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Fed levies $27M fine against BBVA, New York unit

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Fed levies $27M fine against BBVA, New York unit

The Federal Reserve assessed a combined $27 million civil money penalty against Spain-based Banco Bilbao Vizcaya Argentaria SA and unit New York-based BBVA Securities Inc.

The fine stems from BBVA Securities exceeding the Fed-imposed limit on generating revenue from underwriting certain securities and understating the amount of such revenue.

BBVA Securities was required to keep the proportion of its revenue from underwriting and dealing in securities that banks may not underwrite or deal in within 25% of its gross revenues over any two-year period. However, during each rolling two-year period beginning July 1, 2008, and continuing through March 31, 2013, the unit's revenue from such activities "significantly exceeded" the limit, the Fed said.

In addition, for the period including at least July 1, 2008, until June 30, 2012, BBVA and the unit submitted quarterly reports that "significantly understated" the unit's revenue from such activities, inaccurately showing that the unit was in compliance with the revenue restrictions. Meanwhile, BBVA Securities received several extensions of credit from BBVA's New York branch in 2010 and 2011 that were not properly collateralized and the unit failed to pay certain intercompany fees on market terms.

Further, between July 2011 and October 2011, BBVA directly engaged in impermissible securities underwriting and dealing activities in the U.S. without the required regulatory approval.

The Fed stated that the company has taken actions to improve its internal controls and has been in compliance with the revenue limits since April 1, 2013.

BBVA and the unit have also resubmitted quarterly reports for the second quarter of 2010 through the second quarter of 2012 to accurately state the amount of revenue received by the unit from underwriting and dealing in securities that banks may not underwrite or deal in.