of the share capital.

Guarantee reserves On 2 February 2011 the Andorran parliament passed Law 1/2011 on the creation of a deposit and investment guarantee scheme for Andorran banking institutions. The purpose of the abovementioned law is to create a deposit and investment guarantee scheme to guarantee to each customer the recovery of cash and securities deposited in Andorran banking institutions belonging to the guarantee scheme. Based on European models, the maximum amounts guaranteed have been fi xed at €100,000 euros per depositor and €100,000 per investor, for each institution, with an overall limit for the scheme as a whole of €94.1 million, which will be increased by a system of annual contributions of 0.06% until the scheme’s net assets reach 1.5% of the calculation basis of the defi ned contributions, with an upper limit of €200 million. At 31 December 2011 the amount of the guarantee reserves determined by INAF is €4,431 thousand. In accordance with the new law, this amount is held in a Spanish government debt security maturing on 31 January 2013, recorded under “Investment securities” in the accompanying consolidated balance sheet (see note 4.b). Revaluation reserve This reserve relates to the revaluations of tangible fi xed assets authorized by INAF on 30 December 2004 and 30 December 2008, in the amounts of €296 and €2,287 thousand, respectively. The revaluation reserves are non-distributable until the assets effectively leave the Group or INAF authorizes their disposal.

Voluntary reserves Voluntary reserves are freely distributable. Following the entry into force of Law 1/2011 of 2 February on the creation of a deposit and investment guarantee scheme for Andorran banking institutions (see note 4.b), the amount of the guarantee reserves determined by INAF, which at 31 December 2010 was €6,010 thousand (which is the minimum amount per bank established in the law applicable at that date), was €4,431 thousand at 31 December 2011. The difference resulting from the change in the amount of the guarantee reserves, totaling €1,579 thousand, has been reclassiﬁ ed to voluntary reserves.

Consolidation reserves The movements in consolidation reserves in 2011 and 2010 were as follows:

Thousands of euros

Sabadell d’Andorra Serveis Assegurances BancSabadell Inversions, d’Assessorament Segur Vida, d’Andorra, SGOIC, SAU BSA, SAU SAU SA Total

Balance at 31 December 2009 273 14 114 - 401 Distribution of proﬁ t for 2009 361 - 227 - 588 Dividend paid from reserves (325) - (175) - (500) Consolidated Financial Statements Consolidated Balance at 31 December 2010 309 14 166 - 489

82 Distribution of proﬁ t for 2010 559 - 444 - 1,003 Dividend paid from reserves (300) - (400) - (700)

Balance at 31 December 2011 568 14 210 - 792

Consolidated proﬁ t or loss for the period Details of the consolidated proﬁ t or loss for 2011 and 2010, by company, are as follows:

Thousands of euros

2011 2010

BancSabadell d’Andorra, SA 6,245 5,832 Sabadell d’Andorra Inversions, SGOIC, SAU 1,064 559 Interim dividend Sabadell d’Andorra Inversions, SGOIC, SAU (898) (300) Serveis d’Assessorament BSA, SAU - - Assegurances Segur Vida, SAU 909 444 Dividend Assegurances Segur Vida, SAU (868) (400)

6,452 6,135

17. Distribution of proﬁ t

The Board of Directors of BancSabadell d’Andorra SA will recommend to the shareholders in General Meeting that they approve the following distribution of proﬁ t for 2011: Thousands of euros

Distribution: Legal reserves 625 Voluntary reserve 3,494 Dividends 2,126 Profit (loss) for the year 6,245

The proﬁ t or loss of consolidated companies will be distributed as their shareholders decide.

18. Assets and liabilities denominated in currencies other than the euro

As indicated in note 3.c, the exchange rates used are those of the last business day of the year. At 31 December 2011 and 2010 the Group had the following currency cash positions (thousands of euros): Thousands of euros

2011

Assets Liabilities Net position

By currency: US dollars 42,103 42,102 1 Japanese yen 3,131 3,116 15 Pounds sterling 1,735 1,706 29 Swiss francs 1,754 1,753 1 Canadian dollars 1,141 1,142 (1) Financial Statements Consolidated Other currencies 2,238 2,377 7

Total 52,248 52,196 52 83

Thousands of euros

2010

Assets Liabilities Net position

By currency: US dollars 56,476 56,455 21 Japanese yen 615 605 10 Pounds sterling 1,633 1,626 7 Swiss francs 1,753 1,753 - Canadian dollars 362 361 1 Other currencies 1,394 1,390 4 Total 62,233 62,190 43

Apart from the quantities refl ected in notes 5, 6, 7, 8, 11, 12 and 13 to the accompanying fi nancial statements, no other signifi cant items are carried in currencies other than the euro.

19. Other balance sheet and income statement items

“Prepayments and accrued income” in the accompanying consolidated balance sheets at 31 December 2011 and 2010 breaks down as follows: Thousands of euros

2011 2010

Interest 6,342 4,617 Fee and commission income 1,403 1,101 Other 15 15 Total uncollected accrued interest 7,760 5,733 Prepaid expenses 39 71 Total prepayments and accrued income 7,799 5,804

“Other assets” in the accompanying consolidated balance sheets at 31 December 2011 and 2010 breaks down as follows: Thousands of euros

2011 2010

Checks in transit and awaiting clearance 730 531 Bills in transit and awaiting clearance 417 353 Credit card transactions 820 679 Other items 1,456 658 Total current transactions 3,423 2,221 Margin deposits for derivates (*) - 3,789 Inventories 765 - Other 170 55 Total other assets 4,358 6,065

(*) At 31 December 2011, the margin deposits for derivatives have been reclassiﬁ ed to “Loans and receivables – Banks and credit institutions” (see note 7). Consolidated Financial Statements Consolidated “Accruals and deferred income” in the accompanying consolidated balance sheets at 31 December 2011 and 2010 breaks down as follows: 84 Thousands of euros

2011 2010

Interest 5,034 4,757 Other 28 307 Total unpaid accrued expenses 5,062 5,064 Unearned revenue 437 470 Total accruals and deferred income 5,499 5,534

“Other liabilities” in the accompanying consolidated balance sheets at 31 December 2011 and 2010 breaks down as follows: Thousands of euros

2011 2010

Checks in transit and awaiting clearance 163 466 Securities transactions in progress 284 362 Other 1,891 1,263 Total current transactions 2,338 2,091 Taxes payable (*) 543 420 Payable to suppliers 173 207 Provision for remuneration and per diems 1,228 1,189 Other (**) 6,310 213 Total suppliers and other payables 8,254 2,029 Total other liabilities 10,592 4,120 (*) Includes the accrued, unpaid expense for indirect service tax, and non-resident income tax withheld and unpaid. (**) A t 31 December 2011, this item includes the changes in value of the derivatives associated with the debt securities (see note 13). Extraordinary income in excess of 5% of proﬁ t is explained in note 8. 20. Futures

Details of the notional amounts of outstanding futures contracts at 31 December 2011 and 2010, classiﬁ ed according to the purpose of the contracts, are given below:

Thousands of euros 2011 2010

Purchases and sales of foreign currency 130,329 159,583 Interest rate swaps 67,528 71,382 Securities options 8,557 15,529 Futures 569 971 Credit default swaps 99,755 74,400 Total 306,738 321,865

The face value of the existing derivatives contracts does not refl ect the Group’s total exposure, as the net exposure to these instruments is determined by their composition and/or combination. All the interest rate swaps, securities options and credit default swaps (which are sold CDS) relate to hedging transactions in relation to various products sold by the Group. All derivatives transactions are fi rm. At 31 December 2011 and 2010 all the fi nancial derivatives except the futures were OTC products. The maturity structure of the futures contracts, counting from the balance sheet date, is as follows:

Thousands of euros

2011 2010 Consolidated Financial Statements Consolidated Purchases and sales of foreign currency Up to 1 year 102,817 148,186 Between 1 year and 5 years 27,512 11,397 85 130,329 159,583 Interest rate swaps Up to 1 year 22,630 9,494 Between 1 year and 5 years 43,120 56,020 More than 5 years 1,778 5,868 67,528 71,382 Securities options Up to 1 year 8,209 13,510 Between 1 year and 5 years 348 2,019 8,557 15,529 Futures Up to 1 year 569 971 569 971 Credit default swaps Up to 1 year 59,555 16,000 Between 1 year and 5 years 31,200 58,400 More than 5 years 9,000 - 99,755 74,400

21. Assets pledged as collateral

At 31 December 2011 and 2010 there were assets pledged as collateral in the nominal amount of €12,810 thousand and €13,760 thousand. These amounts relate basically to the margin requirement for derivatives transactions entered into by the Bank with other ﬁ nancial institutions. 22. Securities deposits and other third-party securities held in custody

This account shows the market value of the securities deposited by customers and held in custody by the Group. A breakdown of this item in the accompanying consolidated memorandum accounts at 31 December 2011 and 2010, by type of security, is given below:

Thousands of euros

2011 2010

Shares and other equity securities 165,789 180,319 Bonds and other ﬁ xed-income securities (*) 502,917 296,515 Securities of investment schemes not managed by the Group 37,955 58,211 Other 400 1,853 707,061 536,898

(*) At 31 December 2011 this item includes the depositary of the debt securities, which are also recorded under “Debt securities” on the liabilities side of the balance sheet. The securities deposits at 31 December 2011 include an amount of €73,879 thousand as collateral for various lending and guarantee transactions. Discretionary funds under management at 31 December 2011 are recorded under “Securities deposits and other third-party securities held in custody” in the accompanying consolidated memorandum accounts. Asset management fees are included under “Fees and commissions” in the accompanying consolidated income statement. Details of the total resources managed at 31 December 2011 and 2010, independently of whether they are held in custody or deposited by the Group or not, are given below:

Consolidated Financial Statements Consolidated Thousands of euros

2011 2010 86 Held in Held in Held in Held in custody/ custody/ custody/ custody/ deposited by deposited by Total deposited by deposited by Total the Bank third parties the Bank third parties Collective investment schemes 177,228 59,771 236,999 142,945 61,006 203,951 Discretionary funds under management 109,354 9,419 118,773 130,623 6,125 136,748 Other individual clients 771,529 79,189 850,718 807,555 87,600 895,155 Total 1,058,111 148,379 1,206,490 1,081,123 154,731 1,235,854

23. Other memorandum accounts held solely for administrative control purpose

The breakdown of this item in the accompanying consolidated memorandum accounts at 31 December 2011 and 2010 is as follows: Thousands of euros

2011 2010

Guarantees and commitments received 1,235 1,010 Defaulted assets 1,377 345 Unlisted own securities and assets 16,968 12,589 Trusts (*) 148,379 154,731 Foreign bills and checks awaiting payment 1,166 935 169,125 169,610

(*) “Trusts” includes deposits of the investment schemes managed by the Group’s fund management company and brokered by the Bank. It also includes deposits held at other banks on behalf of third parties. 24. Transactions with related parties and group entities

Details of balances with BancSabadell d’Andorra Group subsidiaries, shareholders and related parties in excess of 5% of proﬁ t for the year (in the income statement) or 10% of net assets (in the balance sheet) for 2011 are disclosed below:

Thousands of euros Shareholders Investees Directors Assegurances Segur Vida, SAU

Number of individuals - - Number of companies 1 1 Lending transactions Demand deposits at banks 590 - Banks and credit institutions 14,251 - Investment securities 23,646 - Loans and receivables 517 - Prepayments and accrued income 170 - 39,174 - Borrowing transactions Banks and credit institutions 4,106 - Accruals and deferred income 30 19 Customer deposits - 245 4,136 264 Income statement transactions Interest receivable and similar income 348 -

Interest payable and similar charges 187 914 Financial Statements Consolidated Net free and commission income 126 (11) 661 903 87 Memorandum accounts 143,368 601

All the Group’s transactions with related parties and Group companies were carried out at market prices.

25. Risk management

Monitoring and control Risk monitoring and supervision is divided into four broad areas: • Market risk, which includes foreign exchange risk, interest rate risk and portfolio risk; • Credit risk, which includes counterparty or concentration risk associated with the ﬁ nancial intermediaries or issuers of the securities in the Bank’s own portfolio, and customer credit risk. • Liquidity risk, or the capacity of the Bank to meet its payment obligations in the short term. • Operational risk, which is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. In all cases the risk policies established by the Risk Committee are followed. The Treasury Department, supervised by the Assets and Liabilities Committee, is responsible for monitoring and managing foreign exchange and interest rate risks in the balance sheet as a whole, concentration risks in treasury and investment activities and risks in the Bank’s own portfolio. The Internal Risk and Control Department, supervised by the Risk Committee, is responsible for analyzing and monitoring credit risks and off-balance-sheet exposures to customers. Market risk Foreign exchange risk The Group manages its exposure to currency risk by matching assets and liabilities by currency and systematically hedging customer transactions in the market. Thus, the daily open position limit in each currency, for short or long positions, is €60 thousand. The overall maximum exposure to currency risk is €300 thousand. The same policy is applied to forward currency contracts, taking an equal and opposite position to customer positions. At 31 December 2011 the total net foreign exchange position (spot + forward) was €75 thousand. The Internal Risk and Control Department checks daily that the exposure to foreign exchange risk is within the stated limits.

Interest rate risk The Group’s policy is to minimize interest rate risk by ensuring that the maturity structure of assets and liabilities is practically symmetrical, taking the same benchmark rate for both, so that capital is not signiﬁ cantly affected by changes in interest rates. At weekly intervals the Internal Risk and Control Department performs a gap analysis of the balance sheet, which may be sensitive to interest rate ﬂ uctuations, and carries out a simulation of the impact a 1% change in the interest rate curve would have on the Group’s net interest income to ensure that the impact is never more than 5%. At 31 December 2011, the sensitivity of the balance sheet in euros to a 1% change in interest rates was €210 thousand in absolute terms, equivalent to 2.02% of year-end net interest income.

Portfolio risk The Group’s own portfolio, which is not used for hedging customer transactions, is generally

Consolidated Financial Statements Consolidated invested in ﬁ xed-income securities in the ﬁ nancial sector (banks and insurance companies) with the following characteristics: • Floating-rate coupon indexed to the market rate (EURIBOR) to limit interest rate risk. 88 • Issuer rated A or higher by S&P. • Minimum issue volume of €500 million or the equivalent in U.S. dollars. • Maximum investment in any one issue less than €4 million or the equivalent in U.S. dollars. The Assets and Liabilities Committee of the Bank monitors the positions in the Bank’s own portfolio at monthly intervals, paying special attention to securities whose issuers have had downgrades and securities that are trading consistently below 60%.

Credit risk Concentration or counterparty risk In compliance with applicable law, the maximum weighted exposure to any counterparty for all portfolio transactions, ﬁ nancial derivatives and interbank deposits is 20% of net assets. Broken down, this risk is managed as follows: As a general rule, the maximum concentration in any one issuer in the held-to-maturity portfolio, except for the Bank’s parent company, is determined based on the S&P issuer rating at the moment of acquisition, as follows: • Issuer rating A or AA: 9 million euros or dollar equivalent. • Issuer rating AAA: 12 million euros or dollar equivalent. For interbank transactions the risks arising from the following types of transaction are considered jointly: • Interbank deposits. • Forward currency contracts. • Interest rate, credit or equity swaps. • Other transactions (guarantees, etc.). The risk weights for each of the abovementioned transactions are those established by the laws and regulations applicable in Andorra. For each counterparty an upper limit approved by the board of directors is set. On no account is this limit higher than permitted by said laws and regulations.

Customer credit risk Loans and advances to customers are analyzed and authorized based on authority levels established according to the following parameters: • type of transaction • type of collateral • term • amount The Group’s maximum exposure to any given risk group, understood as a group of related customers to which the Group has exposure, is 20% of net assets. Loan approval procedures are monitored by the Credit Risk Department, which is responsible for ensuring that approval conditions are fully and properly met and, in particular, that appropriate collateral is obtained. In transactions where the collateral consists of securities, the department veriﬁ es at monthly intervals that the market price of the collateral fully covers the risk incurred. It also carries out weekly or daily controls on certain transactions and in certain market conditions. At 31 December 2011, the active risk in the customer loans portfolio was €401,314 thousand.

Liquidity risk Liquidity risk is the risk that the bank will not have, or will be unable to obtain, liquid funds to meet payments in a timely manner. The Group’s policy is to always have liquidity in excess of the legally required minimum, adapting

the level of liquidity to circumstances in the interbank market and customer positions. Financial Statements Consolidated The Treasury Department manages the Bank’s liquidity as determined by asset and liability

positions and forecast cash ﬂ ows on a daily basis and the Internal Risk and Control Department 89 receives daily reports on the Group’s overall liquidity position and analyzes any changes.

Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Operational risks include not only internal events but also external events such as: • External fraud • Physical security and IT errors • Legal risk Operational risks exclude strategic and reputational risk, i.e., any risk arising from damage to the Bank’s image. The Internal Risk and Control Department is responsible for identifying the operational risks that occur in the different areas of the Group companies, so that these risks are known and measures can be taken to prevent them from recurring, as well as for keeping a record of operational risks that can be used to improve systems and processes.

26. Compliance with aplicable laws and regulations

Law regulating capital and liquidity requirements for fi nancial institutions On 29 February 1996, the Andorran parliament passed a law regulating capital and liquidity requirements for fi nancial institutions. This law requires banks to maintain a capital ratio of at least 10%, as recommended by the Basel Committee on Banking Regulation and Supervisory Practices. The law also establishes a mandatory liquidity ratio of at least 40%. The Bank’s capital and liquidity ratios at 31 December 2011, measured in accordance with this law, were 20.22% and 85.97%, respectively (at 31 December 2010 they were 15.41% and 76.02%). The law on capital and liquidity requirements specifi es that the concentration of exposures to any one benefi ciary may not exceed 20% of the Group’s net assets. It further establishes that the aggregate exposure resulting from exposures each of which individually exceeds 5% of net assets may not exceed 400% of net assets. In addition, the exposure to directors may not exceed 15% of net assets. These risks are weighted in accordance with the provisions of this law. In 2011 and 2010 the Group complied with all the requirements of the law. The maximum concentration of exposures to any one benefi ciary as a percentage of the Group’s adjusted net assets was 16.13% in 2011 and 17.44% in 2010. The total amount of loans and other transactions involving an exposure to one benefi ciary in excess of 5% of net assets was less than 123.71% in 2011 and 166.34% in 2010

Law on international cooperation to combat the laundering of the proceeds of international crime The Law on international cooperation to combat the laundering of the proceeds of international crime, which replaced the 1995 Law on the protection of banking secrecy and the laundering of money or assets derived from international crime, came into force on 24 July 2001. In compliance with this law, the Group has put in place a series of internal control and communication procedures aimed at protecting banking secrecy and preventing transactions for money laundering and the fi nancing of terrorism. Specifi c staff training programs have been implemented. On 11 December 2008 the Andorran parliament passed the Law amending the Law on international cooperation to combat the laundering of the proceeds of international crime. This amendment to the Andorran legislation to combat money laundering and the fi nancing of terrorism updated the previous Law, adapted it to international standards and harmonized it with the equivalent laws of other European countries. Consolidated Financial Statements Consolidated Similarly, during 2009 the new Regulations implementing the Law on international cooperation to combat the laundering of the proceeds of international crime and the fi nancing of the terrorism 90 came into force. Lastly, on 25 May 2011 the Andorran parliament passed a new law amending the Law on international cooperation to combat the laundering of the proceeds of international crime and the fi nancing of terrorism. As of 31 December 2011 the new Regulation implementing said Law had not yet come into force.

Law on the indirect taxation of banking services and fi nancial services On 14 May 2002 the Andorran parliament passed the Law on the indirect taxation of banking services and fi nancial services. This law imposes a tax on banking and fi nancial services provided by banks and other fi nancial institutions. The tax liability is calculated by the objective method, in accordance with the Law on the indirect taxation of banking services and fi nancial services, using the information from tax returns. The amount of indirect service tax payable at 31 December 2011 was €2,018 thousand, of which €1,704 has been recorded under “General expenses” in the “Taxes other than income tax” account in the accompanying consolidated income statement, while the remainder has been explicitly transferred to the unit holders of the collective investment scheme managed by Sabadell d’Andorra Inversions, SGOIC, SAU. The fi gure recorded as indirect service tax payable is the difference between the tax payable based on the consolidated fi gures and the sum of the tax payable from the individual returns of investees.

Agreement between Andorra and the European Community in relation to the establishment of measures equivalent to those provided in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments On 21 February 2005 the Andorran parliament ratiﬁ ed the agreement between Andorra and the European Community in relation to the establishment of measures equivalent to those provided in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments. Subsequently, on 13 June 2005 the Government passed a law implementing the above agreement. In that year the Group, acting in its capacity as a payment agent, complied with the obligations contained in the agreement and its implementing law and settled the amount of the withholding.

Law 14/2010 of 13 May on the legal regime of banking institutions and the basic administrative regime of the fi nancial system operating entities. On 13 May 2010, the Andorran parliament passed the law on the legal regime of banking institutions and the basic administrative regime of the fi nancial system operating entities. This law was published in the Andorran Offi cial State Gazette on 9 June 2010, with a period of adaptation to said law of 12 months from the date of publication. The abovementioned law is intended to regulate the legal regime of banking institutions and the basic administrative regime of the fi nancial system operating entities, giving greater security to the Andorran fi nancial sector. This law adapts the Andorran legal framework to the provisions of EU Directive 2004/39/CE of 21 April 2004, more usually referred to as MiFID (Markets in Financial Instruments Directive).

27. Post-balance sheet events

On 1 December 2011 the Andorran parliament passed Law 17/2011 amending Law 95/2010 of 29 December on corporate income tax, which establishes that said tax will be applicable to tax periods starting on or after 1 January 2012. The Law on corporate income tax introduces a new tax concept into the Andorran tax system. Law 95/2012 of 29 December on corporate income tax determines that the general rate of corporate income tax is 10%. However, the fi rst additional provision of said law establishes that in the year of fi rst-time application obligors are entitled to a reduction of 50% of the amount of tax Consolidated Financial Statements Consolidated payable. On 29 December 2011 the Andorran parliament passed Law 22/2011 on the budget for fi nancial year 2012. Article 28 of said law amends article 8, “Tax rate”, of the Law on the indirect taxation of 91 banking services and fi nancial services of 14 May 2002, changing the applicable tax rate to 9.5%. There have been no other signifi cant post-balance sheet events.

28. Other points of interest

At 31 December 2011 there were no other points of interest.

29. Explanation added for translation to english

These ﬁ nancial statements are presented on the basis of the regulatory ﬁ nancial reporting framework applicable to the Group (see Note 2). Certain accounting practices applied by the Group that conform with that regulatory framework may not conform with other generally accepted accounting principles and rules. Board of Directors and Management Team

Board of Directors

Chairman Robert Cassany i Vila

Directors Miquel Alabern i Comas Marcel Albós i Riba Llibert Barcons i Freixas Miquel Àngel Canturri i Montanya Joan Llonch i Andreu Josep Permanyer i Cunillera Josep Anton Ribes i Roca Josep Vilanova i Trias

Secretary Joan Roca i Sagarra

Management Team Board of Management Team Board

92 General Manager Miquel Alabern i Comas

Deputy General Manager Josep Segura i Solà

Fund Manager Division Sandra Estebe i Jové

Commercial Director Gerard Fonolleda i Ramboux

Private Banking Manager Antoni Masip i Mestre

Human Resources Manager Mireia Montoriol i Garriga

Operations Manager Jordi Vilardebó i Costa

Branch Managers Xavier Badell i Santeugini Enric Call i Grau Núria Costoya i Cos Lluís Gaztelu i Guitart Emi Llopart i Villareal Joan Pla i Oliva Addresses of BancSabadell d’Andorra

El Fener branch Av. del Fener, 7 AD500 Andorra la Vella Tel. 73 56 80 Fax 73 56 81 [email protected]

Meritxell branch Av. Meritxell, 85 AD500 Andorra la Vella Tel. 80 36 00 Fax 80 36 01 [email protected]

El Pas de la Casa branch Carrer de les Abelletes, 8 AD200 El Pas de la Casa Tel. 75 56 00 Fax 75 56 01 [email protected]

La Massana branch

Av. de Sant Antoni, s/n Addresses AD400 La Massana Tel. 73 86 00 Fax 73 86 01 93 [email protected]

Encamp branch Av. de Joan Martí, 4 AD200 Encamp Tel. 73 26 00 Fax 73 16 01 [email protected]

Sant Julià branch Av. Francesc Cairat, 22 AD600 Sant Julià de Lòria Tel. 74 26 00 Fax 74 26 01 [email protected]

Head Ofﬁ ce Av. del Fener, 7 AD500 Andorra la Vella Tel. 73 56 00 Fax 73 56 01

Direct Banking ‘A directe - Tel. 73 56 66 ‘A On line - www.bsa.ad 94