Obbligazione Caixabenk 6.75% ( ES0840609004 ) in EUR

Caixabenk

100 EUR ⇌

Spagna

ES0840609004 ( in EUR )

6.75% per anno ( pagato 4 volte l'anno)

perpetue

Prospetto opuscolo dell'obbligazione Caixabank ES0840609004 en EUR 6.75%, scadenza perpetue

13/03/2026 ( In 33 giorni )

CaixaBank è un importante gruppo bancario spagnolo, con sede a Valencia, nato dalla trasformazione della cassa di risparmio "la Caixa", che opera nel settore bancario e assicurativo.

The Obbligazione issued by Caixabenk ( Spain ) , in EUR, with the ISIN code ES0840609004, pays a coupon of 6.75% per year.
The coupons are paid 4 times per year and the Obbligazione maturity is perpetue

CAIXABANK, S.A.
(incorporated as a limited liability company (sociedad anónima) in Spain)
Perpetual Non-Cumulative Contingent Convertible Additional
Tier 1 Preferred Securities
Issue Price: 100 per cent.
The 1,000,000,000 Perpetual Non-Cumulative Contingent Convertible Additional Tier 1 Preferred Securities of 200,000 liquidation preference each (the "Preferred Securities") are being
issued by CaixaBank, S.A. (the "Bank", the "Issuer" or "CaixaBank") on 13 June 2017 (the "Closing Date"). The Bank and its consolidated subsidiaries are referred to herein as the
"CaixaBank Group" or the "Group".
The Preferred Securities will accrue non-cumulative cash distributions ("Distributions") as follows: (i) in respect of the period from (and including) the Closing Date to (but excluding 13 June
2024 (the "First Reset Date"), at the rate of 6.75 per cent. per annum, and (ii) in respect of each period from (and including) the First Reset Date and every fifth anniversary thereof (each a
"Reset Date") to (but excluding) the next succeeding Reset Date (each such period, a "Reset Period"), at the rate per annum, calculated on an annual basis and then converted to a quarterly
rate in accordance with market convention, equal to the aggregate of 6.498 per cent. per annum (the "Initial Margin") and the 5-year Mid-Swap Rate (as defined in the terms and conditions of
the Preferred Securities (the "Conditions")) for the relevant Reset Period. Subject as provided in the Conditions, such Distributions will be payable quarterly in arrears on 13 March, 13 June,
13 September and 13 December, in each year (each a "Distribution Payment Date").
The Bank may elect, in its sole and absolute discretion, to cancel the payment of any Distribution in whole or in part at any time as further provided in Condition 4.3. Without prejudice to the
right of the Bank to cancel the payments of any Distribution: (a) payments of Distributions in any financial year of the Bank shall be made only to the extent the Bank has sufficient
Distributable Items (as defined in the Conditions). To the extent that the Bank has insufficient Distributable Items to make Distributions on the Preferred Securities, the Bank will only make
partial or, as the case may be, no payment of the relevant Distribution on the Preferred Securities; (b) if the Competent Authority (as defined in the Conditions) requires the Bank to cancel the
relevant Distribution in whole or in part, the Bank will only make partial or, as the case may be, no payment of the relevant Distribution on the Preferred Securities; (c) the Bank may make
partial or, as the case may be, no payment of the relevant Distribution on the Preferred Securities if and to the extent that such payment would cause the Maximum Distributable Amount to be
exceeded or otherwise would cause a breach of any regulatory restriction or prohibition on payments on Additional Tier 1 Capital (as defined in the Conditions) pursuant to Applicable Banking
Regulations (as defined in the Conditions); and (d) if the Trigger Event (as defined in the Conditions) occurs at any time on or after the Closing Date (as defined in the Conditions), the Bank
will not make any further Distribution on the Preferred Securities and any accrued and unpaid Distributions up to a Trigger Event shall be automatically cancelled.
The Preferred Securities are perpetual. All, and not some only, of the Preferred Securities may be redeemed at the option of the Bank on any Distribution Payment Date falling on or after the
First Reset Date, at the liquidation preference of 200,000 per Preferred Security plus any accrued and unpaid Distributions for the then current Distribution Period (as defined in the
Conditions) to (but excluding) the date fixed for redemption (the "Redemption Price"). The Preferred Securities are also redeemable on or after the Closing Date at the option of the Bank in
whole but not in part, at any time, at the Redemption Price if there is a Capital Event or a Tax Event (each as defined in the Conditions). Subject, in each case, to the prior consent of the
Competent Authority and otherwise in accordance with the Applicable Banking Regulations (as defined in the Conditions) then in force.
In the event of the occurrence of the Trigger Event (as defined in the Conditions) (i.e. if at any time the CET1 ratio (as defined in the Conditions) falls below 5.125 per cent.), the Preferred
Securities are mandatorily and irrevocably convertible into newly issued ordinary shares in the capital of the Bank ("Ordinary Shares") at the Conversion Price (as defined in the Conditions).
In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Bank, Holders will be entitled to receive (subject to the limitations described in the
Conditions), in respect of each Preferred Security, their respective liquidation preference of 200,000 plus any accrued and unpaid Distributions for the then current Distribution
Period to the date of payment of the Liquidation Distribution (as defined in the Conditions).
The Preferred Securities are rated BB- by Standard & Poor's Credit Market Services Europe Limited ("S&P"). S&P is established in the European Union ("EU") and is registered under
Regulation (EC) No. 1060/2009 (as amended) on credit rating agencies (the "CRA Regulation"). As such, S&P is included in the list of credit rating agencies published by the European
Securities and Markets Authority on its website in accordance with the CRA Regulation. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision,
suspension or withdrawal at any time by the assigning rating organisation.
This document constitutes a listing prospectus (the "Prospectus") for the purposes of Article 3 of Directive 2003/71/EC of the European Parliament and of the Council of the EU, as amended
and implemented in each Member State (the "Prospectus Directive") and has been prepared in accordance with, and including the information required by annexes I, III (sections 3.1 and 3.2),
XIII and XIV of Regulation (EC) No. 809/2004 (the "Prospectus Regulation"). This Prospectus has been approved by the Spanish National Securities Market Commission (Comisión
Nacional del Mercado de Valores) (the "CNMV") in its capacity as competent authority under the Prospectus Directive and its implementing measures in Spain, including the Spanish
Securities Market Act (Royal Legislative Decree 4/2015, of 23 October, approving the consolidated text of the Spanish Securities Market Act; the "LMV").
Application has been made for the Preferred Securities to be admitted to trading on the Spanish AIAF Fixed Income Securities Market ("AIAF"). The Preferred Securities may also be admitted
to trading on any other secondary market as may be agreed by the Issuer.
The Preferred Securities are not intended to be sold and should not be sold to retail clients in any jurisdiction of the EEA, as defined in the rules set out in the Product Intervention (Contingent
Convertible Instruments and Mutual Society Shares) Instrument 2015 (as amended or replaced from time to time, the "PI Instrument") other than in circumstances that do not and will not give
rise to a contravention of those rules by any person. Prospective investors are referred to the section headed "Restrictions on marketing and sales to retail investors" on pages 4 and 5 of this
Prospectus for further information.
An investment in the Preferred Securities involves certain risks. For a discussion of these risks see "Risk Factors" beginning on page 7.
The Preferred Securities and any Ordinary Shares to be issued and delivered in the event of the occurrence of the Trigger Event have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the "Securities Act"), and are subject to United States tax law requirements. The Preferred Securities are being offered outside the United States in
accordance with Regulation S under the Securities Act ("Regulation S"), and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons
except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
Structuring Advisors and Joint Lead Managers
Barclays
Société Générale Corporate & Investment Banking
Joint Lead Managers
CaixaBank
J.P. Morgan
Morgan Stanley
The date of this Prospectus is 13 June 2017
A33805325
1

TABLE OF CONTENTS
Page
IMPORTANT NOTICES ................................................................................................................................... 3
RISK FACTORS ................................................................................................................................................ 7
OVERVIEW OF THE OFFERING .................................................................................................................. 53
DOCUMENTS INCORPORATED BY REFERENCE .................................................................................... 58
DESCRIPTION OF THE ISSUER .................................................................................................................. 60
DESCRIPTION OF SHARE CAPITAL .......................................................................................................... 97
CONDITIONS OF THE PREFERRED SECURITIES ................................................................................... 112
USE OF PROCEEDS ..................................................................................................................................... 153
TAXATION .................................................................................................................................................... 154
SUBSCRIPTION AND SALE ....................................................................................................................... 171
MARKET INFORMATION ........................................................................................................................... 173
ADDITIONAL INFORMATION ................................................................................................................... 179
SIGNATURES ............................................................................................................................................... 183

A33805325
2

IMPORTANT NOTICES
This Prospectus is to be read in conjunction with all documents which have been incorporated by reference
herein (see "Documents Incorporated by Reference"). This Prospectus shall be read and construed on the
basis that such documents are incorporated and form part of this Prospectus.
The Issuer has not authorised the making or provision of any representation or information regarding the
Issuer or the Preferred Securities other than as contained in this Prospectus or as approved for such purpose
by the Issuer. Any such representation or information should not be relied upon as having been authorised by
the Issuer or Barclays Bank PLC, CaixaBank, S.A., J.P. Morgan Securities plc, Morgan Stanley & Co.
International plc and Société Générale (together, the "Joint Lead Managers").
None of the Joint Lead Managers has separately verified the information contained or incorporated by
reference in this Prospectus. None of the Joint Lead Managers nor any of their respective affiliates has
authorised the whole or any part of this Prospectus. Neither the delivery of this Prospectus nor the offering,
sale or delivery of any Preferred Security shall in any circumstances create any implication that there has been
no change in the affairs of the Issuer, or any event reasonably likely to involve any adverse change in the
condition (financial or otherwise) of the Issuer, since the date of this Prospectus or that any other information
supplied in connection with the Preferred Securities is correct as of any time subsequent to the date on which
it is supplied or, if different, the date indicated in the document containing the same.
None of the Joint Lead Managers makes any representation, express or implied, or accepts any responsibility,
with respect to the accuracy or completeness of any of the information contained or incorporated by reference
in this Prospectus or any other information supplied by the Issuer in connection with the Preferred Securities.
Neither this Prospectus nor any such information or financial statements of the Issuer are intended to provide
the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer or
the Joint Lead Managers that any recipient of this Prospectus or such information or financial statements
should purchase the Preferred Securities. Each potential purchaser of Preferred Securities should determine
for itself the relevance of the information contained or incorporated by reference in this Prospectus and its
purchase of Preferred Securities should be based upon such investigation as it deems necessary. None of the
Joint Lead Managers undertakes to review the financial condition or affairs of the Issuer during the life of the
arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the Preferred
Securities of any information coming to the attention of the Joint Lead Managers.
The Joint Lead Managers are acting exclusively for the Bank and no one else in connection with any offering
of the Preferred Securities. The Joint Lead Managers will not regard any other person (whether a recipient of
this Prospectus or otherwise) as their client in relation to any such offering and will not be responsible to
anyone other than the Bank for providing the protections afforded to their clients or for giving advice in
relation to such offering or any transaction or arrangement referred to herein.
This Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, any Preferred
Securities.
The distribution of this Prospectus and the offering, sale and delivery of Preferred Securities in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by
the Issuer and the Joint Lead Managers to inform themselves about and to observe any such restrictions.
In particular, the Preferred Securities and the Ordinary Shares have not been and will not be registered under
the Securities Act and are subject to United States tax law requirements. Subject to certain exceptions,
Preferred Securities may not be offered, sold or delivered within the United States or to U.S. persons.
A33805325
3

In this Prospectus, unless otherwise specified, references to a "member state" are references to a Member
State of the European Economic Area, references to "U.S. dollar" are to United States dollars, references to
"", "EUR" or "euro" are to the currency introduced at the start of the third stage of European economic and
monetary union, and as defined in Article 2 of Council Regulation (EC) No 9741498 of 3 May 1998 on the
introduction of the euro, as amended.
Words and expressions defined in the Conditions (see "Conditions of the Preferred Securities") shall have the
same meanings when used elsewhere in this Prospectus unless otherwise specified.
Potential investors are advised to exercise caution in relation to any offering of the Preferred Securities. If a
potential investor is in any doubt about any of the contents of this Prospectus, it should obtain independent
professional advice. Prior to making an investment decision, potential investors should consider carefully, in
light of their own financial circumstances and investment objectives, all the information contained in this
Prospectus or incorporated by reference herein. A potential investor should not invest in the Preferred
Securities unless it has the expertise (either alone or with its financial and other professional advisers) to
evaluate how the Preferred Securities will perform under changing conditions, the resulting effects on the
value of the Preferred Securities and the impact this investment will have on the potential investor's overall
investment portfolio. See further "Risk Factors The Preferred Securities may not be a suitable investment
for all investors" for additional information.
Restrictions on marketing and sales to retail investors
The Preferred Securities are complex financial instruments and are not a suitable or appropriate investment
for all investors. In some jurisdictions, regulatory authorities have adopted or published laws, regulations or
guidance with respect to the offer or sale of securities such as the Preferred Securities to retail investors. As
agreed by the Bank and the Joint Lead Managers, offers of the Preferred Securities in Spain shall only be
directed specifically at or made to professional investors (inversores profesionales) as defined in Article 205
of the LMV.
In particular, in June 2015, the U.K. FCA published the PI Instrument, which took effect from 1 October
2015. Under the rules set out in the PI Instrument (as amended or replaced from time to time, the "PI Rules"):
(a)
certain contingent write-down or convertible securities (including any beneficial interests therein),
such as the Preferred Securities, must not be sold to retail clients in the EEA; and
(b)
there must not be any communication or approval of an invitation or inducement to participate in,
acquire or underwrite such securities (or the beneficial interest in such securities) where that invitation
or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail
client in the EEA (in each case, within the meaning of the PI Rules), other than in accordance with the
limited exemptions set out in the PI Rules.
The Joint Lead Managers are required to comply with the PI Rules. By purchasing, or making or accepting an
offer to purchase, any Preferred Securities (or a beneficial interest in such Preferred Securities) from the
Issuer and/or the Joint Lead Managers (acting as Joint Lead Managers), each prospective investor will be
deemed to represent, warrant, agree with, and undertake to the Issuer and each of the Joint Lead Managers
that:
(a)
it is not a retail client in any jurisdiction of the EEA (as defined in the PI Rules);
(b)
whether or not it is subject to the PI Rules, it will not:
(i)
sell or offer the Preferred Securities to retail clients in any jurisdiction of the EEA; or
A33805325
4

(ii)
communicate (including the distribution of this Prospectus) or approve an invitation or
inducement to participate in, acquire or underwrite the Preferred Securities (or any beneficial
interests therein) where that invitation or inducement is addressed to or disseminated in such a
way that it is likely to be received by a retail client in any jurisdiction of the EEA (in each case
within the meaning of the PI Rules),
in any such case other than (i) in relation to any sale of or offer to sell Preferred Securities (or any
beneficial interests therein) to a retail client in or resident in the United Kingdom, in circumstances
that do not and will not give rise to a contravention of the PI Rules by any person and/or (ii) in relation
to any sale of or offer to sell Preferred Securities (or any beneficial interests therein) to a retail client in
any EEA member state other than the United Kingdom, where (a) it has conducted an assessment and
concluded that the relevant retail client understands the risks of an investment in the Preferred
Securities (or such beneficial interests therein) and is able to bear the potential losses involved in an
investment in the Preferred Securities (or such beneficial interests therein) and (b) it has at all times
acted in relation to such sale or offer in compliance with the Markets in Financial Instruments
Directive (2004/39/EC) ("MiFID") to the extent it applies to it or, to the extent MiFID does not apply
to it, in a manner which would be in compliance with MiFID if it were to apply to it; and
(c)
it will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside
or outside the EEA) relating to the promotion, offering, distribution and/or sale of the Preferred
Securities (or any beneficial interests therein), including (without limitation) any such laws,
regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an
investment in the Preferred Securities (or any beneficial interests therein) by investors in any relevant
jurisdiction.
Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting
an offer to purchase, any Preferred Securities (or any beneficial interests therein) from the Issuer and/or the
Joint Lead Managers (acting as Joint Lead Managers), the foregoing representations, warranties, agreements
and undertakings will be given by and be binding upon both the agent and its underlying client.
Alternative Performance Measures
This Prospectus (and the documents incorporated by reference in this Prospectus) contains certain
management measures of performance or alternative performance measures ("APMs"), which are used by
management to evaluate CaixaBank's overall performance. These APMs are not audited, reviewed or subject
to a pro forma review by CaixaBank's auditors and are not measurements required by, or presented in
accordance with, International Financial Reporting Standards ("IFRS") as adopted by the EU ("IFRS-EU").
Accordingly, these APMs should not be considered as alternatives to any performance measures prepared in
accordance with IFRS-EU. Many of these APMs are based on CaixaBank's internal estimates, assumptions,
calculations, and expectations of future results and there can be no guarantee that these results will actually be
achieved. Accordingly, investors are cautioned not to place undue reliance on these APMs.
Furthermore, these APMs, as used by CaixaBank, may not be comparable to other similarly titled measures
used by other companies. Investors should not consider such APMs in isolation, as alternatives to the
information calculated in accordance with IFRS-EU, as indications of operating performance or as measures
of CaixaBank's profitability or liquidity. Such APMs must be considered only in addition to, and not as a
substitute for or superior to, financial information prepared in accordance with IFRS-EU and investors are
advised to review these APMs in conjunction with the audited consolidated annual financial statements and
the unaudited quarterly business activity and results report incorporated by reference in this Prospectus.
A33805325
5

The descriptions (including definitions, explanations and reconciliations) of all APMs are set out in section
"Alternative Performance Measures" of the Appendix entitled "Financial reporting glossary" to CaixaBank
Group Management Report for 2016 (as defined below), in the "Alternative Performance Measures" section
of the Appendix entitled "Glossary" to CaixaBank's Quarterly Report for 2017 (as defined below) and in the
"Additional Alternative Performance Measures" section of the Description of the Issuer of this Prospectus.
CaixaBank believes that the description of these management measures of performance in this Prospectus
follows and complies with the "European Securities and Markets Authority Guidelines on Alternative
Performance Measures (APM)" dated 5 October 2015 (the "Guidelines").

A33805325
6

RISK FACTORS
The Bank believes that the following factors may affect its ability to fulfil its obligations under the Preferred
Securities. Most of these factors are contingencies which may or may not occur and the Bank is not in a
position to express a view on the likelihood of any such contingency occurring.
In purchasing the Preferred Securities, investors assume the risk that the Bank may become insolvent or
otherwise be unable to make all payments due in respect of the Preferred Securities. There is a wide range of
factors which individually or together could result in the Bank becoming unable to make all payments due in
respect of the Preferred Securities. It is not possible to identify all such factors or to determine which factors
are most likely to occur, as the Bank may not be aware of all relevant factors and certain factors which it
currently deems not to be material may become material as a result of the occurrence of events outside the
Bank's control. The Bank has identified in this Prospectus a number of factors which could materially
adversely affect its business and ability to make payments due under the Preferred Securities.
Prospective investors should also read the detailed information set out elsewhere in this Prospectus and reach
their own views prior to making any investment decision.
Risks affecting the Bank's financial activity
The Group's business could be significantly affected by a failure to monitor concentration and spread
of risks
The principal banking business conducted by the Issuer consists of retail banking including, amongst other
things, retail financial services such as taking customer deposits and customer lending, as well as the
provision of insurance services, securities transactions and foreign exchange transactions. This part of the
Issuer's business, in addition to the Issuer's investments to expand and develop it, are subject to certain
inherent risks in the financial sector which in turn depend on a series of macroeconomic variables beyond the
Issuer's control.
The risks arising from the Group's business in this respect are typically classified as: (i) credit risk (which
includes sovereign risk, counterparty risk due to treasury positions and risk associated with the investment
portfolio), (ii) market risk, (iii) interest rate risk in the banking book, (iv) actuarial risk, (v) eligible own funds
risk, (vi) funding and liquidity risk, (vii) legal/regulatory risk, (viii) conduct and compliance risk, (ix)
technological risk, (x) operating processes and external events risk, (xi) reliability of financial reporting risk
and (xii) reputational risk.
Although the Group monitors its risk concentration by geographic area and by business activity, a failure to
monitor and adequately remedy any significant imbalances in the spread of the Group's risk concentration
could adversely affect the Group's operations in an affected particular geographical region or business sector,
or both.
Credit Risk
The Group is exposed to the creditworthiness of its customers and counterparties. Credit risk can be defined
as possible losses which may be generated by a potential default in whole or in part of obligations by a
counterparty or debtor (including, but not limited to, the insolvency of a counterparty or debtor). Credit risk is
the most significant risk item on the Group's balance sheet and, primarily, such risks are of concern in respect
of the Group's business activities in the banking, insurance, treasury and investee portfolio sectors. In recent
years, the main items in the consolidated assets of the Group that are subject to credit risk have been
fluctuating. The movements thereof have been shaped by the integration of Banca Cívica, S.A. ("Banca
Cívica"), Banco de Valencia, S.A. ("Banco de Valencia") and Barclays Bank S.A.U. on the Group's balance
A33805325
7

sheet in 2012, 2013 and 2015 respectively, and the deleveraging process in connection therewith, and, more
recently, by the integration of Banco BPI, S.A. ("Banco BPI") after the end of the acceptance period of the
tender offer on 7 February 2017.
Payment defaults by clients and other counterparties may arise from events and circumstances that are
unforeseeable or difficult to predict or detect. Market turmoil and economic weakness, especially in Spain,
could have a material adverse effect on the liquidity, business and financial conditions of the Group's clients,
which could in turn impair its loan portfolio. Adverse changes in the credit quality of CaixaBank's borrowers
and counterparties could affect the recoverability and value of CaixaBank's assets and require an increase in
provisions for bad and doubtful debts and other provisions. In addition, collateral and security provided to the
Group may be insufficient to cover the exposure or the obligations of others to the Group. Accordingly, any of
the foregoing could have a material adverse effect on the Group's business, financial condition and results of
operations.
A weakening in customers' and counterparties creditworthiness' could impact the Group's capital adequacy.
The regulatory capital levels the Group is required to maintain are calculated as a percentage of its risk-
weighted assets ("RWA"), in accordance with Directive 2013/36/EU of the European Parliament and of the
Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit
institutions and investment firms (the "CRD IV Directive"), amending Directive 2002/87/EC and repealing
Directives 2006/48/EC and 2006/49/EC, and the regulation governing capital requirements according to
Regulation (EU) 575/2013, of 26 June, on prudential requirements for credit institutions and investment firms
(the "CRR"). The RWA consist of the Group's balance sheet, off-balance sheet and other market and
operational risk positions, measured and risk-weighted according to regulatory criteria, and are driven, among
other things, by the risk profile of its assets, which include its lending portfolio. If the creditworthiness of a
customer or a counterparty declines, the Group would lower their rating, which would presumably result in an
increase in its RWA, which potentially could deteriorate the Group's capital adequacy ratios and limit its
lending or investments in other operations. Furthermore, the creditworthiness of a customer or a counterparty
resulting in a default it would have an impact in the expected losses of the Group and cause an increase in its
relevant provisions.
Sovereign Risk
As Spanish financial institution with a nationwide footprint and the substantial majority of the Group's gross
operating income derived from Spain, any decline in Spain's credit ratings could adversely affect the value of
certain respective securities held by the Group in its various portfolios and could also adversely impact the
extent to which the Group can use Spanish government bonds it holds as collateral for European Central Bank
(the "ECB") refinancing and, indirectly, for refinancing with other securities, should it choose to do so.
Likewise, any permanent reduction in the value of Spanish government bonds would adversely affect its
ability to access liquidity, raise capital and meet minimum regulatory capital requirements. As such, a
downgrade or series of downgrades in the sovereign rating of Spain and any resulting reduction in the value
of Spanish government bonds may have a material adverse effect on the Group's business, financial condition
and results of operations. Furthermore, any downgrades of Spain's ratings may increase the risk of a
downgrade of the Group's credit ratings by the rating agencies.
Besides Spain and Portugal, following the integration of Banco BPI (see "Acquisitions and Disposals during
2014-2016 Banco BPI Takeover Bid" for additional information), the main country where the Group has
investment securities exposure is Italy, with investments of 2,893 million as of 31 December 2016.
Market Risk
The Group is exposed to market risk as a consequence of its trading activities in financial markets and
through the asset and liability management of its overall financial position, including the Group's trading
A33805325
8

portfolio. Therefore, the Group is exposed to losses arising from adverse movements in levels and volatility of
interest rates, foreign exchange rates, and commodity and equity prices. The Group uses a number of
qualitative tools, metrics and models which may fail to predict future risk exposures and, to the extent they
do, such predictions may be inaccurate. If the Group were to suffer substantial losses due to any such market
volatility, it would adversely affect the Group's business, financial condition and results of operations.
Actuarial Risk
Actuarial risk is associated with the insurance business within the Group's existing business lines and types of
insurance. Actuarial risk reflects the risk arising from the execution of life and other insurance contracts,
considering events covered and the processes used in the conduct of business, and distinguishing mortality,
longevity, disability and morbidity risk. Management of this risk depends on actuarial management policies
relating to subscription, pricing and accident rates.
A new solvency framework for insurance and reinsurance companies operating in the EU, referred to as
"Solvency II" has entered into force, as of 1 January 2016, and it is currently being developed.
The establishment of this new solvency framework started with the adoption of the European Directive
2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance of 25 November
2009, as amended by Directive 2013/58/EU of 11 December and by Directive 2014/51/EU of 16 April (the
"Solvency II Directive").
The Solvency II Directive has been implemented in Spain through Law 20/2015, of 14 July, on the regulation,
supervision and solvency of insurance and reinsurance undertakings and Royal Decree 1060/2015, of 2
December on the regulation, supervision and solvency of insurance and reinsurance undertakings.
The insurance business has a significant role within the Group. The changes introduced by this recent
regulation may have an impact on the capital and liquidity requirements of the insurance business of the
Group. Given the recent entry into force of the Solvency II regime and how regulators (including the
Directorate General of Insurance and Pension Funds (Dirección General de Seguros y Fondos de Pensiones))
will interpret it, it is difficult to calculate its precise impact of such regime on the Group. As the Group
implements the new regulation it might affect how the Group performs its insurance business activities and
also have a material adverse effect on the Group's business, financial condition and results of operations.
Adverse regulatory developments or changes in government policy relating to any of the foregoing or other
matters could have a material adverse effect on the Group's business, financial condition and results of
operations.
The Group's business could be affected if its capital is not effectively managed
Effective management of the Group's capital position is important to its ability to operate its business and to
pursue its business strategy. In response to the 2008 financial crisis, a number of changes to the regulatory
capital framework have been adopted or are being considered. For example, the CRR, the CRD IV Directive
and any CRD IV Implementing Measures (as defined in the Conditions and any or any combination of the
CRD IV Directive, the CRR and any CRD IV Implementing Measures being "CRD IV") through which the
EU is implementing the Basel III capital reforms.
As these and other changes are implemented or future changes are considered or adopted whish may limit the
Group's ability to manage its balance sheet and capital resources effectively or to access funding on
commercially acceptable terms, the Group may experience a material adverse effect on its financial condition
and regulatory capital position.
Debt and equity investors, analysts and other market professionals may also require higher capital buffers
than those required under current or proposed future regulations due to, among other things, the continued
A33805325
9

general uncertainty involving the financial services industry and the uncertain global economic conditions.
Any such market perception, or any concern regarding compliance with future capital adequacy requirements,
could increase the Group's borrowing costs, limit its access to capital markets or result in a downgrade in its
credit ratings, which could have a material adverse effect on its business, financial condition and results of
operations.
Credit, market and liquidity risks may have an adverse effect on the Group's credit ratings and the
Group's cost of funds. Any reduction in the Group's credit rating could increase the Group's cost of
funding and adversely affect the Group's interest margins
The Group is rated by various credit rating agencies (see "Additional Information Credit ratings assigned to
an issuer or its debt securities at the request or with the co-operation of the Issuer in the rating process").
The credit ratings of the Group are an assessment by rating agencies of its ability to pay its obligations when
due. Credit ratings affect the cost and other terms upon which the Group is able to obtain funding. Rating
agencies regularly evaluate the Group and their ratings of its long-term debt are based on a number of factors,
including the Group's financial strength as well as conditions affecting the financial services industry
generally.
Credit ratings are subject to the evaluation of the financial strength of a company in accordance with the
methodology applied by rating agencies. In addition, the Issuer's rating is affected by the sovereign rating of
Spain, which is the maximum level achievable by the Issuer.
Any downgrade in the Group's ratings could increase its borrowing costs, and require it to post additional
collateral or take other actions under some of its derivative contracts, and could limit its access to capital
markets and adversely affect Group's commercial business. For example, a ratings downgrade could
adversely affect the Group's ability to sell or market certain of its products, engage in business transactions
particularly longer-term and derivatives transactions and retain its customers, particularly customers who
need a minimum rating threshold in order to invest. This, in turn, could reduce the Group's liquidity and have
a material adverse effect on its business, financial condition and results of operations.
In light of the difficulties in the financial services industry and the financial markets, there can be no
assurance that the rating agencies will maintain their current ratings or outlooks. The Group's failure to
maintain favourable ratings and outlooks could increase the cost of its funding and adversely affect the
Group's interest margins and results of operations.
The Group has a continuous demand for liquidity to fund its business activities. The Group may
suffer during periods of market-wide or firm-specific liquidity constraints, and liquidity may not be
available to it even if its underlying business remains strong
Liquidity risk comprises uncertainties in relation to the Group's ability, under adverse conditions, to timely
access funding necessary to cover the Group's obligations to customers as they become due, to meet the
maturity of the Group's liabilities and to satisfy capital requirements. It includes both the risk of unexpected
increases in the cost of funding and the risk of not being able to structure the maturity dates of the Group's
liabilities reasonably in line with the Group's assets.
Liquidity and funding continues to remain a key area of focus for the Group and the industry as a whole.
Should the Group, due to exceptional circumstances, be unable to continue to source sustainable funding, its
ability to fund its financial obligations could be affected.
The Group's main source of liquidity and funding is its customer deposit base, as well as on-going access to
wholesale lending markets, including senior unsecured and subordinated bonds, interbank deposits, mortgage
and public sector covered bonds and short-term commercial paper. CaixaBank's financial position could be
adversely affected if access to liquidity and funding is limited or becomes more expensive for a prolonged
A33805325
10