MicroBank de “la Caixa”, S.A. Annual Financial Statements for the year ended 31 December 2009, prepared in conformity with Banco de España Circular 4/2004 of 22 December, and Directors’ Report, together with the Auditors’ Report

MicroBank de “la Caixa”, S.A. Notes to the financial statements for the financial year ended 31 December 2009

1. Description of the Entity and Other Information

a) Description of the Entity

MicroBank de “la Caixa”, S.A. (hereinafter referred to as “the Entity”) is an extension of Banco de Europa, S.A. Around the middle of 2007, when the change in the Bylaws and the business activities took place, Banco de Europa, S.A. was the dominant company of a group of entities whose corporate purpose was the provision of financial services and financial leasing and whose activities it controlled either directly or indirectly. At the end of 1996, the Bank sold all its branches and the banking business conducted therein to Caixa d’Estalvis i Pensions de Barcelona, “la Caixa”, transferring all asset and liability transactions with clients, with the exception of the asset transactions that were recognised at the time of the sale as doubtful loans and the real property originating from foreclosed assets, which continued to be managed within the Entity.

Until the aforementioned change of activity, Banco de Europa had no employees. These went on to form part of the staff of GDS-Cusa, S.A. and Caixarenting, S.A., with the latter companies taking over all rights and obligations.

At the Extraordinary General Meeting of “la Caixa” held on 19 October 2006, it was announced that a microcredit bank was to be created as part of the implementation of a group of social initiatives. It was also announced that the Entity that would be used for the implementation of this initiative would be Banco de Europa, S.A., which from the 2007 financial year would take the name of MicroBank de “la Caixa”, S.A.

Thus the previous activities of Banco de Europa, S.A., essentially connected with the holding of equity interests, ceased. More specifically, 99.67% of FinanciaCaixa II, E.F.C., S.A., 99.998% of GDS-Cusa, S.A., 99% of CaixaRenting, S.A., 55% of Finconsum, E.F.C., S.A. and 20% of Telefónica Factoring, E.F.C., S.A. were transferred to “la Caixa” on 20 March 2007. This transfer generated a profit for the Company of approximately €78,000,000.

At the General Meeting of Shareholders of Banco Europa, S.A. held on 24 January 2007, the change in trading name was approved, and the company took the name of MicroBank de “la Caixa”, S.A.

The corporate purpose of the company was also defined at the same Meeting of Shareholders; this consisted of the receipt of funds from the public under irregular deposit contracts or similar, to be applied on the Company’s own behalf to credit and microcredit activities, i.e., the granting of unsecured loans, with the aim of financing small business ventures launched by individuals who, owing to their socio-economic status, find it difficult to obtain traditional bank financing, and providing customers with drawing, transfer, custodianship and brokerage services.

MicroBank is integrated within the Caixa d’Estalvis i Pensions de Barcelona Group, whose dominant company is Caixa d’Estalvis i Pensions de Barcelona, governed by the commercial legislation currently in force in Spain and having its registered office at Avenida Diagonal 627, Barcelona, this being the company that prepares the consolidated financial statements. The consolidated annual financial statements of the Caixa d’Estalvis i Pensions de Barcelona Group for the 2009 financial year were prepared by the Directors at the meeting of the Board of Directors held on 4 February 2010. The consolidated annual financial statements of the Caixa d’Estalvis i Pensions de Barcelona Group for the 2008 financial year were approved by its General Meeting of 23 April 2009.

b) Basis of presentation of the annual financial statements

The Entity’s annual financial statements were prepared in accordance with the accounting models and criteria and the valuation standards established in Banco de España Circular 4/2004 of 22 December, (hereinafter referred to as “Circular 4/2004”), amended by Circular 6/2008 of 26 November, so as to provide a faithful image of the Entity’s capital and financial situation at 31 December 2009, its trading results, changes in equity and the cash flows generated during the financial year ended on that date. Circular 4/2004 constitutes the adaptation by the Spanish credit institutions sector of the International Financial Reporting Standards adopted by the European Union by means of Community Regulations, in accordance with Regulation No, 1606/2002 of the European Parliament and of the Council, of 19 July 2002, on the application of International Accounting Standards.

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The accounting standards defined by Circular 4/2004 are detailed in Note 2. No criteria have been applied that might entail any difference in the respect of the former or have a material impact. The annual financial statements have been prepared on the basis of the accounting records kept by the Entity.

c) Responsibility for information and estimates

The Entity’s annual financial statements for the 2009 financial year were formulated by its Directors at the meeting of the Board of Directors held on 15 March 2010 and are pending approval by the Entity’s General Meeting of Shareholders, which is expected to approve them without any significant changes. The annual financial statements for the 2008 financial year were approved by the General Meeting of Shareholders held on 8 June 2009 and are presented exclusively for the purposes of comparison with the information relating to the 2009 financial year. The information contained in these annual financial statements is the responsibility of the Directors of the Entity. In the Entity’s annual financial statements for the 2009 financial year, occasional use has been made of estimations made by its Directors in order to quantify certain of its assets, liabilities, income, expenses and obligations recorded in the statements. Essentially, these estimations relate to:

• Losses due to impairment of certain assets (see Notes 2.h, 2.n and 2.o).

• The hypotheses used in the actuarial calculation of post-employment benefit liabilities and obligations and other long-term obligations vis-à-vis employees (see Note 2.k).

• The useful life of tangible and intangible assets (See Notes 2.n and 2.o).

Although these estimates were made on the basis of the best information available at 31 December 2009, future events might make it necessary to revise them (upwards or downwards) in the years to come. Any such revisions would be made in conformity with the provisions of Regulation Nineteen of Circular 4/2004. d) Investments in credit institutions

In conformity with the provisions of Royal Decree 1245/1995 on the publicising of equity interests, MicroBank de ”la Caixa”, holds no direct equity interest equal to or greater than 5% of the capital or voting rights of any credit institutions. The information relating to the publicising of the equity interests of the “la Caixa” Group, of which the Bank forms part as a dependent company of Caixa d’Estalvis i Pensions de Barcelona “la Caixa”, is contained in the consolidated annual financial statements of the “la Caixa” Group. e) Capital adequacy ratio Law 13/1992, as amended, and Banco de España Circular 3/2008 govern the minimum levels of capital that must be maintained by Spanish credit institutions, at both individual and consolidated group level, and the form in which such capital is constituted. The Entity, in accordance with the aforesaid rules, has requested and obtained from Banco de España exemption from individual compliance with the general capital requirements, having demonstrated that the company satisfies the requirements established by current legislation in this regard, there being no current or foreseeable future practical or legal impediments to the immediate transfer of capital or redemption of liabilities. Currently, in accordance with Transitional Provision Three of Circular 3/2008, the Company determines its individual requirements by applying a reduction of 50% to the general requirements. f) Minimum reserve ratio By virtue of Monetary Circular 1/1998 of 29 September, effective from 1 January 1999, the ten-year cash ratio was repealed and superseded by the minimum reserve ratio. The Entity, in accordance with the aforesaid rules, has requested and obtained from Banco de España exemption from individual compliance with the general minimum reserve ratio requirements, there being no current or foreseeable future practical or legal impediments.

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g) Agency contracts The Entity has designated “la Caixa” as exclusive Agent, with whom it has signed a contract of indeterminate duration for the provision of a service of full management of the internal and external processes arising from the financial operations carried out by the Entity with its clients. h) Environmental impact

Given the business in which the Entity is engaged, it has no responsibilities, expenses, assets, provisions or contingencies of an environmental nature that might be of significance in relation to its equity or financial situation and their results. Consequently, no specific breakdown of information on environmental matters is included in these notes to the annual financial statements.

i) Subsequent events

Between the end of the financial year and the date of preparation of these annual financial statements, no events have occurred that have a significant impact on them.

2. Accounting principles and policies and valuation criteria applied

In the preparation of the Entity’s annual financial statements for the 2009 financial year, the following accounting principles and policies and valuation criteria have been applied:

a) Financial instruments

Initial recognition of financial instruments

Financial instruments are initially recognised on the balance sheet when the Entity becomes a party to the contract giving rise to them, in accordance with the conditions of that contract. More specifically, debt instruments, such as loans and deposits, are recognised on the date from which the legal right to receive or the legal obligation to pay cash, respectively, arises. Financial derivatives are generally recognised on the trade date.

Financial asset purchase and sale transactions arranged through conventional contracts, i.e., contracts in which the reciprocal obligations of the parties must be fulfilled within a timescale established by regulations or market conventions and that cannot be settled by offset, such as stock exchange contracts and forward currency purchases and sales, are recognised on the date on which the rewards, risks, rights and obligations pertaining to any owner are applicable to the acquiring party, which, depending on the type of financial asset bought or sold, may be the trade date or the settlement or delivery date. In particular, transactions carried out on the spot currency market are recognised, as applicable, on the settlement date; transactions carried out on equity instruments traded on secondary Spanish markets are recognised, as applicable, on the trade date and transactions carried out on debt instruments traded on secondary Spanish securities markets are recognised, as applicable, on the settlement date. Derecognition of financial instruments

A financial asset is derecognised on the balance sheet when one of the following circumstances arises:

• The contractual rights to the cash flows from the financial asset expire; or

• The financial asset is transferred and the risks and rewards of the asset are substantially transferred or, even if these are not substantially transferred or retained, control of the asset is transferred (see Note 2.f).

A financial liability is derecognised on the balance sheet when the related obligations are extinguished or when it is acquired by the Entity with the intention of either placing it again or cancelling it.

Fair value and amortised cost of financial instruments

At the time of their initial recognition on the balance sheet, all financial instruments are recognised at fair value, which, in the absence of evidence to the contrary, is the transaction price. After initial recognition, at a determined date, the fair value of a financial instrument is understood as the amount for which it could be bought or sold on that date between two well-informed parties in a transaction conducted under conditions of mutual independence. The most objective and most commonly used reference for the fair value of a financial instrument is the price that would be paid for it on an organised, transparent and deep market (“quoted price” or “market price”).

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If a market price does not exist for a given financial instrument, its fair value is estimated by reference to the price established in recent transactions involving similar instruments and, in the absence of any such transactions, by reference to valuation models that have been sufficiently tested and acknowledged by the international financial community, taking account of the specific features of the instrument to be valued and, most particularly, the various types of risk associated with the instrument. Notwithstanding the foregoing, the limitations of the valuation models used and the possible inaccuracies of the assumptions required by those models may mean that the estimated fair value of a financial instrument does not coincide precisely with the price at which the instrument might be bought or sold on the date of its valuation.

The fair value of derivatives not traded on organised markets or traded on organised markets lacking depth or transparency is determined on the basis of the sum of the future cash flows arising from the instrument, discounted on the valuation date (“present value” or “theoretical closing”), using valuation methods recognised by the financial markets such as: “net present value” (NPV), option pricing models, etc.

Financial instruments are classified under one of the following categories according to the methodology used to determine their fair value:

Level 1: Financial instruments whose fair value is determined by reference to their quoted prices on

active markets, without making any change to those prices.

Level 2: Financial instruments whose fair value is estimated on the basis of prices quoted on organised markets for similar instruments or through the use of other valuation techniques in which all significant inputs are based on directly or indirectly observable market data.

Level 3: Instruments whose fair value is estimated through the use of valuation techniques in which one or more significant inputs are not based on observable market data.

For the purposes of the provisions of the foregoing paragraphs, an input is regarded as significant when it is important in determining the fair value as a whole. For the majority of financial assets and liabilities, the criterion used for recognition on the balance sheet is that of the amortised cost. This criterion is applied to financial assets included under “Lending investments” and “”Held-to-maturity investments” and, for financial liabilities, to those recognised as “Financial liabilities at amortised cost”. Amortised cost is understood to be the acquisition cost of a financial asset or liability plus or minus, as appropriate, the repayments of principal and interest and the portion recognised on the income statement, using the effective interest method, of the difference between the initial amount and the maturity amount of such financial instruments. In the case of financial assets, amortised cost also includes any reductions for impairment.

The effective interest rate is the discount rate that exactly matches the initial value of a financial instrument for all its estimated cash flows of all kinds through its remaining life. For fixed-interest financial instruments, the effective interest rate matches the contractual interest rate established on the acquisition date, adjusted where applicable for the fees and transaction costs which, in accordance with the provisions of Circular 4/2004, must be included in the calculation of such effective interest rate. In the case of floating-rate financial instruments, the effective interest rate is estimated in a manner similar to that used for fixed-interest transactions, and is recalculated on each date of review of the contractual interest rate on the transaction according to the changes that have affected future cash flows. Classification and measurement of financial assets and liabilities

Financial instruments are classified on the Entity’s balance sheet principally in one of the following categories:

• Lending investments: This category includes unlisted debt instruments, financing granted to third parties in connection with normal credit activities, loans made by the Entity, and debts contracted with the Entity by purchasers of its goods and services. The financial assets included in this category are initially measured at their fair value, adjusted by the amount of the fees and transaction costs directly attributable to the acquisition of the financial asset, which, in accordance with the provisions of Banco de España Circular 4/2004 of 22 December, must be recognised on the income statement using the effective interest method until maturity. After acquisition, the assets included in this category are valued at amortised cost.

Assets acquired at a discount are measured at the cash amount paid, and the difference between their repayment value and the cash amount paid is recognised as financial income on the income statement over the remaining term until maturity.

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It is generally the Entity’s intention to maintain the granted loans and credit facilities until their final maturity, for which reason they are presented on the balance sheet at amortised cost.

The interest earned on these assets is recognised under “Interest and Similar Income” on the income statement, and is calculated using the effective interest rate method. Any impairment losses on these assets are recognised in accordance with the provisions of Note 2.h).

• Financial liabilities at amortised cost: The financial liabilities included in this category are initially

measured at fair value adjusted by the amount of the transaction costs directly attributable to the issue or contracting of the financial liability, which are recognised on the income statement by applying the effective interest rate method defined in Circular 4/2004 until maturity. They are subsequently measured at amortised cost, calculated by applying the effective interest rate method defined in Circular 4/2004.

The interest incurred by these financial liabilities, calculated by the effective interest rate method, is recognised under “Interest and Similar Charges” on the income statement. Financial liabilities included in this category that are covered in hedging operations are recognised in accordance with the provisions of Note 2.b).

Inter-portfolio reclassifications of financial instruments

In the 2009 financial year there were no inter-portfolio reclassifications of financial instruments.

b) Hedge accounting and risk mitigation

The Entity uses financial derivatives as part of its strategy to reduce its exposure to interest rate risks. When these transactions satisfy certain requirements established in Rules 30.1 or 30.2 of Circular 4/2004, they are regarded as “hedges”.

When the Entity designates an operation as a hedging operation, it does so from the initial moment of the operation or the instrument included in the hedging, and documents the operation appropriately. The documentation of these hedging operations adequately identifies the hedged instrument or instruments and the hedging instrument or instruments, as well as the nature of the risk to be hedged against, and the criteria or methods applied by the Entity to evaluate the effectiveness of the hedge over its entire lifetime according to the risk to be hedged against.

The Entity considers only those operations which are considered to be highly effective throughout their life as hedging operations. A hedge is considered to be highly effective if, during its expected life, the changes in fair value or in the cash flows attributed to the risk hedged in the hedging operation of the hedged instrument or instruments are almost entirely offset by changes in the fair value or in the cash flows, as appropriate, of the hedged instrument or instruments.

To measure the effectiveness of hedges defined as such, the Entity analyses whether, from the beginning to the end of the term defined for the hedge, it may be prospectively expected that the changes in fair value or in the cash flows of the hedged item that are attributable to the hedged risk will be almost entirely offset by changes in the fair value or in the cash flows, as appropriate, of the hedging instrument or instruments and, retrospectively, that the results of the hedge will be within a range of 80% to 125% of the results of the hedged item.

All hedging operations carried out by the Entity are cash flow hedges aimed at hedging the changes in cash flows that are attributable to a particular risk associated with a financial asset or liability or to a highly probable forecast transaction, provided that they may affect the income statement. In the specific case of financial instruments designated as hedge items or qualifying for hedge accounting, the valuation differences arising on the portion of the hedging instruments qualifying as an effective hedge are recognised temporarily under “Equity - Valuation Adjustments - Cash Flow Hedges” and are not recognised on the income statement until the gains or losses on the hedged item are recognised on the income statement or until the date of maturity of the hedged item, or in certain cases until the hedge is discontinued. The gains or losses on the derivative are recognised under the same heading on the income statement as that of the gains or losses on the hedged item. Financial instruments hedged in this type of hedging transaction are recognised using the methods described in Note 2.a), without any changes in view of their considered status as hedged instruments. The Entity discontinues hedge accounting when the hedging instrument expires or is sold, when the hedge no longer qualifies for hedge accounting, or when the designation as a hedging operation is revoked.

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Derivatives embedded in other financial instruments or in other contracts are accounted for separately as derivatives if their risks and characteristics are not closely related to those of the host instrument or contract, provided a reliable fair value can be attributed to the embedded derivative considered separately. c) Foreign currency transactions

The Entity’s functional currency is the Euro. Consequently, all balances and transactions denominated in currencies other than the Euro are deemed to be denominated in “foreign currency”. The Entity maintained no assets or liabilities in foreign currency during the 2008 and 2009 financial years.

d) Recognition of Income and Expenses

The most significant criteria used by the Entity for the recognition of its income and expenses are summarised below:

a) Interest income, interest expenses, dividends and similar items:

Interest income, interest expenses and similar items are generally recognised on an accrual basis using the effective interest method defined in Circular 4/2004. Interest accrued on doubtful loans, including loans exposed to country risk, is credited to income upon collection, which is an exception to the general rule. Dividends received from other companies, where applicable, are recognised as income when the Entity’s right to receive them arises, which is when the dividend is officially declared by the company’s relevant body.

b) Fee and commission income and expenses:

Fee and commission income and expense are recognised on the income statement on the basis of different criteria according to their nature.

Financial fees and commissions, which include loan and credit origination fees, form part of the effective income or cost of a financial transaction and are recognised under the same heading as finance income or expenses, namely “Interest and Similar Income”. These fees and commissions, which are collected in advance, are recognised on the income statement over the life of the transaction, except for the portion offsetting the related direct costs. Fees and commissions offsetting related direct costs, which are understood as those that would not have arisen if the transaction had not been arranged, are recognised under “Other Operating Income” when the loan is taken out. Individually, the total amount of these fees and commissions may not exceed 0.4% of the principal of the financial instrument, subject to a maximum limit of €400, and any excess is recognised on the income statement over the life of the transaction. If the total amount of these fees and commissions does not exceed €90, they are recognised immediately on the income statement. In any event, related direct costs that are individually identified can be recognised directly on the income statement upon inception of the transaction, provided they do not exceed the fee or commission collected. These direct costs are recognised under “Other Operating Income – Financial fees and commissions offsetting direct costs” on the income statement (see Note 23). Non-financial fees and commissions arising from the provision of services are recognised under “Fee and Commission Income” and “Fee and Commission Expense” over the life of the service, except for those relating to services provided in a single act, which are accrued when the single act is carried out.

c) Non-financial income and expense:

These are recognised for accounting purposes on an accrual basis.

d) Deferred collections and payments:

These are recognised for accounting purposes at the amount resulting from discounting the expected cash flows to net present value at market rates.

e) Offsetting of balances

Financial asset and liability balances will be offset, and therefore reported on the balance sheet at their net amount, only if they originate in transactions for which there is a contractually or legally enforceable right to offset the amounts concerned and the entities concerned intend either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

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f) Transfers of financial assets

The accounting treatment of transfers of financial assets depends on the form in which the risks and rewards associated with the transferred assets are themselves transferred to third parties:

• If the risks and rewards of the transferred assets are substantially transferred to third parties (as would

be the case for unconditional sales, sales with an agreement to repurchase the assets at the fair value on the repurchase date, sales of financial assets with call options acquired or put options granted deeply out of the money, securitisations of assets in which the grantor does not hold any subordinated financing or grant any credit enhancements to the new holders, or other similar cases), the transferred financial asset is derecognised on the balance sheet, with simultaneous recognition of any right or obligation retained or created as a consequence of the transfer.

• If the risks and rewards associated with the transferred financial asset are substantially retained (as would be the case for sales with an agreement to repurchase the asset at a fixed price or at the selling price plus interest, securities loan contracts in which the borrower has the obligation to return the same or similar assets, securitisations of financial assets in which subordinated financing or other types of credit enhancement are maintained which substantially absorb the credit losses expected for the securitised assets, and other similar cases), the transferred financial asset is not derecognised on the balance sheet and continues to be valued according to the same criteria used before the transfer. However, the following are recognised without any offsetting between them:

- An associated financial liability for an amount equal to the consideration received, which is subsequently valued at its amortised cost; or, if the requirements indicated above for its classification under other financial liabilities at fair value through profit or loss are satisfied, at its fair value, in accordance with the criteria indicated above for this category of financial liabilities.

- Income from the financial asset transferred but not derecognised as well as the expenses of the

new financial liability.

• If the risks and rewards associated with the transferred financial asset are neither substantially retained nor substantially transferred (as would be the case for sales of financial assets with call options acquired or put options granted which are neither deeply in nor deeply out of the money, securitisations of assets in which the grantor takes on a subordinated financing or other type of credit enhancement for a portion of the transferred asset, and other similar cases), a distinction is made between the following two cases:

- If the Entity does not retain control of the transferred financial asset: in this case, the transferred asset is derecognised on the balance sheet, and recognition is given to any right or obligation retained or created as a consequence of the transfer.

- If the Entity retains control of the transferred financial asset: it continues to recognise the asset on the balance sheet for an amount equal to its exposure to the changes in value that it may experience, and recognises a financial liability associated with the transferred financial asset. The net amount of the transferred asset and the associated liability will be the amortised cost of the rights and obligations retained, if the transferred asset is measured by the amortised cost method, or the fair value of the rights and obligations retained, if the transferred asset is measured by the fair value method.

In accordance with the above, financial assets are derecognised on the balance sheet only when the cash flows that they generate have expired or when the associated risks and rewards are substantially transferred to third parties. g) Asset swaps

An “asset swap” means the acquisition of tangible or intangible assets in exchange for the delivery of other non-monetary assets or a combination of monetary and non-monetary assets.

The financial assets received in a financial asset swap are recognised at fair value, provided the swap transaction can be regarded as having a commercial nature, as defined by Circular 4/2004, and when the fair value of the received asset or, failing this, of the delivered asset can be reliably estimated. The fair value of the received instrument is determined as the fair value of the delivered asset plus, if applicable, the fair value of the delivered monetary counterparts, unless there is clearer evidence of the fair value of the received asset.

During the 2009 and 2008 financial years there were no asset swaps.

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h) Impairment of financial assets

A financial asset is deemed to be impaired, and its carrying value is consequently adjusted to reflect the effect of its impairment, when there is objective evidence that events have occurred which give rise to:

• In the case of debt instruments (loans and securities representing debt), a negative impact on the

future cash flows that were estimated at the transaction date.

• In the case of equity instruments, the inability to recover the carrying value in full.

As a general rule, the carrying value of impaired financial instruments is adjusted with a charge to the income statement for the period in which the impairment becomes evident, and the reversal, if any, of previously recognised impairment losses is recognised on the income statement for the period in which the impairment is reversed or reduced.

When the recovery of any recognised amount is considered unlikely, the amount is written off on the balance sheet, without prejudice to any actions that the Entity may initiate to seek collection until its rights are definitively extinguished due to expiry of the statute of limitations period, forgiveness or any other cause. Details are given below of the criteria applied by the Entity to determine the possible impairment losses in each of the different categories of financial instruments, as well as the method used for calculating the hedges recognised for such impairment.

Debt instruments carried at amortised cost

The amount of an impairment loss incurred on a debt instrument is equal to the positive difference between its carrying value and the present value of its projected future cash flows. The market value of a quoted debt instrument is regarded as a reasonable estimation of the present value of its future cash flows.

In estimating the future cash flows of debt instruments, the following elements are taken into account:

• All amounts expected to be obtained during the remaining life of the instrument, including, if applicable,

those originating in the guarantees that underlie it (after deduction of the necessary costs for its foreclosure and subsequent sale). The impairment loss considers the estimated possibility of collecting the interest accrued, due and not collected.

• The different types of risk to which each instrument is subject, and

• The circumstances in which the collections are expected to be made.

Subsequently, these cash flows are discounted at the effective contractual interest rate of the instrument (if the rate is fixed) or at the effective contractual interest rate at the discount date (if the rate is variable).

With specific regard to impairment losses resulting from materialisation of the insolvency risk of the obligors (credit risk), a debt instrument is impaired due to insolvency:

• When there is evidence of a deterioration of the obligor’s ability to pay, which becomes evident either

because the obligor is in arrears or for other, different reasons, and/or

• Upon materialisation of country risk, understood as the risk due to circumstances other than normal commercial risk, associated with debtors resident in a given country.

Potential impairment losses on these assets are assessed as follows:

• Individually: for all significant debt instruments and for instruments which, although not individually significant, are not susceptible to being classified in homogeneous groups of instruments with similar risk characteristics in terms of the type of instrument, the debtor’s business sector and geographical area of activity, the type of guarantee or collateral, the age of past-due amounts, etc.

• Collectively: the Entity establishes distinct classifications on the basis of the nature of the obligors, transaction status, type of guarantee, age of past-due amounts, etc, and for each of these risk groups it establishes the impairment losses (“identified losses”) that it recognises on the financial statements.

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In addition to the identified losses, the Bank recognises an overall impairment loss on risks classified as “standard”, which are not specifically identified and correspond to inherent losses incurred at the date of preparation of the financial statements. This loss is quantified by applying the statistical parameters established by Banco de España based on its experience and on the information available to it concerning the Spanish banking system, which is modified when circumstances make it advisable to do so. The method used to estimate the global impairment loss basically consists of aggregating the outcome of the various risks classified as “standard” on the basis of the statistical parameters established by Banco de España, less the specifically identified losses (specific provisions). When these specifically identified losses are greater, pursuant to applicable legislation the provision established for inherent losses (general provision for insolvencies) can be used, subject to certain limitations. On the other hand, debt instruments which, while not satisfying the criteria for individual classification as doubtful, show weaknesses that might result in significant losses for the Entity over and above the hedging against impairment due to specially monitored risks, are classified as substandard risks.

i) Financial guarantees and provisions established on them

”Financial guarantees” are defined as contracts whereby the Entity is required to make specific payments on behalf of a third party if that party is unable to pay, irrespective of the contractual form of the obligation: guarantee, technical or financial surety, irrevocable documentary credit issued or confirmed by the Entity, etc.

Financial guarantees are recognised upon execution at fair value (understood as the present value of the future cash flows) under “Lending investments – Loans and advances to customers”, with a balancing entry under “Financial liabilities at amortised cost – Other financial liabilities”. Financial guarantees, regardless of the principal, contractual form or other circumstances, are reviewed periodically in order to determine the credit risk to which they are exposed and, if appropriate, to consider whether any provision must be established for that risk. The credit risk is determined by applying criteria similar to those established for quantifying impairment losses on debt instruments carried at amortised cost, described in Note 2.h) above. The provisions established to cover these transactions are entered under “Provisions for Contingent Liabilities and Commitments” on the liabilities side of the balance sheet. The appropriation and recovery of these provisions are recognised with a balancing entry under “Contributions to Provisions (Net)” on the income statement. j) Leasing transactions Operating leases In operating leases, ownership of the leased asset and substantially all the risks and rewards incidental thereto remain with the lessor. When the Entity acts as lessor in an operating lease transaction, it presents the acquisition cost of the leased assets under “Tangible assets”, either as “Investment Property” or as “Property, Plant and Equipment – Leased out under an Operating Lease”, depending on the nature of the asses forming the subject of the lease. The depreciation policy for these assets is consistent with that for similar plant, property and equipment for own use, and income from leasing contracts is recognised under “Other Operating Income” on the income statement, on a straight-line basis. When the Entity acts as lessee in an operating lease transaction, the leasing expenses, including any incentives granted by the lessor, are charged to “Administrative Expenses – Other general administrative expenses” on the income statement, on a straight-line basis. k) Personnel expenses

Post-employment benefits and other post-employment benefits

Post-employment benefits are the sums paid to employees upon termination of their period of employment. Post-employment benefits, including those covered by internal or external pension funds, are classified as defined-contribution or defined-benefit plans, according to the conditions of the obligations concerned, taking account of all the commitments assumed both within and outside the terms formally agreed with employees.

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The Entity must complete the Social Security payments relating to determined employees, or to their successors in title, in the event of retirement, death of spouses, death of parents, permanent incapacity or serious invalidity.

In accordance with the current collective agreement, MicroBank de “la Caixa”, S.A. (formerly Banco de Europa, S.A.) has the obligation towards employees who have been with the bank since before 8 March 1980, to supplement the Social Security contributions paid by its employees or their successors in title in the event of retirement, permanent incapacity, death of spouses or death of parents.

On 30 December 2002, the Bank externalised its pension obligations for current employees. The obligations entered into with its former employees are covered by means of an internal fund. In 2003, for the purposes of transferring staff to GDS-Cusa S.A. and CaixaRenting S.A., these two companies took over the obligations towards current employees.

The current value of these post-employment benefit obligations assumed by the Entity, and the manner in which those obligations are covered, are as follows:

2009 2008

Obligations assumed Current employees 188 174 Former employees 3,732 3,933 Total 3,920 4,107

Coverage Internal funds 3,732 3,933 Assets allocated to the coverage of obligations 188 174 Total 3,920 4,107

Unrecognised Actuarial gains or losses - - Cost of non-accrued past services - - Total - -

These amounts are recognised under “Provisions – Provisions for pensions and similar obligations” (Note 12).

On 31 December 2009 and 2008, actuarial valuations were made of the post-employment benefit obligations by applying the projected unit credit method and considering, as the estimated retirement age of each employee, the first age at which he or she is eligible for retirement. The most significant actuarial hypotheses used in these calculations for former employees are as follows:

2009 2008

Technical interest rate 4.00% 4.00% Mortality tables PERM/F 2000P PERM/F 2000P Annual rate of pension increase 2% 2% Annual rate of pay increase Not applicable Not applicable Cumulative annual increase in RPI 2% 2%

Assets allocated to the coverage of obligations or allocated to the plan are the assets with which the obligations are settled, and do not belong to the Entity. They are available only for the payment or financing of financing post-employment benefits and cannot devolve to the Entity.

The actuarial gains and losses are those that arise from differences between previous actuarial hypotheses and reality and, where applicable, those that arise from changes in the actuarial hypotheses used. At 31 December 2009 and 2008 there were no actuarial gains or losses not recognised by the Entity.

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Post-employment benefit obligations are recognised on the income statement as follows:

i. Under “Interest and similar expenses” for the interest expense that corresponds to the increase produced during the financial year in the current value of the obligations due to the passing of time.

ii. Under “Contributions to Provisions (net)” for the actuarial gains and losses.

Termination benefits

In accordance with current legislation, the Entity is obliged to compensate employees who are dismissed without justified cause. There is no staff reduction plan in existence that makes it necessary to create a provision in this regard.

Credit facilities to employees

In accordance with Circular 4/2004, credit facilities made available to employees at rates below those of the market are considered to be non-monetary benefits and are calculated as the difference between market rates and the agreed rates. These items are recognised under “Administrative Expenses – Personnel Expenses”, with a balancing entry under “Interest and Similar Income” on the income statement. l) Income tax Expenditure on Spanish corporation tax is recognised on the income statement, unless it arises from a transaction whose results are recognised directly in equity, in which case the related income tax is recognised with a balancing entry in equity. Income tax expenditure for the year is calculated as the tax payable on the taxable profit for the year, adjusted for the changes arising during the year in the assets and liabilities recognised as a result of temporary differences, tax credits and allowances, and any tax losses (see Note 16).

The Entity considers that a temporary difference exists when there is a difference between the carrying amount of an asset or liability and its tax base. The tax base of an asset or liability is taken to be the amount attributed to that asset or liability for tax purposes. A taxable temporary difference is one that will generate a future obligation for the Entity to make a payment to the tax authorities. A deductible difference is one that will generate a future right to a refund or to make a smaller payment to the tax authorities. Tax credits and allowances are amounts that, after performance of the activity or obtaining of the profit or loss giving entitlement to them, are not used for tax purposes on the tax return until the conditions for doing so as established in tax regulations have been met, provided that the Entity considers it likely that they will be used in future periods. Current tax assets and liabilities are considered to be those amounts that are expected to be recovered from or paid to the tax authorities, respectively, within a period not exceeding 12 months from the date of their recognition. Deferred tax assets or liabilities, for their part, are considered to be those amounts that are expected to be recovered from or paid to the tax authorities, respectively, in future periods. Deferred tax liabilities are recognised for all taxable temporary differences. However, deferred tax liabilities arising from the recognition of goodwill are not recognised. The Entity recognises deferred tax assets arising from deductible temporary differences, tax credits and allowances or the existence of tax losses only if the following conditions are satisfied:

• Deferred tax assets are recognised only if it is considered likely that the Entity will obtain sufficient future taxable profit to be able to offset them; and

• In the case of deferred tax assets arising from tax losses, such losses have been generated by identified causes that are unlikely to be repeated.

No deferred tax asset or liability is recognised upon the initial recognition of an asset or liability, unless it arises in a combination of trades and, at the time of its recognition, it did not affect either accounting profit/loss or taxable profit/loss.

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The deferred tax assets and liabilities recognised are reassessed at each balance sheet date in order to ascertain whether they still exist, and appropriate adjustments are made on the basis of the findings of the analyses performed. Since 2007, the Entity has paid Corporation Tax, under the Consolidated reporting system, within the Group whose dominant Entity is Caixa d’Estalvis i Pensions de Barcelona “la Caixa”, “la Caixa” intends to continue using the Consolidated reporting system in future years. m) Subsidies The Company statements for the subsidies received from the European Social Fund and from the “la Caixa” Welfare Projects are as follows:

• The social actions of the “la Caixa” Welfare Projects relating to the financing of disadvantaged groups are channelled through MicroBank de “la Caixa”. Consequently, and by virtue of a collaboration agreement, each year the “la Caixa” Welfare Projects transfers to MicroBank the funds that it has earmarked for partially defraying structural costs and the costs associated with covering defaults associated with the financing of disadvantaged groups. The funds received are recognised under “Other operating income” (See Note 23).

• The subsidies from the European Investment Fund are made to cover the losses arising from collapses of social and financial micro-credits granted during a given period of time. They are recognised on the income statement in proportion to the extent to which the Bank recognises the corresponding insolvency provisions corresponding to the social and financial micro-credits granted. The income obtained in this regard is recognised user “Other operating income” (see Note 23).

n) Tangible assets

Tangible assets for own use

“Property, plant and equipment for own use” comprises the assets, owned or acquired under financial leases, held by the Entity for present or future use for administrative purposes or for the production or supply of goods that are expected to be used over more than one economic period. This category includes the tangible assets received by the Company for the total or partial liquidation of financial assets representing collection rights against third parties and which it expects to use continuously for its own purposes, “Property, plant and equipment for own use” is recognised on the balance sheet at acquisition cost (revalued, for certain assets, in conformity with Transitional Provision One of Circular 4/2004), determined on the basis of the fair value of each consideration released, plus the sum of monetary disbursements made or promised, less:

• The corresponding accumulated amortisation; and

• If applicable, the estimated losses arising from a comparison between the net value of each item and the corresponding recoverable amount.

For these purposes, the acquisition cost of the foreclosed assets that come to form part of the Entity’s tangible assets for own use is compared with the net amount of the financial assets delivered in exchange for their foreclosure.

Depreciation is calculated using the straight-line method on the basis of the acquisition cost of the assets less their residual value. However, land containing buildings and other constructions is not depreciated since it is considered to have an indefinite life. The annual tangible asset depreciation charge is recognised under “Depreciation and Amortisation” on the income statement, and is basically calculated on the basis of the estimated years of useful life of the various assets, as detailed below:

Years of useful life Furniture 5-10 Computer equipment 4 Data processing equipment 5

At the end of each accounting period, the Entity assesses whether there is any internal or external indication that the net value of its tangible assets exceeds the recoverable amount. If this is the case, the carrying amount of the asset concerned is reduced to its recoverable amount, and future depreciation charges are adjusted in

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proportion to the revised carrying amount and to the new remaining useful life, if the useful life has to be re-estimated. Any reduction in the carrying amount of tangible assets for own use is recognised, where necessary, under “Impairment Losses (Net) – Other Assets” on the income statement. Similarly, if there is an indication of a recovery in the value of an impaired tangible asset, the Entity recognises the reversal of the impairment loss recognised in previous periods by means of a corresponding credit under “Impairment Losses (Net) – Other Assets” on the income statement, and the future depreciation charges are adjusted accordingly. Under no circumstances may the reversal of an impairment loss raise its carrying amount above the amount at which it would have been stated if no impairment losses had been recognised in previous years.

Likewise, the estimated useful life of tangible assets for own use is reviewed at least each year with a view to detecting any significant changes, which, if they arise, are adjusted by a corresponding correction in the amortisation charge to the income statements of future years on the basis of the new useful life.

Upkeep and maintenance expenses on tangible assets for own use are charged to profits for the period in which they are incurred, under “Administrative Expenses – Other General Administrative Expenses” on the income statement.

Tangible assets that require a period greater than one year to be in conditions of use include, as part of their acquisition cost or production cost, the financial expenses that are payable before the fulfilment of operating conditions and that are drawn by the supplier or correspond to loans or other types of external financing directly attributable to their acquisition, manufacture or construction. The capitalisation of financial costs is suspended, where applicable, during periods in which the performance of the assets is interrupted, and ends on substantial completion of all the activities necessary for preparing the asset for its intended use. o) Intangible assets

Intangible assets are identifiable non-monetary assets without physical substance which arise as a result of a legal trade or are developed internally by the Entity. However, only intangible assets whose cost can be estimated objectively and from which it is considered likely that the future economic benefits will be obtained are recognised.

Intangible assets are recognised initially at acquisition or production cost and subsequently measured at cost less any accumulated amortisation and any accumulated impairment losses.

Other intangible assets

Intangible assets other than goodwill are recognised on the balance sheet at acquisition or production cost, net of accumulated amortisation and any impairment losses. Intangible assets may have an “indefinite useful life” when, on the basis of the analyses conducted on all relevant factors, it is concluded that there is no foreseeable limit to the period during which they are expected to generate net cash flows for the Entity, or a “finite useful life” in all other cases. Intangible assets with an indefinite useful life are not amortised, but at the end of each accounting period the Entity reviews, where applicable, their respective remaining useful lives, in order to ensure that these remain indefinite. Intangible assets with a finite useful life are amortised accordingly, applying criteria similar to those used for the amortisation of tangible assets. The annual amortisation charge for intangible assets with a finite useful life is recognised under “Depreciation and Amortisation” on the income statement. For assets with an indefinite useful life and those with a finite useful life, the Entity recognises any loss that may have occurred in the recorded value of those assets due to impairment, with a balancing entry under “Impairment Losses (Net) – Other Assets – Goodwill and other intangible assets” on the income statement. The criteria for recognition of impairment losses on these assets and, where applicable, recoveries of impairment losses recognised in previous years are similar to those applied to tangible assets for own use (see Note 2.n). p) Provisions and contingent liabilities

In preparing the Entity’s annual financial statements, the Directors differentiate between:

• Provisions: credit balances covering present obligations at the date of presentation of the balance

sheet arising from past events that could give rise to a loss for the Entity, which are considered as likely to occur and certain as to their nature but uncertain as to their amount and/or time of cancellation, and

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• Contingent liabilities: possible obligations that arise from past events and whose existence depends on the occurrence or non-occurrence of one or more future events beyond the Entity’s control.

The Entity’s annual financial statements include all the material provisions with respect to which it is considered more likely than not that the obligation will have to be settled. Contingent liabilities are recognised in the Entity’s annual financial statements only if it is informed about them, in conformity with the requirements of Circular 4/2004 (see Note 18.a). Provisions - which are quantified on the basis of the best available information regarding the consequences of the event that gives rise to them, and are re-estimated at the end of each accounting period - are used to cover the specific obligations for which they were originally recognised, and are reversed in full or in part when those obligations cease to exist or are reduced. The accounting and release of the provisions considered necessary on the basis of the above criteria are recognised as charges or credits under “Contributions to Provisions (Net)” on the income statement. q) Cash flow statements The following terms are used in the presentation of cash flow statements:

• Cash flows: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid

investments subject to a low risk of changes in value.

• Operating activities: the core activities of credit institutions and other activities that are not investment or financing activities. Operating activities also include the interest paid on any financing received, even though these are regarded as financing activities. Activities carried out on the different categories of financial instruments cited in Note 2.a, above are regarded as operating activities for the purposes of preparing these statements, with the exception, where applicable, of held-to-maturity investments, subordinated financial liabilities and strategic investments in held-for-sale equity instruments. For these purposes, investments are regarded as strategic when they are made with the intention of establishing or maintaining a long-term operating relationship with the investee on account of any of the situations that could result in determination of the existence of significant influence, without any such significant influence existing in reality.

• Investment activities: activities of purchase, sale or disposal by other means of long-term assets and other investments not included under “Cash and Cash Equivalents”, such as tangible assets, intangible assets, equity interests, held-for-sale non-current assets and their associated liabilities, and strategic investments in held-for-sale equity instruments and held-to-maturity debt instruments, as applicable.

• Financing activities: activities entailing changes in the size and composition of equity and of liabilities that do not form part of operating activities, such as subordinated liabilities.

r) Statement of changes in equity

The statement of changes in equity presented in these annual financial statements shows all changes in equity that occurred during the financial year. This information is subdivided into two statements: the statement of recognised income and expenses, and the statement of total changes in equity. The principal characteristics of the information contained in both parts of the report are explained below: Statement of recognised income and expenses

This part of the statement of changes in equity shows the income and expenses generated for the Entity as a result of its activities during the year, distinguishing between items recognised as results on the income statement for the financial year and other income and expenses recognised directly in equity in accordance with the provisions of current legislation.

This statement therefore presents:

a) The income for the year.

b) The net amount of income and expenses temporarily recognised under valuation adjustments to

equity.

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c) The net amount of income and expenses definitively recognised in equity.

d) The income tax payable in respect of the items cited in points b) and c) above. Changes in income and expenses recognised in equity as valuation adjustments are broken down, where applicable, into the following headings:

1. Valuation gains (losses): shows the amount of income, net of expenses incurred during the year,

recognised directly in equity. The amounts recognised under this item during the financial year are maintained under this item, even if they are transferred to the income statement in the same financial year, at the initial value of other assets and liabilities or are reclassified to another item.

2. Amounts transferred to the income statement: shows the amount of valuation gains or losses

previously recognised in equity, even if recognised in the same financial year on the income statement. 3. Amounts transferred to the initial value of hedged items: shows the amount of valuation gains or

losses previously recognised in equity, even if recognised in the same financial year at the initial value of the assets or liabilities as a result of cash flow hedges.

4. Other reclassifications: shows the amount of transfers made during the year between valuation adjustment items in conformity with the criteria established by current legislation.

The amounts of these items are presented gross, showing their corresponding tax impact under “Income Tax” on the statement, except as previously indicated for items corresponding to valuation adjustments for entities measured using the equity method. Statement of total changes in equity This part of the statement of changes in equity shows all changes in equity that occurred during the year, including those arising from changes in accounting policy and the correction of errors. This statement therefore shows a reconciliation of the carrying value, at the start and end of the year, of all items forming part of equity, grouping the changes by nature under the following headings:

a) Adjustments due to changes in accounting policy and adjustments made to correct errors: this includes

changes in equity arising from the retroactive restatement of financial statement balances due to changes in accounting policy or the correction of errors.

b) Income and expenses recognised in the year: shows, in aggregated form, the total of the above-

mentioned items recognised on the income statement. c) Other changes in equity: shows the other items recognised in equity, such as capital increases or

reductions, distribution of dividends, transactions with own equity instruments, payments with equity instruments, transfers between equity items and other increases/decreases in equity.

3. Risk management

Global risk management is essential for the business of any credit institution. At MicroBank, the purpose of this global risk management is to optimise the risk/return ratio, through the identification, measurement and assessment of risks and their ongoing consideration in the business’s decision-making process, always within a framework that enhances the quality of the services provided to customers. The risks incurred as a result of the Bank's activities are classified as follows: credit risk (arising from both commercial and investment banking activities); market risk (which includes structural balance sheet interest rate risk, the price or rate risk associated with treasury positions, and foreign exchange risk); liquidity risk; operational risk; and compliance risk. The same “la Caixa” model is applied to each of these types of risk, using a set of quantification and monitoring tools and techniques considered to be adequate and coherent with the standards and best practices for managing the financial risks of a financial institution. All operations within the sphere of risk measurement, monitoring and management are undertaken, with the knowledge and review of the Bank, by the various specialist areas of “la Caixa” and pursuant to the recommendations of the Basel Committee on Banking Supervision: “International Convergence of Capital Measurement and Capital Standards: A Revised Framework”, commonly referred to as Basel II, and the subsequent transposition of the corresponding EU directives and Banco de España Circular 3/2008 of 22 May.

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a) Credit risk Credit risk arises in relation to the possibility of losses resulting from default of payment obligations by our customers in the repayment of their loans, in terms of both form and timescale. This risk, which is inherent to the activities of credit institutions, is the most significant risk on the Bank’s balance sheet and therefore the only one described in detail in this document. The Bank’s credit risk policy, as approved by the Board of Directors of MicroBank on 24 October 2007, is detailed below:

• In accordance with Banco de España Circular 4/2004, the Board of Directors approves the Bank’s credit risk criteria, adopting the same risk criteria as “la Caixa”, as the parent of the Group, contained in its credit risk measurement principles and policies, and assuming the same powers to grant risk operations.

• Although these criteria refer to a wider range of products than that currently handled by the Bank, they are adopted in a broad sense and with the expectation of an increase in the types of products handled.

• The same approval process applies to the Bank’s micro-credit rules on permitted operations, which detail the procedures for the granting, monitoring and any possible default of social and financial micro-credits. The Management Committee has the power to modify these rules by means of operational or procedural changes that do not affect the criteria and powers to which the aforementioned policies refer.

• There are other operational aspects to be monitored which are reflected in the application and granting policy for asset operations.

The Bank’s lending activities are essentially geared towards covering the financing needs of collectives with limited resources. To this end, the range of products aims to provide the market with three lines of micro-credits:

o Social micro-credits: the programme of social micro-credits responds to financing requests

channelled by MicroBank’s collaborating institutions, which provide their services to the requesting collectives and can also collaborate in the development of business plans for the projects and in giving support during their startup and implementation phases. These micro-credits involve small-scale loans of up to €15,000, or exceptionally up to €25,000, intended to finance self-employment projects set up by people who have no access to traditional financing and cannot provide any type of collateral.

o Financial micro-credits: these are aimed at entrepreneurs (individuals), falling within the category of micro-entrepreneurs, with annual turnover of less than €60,000. They are designed to provide financing for business ventures that create wealth and, more particularly, that create or preserve jobs and job stability, with a consequent contribution to social cohesion. These micro-credits are subject to maximum limit of €25,000 and are managed directly by the network of "la Caixa" branches, which cannot accept any type of collateral on them. The current financing policy aims to support self-employment and projects for the creation, consolidation or expansion of new and existing small businesses.

o Family micro-credits: this line of products aims to answer the needs of families by helping them to overcome temporary difficulties and facilitating personal development. These are unsecured loans of up to €25,000 for customers with a net annual income of up to €18,000 per borrower (maximum of two borrowers). These micro-credits are granted and managed through the network of “la Caixa” branches.

In order to make its entire product range available to customers, with the highest possible service quality and proximity, the Bank carries out its commercial activity through the network of “la Caixa” branches. To this end, the Bank has signed an Agency and Service Provision Contract with “la Caixa”, which covers all procedural and legal aspects governing this relationship, (Note 1.g) During the course of 2009, loans totalling €176,778,000 were granted, of which €2,751,000 were in Social Micro-credits, €40,688,000 in Financial Micro-credits and €133,339,000 in Family Micro-credits.

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Granting procedure There are certain differences in the operational procedures for the granting and formalisation of social, financial and family micro-credits. The main points of these procedures are detailed below.

• Social micro-credits: The handling of applications for social micro-credits initially involves the collaborating Community Entities. These are able to provide the applicant with advice on drawing up the business plan, assessing the viability of the project and preparing the financing proposal. Subsequently, in all cases, they refer the applicant to a branch of “la Caixa”, which analyses the proposed project, evaluates its viability, and approves or rejects the operation, without any security other than the personal guarantee of the applicant.

• Financial micro-credits: these are granted directly by “la Caixa” branches to entrepreneurs who

approach them either directly or through the collaborating Community Entities, provided the applicant’s profile matches that established for this type of loan. The branches follow the acceptance, analysis and approval procedures established for this type of operation, and in all cases there is a requirement to attach a business plan or document explaining the project so that the intended purpose and viability of the proposed operation can be evaluated.

• Family micro-credits: these are granted directly by “la Caixa” branches, and are handled in accordance with the same analysis, approval and formalisation procedures as “la Caixa” personal loans.

Management of default The Investment and Risk Control Area oversees the acceptance and monitoring of the associated risk. This function is carried out through a process that allows the managers to have a complete view of the situation of each customer. In the case of social micro-credits, the collaboration of specialist personnel is drawn upon, in addition to the normal procedures used by “la Caixa”. These operations are handled on the basis of an individual case-by-case analysis. The procedure for financial micro-credits and family micro-credits is the same as that used by “la Caixa”. With the aim of achieving greater efficiency in recovery management, the Bank has signed a contract with GDS-Cusa, S.A., a member of the “la Caixa” group, for the provision of recovery services in relation to doubtful or unpaid debts and bankruptcies. It is also important to note that the Bank has taken over the agreement previously entered into between “la Caixa” and the EIF (European Investment Fund) whereby, under the MAP (Multiannual Programme for Enterprise and Entrepreneurship), the EIF covers 75% of defaults in social and financial micro-credits satisfying the admission criteria of the programme and granted between 1 July 2006 and 31 December 2007, up to a maximum of 11.25% of the portfolio covered by the said agreement, with a ceiling of €1,668,000. In the 2008 financial year, a new agreement was signed between the Bank and the EIF (European Investment Fund), similar to that signed in 2006. This new agreement falls within the scope of the CIP (Competitiveness and Innovation Framework Programme), and covers the same percentage of defaults as the previous agreement (75%) in relation to the same type of loans granted between 1 January 2008 and 31 December 2009, up to a maximum of 7.5% of the portfolio covered by that agreement, with a ceiling of €9,825,000. In the current financial year, the Bank and the EIF signed a renewal of the agreement in force until 31 December 2009. The renewal extended the agreement for a further 2 years, thus covering financial and social micro-credits satisfying the CIP admission criteria and granted between 1 January 2008 and 31 December 2011, up to a maximum of 7.5% of the portfolio covered by that agreement, with a new ceiling of €18,000,000. Meanwhile, the "la Caixa" Welfare Projects, through which the social micro-credit activity was first begun, will continue its economic collaboration with the Bank in developing and maintaining training programmes for community entities and assisting them by covering defaults in social micro-credits not covered by the EIF and other operating costs, thus helping to defray the expenses of the Bank's social initiatives. To this end, an agreement was signed between MicroBank and the “la Caixa” Welfare Projects covering the years 2008 to 2010.

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b) Liquidity risk This is defined as any potential inability by the Entity to meet its payment commitments, even temporarily, due to a lack of liquid assets or inability to access the markets for refinancing at a reasonable price. This risk may be caused by outside factors due to financial or systematic crises, reputational problems or, internally, owing to an excessive concentration of liabilities due. The Entity is basically exposed to the daily requirements of its available liquid funds for its own contractual obligations to supply credit. In order to provide for efficient hedging of sources of liquidity, the Entity has been granted two loans from the Council Europe Bank (CEB) for a total of €80,000,000, of which €55,000,000 had been drawn as at 31 December 2009. The Entity also has another source of liquidity, obtained through a credit line engaged with Caixa d’Estalvis i Pensions de Barcelona, up to a limit of €30,000,000, and thus together with client funding, the Entity met its liquidity needs for financial year 2010 and thereafter, to be able to make the investment provided for in its budgets. For further hedging of its future liquidity needs, in financial year 2009 the Entity obtained several loans granted by Caixa d’Estalvis i Pensions de Barcelona to cover all investments made the previous month, while the line of credit mentioned above is used as a source of liquidity for the current year, with the monthly supply being completely hedged by the loans granted by Caixa d’Estalvis i Pensions de Barcelona. Following is a breakdown, by remaining instalments, of the balances of specific items on the Entity’s balance sheet for financial years 2009 and 2008, not including the corresponding valuation adjustments: 31 December 2009

(Thousands of euros)

Sight Up to 1 month

Over 1 month to 3

months

Over 3 months to 12

months

Over 1 year to 5

years Over 5 years Total

Cash and deposits with central banks - - - - - - -Deposits with credit institutions 6,193 - - - - - 6,193Loans to customers 39 6,433 12,955 53,498 155,527 9,236 237,688Debt instruments

- - - - - 12 12

Assets 6,232 6,433 12,955 53,498 155,527 9,248 243,893 Deposits from central banks - - - - - - -Deposits from credit institutions - 3,367 3,210 18,821 93,150 9,404 127,952Customer deposits 1,580 9,599 - - - - 11,179Remaining liabilities

- 112 - - - - 112

Liabilities 1,580 13,078 3,210 18,821 93,150 9,404 139,243 Liquidity gap by tranche 4,652 (6,645) 9,745 34,677 62,377 (156) 104,650Accumulated liquidity gap

4,652 (1,993) 7,752 42,429 104,806 104,650 104,650

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31 December 2008

(Thousands of euros)

Sight Up to 1 month

Over 1 month to 3 months

Over 3 months to 12 month

s

Over 1 year to 5 years

Over 5 years Total

Cash and deposits with central banks - - - - - - -Deposits with credit institutions 114 - - - - - 114Loans to customers 11 3,408 7,022 30,635 96,559 7,744 145,379Debt instruments - - - - - 12 12Assets 125 3,408 7,022 30,635 96,559 7,756 145,505 Deposits from central banks - - - - - - -Deposits from credit institutions - 39,277 - 1,502 4,286 3,214 48,279Customer deposits 949 1,098 - - - - 2,047Remaining liabilities - 242 - - - - 242Liabilities 949 40,617 - 1,502 4,286 3,214 50,568 Liquidity gap by tranche (824) (37,209) 7,022 29,133 92,273 4,542 94,937Accumulated liquidity gap (824) (38,033) (31,011) (1,878) 90,395 94,937 94,937

c) Interest rate risk Changes in interest rates may have two effects on the Entity’s financial instruments: their change in value, or change in the future cash flows to which they give rise. For example, fixed-rate instruments or those determined at the time of contracting are typically subject to the first effect. By contrast, instruments whose appreciation is determined over their lifetime in a manner referenced to market conditions may suffer from the second effect. All lending transactions are awarded at a fixed rate, and therefore the Entity seeks to obtain financing at fixed rates (natural balance hedges) or engage in IRS (Interest Rate Swaps), by which it converts its variable-rate financing to fixed-rate financing. In this way, the financing of future cash flows is predictable. The Entity has financial instruments that are exposed to unexpected movements in interest rates, which may, in the end, result in unexpected variances in financial margins if, as is typical in banking activity, total liabilities or off-balance-sheet items are subject to temporary shifts due to revaluation periods or different asset maturity dates. In order to establish an efficient and stable hedge over time for interest rate risk, which is affected to a greater extent by the loan granted by the CEB and by lending policy, an agreement has been entered into with “la Caixa” consisting of the monthly provision of a loan granted for the total investment made during that month by MicroBank de “la Caixa,” S.A., at an interest rate of Euribor plus a spread of 0.5% corresponding to that of the day the loan was granted, which permits the conversion of variable rate risk into fixed rate risk. . This hedging system prevents shifts in interest rates, and thus allows for maximum adjustment of the ratio between the Entity’s investment and financing. The Entity has also entered into an IRS to hedge the variable interest rate risk of the loan granted by the CEB. Thus, the Bank’s balance sheet is presented through a matrix of maturities or revisions, without taking valuation adjustments into account:

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31 December 2009

Thousands of euros Periods until the review of effective interest rate or maturity

Up to 1 month

1 to 3 months

3 to 6 months

6 to 12 months

Over 1 year

Assets sensitive to interest rate risk Deposits with central banks - - - - - Deposits with credit institutions 6,193 - - - - Loans to customers 16,825 19,619 26,621 44,741 125,934 Debt instruments - - - - - Total sensitive assets 23,018 19,619 26,621 44,741 125,934 Liabilities sensitive to interest rate risk Deposits from central banks - - - - - Deposits from credit institutions 1,632 3,219 4,685 14,221 99,420 Customer deposits 1,600 1,191 783 954 6,652 Long-term funding 7,600 8,862 12,024 20,209 56,883 Total sensitive liabilities 10,832 13,272 17,492 35,384 162,955 Sensitivity measures Difference: Assets – Liabilities 12,186 6,347 9,129 9,357 (37,021) Accumulated difference: Assets – Liabilities 12,186 18,533 27,662 37,019 (2)

31 December 2008

Thousands of euros

Periods until the review of effective interest rate or maturity Up to 1 month

1 to 3 months

3 to 6 months

6 to 12 months

Over 1 year

Assets sensitive to interest rate risk Deposits with central banks - - - - - Deposits with credit institutions 116 - - - - Loans to customers 9,957 11,238 15,611 26,769 81,517 Debt instruments - - - - - Total sensitive assets 10,073 11,238 15,611 26,769 81,517 Liabilities sensitive to interest rate risk Deposits from central banks - - - - - Deposits from credit institutions - 46,777 - - - Customer deposits 293 218 143 175 1,218 Long-term funding 6,614 7,465 10,370 17,783 54,152 Total sensitive liabilities 6,907 54,460 10,513 17,957 55,370 Sensitivity measures Difference: Assets – Liabilities 3,166 (43,222) 5,098 8,812 26,147 Accumulated difference: Assets – Liabilities 3,166 (40,056) (34,958) (26,146) 1

d) Other market risks

Given the specific operations of MicroBank de “la Caixa”, S.A., no other market risks worthy of mention were evaluated.

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4. Allocation of income for the year

The proposed allocation of income for financial year 2009 which the Entity’s Board of Directors will submit for approval to the Shareholders’ Meeting, as well as the one already approved for financial year 2008, is as follows:

(Thousands of euros) 2009 2008 Distribution basis Income for the year 6,613 3,434

6,613 3,434

Distribution To obligatory reserves - - To voluntary reserves 6,613 3,434

6,613 3,434

5. Compensation of the Entity’s Directors and Senior Management

Pursuant to Circular 4/2004, “key personnel of the Entity’s administration and management”, who are understood as being individuals with direct and indirect authority and responsibility for planning, directing and controlling the Entity’s activities, consist of the members of the Board of Directors and Senior Management. Due to their positions, this group of individuals is considered a “related party”, and as such, is subject to certain reporting requirements as summarised in this Note.

Related parties also consist of those individuals who maintain certain relationships of blood or marriage with “key administrative and management personnel”, as well as subsidiary companies, companies with significant influence, or those subject to significant voting power by key personnel or any of the aforementioned individuals in their family environment. The Entity’s transactions with these other related parties, if any, are reported in Note 18.c).

a) Compensation of the Board of Directors

All compensation received by the Board of Directors and delegated commissions correspond solely to fees for attendance at meetings and for travel. The governing bodies receive no other compensation for performing their duties as members of the Entity’s Board.

The following table breaks down the compensation owed to members of the Entity’s Board of Directors, solely in their capacity as Directors of the Entity, in financial years 2009 and 2008: 2009 Board of

Directors Management Commission/ Committee

Control/ Auditing

Total

D. Manuel García Biel (a) 75 - - 75 D. José Francisco de Conrado Villalonga* 308 - - 308 D. José Juan Pintó Ruiz 150 - - 150 D. Miguel Noguer Planas 100 - - 100 Da. María Dolors Llobet María (b) 25 - - 25 TOTAL 658 - - 658

(a) Derecognised 8 September 2009 (b) Recognised 8 September 2009

2008 Board of

Directors Management Commission/ Committee

Control/ Auditing

Total

D. Manuel García Biel (a) 100 - - 100 D. José Francisco de Conrado Villalonga* 250 - - 250 D. José Juan Pintó Ruiz 150 - - 150 D. Miguel Noguer Planas 100 - - 100 TOTAL 600 - - 600 * Chairman of the Board of Directors. With executive responsibility

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b) Compensation of Senior Management

In preparing these individual annual financial statements, the Entity’s senior management was assumed as being the 7 individuals (7 in financial year 2008) who served as the Entity’s Managing Director and in other positions of responsibility.

The following table shows compensation earned by the Bank’s senior management personnel in financial years 2009 and 2008. The compensation is posted under the heading “Administrative Expenses – Personnel Expenses” in the income statement.

Thousands of euros 2009 2008 Fixed salary payments 635 472 Variable salary payments 44 28 Other compensation 4 - 683 500

In financial years 2009 and 2008, no significant amount whatsoever was paid as indemnification to Bank personnel.

c) Directors’ obligations of loyalty Regarding the requirements of Section 4, Article 127 ter of the Corporations Law, equity interests that members of the Entity’s Board of Directors hold in other entities with the same, similar or complementary types of activity as those that constitute the corporate purpose of the Entity itself as of 31 December 2009 are summarised below:

Director Entity of Investment No, of Shares

José Francisco de Conrado Villalonga BBVA 47,555 BSCH 54,549 City Group 80,301 José- Juan Pintó Ruiz BSCH 1,585 Sebastián Sastre Papiol - - Evaristo del Canto Canto - - Juan Carlos Gallego González María Dolors Llobet Maria

- -

- -

Miguel Noguer Planas - - Manuel Romera Gómez - - Juan Reguera Díaz - - Josep Ramón Montserrat - - Similarly, in accordance with the article mentioned above, information on members of the Entity’s Board of Directors who have declared that they are serving in positions or offices, on their own account or on behalf of another party, at other Entities with the same, similar or complementary types of activity as those that constitute the corporate purpose of the Entity itself are summarised below:

Director Entity Position or office

José Francisco de Conrado Villalonga - - José- Juan Pintó Ruiz - - Sebastián Sastre Papiol Self Trade Bank, S,A Non-board member

secretary of the Board of Directors

Evaristo del Canto Canto - - Juan Carlos Gallego González - - María Dolors Llobet Maria - - Miguel Noguer Planas Caixa d’Estalvis i Pensions de

Barcelona Director

Manuel Romera Gómez - - Juan Reguera Díaz - - Josep Ramón Montserrat - -

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6. Lending investments

The composition of the balance of this item of the attached balance sheets, consistent with the nature of the financial instrument from which they originate, is as follows:

Thousands of euros 2009 2008 Deposits with credit institutions 6,193 115Loans to customers 231,645 143,590Debt instruments - - 237,838 143,705

Following is a breakdown of the principal valuation adjustments included in each of the various types of assets in the “lending investments” item:

2009

Thousands of euros Valuation adjustments

Gross balance

Impairment fund

Accrued interest

Fees and commissions Other Balance

Deposits with credit institutions 6,192 - 1 - - 6,193Loans to customers 237,688 (6,591) 1,925 (1,377) - 231,645Debt instruments 12 (12) - - - -Total 243,892 (6,603) 1,926 (1,377) - 237,838

2008

Thousands of euros Valuation adjustments

Gross balance

Impairment fund

Accrued interest

Fees and commissions Other Balance

Deposits with credit institutions 114 - 1 - - 115Loans to customers 147,061 (3,726) 1,064 (809) - 143,590Debt instruments 12 (12) - - - -Total 147,187 (3,738) 1,065 (809) - 143,705

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6.1 Deposits with credit institutions

The breakdown of this item, by rate and credit status, without accounting for valuation adjustments, is as follows:

Thousands of euros 2009 2008 Sight 6,192 114Other accounts 6,192 114Term - -Term accounts - -Total 6,192 114

The average effective interest rate of financial assets comprising the “Deposits with credit institutions” item was the one-day Euribor less 0.01% during financial years 2009 and 2008. These rates derive from interest accrued during the year and do not include product corrections as a consequence of accounting hedges. All sight balances correspond to balances maintained with Caixa d´Estalvis i Pensions de Barcelona “la Caixa”. 6.2 Loans to customers Following is a breakdown of the balances in this item, without accounting for valuation adjustments to account, by transaction type and status, counterparty, borrower’s business sector and interest rate type of the transactions:

By loan type and status:

Thousands of euros 2009 2008 Debtors with real collateral 14 15Other term debtors 233,727 145,078Sight and sundry debtors 368 297Doubtful assets 3,579 1,671Total 237,688 147,061

By counterparty

Thousands of euros 2009 2008 Public sector - -Public authorities - -Private sector 237,688 147,061Residents 237,438 146,854Non-residents 250 207Total 237,688 147,061

By interest rate type

Thousands of euros 2009 2008

Fixed interest rate 237,688 147,061 Variable interest rate - -

Total 237,688 147,061

In 2009, the average effective interest rate of financial assets comprising the “Loans to Customers” item was 9.97%. In 2008 it was 9.18%.

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Changes occurring in financial years 2009 and 2008 in the “Doubtful Assets” account may be broken down as follows:

Thousands of euros 2009 2008 Balance at start of year 1,671 701 Plus: Addition of new assets 11,810 5,885 Less: Normalised assets (1,383) (509) Awarded assets and other - - Assets derecognised (Note 6.4)

(8,519) (4,406)

Balance at year-end 3,579 1,671 The classification of doubtful assets by instrument type, at 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Loans with securities guarantee - - Loans with personal guarantee 3,579 1,671 Current account overdrafts - - 3,579 1,671

The age of the doubtful asset balances, as at 31 December 2009 and 2008, is as follows: 2009

Thousands of euros Up to 6 months

6 to 12 months

12 to 18 months

18 to 24 months

More than 24 months Total

Transactions involving other guarantees

1,867 1,083 483 96 50 3,579

1,867 1,083 483 96 50 3,579 2008

Thousands of euros Up to 6 months

6 to 12 months

12 to 18 months

18 to 24 months

More than 24 months Total

Transactions involving other guarantees

1,390 198 22 - 61 1,671

1,390 198 22 - 61 1,671

Following is the breakdown, by type of guarantee and counterparty, of matured, non-impaired assets (with amounts corresponding to instalments for loans matured 31 December 2009 and 2008).

Thousands of euros 2009 2008 Personal guarantee loans 256 249 Current account overdrafts 57 2 313 251

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Following is the breakdown, by date, of assets due and not impaired as at 31 December 2009 and 2008, by classes of counterparty and instrument types:

Assets at maturity and not impaired as at 31 December 2009

Thousands of euros Up to 1 month

1 to 2 months

2 to 3 months Total

By counterparty classes

Other resident sectors 90 120 102 312 Other non-resident sectors - - 1 1 90 120 103 313 By instrument type Loans and credit accounts 33 120 103 256 Overdrafts 57 - - 57 90 120 103 313

Assets at maturity and not impaired as at 31 December 2008

Thousands of euros Up to 1 month

1 to 2 months

2 to 3 months Total

              By counterparty classes           Other resident sectors 48 99 103 250 Other non-resident sectors - 1 - 1 48 100 103 251 By instrument type Loans and credit accounts 46 100 103 249 Overdrafts 2 - - 2 48 100 103 251

The breakdown of impaired assets determined individually, classified by guarantees during financial year 2009 and 2008, is as follows: 2009

Thousands of euros

Sub-standard Doubtful

Base Provision Base Provision Guarantee- Personal 8,456 2,030 3,579 1,205Mortgage - - - -Other - - - -

8,456 2,030 3,579 1,205

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2008

Thousands of euros

Sub-standard Doubtful

Base Provision Base Provision Guarantee- Personal 13,809 1,382 1,671 365Mortgage - - - -Other - - - -

13,809 1,382 1,671 365

6.3 Impairment fund Following are changes occurring in the balance of provisions covering losses from the impairment of assets comprising the balance of the “Lending investments” item for financial years 2009 and 2008: 2009:

Thousands of euros

Opening balance Provisions Recoveries Utilisations Balance

31-12-2009 Specific hedge 1,759 10,714 (937) (8,264) 3,272Loans to customers 1,747 10,714 (937) (8,264) 3,260Debt instruments 12 - - - 12Generic hedge 1,979 1,352 - - 3,331Loans to customers 1,979 1,352 - - 3,331Total 3,738 12,066 (937) (8,264) 6,603

2008:

Thousands of euros

Opening balance Provisions Recoveries Utilisations Balance

31-12-2008

Specific hedge 1,664 5,737 (1,388) (4,266) 1,759Loans to customers 1,664 5,737 (1,388) (4,266) 1,747

Debt instruments 12 - - - 12Generic hedge 165 1,814 - - 1,979Loans to customers 165 1,814 - - 1,979Total 1,829 7,551 (1,388) (4,266) 3,738

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6.4 Assets derecognised on the balance sheet due to impairment Following are changes occurring in financial years 2009 and 2008 to impaired financial assets not posted to the balance sheet because their recovery is considered remote, even though the Entity has not suspended efforts to recover the amounts owed:

Thousands of euros 2009 2008 Balance of financial assets for which recovery is considered

remote at the start of the year 5,565 1,230 Additions-

Charge to corrections to value, asset impairment (Note 6.3) 8,264 4,266 Direct charge to the income statement - - Products due and not collected 255 140

Recoveries – For collection in cash - - For collection in cash of revenue due and not collected (Note 27) 249 71

Balance of financial assets for which recovery is considered remote at year-end 13,835 5,565

At 31 December 2009 and 2008, balances under the category of Lending Investments removed from the balance sheet of the Entity because their recovery is considered remote, correspond completely to customer loans.

7. Hedging derivatives

The breakdown by type of notional product of derivatives designated as hedging derivatives at 31 December 2009 and 2008and 2008 is as follows:

Thousands of euros 2009 2008 Financial swaps on future interest rates 55,000 -

Total 55,000 - The notional value of formal contracts does not include actual risk assumed by the Entity, since the net position in these financial instruments results from their offset and/or combining. All derivatives correspond to micro-hedges of cash flows. The Entity entered into financial swap transactions on interest rates with Caixa d´Estalvis i Pensions de Barcelona “la Caixa”, which were designated as existing interest rate risk hedging instruments on Deposits from Credit Institutions, and repaid at a variable interest rate, for classification under Financial Liabilities at Amortised Cost – Deposits from Credit Institutions” (see Note 11.1).

The breakdown by product type of the fair value of derivatives designated as hedging derivatives at 31 December 2009 is as follows:

Thousands of euros 2009

Assets Liabilities Financial swaps on interest rates 28 253

Total 28 253

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8. Insurance policies linked to pensions

The breakdown of this item on the balance sheets at 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Group Entities (Departments) 188 174 Other related Entities - - Remaining Entities - -

Total 188 174

The amount corresponding to the fair value of assets allocated to pension obligations the MicroBank “la Caixa” has assumed with an active employee of the Entity. Said obligation has been outsourced through an insurance policy contracted with the company VidaCaixa S.A., de Seguros y Reaseguros (a Company belonging to the “la Caixa” group.)

9. Tangible and intangible assets

9.1 Tangible assets

Movements posted to the tangible assets item of the balance sheet during financial years 2009 and 2009 were as follows:

2009

Own use Real estate

investments Total Thousands of euros Cost- Balances at 31 December 2008 83 - 83 Additions 16 - 16 Removals - - - Transfers - - - Balances at 31 December 2008 99 - 99 Accumulated Depreciation- Balances at 31 December 2008 (9) - (9) Additions (Note 25) (20) - (20) Removals - - - Transfers - - - Balances at 31 December 2008 (29) - (29) Net tangible assets- Balances at 31 December 2008 74 - 74 Balances at 31 December 2008 70 - 70

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2008

Own use Real estate

investments Total Thousands of euros Cost- Balances at 31 December 2007 41 - 41 Additions 78 - 78 Removals (36) - (36) Transfers - - - Balances at 31 December 2008 83 - 83 Accumulated Depreciation- Balances at 31 December 20087 (2) - (2) Additions (Note 25) (31) - (31) Removals 24 - 24 Transfers - - - Balances at 31 December 2008 (9) - (9) Net tangible assets- Balances at 31 December 2007 32 - 32 Balances at 31 December 2008 74 - 74

The breakdown, by type, of the items comprising the “Tangible Assets – Own Use” item on the balance sheets at 31 December 2009 and 2008, is as follows:

Thousands of euros Cost Depreciation Net Depreciation Balance

Furniture, vehicles and other facilities 73 (7) 66Computer equipment 10 (2) 8Balances at 31 December 2008 83 (9) 74 Furniture, vehicles and other facilities 88 (24) 64Computer equipment 11 (5) 6Balances at 31 December 2009 99 (29) 70

As at 31 December 2009 and 2008, there were no tangible assets for own use that had been completely depreciated.

The fair value of all tangible fixed assets at 31 December 2009 and 2008 does not differ significantly from that posted under the “Tangible Assets” item of the attached balance sheet.

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9.2 Intangible assets

Movements posted to the intangible assets item of the balance sheet during financial years 2009 and 2009 were as follows:

2009 Thousands

of euros Cost- Balances at 31 December 2008 3 Additions - Removals - Transfers - Balances at 31 December 2009 3 Accumulated Depreciation- Balances at 31 December 2008 (1) Additions (Note 25) (1) Removals - Transfers - Balances at 31 December 2009 (2) Net tangible assets- Balances at 31 December 2008 2 Balances at 31 December 2009 1

2008

Thousands of euros

Cost- Balances at 31 December 2007 1 Additions 2 Removals - Transfers - Balances at 31 December 2007 3 Accumulated Depreciation- Balances at 31 December 2007 - Additions (Note 25) (1) Removals - Transfers - Balances at 31 December 2008 (1) Net tangible assets- Balances at 31 December 2008 1 Balances at 31 December 2008 2

The additions of intangible assets correspond to payments to third parties for acquisition and development of computer programs and systems for the Entity.

At 31 December 2009 and 2008 there were no totally amortisable assets in use.

All of the intangible assets have a definite useful life, and are amortized in an average period of 3 years.

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10. Remaining assets

The composition of the item on the balance sheets as at 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Accruals 4,476 3,394 Other items - - 4,476 3,394

Included among accruals are balances pending collection as at 31 December 2009 and 2008, corresponding to subsidies of the Welfare Projects of “la Caixa” and the European Investment Fund.

11. Financial liabilities at depreciated cost

Following is a breakdown, by type, of the composition of this item on the attached balance sheets as at 31 December 2009 and 2008:

Thousands of euros 2009 2008 Deposits with credit institutions 128,018 48,718Customer deposits 11,179 2,048Other financial liabilities 1,132 251 140,329 51,017

Following is a detail of the principal valuation adjustments included in each of the various liabilities of the “Financial liabilities at depreciated cost” item as at 31 December 2009 and 2008:

2009

Thousands of euros Gross

balance Valuation adjustments

Balance Accrued interest

Derivative micro-hedges

Transaction costs

Discounted premiums

Deposits with credit institutions 127,952 66 - - - 128,018Customer deposits 11,179 - - - - 11,179Other financial liabilities 1,132 - - - - 1,132Total 140,263 66 - - - 140,329

2008

Thousands of euros Gross

balance Valuation adjustments

Balance Accrued interest

Derivative micro-hedges

Transaction costs

Discounted premiums

Deposits with credit institutions 48,279 439 - - - 48,718Customer deposits 2,048 - - - - 2,048Other financial liabilities 251 - - - - 251Total 50,578 439 - - - 51,017

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11.1 Deposits from credit institutions

The composition of this item of the balance sheets as at 31 December 2009 and 2008, by transaction type, not including valuation adjustments, is shown below:

Thousands of euros 2009 2008 Term accounts 123,179 7,500 Other accounts 4,773 40,779 127,952 48,279

The average effective interest rate of financial instruments classified under this item during financial year 2009 was 2.67% (5.36% in financial year 2008).

The “Term Accounts” balance includes the cash provision totalling €30,000,000, consisting of a loan from the Council of Europe Development Bank. The interest rate applied was the three-month Euribor less 0.02% for the first tranche. In the current financial year, the Council of Europe Development Bank awarded a new loan totalling €50,000,00 with only €25,000,000 being drawn at 31 December 2009. The interest rate applied is the three-month Euribor plus 0.44%.

Moreover, this account shows several loans awarded by “la Caixa” in financial year 2009, the amount of which totalled €68,179,000 at 31 December 2009.

The “Other accounts” balance corresponds to amounts to be paid to “la Caixa” for settlement of the current Corporate Tax, totalling €4,773,000 and €1,502,000 at 31 December 2009 and 2008, respectively. Also shown is the amount drawn from the “la Caixa” credit line, with no amount being drawn at the close of financial year 2009. At 31 December 2008, the amount drawn on the aforementioned credit line reached €39,277,000.

The amounts not drawn from the “la Caixa” credit line as at 31 December 2009 and 2008 totalled €30,000,000 and €15,723,000 respectively.

11.2 Customer deposits

The breakdown of this item on the balance sheet at 31 December 2009 and 2008, by transaction type, not including valuation adjustments, is shown below:

Thousands of euros 2009 2008 By type Current accounts 1,583 950 Savings accounts 9,596 1,098 11,179 2,048 By counterparty Resident Public Authorities 3 - Other resident sectors 11,078 2,017 Other non-resident sectors 98 31 11,179 2,048

The average effective interest rate of financial instruments classified under this item during financial year 2009 was 0.1% (0.1% in financial year 2008).

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11.3 Other financial liabilities

The composition of this item on the balance sheet as at 31 December 2009 and 2008, by transaction type, is shown below:

Thousands of euros 2009 2008 Obligations payable 1,046 184 Collection accounts 60 57 Financial guarantees 26 10 1,132 251

In the Obligations payable account, there appears the amount of €1,046,000 at 31 December 2009, basically representing pending amounts payable at 31 December 2009 and 2008 for “Other General Administration Expenses.”

12. Provisions

The breakdown of this item on the balance sheets at 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Funds for pensions and similar obligations 3,920 4,107 Provisions for contingent risks and commitments 12 5 Other provisions 92 - 4,024 4,112

The item “Funds for pensions and similar obligations” on the attached balance sheets includes the current value of post-employment commitments considered defined-benefit plans, as described in further detail in Note 2.K.

In accordance with the current collective agreement, the Company has a commitment to individuals with seniority at the bank from prior to 8 March 1980, to supplement Social Security benefits received by its employees for retirement, permanent disability, or status as widow(er) or orphan.

On 1 August 2008, the Company outsourced its pension commitments for active personnel, to an insurance policy underwritten by VidaCaixa, S.A. de Seguros y Reaseguros. The obligations incurred to retired personnel are covered by an internal fund totalling €3,732,000 and €3,933,000 and on 31 December 2009 and 2008, respectively.

The “Provisions for risks and contingent liabilities” item corresponds to the correction for impairment of contingent risks.

Changes during financial years 2009 and 2008 under the Provisions item are shown below:

Thousands of euros 2009 2008

Pensions and

similar obligations

Risks and contingent liabilities

Other provisions

Pensions and similar

obligations

Risks and contingent liabilities

Other provisions

Balance at start of year 4,107 5 - 4,248 - - Contributions to income: 147 7 92 53 5 -

Interest and similar charges (Note 20) 154 - - 167 - -

Contributions to provisions (Note 26) (7) 7 92 (114) 5 -

Transfers - - - 174 - -

Recoveries - - - - - -

Utilisations (348) - - (368) - -

Other changes 14

Balance at year-end 3,920 12 92 4,107 5 -

The balance of “Other provisions” shows provisions to address disability commitments to the Entity’s personnel.

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13. Remaining liabilities

The breakdown of the Remaining Liabilities item on the balance sheets at 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Accruals 143 297 Other – Transactions in progress - - 143 297

The breakdown of Accruals as at 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Expenses accrued but not due 48 229 Personnel expenses accrued but not due 95 68 143 297

14. Shareholders' equity

14.1 – Share capital

As at 31 December 2009 and 2008, share capital consisted of 961,264 shares of 53.05 euros par value each, completely subscribed and disbursed.

At 31 December 2009 and 2008, the Company shareholders and the percentage representation of the Share Capital is as follows:

Shareholders % of ownership

2009 2008 Caixa d’Estalvis i Pensions de Barcelona 99.99% 99.99% Caixa Corp S.A. 0.01% 0.01% Total 100% 100%

14.2 – Reserves

Movements in this item during financial year 2009 were as follows:

Thousands of euros Legal reserves

Voluntary reserve Other reserves Surplus Income

Initial balance 10,199 8,781 (70) 7 3,434Shareholder contributions - - - - -Distribution of retained earnings from the previous year - 3,441 - (7) (3,434)Income for the year - - - - 6,613Ending balance 10,199 12,222 (70) - 6,613

In accordance with the Amended Text of the Corporations Law, entities that earn profits in one financial year must contribute 10% of the year’s profits to Legal Reserve. These contributions must continue until the Legal Reserve totals at least 20% of the share capital disbursed. The Legal Reserve may be used to increase Share Capital for the portion of its balance that exceeds 10% of the Share Capital already increased. Until it totals 20% of Share Capital, the Legal Reserve may only be allocated to offset losses, provided there are no other sufficient reserves for this purpose. At 31 December 2009 and 2008 the legal reserve was completely provided for.

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15. Valuation adjustments

Cash flow hedges

This item on the attached balance sheets shows the amount of changes in value in financial derivatives designated as hedging instruments in cash flow hedges, in the share of the aforementioned changes considered as being “effective hedges” (see Note 2.b).

Following are movements in the balance of this item during financial year 2009:

31-12-2008 Amounts transferred to the income statement

(after taxes)

Capital gains and losses by valuation

Deferred tax liabilities/ assets 31-12-2009

- - (166) - (166)

16. Tax situation

16.1 Financial years subject to tax audit

Starting in financial year 1997, the Company is subject to corporate tax under the consolidated reporting system within the “la Caixa” group, the dominant entity of which is Caixa d’Estalvis i Pensions de Barcelona “la Caixa”, “la Caixa” has the intention of maintaining the tax system of the groups of companies in the corporate tax in coming years, and to this end has issued timely notification to the tax authorities.

The fact that the Entity has submitted a consolidated corporate tax return does not ensure that the corporate tax accrued by the Entity differs significantly from that which would occur in the case of individual taxation.

For the taxes applicable to it, the Company has opened up the following financial years for audit:

Financial years

Corporate Tax 2005-2009

Withholdings/income to the share capital account 2006-2009

Withholding for the non-resident tax account 2006-2009

Withholding/ income to the property-leasing account 2006-2009

Withholding/ income to the labour/professional compensation account 2006-2009

Value-added tax 2006-2009

Due to the various interpretations that might be made of the tax regulations applicable to transactions carried out by the Entity for the years pending audit, there may be certain contingent tax liabilities not subject to objective quantification. Nevertheless, in the opinion of the Entity’s Directors, the possibility that such contingent liabilities will materialise in future audits is remote and, in any case, any tax debt that might result from them would not significantly affect these annual financial statements.

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16.2 Reconciliation of book and tax income

The reconciliation between book income in financial years 2009 and 2008, and the taxable bases of the corporate tax, is as follows:

Thousands of euros 2009 2008

Book income before taxes 9,369 4,992Permanent differences - - Increase due to permanent differences 154 167Decrease due to permanent differences (354) (482)Adjusted book income 9,169 4,677 Complete prior payment (30%) 2,751 1,403Other adjustments 5 155Accrued corporate tax expense 2,756 1,558

Under current tax regulation, certain temporary differences have occurred in 2009 and 2008 that must be taken into account when estimating income tax to be paid to the public authorities:

Thousands of euros 2009 2008

Prior taxable base 9,169 4,992 Temporary differences - - Increase for temporary differences - - Generated during the year 1,197 328 Recoveries from previous years - - Total increase due to temporary differences 1,197 328 Decrease due to temporary differences - - Recoveries during the year - - Recoveries from previous years (241) (314) Total decrease due to temporary differences (241) (314) Tax base 10,125 5,006 Complete prior payment 3,037 1,502 Offset of cooperative payments lost - - Complete payment 3,037 1,502 Donations - - Deduction for contributions to the pension plan - - Positive reduced payment 3,037 1,502 Withholdings and payments to account - - Split payments - - Payment due 3,037 1,502

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16.3 Deferred taxes

The differences between total tax credited and the amount payable correspond to advance and deferred taxes from temporary differences in the tax assessment, and are posted under the “Tax assets” and “Tax liabilities” items. The status of advanced and deferred taxes as at 31 December 2009 and 2008 is as shown in the following table:

Thousands of euros 2009 2008 Tax assets - deferred Deferred tax – generic contribution 352 - Deferred tax – sub-standard contribution 386 178 Deferred tax – labour disability coverage 27 - Contributions to pension funds 1,520 1,593 2,285 1,771 Tax liabilities - deferred Sale of interests to “la Caixa” 20,351 20,351 20,351 20,351

The movements experienced in financial years 2009 and 2008 in the balances of deferred asset and liability taxes are shown below: 2009

Thousands of euros Assets Liabilities Balance at start of year 1,771 20,351 Adjustments for previous years 228 - Corporate tax during the year - - Additions for sale of interests to “la Caixa” - - Decreases due to pension-fund differences (73) - Transfer and others 359 - Balance at year-end 2,285 20,351

2008

Thousands of euros Assets Liabilities Balance at start of year 1,696 20,303 Adjustments for previous years - - Corporate tax during the year - - Additions for sale of interests to “la Caixa” - - Decreases due to pension-fund differences (103) - Transfer and others 178 49 Balance at year-end 1,771 20,351

Deferred tax liabilities correspond to the sale of interests of 99.67% of FinanciaCaixa II, E.F.C., S.A., 99.998% of GDS-Cusa, S.A., 99% of CaixaRenting, S.A., 55% of Finconsum, E.F.C., S.A. and 20% of Telefónica Factoring E.F.C., S.A., which were transferred to “la Caixa” on 20 March 2007.

17. Fair value

Fair value of financial assets and liabilities

Regarding the fair value of the items making up the balance sheet, it should be noted that it does not produce significant effects on the balance sheet.

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18. Other significant information

a) Financial guarantees and other surety provided

Financial guarantees are understood as being those amounts that the Entity must pay on behalf of third parties in the event of failure to do so by those originally obligated to make the payment, in response to commitments assumed by the latter during the course of its normal activity.

A significant part of these amounts will come due without any payment obligation by the Entity materialising, and therefore the combined balance of these commitments may not be considered as an actual future need for financing or liquidity to be granted to third parties by the Entity.

Revenue obtained from guarantee instruments is posted to the “Fee and commission income” and “Interest and similar income” items (for the amount corresponding to the adjusted value of fees and commissions) in the income statements for financial years 2009 and 2008, and is calculated by applying the rate set in the agreement applicable to the nominal value of the guarantee.

Provisions posted to cover the provision of these guarantees, which have been calculated by applying criteria similar to those applied in calculating the impairment of financial assets valued at depreciated cost, have been posted to the “Provisions- Provisions for risks and contingent liabilities” item of the balance sheet (see Note 12).

Following is a detail of the financial guarantees and other sureties provided at 31 December 2009 and 2008, in accordance with the maximum risk assumed by “la Caixa” in relation to the same:

Thousands of euros 2009 2008 Financial guarantees 417 207 Other sureties - - 417 207

b) Balances and transactions with Group companies

The detail of balances with Group companies as at 31 December 2009 and 2008, from transactions occurring in the financial year ending on that date, is as follows:

31 December 2009

Thousands of euros Asset balances

Liability balances Expenses Revenue

“la Caixa” 6,221 73,059 3,454 71 Welfare Projects “la Caixa” 362 - - 3,647 VidaCaixa 188 11 - Foment Immobiliari Assequible II - 1 8 - Sumasa - 1 8 - Servicios Informáticos “la Caixa” - 112 1,326 - CaixaRenting - 1 40 - GDS-Cusa - 15 142 - 6,771 73,189 4,989 3,718

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31 December 2008

Thousands of euros Asset balances

Liability balances Expenses Revenue

“la Caixa” 115 41,217 1,139 689 Welfare Projects “la Caixa” 1,022 - - 3,611 VidaCaixa 174 - 18 - Foment Immobiliari Assequible II - - 1 - Allglobal Names - - 1 - Foment Immobiliari Assequible II - - 41 - Sumasa - 35 5 - Servicios Informáticos “la Caixa” - 132 1,367 - CaixaRenting - - 20 - GDS-Cusa - - 19 - Servihabitat - - 1 - “la Caixa” - - 2 - e-la Caixa - - 34 - 1,311 41,384 2,648 4,300

c) Transactions with related parties

The Entity has engaged in no transactions with related parties other than those shown in Notes 5 and 18.b, posted to the annual financial statements of 31 December 2009 and 2008.

19. Interest and similar income

This item of the attached income statements contains interest accrued during the year by yield-bearing financial assets, implicit or explicit, obtained from applying the effective interest rate method, as well as corrections of revenue as a consequence of accounting hedges.

Next is a breakdown of the source of interest and similar income accrued in favour of the Company during financial years 2009 and 2008:

Thousands of euros 2009 2008 Deposits with credit institutions 9 689 Loans to customers 19,969 8,237 Doubtful assets 77 27 Correction of revenue due to hedging activities 61 - 20,116 8,953

20. Interest and similar charges

This item of the attached income statements contains interest accrued during the year by yield-bearing financial assets, implicit or explicit, obtained from applying the effective interest rate method, as well as corrections of costs as a consequence of accounting hedges.

The breakdown of the balance of this item on the income statements for financial years 2009 and 2008 is as follows:

Thousands of euros 2009 2008

Deposits from credit institutions 2,136 780

Customer deposits 2 -

Correction of expenses due to hedging activities 191 -

Interest cost of pension funds (Note 12) 154 167 2,483 947

45

The balance of “Deposits with credit institutions” accrued during financial year 2009 corresponds to interest accrued due to the provision of the line of credit and loans granted from “la Caixa” totalling €177,000 and €1,611,000, respectively. The remaining amount corresponds to interest accrued by cash provisions for loans from the Council of Europe Development Bank, totalling €348,000.

21. Fee and commission income

Following is the total revenue from fees and commissions accrued in financial years 2009 and 2008, classified in accordance with the major categories from which they originated:

Thousands of euros 2009 2008

Fees and commissions for contingent risks 12 2 Fees and commissions for collection and payment services 39 6 Other fees and commissions 128 2 179 10

The balance of “Other fees and commissions” corresponds basically to fees and commissions received by the Bank to maintain customer deposits.

22. Fee and commission paid

All fees and commissions paid in financial years 2009 and 2008 correspond to fees and commissions assigned to other entities and correspondents.

23. Other operating income

The breakdown of the balance of this item on the income statements for financial years 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Financial fees and commissions offsetting direct costs 1,983 1,083 Other recurring revenue 7,530 6,218 9,513 7,301

The balance of “Other recurring revenue” corresponds to sums received for “la Caixa” Welfare Projects in accordance with the collaboration agreement signed, through which the Welfare Projects makes funds available to the Company so that it may carry out the social works entrusted to it. It also includes revenue from the subsidy granted by the FEI for transactions in default up to a pre-set maximum. At 31 December 2009, €362,000 and €4,414,000, respectively, were pending collection for both items (see Note 10).

24. Administrative Expenses

24.1. – Personnel expenses

The composition of the “Personnel expenses” item of the income statements for financial years 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Salaries and bonuses to active personnel 1,022 754 Social security contributions 134 107 Training expenses 5 13 Other personnel expenses 33 33 1,194 907

46

As at 31 December 2009 and 2008, the distribution by Entity category was as follows:

31 December 2009 31 December 2008

Men Women Total Men Women Total

Senior Management 4 3 7 4 3 7Administration - 6 6 - 6 6 4 9 13 4 9 13

The average number of employees in financial years 2009 and 2008, and their distribution by category and gender, does not differ significantly from the number of employees at 31 December 2009 and 2008, respectively, as shown in the above table.

24.2 Other general administrative expenses

The breakdown of the balance of this item on the income statements for financial years 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Buildings, facilities and materials 310 320 Computer equipment 1,226 1,360 Communications 83 25 Publicity and advertising 1,306 32 Technical reports - 3 By government and oversight bodies 658 601 Personnel travel and representation expenses 328 221 Association dues 17 21 Subcontracted administrative services 1,672 739 Contributions and taxes 85 15 Other expenses 19 53 5,704 3,390

In the Subcontracted Administrative Services sub-item, the Entity posted expenses to Caixa d’Estalvis i Pensions de Barcelona under the agreement entered into with the latter by which it undertakes to promote, enter into and formalise micro-lending transactions and services on behalf of MicroBank de “la Caixa”, S.A., and expenses incurred in providing management, administration and monitoring services for all transactions with or without the intervention of “la Caixa” as agent, for a total of €1,406,000.

Total fees for the audit of the financial statements for financial year 2009 by Deloitte, S.L. were €39,000. In financial year 2008, the amount of fees paid to Pricewaterhouse Coopers Auditors, S.L. for auditing services on the annual financial statements for financial year 2008 was €32,000.

25. Depreciation

The breakdown of this item on the income statements for the financial years ending 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Tangible assets: For own use (see Note 9.1) 20 31 Intangible assets (see Note 9.2) 1 1 21 32

47

26. Contributions to provisions (net)

The breakdown of this item on the income statement for the financial years ending 31 December 2009 and 2008 is as follows (see Note 12):

Thousands of euros 2009 2008 Contributions to pension funds and similar obligations (7) (114) Provisions for contingent risks and commitments 7 5 Other provisions 92 - 92 (109)

27. Losses due to impairment of financial assets (net)

The breakdown of this item on the income statements for the financial years ending 31 December 2009 and 2008 is as follows:

Thousands of euros 2009 2008 Lending investments 10,880 6,092 Contributions to the hedging fund (see Note 6.3) 12,066 7,551 Amortisation of loans without funds - - Recoveries from the hedging fund (see Note 6.3) (937) (1,388) Recoveries of defaults (see Note 6.4) (249) (71)Other financial instruments not valued at fair value with changes in losses and gains - - 10,880 6,092

28. Customer Service Department

At a meeting held by the Company’s Board of Directors on 20 July 2004, the following agreements were adopted:

1. Adhering to the Customer Protection Regulation for the “la Caixa” Group. 2. Assuming responsibility for the Customer Service Department, through the individual that performs this

task for “la Caixa”. 3. Consenting to and assuming responsibility for serving as Consumer Ombudsman, in the institution

known as “Defensor del Cliente de las Cajas de Ahorro Catalana,” within the Federación Catalana de Cajas de Ahorro [Catalan Federation of Savings Banks], subject to the current provisions of its specific Regulation.

The aforementioned regulation entered into force in financial year 2004, becoming completely operational as at financial year 2005. Article 17.2 of Order ECO/734/2004 of 11 March, on Customer Service Departments and Consumer Ombudsmen for Financial Entities, states that the report on the annual financial statements should briefly summarise the contents of the report on the Entity’s Customer Service Department. This summary is as follows:

• The Customer Service Department and Consumer Ombudsman received 6 claims in financial year 2009, resolving all of them within the established legal period.

29. Subsequent events

During the period from 31 December 2009 and the date of formulation of these annual financial statements, no other event occurred that significantly affected the Entity.

48

MicroBank de “la Caixa”, S.A. Management Report for the financial year ending 31 December 2009

• The economic income and financial situation of MicroBank have evolved in accordance with the projections made for this financial year, as it posted after-tax income of €6,613,000.

• The commercial development of the activity was favourable, displaying notable growth compared to the previous year, both in the number of loans made and the amounts paid.

• Performance of the lending portfolio was considered adequate for the profile of operations realised.

• The ratio of loans transferred to default risks against the number of loans issued at 31 December 2009 and 2008, reached 3.71% and 3%, respectively.

• On 29 December 2009 the existing agreement between MicroBank and the European Investment Fund (EIF), within the scope of the CIP (Competitiveness and Innovation Framework Programme) of the European Commission, , in force until 31 December 2009, was renewed, expanding the period for risk hedging granted by this body until 31 December 2011.

• Over the course of 2009, the €30,000,000, loan granted by the Development Bank of the Council of Europe (CEB) was drawn in full, and on 10 December a new financing operation between said Entity and MicroBank with a value of €50,000,000 was signed, of which €25,000,000 was made available before the end of the year.

• The “la Caixa” Welfare Projects collaborated economically with MicroBank for the purposes arising from its agreed social Works, in the amount established in the agreement signed for 2008 to 2010.

• Following are other significant events that occurred in financial year 2009:

o Application before Banco de España to use the criteria proposed for calculating equity by credit risk.

o Expansion of the substandard provision for social microcredit operations to 24%.

o Maintenance of the complete hedging for non-credit risks in our loan portfolio.

o Renewal of existing financial activities with “la Caixa” in accordance with anticipated needs.

o Authorisation to act as collecting Entity and capacity to pay taxes, benefits and subsidies by direct debit.

o Adherence to the Global Compact of the United Nations regarding Social Responsibility.

o Inclusion of MicroBank in the Council of European Microfinance Network (EMN)

o In 2009 MicroBank received inspection visits from the European Investment Fund and Development Bank of the Council of Europe

49

50

• MicroBank de “la Caixa” has at 31 December 2009 a total workforce of 12 persons.

• The expected performance of the Bank for financial year 2010 is growth similar to that of financial year 2009

• No investments were made in R&D during financial year 2009.

• The Bank did not acquire any treasury shares in financial year 2009.

• During the period from 31 December 2009 and the date of formulation of these annual financial statements, no other event occurred that significantly affected the Entity.

MicroBank de “la Caixa”, S.A. Preparation of the annual financial statements A measure undertaken by the Secretary of the Board of Directors of MicroBank de “la Caixa”, S.A., D. Sebastián Sastre Papiol, to demonstrate that each and every one of the members of the Board of Directors of MicroBank de “la Caixa”, S.A., at its meeting of 15 March 2010, prepared, through this document consisting of XX pages of sealed, Class 8 paper, numbered from No. XXXXXXX to XXXXXXX, both inclusive, used only on their reverse side, and inspected by me for purposes of identification, the annual financial statements and management report of MicroBank de “la Caixa”, S.A. for the financial year ending 31 December 2009 for examination by the auditors, signed by each and every one of the directors, whose first and last names appear below on this document.

Mr. José Francisco de Conrado Villalonga Mr. José Juan Pintó Ruiz (Chairman) (Vice Chairman) Mr. Sebastián Sastre Papiol Mr. Evaristo del Canto Canto (Director and Secretary) (Director) Mr. Juan Carlos Gallego González Mr. Miguel Noguer Planas (Director) (Director) Sra. Maria Dolors Llobet Maria Mr. Josep Ramón Montserrat Miró (Director) (Director) Mr. Manuel Romera Gómez Mr. Juan Reguera Díaz (Director) (Director)

ASSETS 31.12.09 31.12.08(*) LIABILITIES AND SHAREHOLDERS' EQUITY 31.12.09 31.12.08 (*)CASH AND CENTRAL BANK DEPOSITS - - LIABILITIES

TRADING PORTFOLIO - TRADING PORTFOLIO - - Deposits at credit entities - - Central bank deposits - - Loans to clients - - Credit entity deposits - - Debt instruments - - Client deposits - - Equity instruments - - Debits representing negotiable securities - - Trading derivatives - - Trading derivatives - -Adjustment accounts: Loans or in guarantee - - Short securities positions - -

Other financial liabilities - -OTHER FINANCIAL ASSETS AT REASONABLE VALUE WITH CHANGES IN GAINS AND LOSSES - - OTHER FINANCIAL LIABILITIES AT REASONABLE VALUE WITH Deposits at credit entities - - CHANGES IN GAINS AND LOSSES - - Loans to clients - - Central bank deposits - - Debt instruments - - Credit entity deposits - - Equity instruments - - Client deposits - - Trading derivatives - - Debits representing negotiable securities - -Adjustment accounts: Loans or in guarantee Subordinated liabilities - -FINANCIAL ASSETS AVAILABLE FOR SALE - - Other financial liabilities - - Debt instruments - - Equity instruments - - FINANCIAL LIABILITIES AT DEPRECIATED COST (Note 11) 140.329 51.017Adjustment accounts: Loans or in guarantee - - Central bank deposits - -

Credit entity deposits 128.018 48.718LOAN INVESTMENTS (Note 6) 237.838 143.705 Client deposits 11.179 2.048 Deposits at credit entities 6.193 115 Debits representing negotiable securities - - Loans to clients 231.645 143.590 Subordinated liabilities - - Debt instruments - - Other financial liabilities 1.132 251 Other financial assets - -Adjustment accounts: Loans or in guarantee

ADJUSTMENTS TO FINANCIAL LIABILITIES FOR MACRO-HEDGES - -- -

PORTFOLIO OF INVESTMENTS AT MATURITY - - HEDGING DERIVATIVES (Note 7) 253 -Adjustment accounts: Loans or in guarantee

- - RELATED LIABILITIES WITH NON-CURRENT ASSETS FOR SALE - -ADJUSTMENTS TO FINANCIAL ASSETS FOR MACRO-HEDGES

28 - PROVISIONS (Note 12) 4.024 4.112HEDGING DERIVATIVES (Note 7) Funds for pensions and similar obligations 3.920 4.107

- - Provisions for taxes and legal contingencies - -NON-CURRENT ASSETS FOR SALE Provisions for risks and contingent commitments 12 5

- - Other provisions 92 -EQUITY INTERESTS - - Related entities - - TAX LIABILITIES (Note 16) 20.351 20.351 Multi-Group entities - - Current - - Group entities Deferred 20.351 20.351

188 174PENSION-RELATED INSURANCE POLICIES (Note 8)

70 74 SOCIAL WORKS FUND - -TANGIBLE ASSETS (Note 9) 70 74 Tangible fixed assets 70 74 REMAINING LIABILITIES (Note 13) 143 297 For own use - - Assigned in operating lease - - PRINCIPAL REDEEMABLE AT SIGHT - - Assigned to social works - - Real estate investments - - TOTAL LIABILITIES 165.100 75.777Adjustment accounts: acquired in financial lease

1 2 NET EQUITY 79.793 73.346INTANGIBLE ASSETS - - Goodwill 1 2 SHAREHOLDERS' EQUITY 79.959 73.346 Other intangible assets Share Capital (Note 14.1) 50.995 50.995

2.292 1.774 Registered 50.995 50.995TAX ASSETS (Note 16) 7 3 Less: non-compulsory capital - - Current 2.285 1.771 Issuance premium - - Deferred Reserves (Note 14.2) 22.351 18.917

4.476 3.394 Accumulated reserves (losses) - -REMAINING ASSETS (Note 10) Other equity instruments - -

Compound financial instruments - - Equity contributions and related funds - - Remaining equity instruments - -Less: treasury shares - -Income for the year (Note 4) 6.613 3.434Less: dividends and compensation - -

VALUATION ADJUSTMENTS (Note 15) (166) -Financial assets available for sale - - Cash-flow hedges (166) - Hedges of net investments in foreign businesses - - Exchange rate variations - - Non-current assets for sale - - Remaining valuation adjustments - -

TOTAL ASSETS 244.893 149.123 TOTAL LIABILITIES AND NET EQUITY 244.893 149.123

ADJUSTMENT ACCOUNTSCONTINGENT RISKS (Note 18) 417 207CONTINGENT COMMITMENTS - -

Notes 1 to 29 described in the Report form an integral part of the balance sheet as at 31 December 2009.

MICROBANK DE LA CAIXA, S.A.

BALANCE SHEETS AT 31 DECEMBER 2009 AND 2008 (Thousands of euros)

(*) Presented solely for purposes of comparison

1

2009 2008 (*)

INTEREST AND SIMILAR RETURNS (Note 19) 20.116 8.953INTEREST AND SIMILAR CHARGES (Note 20) (2.483) (947)

INTEREST MARGIN 17.633 8.006

YIELD ON EQUITY INSTRUMENTS - -COMMISSIONS RECEIVED (Note 21) 179 10COMMISSIONS PAID (Note 22) (59) (8)INCOME FROM FINANCIAL ACTIVITIES (net) - - Trading portfolio - - Other financial investments at reasonable value with changes in gains and losses - - Financial instruments not valued at reasonable value with changes in gains and losses - - Other - -EXCHANGE RATE DIFFERENCES (net) - -OTHER OPERATING REVENUE (Note 23) 9.513 7.301OTHER OPERATING CHARGES (6) (5)

GROSS MARGIN 27.260 15.304

ADMINISTRATIVE EXPENSES (6.898) (4.297) Personnel expenses (Note 24.1) (1.194) (907) Other general administrative expenses (Note 24.2) (5.704) (3.390)DEPRECIATION (Note 25) (21) (32)PROVISIONS (NET) (Note 26) (92) 109LOSSES DUE TO IMPAIRMENT OF FINANCIAL ASSETS (NET) (Note 27) (10.880) (6.092) Credit investments (10.880) (6.092) Other financial instruments not valued at reasonable value with changes in gains and losses - -

INCOME FROM OPERATING ACTIVITIES 9.369 4.992

LOSSES DUE TO IMPAIRMENT OF REMAINING ASSETS (net) - - Goodwill and other intangible assets - - Other assets - -

GAINS (LOSSES) FROM THE WRITE-OFF OF ASSETS NOT CLASSIFIED AS CURRENT FOR SALE - -

NEGATIVE DIFFERENCE IN BUSINESS COMBINATIONS - -

GAINS (LOSSES) FROM NON-CURRENT ASSETS FOR SALE NOT CLASSIFIED AS SUSPENDED ACTIVITIES - -

PRE-TAX INCOME 9.369 4.992

INCOME TAX (Note 16) (2.756) (1.558)MANDATORY CONTRIBUTION TO SOCIAL WORKS AND FUNDS - -

INCOME FOR THE YEAR FROM ONGOING OPERATIONS 6.613 3.434

INCOME FROM SUSPENDED OPERATIONS - -

INCOME FOR THE YEAR 6.613 3.434

MICROBANK DE LA CAIXA, S.A.

PROFIT AND LOSS STATEMENTSFOR THE FINANCIAL YEARS ENDING

31 DECEMBER 2009 AND 2008(Thousands of euros)

(*) Presented solely for purposes of comparisonNotes 1 to 29 described in the Report form an integral part of the balance sheet as at 31 December 2009.

2

Fin. Year Fin. Year2009 2008 (*)

A) INCOME FOR THE YEAR 6.613 3.434

B) OTHER RECOGNISED REVENUE AND EXPENSES (166) -

Financial assets available for sale - -Gains (losses) due to appreciation - -Amounts transferred to the profit and loss account - -Other reclassifications - -

Cash flow hedges (166) -Gains (losses) due to appreciation (296) -Amounts transferred to the profit and loss account 130 -Amounts transferred at the initial value of hedged items - -Other reclassifications - -

Hedges of net investments in foreign businesses - -Gains (losses) due to appreciation - -Amounts transferred to the profit and loss account - -Other reclassifications - -

Exchange rate differences - -Gains (losses) due to appreciation - -Amounts transferred to the profit and loss account - -Other reclassifications - -

Non-current assets for sale - -Gains (losses) due to appreciation - -Amounts transferred to the profit and loss account - -Other reclassifications - -

Actuarial gains (losses) in pension plans - -

Entities valued using the equity method - -Gains (losses) due to appreciation - -Amounts transferred to the profit and loss account - -Other reclassifications - -

Remaining recognised revenue and expenses - -

Income tax - -

TOTAL RECOGNISED REVENUE AND EXPENSES (A + B) 6.447 3.434

MICROBANK DE LA CAIXA, S.A.

STATEMENTS OF CHANGES IN NET EQUITY

STATEMENTS OF REVENUES AND EXPENSES RECOGNISED DURING THEFINANCIAL YEARS ENDING 31 DECEMBER 2009 AND 2008

(Thousands of euros)

(*) Presented solely for purposes of comparisonNotes 1 to 29 described in the Report form an integral part of the balance sheet as at 31 December 2009.

3

NET ASSETS TOTAL NET ASSETS

SHAREHOLDERS' EQUITY VALUATION ADJUSTMENTS

Capital Reserves Other equity instruments

Income for the year

Less: dividends and compensation

Total shareholders

' equity

1. Ending balance at 31 December 2008 50.995 18.917 - 3.434 - 73.346 - 73.3461.1 Adjustments for changes in accounting criteria - - - - - - - -1.2 Adjustments for errors - - - - - - - -

2. Adjusted starting balance 50.995 18.917 - 3.434 - 73.346 - 73.346

3. Total recognised revenue and expenses - - - 6.613 - 6.613 (166) 6.447

4. Other changes in net assets - 3.434 - (3.434) - - - -4.1. Increases in appropriations - - - - - - - -4.2. Decreases in appropriations - - - - - - - -4.3. Conversion of financial liabilities to share capital - - - - - - - -4.4. Increases in other equity instruments - - - - - - - -4.5. Reclassification of financial liabilities to other equity instruments - - - - - - - -4.6. Reclassification of other equity instruments to financial liabilities - - - - - - - -4.7. Distribution of dividends/ Compensation to shareholders - - - - - - - -4.8. Transactions involving shareholders' equity (net) - - - - - - - -4.9. Transfers between net asset items - 3.434 (3.434) - - - -4.10. Increases (reductions) due to business combinations - - - - - - - -4.11. Discretionary contribution to social works - - - - - - - -4.12. Payments with equity instruments - - - - - - - -4.13. Remaining increases (decreases) in net equity - - - - - - - -

5. Ending balance at 31 December 2009 50.995 22.351 - 6.613 - 79.959 (166) 79.793

NET ASSETS TOTAL NET ASSETS

SHAREHOLDERS' EQUITY VALUATION ADJUSTMENTS

Capital Reserves Other equity instruments

Income for the year

Less: dividends and compensation

Total shareholders

' equity

1. Ending balance at 31 December 200750.995 15.420 - 61.017 (54.848) 72.584 - 72.584

1.1 Adjustments for changes in accounting criteria - - - - - - - -

1.2 Adjustments for errors - - - - - - - -

2. Adjusted starting balance 50.995 15.420 - 61.017 (54.848) 72.584 - 72.584

3. Total recognised revenue and expenses - - - 3.434 - 3.434 - 3.434

4. Other changes in net assets - 3.497 - (61.017) 54.848 (2.672) - (2.672)4.1. Increases in appropriations - - - - - - -4.2. Decreases in appropriations - - - - - - - -4.3. Conversion of financial liabilities to share capital - - - - - - - -4.4. Increases in other equity instruments - - - - - - - -4.5. Reclassification of financial liabilities to other equity instruments - - - - - - - -4.6. Reclassification of other equity instruments to financial liabilities - - - - - - - -4.7. Distribution of dividends/ Compensation to shareholders - - - (57.520) (57.520) - (57.520)4.8. Transactions involving shareholders' equity (net) - - - - - - - -4.9. Transfers between net asset items - 3.497 - (3.497) 54.848 54.848 - 54.8484.10. Increases (reductions) due to business combinations - - - - - - - -4.11. Discretionary contribution to social works - - - - - - - -4.12. Payments with equity instruments - - - - - - - -4.13. Remaining increases (decreases) in net equity - - - - - - - -

5. Ending balance at 31 December 2008 50.995 18.917 - 3.434 - 73.346 - 73.346

(*) Se presenta, única y exclusivamente, a efectos comparativos

(Thousands of euros)

Notes 1 to 29 described in the Report form an integral part of the balance sheet as at 31 December 2009.

MICROBANK DE LA CAIXA, S.A.

STATEMENTS OF CHANGES IN NET EQUITY (continued)

STATEMENTS OF REVENUE AND EXPENSES RECOGNISED DURING THEFINANCIAL YEARS ENDING 31 DECEMBER 2009 AND 2008

4

Fin. Year Fin. Year2009 2008 (*)

A) CASH FLOWS FROM OPERATING ACTIVITIES 6.094 (52.783)

1. Income for the year 6.613 3.434

2. Adjustments to obtain cash flow from operating activities11.242 7.741

2.1 Depreciation 21 322.2 Other adjustments 11.221 7.709

3. Net increase/ decrease in operating activities (100.826) (112.421)3.1 Trading portfolio - -3.2 Other financial assets at reasonable value with changes in losses and gains - -3.3 Financial assets available for sale - -3.4 Credit investments (99.184) (110.033)3.5 Other operating assets (1.642) (2.388)

4. Net increase/ decrease in operating liabilities 89.065 48.4634.1 Trading portfolio - -4.2 Other financial assets at reasonable value with changes in losses and gains - -4.3 Financial liabilities at depreciated cost 89.312 50.2634.4 Other operating liabilities (247) (1.800)

5. Collections/ Payments due to income tax - -

B) CASH FLOW FROM INVESTMENT ACTIVITIES (16) (75)

6. Payments - -6.1 Tangible assets - -6.2 Intangible assets - -6.3 Equity interests - -6.4 Dependent entities and other business units - -6.5 Non-current assets and related liabilities for sale - -6.6 Portfolio of matured investments - -6.7 Other payments related to investment activities - -

7. Collections (16) (75)7.1 Tangible assets (16) (73)7.2 Intangible assets - (2)7.3 Equity interests - -7.4 Dependent entities and other business units - -7.5 Non-current assets and related liabilities for sale - -7.6 Portfolio of matured investments - -7.7 Other payments related to investment activities - -

C) CASH FLOWS FROM FINANCING ACTIVITIES - (2.672)

8. Payments - (2.672)8.1 Dividends - (2.672)8.2 Subordinated liabilities - -8.3 Amortisation of equity instruments - -8.4 Acquisition of equity instruments - -8.5 Other payments related to financing activities - -

9. Collections - -9.1 Subordinated liabilities - -9.2 Issuance of equity instruments - -9.3 Transfer of equity instruments - -9.4 Other collections related to financing activities - -

D) EFFECT OF CHANGES IN EXCHANGE RATES - -

E) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C+D) 6.078 (55.530)

F) CASH AND CASH EQUIVALENTS AT START OF PERIOD 115 55.645

G) CASH AND CASH EQUIVALENTS AT END OF PERIOD 6.193 115

ADJUSTMENT ACCOUNTS:

COMPONENTS OF CASH AND CASH EQUIVALENTS AT END OF PERIOD1.1 Cash - -1.2 Cash-equivalent balances at central banks - -1.3 Other financial assets - -1.4 Deposits at credit entities 6.193 1151.4 Less: bank overdrafts repayable at sight - -Total cash and cash equivalents at end of period 6.193 115

(*) Presented solely for purposes of comparisonNotes 1 to 29 described in the Report form an integral part of the balance sheet as at 31 December 2009.

MICROBANK DE LA CAIXA, S.A.

CASH FLOW STATEMENTS FOR THE FINANCIAL YEARSENDING 31 DECEMBER 2009 AND 2008

(Thousands of euros)

5