BBVA Continental-Preliminary Offering Circular.pdf

8/9/2019 BBVA Continental-Preliminary Offering Circular.pdf

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IMPORTANT NOTICE

THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1)

QUALIFIED INSTITUTIONAL BUYERS (QIBs) (WITHIN THE MEANING OFRULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES

ACT)) OR (2) NON-U.S. PERSONS (WITHIN THE MEANING OF REGULATION S

UNDER THE SECURITIES ACT) OUTSIDE THE UNITED STATES.

IMPORTANT: You must read the following before continuing. The following applies to the

information memorandum following this page (the Information Memorandum), and you aretherefore advised to read this carefully before reading, accessing or making any other use of the

Information Memorandum. In accessing the Information Memorandum, you agree to be bound

by the following terms and conditions, including any modifications to them any time you receiveany information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF

SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THESECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OROTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD

WITHIN THE U.S. OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS

DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TOAN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE

REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE LAWS

OF OTHER JURISDICTIONS. THE INFORMATION MEMORANDUM AND THE OFFEROF THE NOTES ARE ONLY ADDRESSED TO AND DIRECTED AT PERSONS IN

MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED

INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS

DIRECTIVE (DIRECTIVE 2003/71/EC) AND RELATED IMPLEMENTATION MEASURESIN MEMBER STATES (QUALIFIED INVESTORS). IN ADDITION, IN THE UNITED

KINGDOM THE INFORMATION MEMORANDUM IS ONLY BEING DISTRIBUTED TO

PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TOINVESTMENTS FALLING WITHIN ARTICLES 19(1) AND 19(5) OF THE FINANCIAL

SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AND

OTHER PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED(ALL SUCH PERSONS TOGETHER REFERRED TO AS RELEVANT PERSONS). ANY

INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS INFORMATION

MEMORANDUM RELATES IS AVAILABLE ONLY TO (I) IN THE UNITED KINGDOM,RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EUROPEAN

ECONOMIC AREA OTHER THAN THE UNITED KINGDOM, QUALIFIED INVESTORS,AND WILL BE ENGAGED IN ONLY WITH SUCH PERSONS. IN ADDITION, NO

PERSON MAY COMMUNICATE OR CAUSE TO BE COMMUNICATED ANYINVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY, WITHIN

THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT

2000 (the FSMA), RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF


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You should rely only on the information contained in this offering circular. No one has been authorized toprovide you with information that is different. This document may only be used where it is legal to sell thesesecurities. The information in this document may only be accurate on the date of this document.

Unless otherwise indicated or the context otherwise requires, all references in this offering circular to theBank, refer to BBVA Continental and its consolidated subsidiaries. References to BBVA Continental arereferences to BBVA Continental only.

This offering is made in reliance upon an exemption from registration under the Securities Act for offersand sales of securities that do not involve a public offering. By purchasing the Notes, you will be deemed to havemade the acknowledgements, representations and agreements described under Notice to Investors in this offeringcircular. No offer is being made to sell the Notes in any jurisdiction except where such an offer or sale is permitted.The Notes may not be transferred or resold except as permitted under the Securities Act and related regulations andapplicable state securities laws. You should understand that you will be required to bear the financial risks of yourinvestment for an indefinite period of time.

The distribution of this offering circular, or any part thereof, and the offering, sale and delivery of the Notesin certain jurisdictions may be restricted by law. This offering circular may only be used for the purposes for whichithas been published. Any persons in possession of this offering circular are required to become familiar with and toobserve such restrictions. For a description of restrictions on offers, sales and deliveries of the Notes and on the

distribution of this offering circular, see Notice to Investors and Plan of Distribution.

This offering circular does not constitute an offer of, or an invitation by or on behalf of any entity, or any ofsuch entitys directors, officers and affiliates to subscribe for or purchase any securities in any jurisdiction to anyperson to whom it is unlawful to make such an offer in such jurisdiction. Each purchaser of the Notes must complywith all applicable laws and regulations in force in each jurisdiction in which it purchases, offers or sells such Notesor possesses or distributes this offering circular and must obtain any consent, approval or permission required by itforthe purchase, offer or sale by it of such Notes under the laws and regulations in force in any jurisdiction to whichit is subject or in which it makes such purchases, offers or sales. Neither the delivery of this offering circular nor anysale made hereunder shall under any circumstances imply that there has been no change in the Banks affairs, or theaffairs of the Banks subsidiaries, or that the information set forth in this offering circular is correct as of any datesubsequent to the date of this offering circular.

This offering circular has been prepared solely for use in connection with the proposed offering of theNotes. Rights are reserved to reject any offer to purchase, in whole or in part, for any reason, or to sell less than allof the Notes offered by this offering circular. BBVA Securities Inc. (BBVA), Merrill Lynch, Pierce, Fenner &Smith Incorporated (BofA Merrill Lynch) and Goldman, Sachs & Co. (Goldman Sachs) will act as initialpurchasers with respect to the offering of the Notes. This offering circular is personal to you and does not constitutean offer to any other person or to the public in general to subscribe for or otherwise acquire the Notes.

Distribution of this offering circular by you to any person other than those persons retained to advise you isunauthorized, and any disclosure of any of the contents of this offering circular is prohibited.

You must (1) comply with all applicable laws and regulations in force in any jurisdiction in connection withthe possession or distribution of this offering circular and the purchase, offer or sale of the Notes, and (2) obtainany required consent, approval or permission for the purchase, offer or sale by you of the Notes under the laws and

regulations applicable to you in force in any jurisdiction to which you are subject or in which you make suchpurchases, offers or sales, and neither the Bank nor the initial purchasers or their agents have any responsibility therefor.See Notice to Investors for information concerning certain transfer restrictions applicable to the Notes.

You acknowledge that:

you have been afforded an opportunity to request from us, and to review, all additional informationconsidered by you to be necessary to verify the accuracy of, or to supplement, the informationcontained in this offering circular;


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you have not relied on any initial purchaser or its respective agents or any person affiliated with anyinitial purchaser or its respective agents in connection with your investigation of the accuracy of suchinformation or your investment decision; and

no person has been authorized to give any information or to make any representation concerning theBank or the Notes other than those as set forth in this offering circular. If given or made, any such

other information or representation should not be relied upon as having been authorized by us, theinitial purchasers or their agents.

The Notes are not deposits of the Bank and are not insured by the United States Federal Deposit InsuranceCorporation or any other United States governmental agency or any Peruvian banking governmental agency.

In making an investment decision, you must rely on your own examination of the business of the

Bank and the terms of this offering, including the merits and risks involved. None of the Securities and

Exchange Commission (the SEC), any state securities commission , the SMV nor any other regulatory

authority has made any recommendation with respect to an investment in the Notes. Furthermore, these

authorities have not confirmed the accuracy or determined the adequacy of this offering circular. Any

representation to the contrary is a criminal offense. You should not construe the contents of this offeringcircular as legal, business or tax advice. You should consult your own attorney, business advisor or taxadvisor.

This offering circular may only be used for the purpose for which it has been published. Neither the

initial purchasers nor any of their agents is making any representationor warranty as to the accuracy or

completeness of the information contained in this offering circular, and nothing contained in this offeringcircular is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Neitherthe initial purchasers nor any of their agents has independently verified all of such information and assumes

no responsibility for the accuracy or completeness of the information contained in this offering circular.

__________________

See Risk Factors beginning on page 21 of this offering circular for a description of certain factors relatingto an investment in the Notes, including information about the business of the Bank. None of the Bank, the initialpurchasers nor any of their respective representatives is making any representation to you regarding the legality of an

investment by you under applicable investment or similar laws. You should consult with your own advisors as tolegal, tax, business, financial and related aspects of an investment in the Notes.

YOU ARE HEREBY INFORMED THAT THE DESCRIPTION SET FORTH HEREIN WITH

RESPECT TO U.S. FEDERAL TAX ISSUES WAS NOT INTENDED OR WRITTEN TO BE USED, ANDSUCH DESCRIPTION CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF

AVOIDING ANY PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER UNDER THE U.S.INTERNAL REVENUE CODE. SUCH DESCRIPTION WAS WRITTEN TO SUPPORT THE

MARKETING OF THE NOTES. THIS DESCRIPTION IS LIMITED TO THE U.S. FEDERAL TAX ISSUES

DESCRIBED HEREIN. IT IS POSSIBLE THAT ADDITIONAL ISSUES MAY EXIST THAT COULDAFFECT THE U.S. FEDERAL TAX TREATMENT OF THE NOTES, OR THE MATTERS THAT ARE

THE SUBJECT OF THE DESCRIPTION NOTED HEREIN, AND THIS DESCRIPTION DOES NOT

CONSIDER OR PROVIDE ANY CONCLUSIONS WITH RESPECT TO ANY SUCH ADDITIONAL ISSUES.

TAXPAYERS SHOULD SEEK ADVICE BASED ON THE TAXPAYERS PARTICULAR

CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

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The Notes will be available initially only in book-entry form. The Notes that are offered and sold in theUnited States to U.S. Persons who are QIBs in reliance upon Rule 144A will be represented by beneficial interests ina global note in fully registered form without interest coupons (the Rule 144A Note). The Notes offered and soldoutside the United States to non-U.S. persons pursuant to Regulation S are expected to be represented by beneficial


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interests in a global note in fully registered form without interest coupons (the Regulation S Note, and togetherwith the Rule 144A Note, the Global Notes). The Global Notes will be deposited with a custodian for, andregistered in the name of a nominee of, The Depository Trust Company (DTC) for the accounts of its direct andindirect participants, including Euroclear Bank S.A./N.V., as operator ofthe Euroclear System and ClearstreamInternational S.A. After the initial issuance of the Global Notes, certificated notes may be issued in registeredform in very limited circumstances.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR ANAPPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THESTATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY ISEFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OFNEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATEOF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B ISTRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NORTHE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR ASECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE

HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, ORRECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY ORTRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TOANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANYREPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THISPARAGRAPH.

NOTICE TO PERU RESIDENTS

NEITHER THE NOTES NOR THE OFFERING CIRCULAR HAVE BEEN NOR WILL BE

REGISTERED WITH OR APPROVED BY THE PERUVIAN SUPERINTENDENCY OF THE

SECURITIES MARKETS (SUPERINTENDENCIA DEL MERCADO DE VALORESOR SMV) OR THE

LIMA STOCK EXCHANGE (BOLSA DE VALORES DE LIMAOR BVL). ACCORDINGLY, THENOTES CANNOT BE OFFERED OR SOLD IN PERU EXCEPT IN COMPLIANCES WITH THE

APPLICABLE PERUVIAN SECURITIES REGULATIONS.

APPLICATION HAS BEEN MADE WITH ALL THE PERUVIAN PRIVATE PENSION FUNDS

CURRENTLY EXISTING, IN ORDER FOR THEM TO ANALYZE AND QUALIFY THE NOTES AS

ELIGIBLE INVESTMENT ACCORDING TO THE APPLICABLE REGULATIONS.

NOTICE TO HONG KONG RESIDENTS

THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY

REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION INRELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF

THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.

NOTICE TO RESIDENTS IN THE UNITED KINGDOM

THIS COMMUNICATION IS ONLY BEING DISTRIBUTED TO AND IS ONLY DIRECTED

AT (I) PERSONS WHO ARE OUTSIDE THE UNITED KINGDOM OR (II) INVESTMENTPROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND

MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE ORDER) OR (III) HIGH

NET WORTH COMPANIES, AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE


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COMMUNICATED, FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER (ALL SUCH

PERSONS TOGETHER BEING REFERRED TO AS RELEVANT PERSONS). THE NOTES ARE

ONLY AVAILABLE TO, AND ANY INVITATION, OFFER OR AGREEMENT TO SUBSCRIBE,PURCHASE OR OTHERWISE ACQUIRE SUCH NOTES WILL BE ENGAGED IN ONLY WITH,

RELEVANT PERSONS. ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT

OR RELY ON THIS DOCUMENT OR ANY OF ITS CONTENTS.

WHERE YOU CAN FIND MORE INFORMATION

The following documents will be made available to the holders of the Notes, at the corporate trust office ofthe Trustee at no cost: copies of the Indenture (as defined herein) as well as this offering circular, the Banksincorporation documents and the annual audited consolidated financial statements of the Bank prepared inconformity with generally accepted accounting principles prescribed for financial institutions subject to supervisionby the Superintendency of Banks, Insurance and Private Pension Fund Administrators, or SBS (Peruvian GAAP).Information is also available at the office of the Luxembourg listing agent, so long as the Notes are listed on theLuxembourg Stock Exchange and the rules thereof so require.

Application is expected to be made to admit the Notes to listing on the Official List of the LuxembourgStock Exchange and to trade them on the Euro MTF market of such exchange in accordance with its rules. Thisoffering circular forms, in all material respects, the listing circular for admission to the Luxembourg Stock Exchange.

The Luxembourg Stock Exchange will require certain undertakings in connection with the listing of Notes, includingthe provision to it of certain financial information, so long as the Notes are listed on the Luxembourg StockExchange and the rules thereof so require.

ENFORCEMENT OF JUDGMENTS

The Bank is a bank organized and existing under the laws of Peru. All of its directors and officers resideoutside the United States, and all or a significant portion of the assets of such persons may be, and substantially all ofits assets are, located outside the United States. As a result, it may not be possible to effect service of process uponsuch persons or entities outside Peru or to enforce against them in the courts of jurisdictions other than Peru anyjudgments obtained in such courts that are predicated upon the laws of such other jurisdictions.

Any final and conclusive judgment for a fixed and definitive sum obtained against the Bank in any foreign

court having jurisdiction in respect of any suit, action or proceeding against it for the enforcement of any of itsobligations in support of the Notes that are governed by New York law will, upon request, be deemed valid andenforceable in Peru through an exequatur judicial proceeding without the local court reopening or re-examining thecase, reviewing the merits of the cause of action in respect to which such judgment was given or re-litigating themerits adjudicated upon, provided that the following requirements are met:

(i) the judgment does not resolve matters under the exclusive jurisdiction of Peruvian courts (and thematters contemplated by this offering circular are not matters under the exclusive jurisdiction ofPeruvian courts);

(ii) such court had jurisdiction under its own conflicts of law rules and under general principles ofinternational procedural jurisdiction;

(iii) the Bank received service of process in accordance with the laws of the jurisdiction of the courtrendering such judgment, was granted a reasonable opportunity to appear before such foreign court,and was guaranteed due process rights;

(iv) the judgment has the status of res judicata as defined in the jurisdiction of the court rendering suchjudgment;

(v) no pending litigation in Peru between the same parties for the same issue was initiated before thecommencement of the proceeding that concluded with the foreign judgment;


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(vi) the judgment is not incompatible with another judgment that fulfills the requirements ofrecognition and enforceability established by Peruvian law unless such foreign judgment wasrendered first;

(vii) the judgment is not contrary to Peruvian public order or good morals;

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it is not proven that such foreign court denies enforcement of Peruvian judgments or engages in areview of the merits thereof;

(ix) such judgment has been (a) in the case of jurisdictions that are party to the 1961 Hague ConventionAbolishing the Requirements of Legislation of Foreign Public Documents (The Hague ApostilleConvention), duly apostilled by the competent authority of the jurisdiction of the issuing court, or(b) in the case of jurisdictions that are not party to The Hague Apostille Convention, certified byPeruvian consular authorities in the country in which it was issued; and in both cases, isaccompanied by a certified and officially translated copy of such judgment into Spanish;

(x) there is in effect a treaty between the country where said foreign court sits and Peru regarding therecognition and enforcement of foreign judgments. In the absence of such a treaty, the reciprocityrule is applicable (such reciprocity being presumed), under which a judgment given by a foreigncompetent court will be admissible in Peruvian courts and will be enforceable thereby, except ifaccording to such foreign law: (i) judgments issued by Peruvian courts are not admissible in thecourts of such foreign country or (ii) judgments issued by Peruvian courts are subject to re-examination of the merits thereof by the courts of such foreign country; and

(xi) the applicable court fees have been paid.

There is no reason to believe that any of the Banks obligations in support of the Notes, which are governedby New York law, would be contrary to Peruvian public order and international treaties binding upon Peru orgenerally accepted principles of international law. There is no existing treaty between the United States and Peru forthe reciprocal enforcement of foreign judgments.

In connection with the issuance of the Notes, the Bank will designate CT Corporation System as its agentupon whom process may be served in connection with any proceedings in New York.

FORWARD-LOOKING STATEMENTS

This offering circular contains forward-looking statements. Examples of such forward-looking statementsinclude, but are not limited to, the following: (1) statements regarding the future results of operations and financialcondition of the Bank, (2) statements of plans, objectives or goals, including those related to the operations of theBank, and (3) statements of assumptions underlying such statements. Words such as believe, anticipate,should, estimate, forecast, expect, may, intend and plan and similar expressions are intended toidentify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve inherent risks and uncertainties, both general and specific, and there arerisks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. TheBank cautions investors that a number of important factors could cause actual results to differ materially from the

plans, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements.These factors include the following:

events in the global economy and the global financial system;

changes in the preferences and financial condition of the Banks consumers, and competitive conditionsin the markets the Bank serves;


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changes in overall economic conditions in Peru, including exchange rates, interest rates or the rate ofinflation, and changes in political and business conditions in Peru;

governmental interventions resulting in changes in the Peruvian economy, taxes, tariffs or regulatoryenvironment;

the effect of changes in accounting principles, new legislation, intervention by regulatory authorities,government directives or monetary or fiscal policy in Peru;

the Banks ability to compete successfully;

changes in the Banks business;

the effect of the implementation of any aspect of the Banks business strategy;

the Banks ability to implement marketing strategies successfully;

the Banks identification of business opportunities;

the Banks ability to develop and introduce new products and services;

changes in the cost of products and the Banks operating costs;

the Banks level of indebtedness and other financial obligations;

the Banks ability to attract new customers;

the Banks ability to maintain existing business relationships and to create new relationships;

limitations on the Banks access to sources of financing on competitive terms;

restrictions on foreign currency convertibility and remittance outside Peru;

failure to meet capital or other requirements;

changes in reserve requirements; and

managements belief that pending legal and administrative proceedings will not have a materiallyadverse effect on the Banks business, financial condition or results of operations.

Potential investors should read the sections of this offering circular entitled Risk Factors, ManagementsDiscussion and Analysis of Financial Condition and Results of Operations and The Bank for a more completediscussion of the factors that could affect the future performance of the Bank and the markets in which the Bankoperates.

Should one or more of these factors or uncertainties materialize, or should underlying assumptions proveincorrect, actual results may vary materially from those anticipated, believed, estimated, expected or intended, asdescribed in this offering circular. The Bank does not have any intention to update these forward-lookingstatements.

Moreover, no assurances can be given that any of the historical information, data, trends or practicesmentioned and described in this offering circular are indicative of future results or events.


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PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

Accounting Principles

This offering circular includes the Banks audited consolidated financial statements as of and for the yearsended December 31, 2013 and 2012 (the 2013/2012 Audited Financial Statements) and as of and for the years

ended December 31, 2012 and 2011 (the 2012/2011 Audited Financial Statements and together withthe 2013/2012 Audited Financial Statements, the Audited Financial Statements), and the Banks unaudited interimconsolidated condensed financial statements as of June 30, 2014 and for the six-month periods ended June 30, 2013and 2014 (the Interim Financial Statements and together with the Audited Financial Statements, the FinancialStatements) all stated in Peruvian Nuevos Soles.

The 2013/2012 Audited Financial Statements have been prepared in accordance with current PeruvianGAAP (Current Peruvian GAAP) applicable to financial entities which includes the amendments of theAccounting Manual for Financial Entities approved by the SBS, as described in Note 2(a) to the 2013/2012 AuditedFinancial Statements, which are a partial adoption of International Financial Reporting Standards (IFRS). Note2(a) to the 2013/2012 Audited Financial Statements also describes the numerical reclassification of certain financialstatement line items as of and for the year ended December 31, 2012 from Peruvian GAAP as in effect on December31, 2011 (Prior Peruvian GAAP) to Current Peruvian GAAP. Unless otherwise stated, financial information inthis offering circular as of and for the year ended December 31, 2012 is stated in Current Peruvian GAAP.

References to Peruvian GAAP are references to generally accepted accounting principles in Peru, as in effect fromtime to time.

The principal differences between Current Peruvian GAAP and Prior Peruvian GAAP includereclassification of assets from Other assets to more specific line items, reclassification of Securities, bonds andother financial obligations to Due to banks and other obligations, presentation of a Statement of comprehensiveincome that includes a Statement income and a Statement of comprehensive income, reclassification of someitems of Gross financial margin to Gain/loss from financial operations, reclassification of the reversals ofprovisions for indirect loans from Provisions for loan losses to Provision for indirect loans and inclusion offinancial intermediation operations as operating activities in the statement of cash flows. For a discussion of theprincipal differences between Current Peruvian GAAP and Prior Peruvian GAAP, see Management Discussion andAnalysis of Financial Condition and Results of OperationsCurrent Peruvian GAAP and Prior Peruvian GAAPand Note 2(a) to the 2013/2012 Audited Financial Statements.

The 2012/2011 Audited Financial Statements were prepared in accordance with Prior Peruvian GAAP.Financial statement line items as of and for the year ended December 31, 2011 in this offering circular are presentedin Prior Peruvian GAAP. Financial information contained in or derived from the 2012/2011 Audited FinancialStatements may not be fully comparable with financial information for other periods presented herein. Unlessotherwise indicated, the financial information presented herein is based upon the Financial Statements.

Peruvian GAAP differs in certain significant respects from IFRS. For a description of highlights of certaindifferences between Peruvian GAAP and IFRS, see Annex APrincipal Differences between Peruvian GAAP andIFRS (as adopted by the IASB).

The Audited Financial Statements have been audited by Beltran, Gris y Asociados S. Civil de R.L., aPeruvian entity that is a member firm of Deloitte Touche Tohmatsu Limited, as stated in their reports appearing

herein.

Currencies

Unless otherwise specified or the context otherwise requires, references in the Financial Statements to $,US$, Dollars and U.S. Dollars are to United States Dollars and references to S/., Nuevo Sol or NuevosSoles are to Peruvian Nuevos Soles.


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For the convenience of the reader, this offering circular presents translations of certain Nuevo Sol amountsinto U.S. Dollars at specified rates, or the S/./$ exchange rate.

No representation is made that the Nuevo Sol or U.S. Dollar amounts in this offering circular could havebeen or could be converted into U.S. Dollars or Nuevos Soles, as the case may be, at any particular rate or at all.Unless otherwise indicated, the Bank has translated Nuevos Soles amounts into U.S. Dollars at an exchange rate ofS/.2.795 per US$1.00, based on the exchange rate reported by the SBS on June 30, 2014. See Exchange Rates andCurrency for information regarding rates of exchange between the Nuevo Sol and the U.S. Dollar for the periodsspecified therein. For a discussion of the effects on the Bank of fluctuating exchange rates, see ManagementsDiscussion and Analysis of Financial Condition and Results of Operations. For a discussion of how the value of theNuevo Sol may affect the Banks business, financial condition and results of operations and the value of itssecurities, read the section of this offering circular entitled Risk Factors.

Terms Relating to the Banks Loan Portfolio and Business

Total gross loans for 2013, 2012 and 2011 includes deferred interest on discounted notes, refinancedloans, restructured loans and leasing receivables and excludes accrued interest and provision for loan losses.

Performing loans refers, for purposes of the Banks consolidated financial information, to loans that donot include past due loans and legal collection loans, which are past due loans that are in the judiciarycollection process and, for purposes of the SBS, loans that do not include refinances and restructured loans.

Non-performing loans refers to past due loans plus legal collection loans.

Terms Relating to the Banks Capital Adequacy

Regulatory capital refers to the sum of tier 1 regulatory capital or basic capital and supplementary capital.

Basic capital or tier 1 capital refers to the tier 1 regulatory capital (patrimonio efectivo bsico o de Nivel 1)of the Bank calculated in accordance with article 184(A) of the Peruvian Banking Law, as amended, restated,supplemented or replaced from time to time.

Supplementary capital refers to the sum of tier 2 and tier 3 regulatory capital (patrimonio efectivosuplementario), calculated in accordance with Article 184(B) of the Peruvian Banking Law, as amended,restated, supplemented or replaced from time to time.

Other Definitions

Retail banking refers to the Banks line of business that serves individuals and small businesses withannual sales under US$1.4 million.

Middle market banking refers to the Banks line of business that serves companies with annual sales ofUS$1.4 million to US$75 million, institutional customers and government entities.

Corporate banking refers to the Banks line of business that serves large corporate groups with annual

sales equal to or greater than US$75 million and multinational corporations.

Rounding Adjustments

The Bank has made rounding adjustments to certain numbers included in the offering circular. As a result,numerical figures presented as totals may not always be the arithmetic aggregations of their components, aspresented.


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Market and Industry Information

Market data and certain industry data used in this offering circular were obtained from internal reports andstudies, where appropriate, as well as estimates, market research, publicly available information (includinginformation available from the SBS, theBanco Central de Reserva del Per (Central Reserve Bank of Peru or theCentral Bank) and the Peruvian Ministry of Economy and Finance and industry publications. Market share,ranking, dollarization and loans and deposit data obtained from the SBS is limited to the banking operations ofPeruvian banks, including any foreign branches and representative offices of Peruvian banks. However, such SBSinformation excludes all Peruvian and foreign subsidiaries of Peruvian banks. Therefore, it excludes the operationsof the Banks subsidiaries, including Continental Bolsa Sociedad Agente de Bolsa S.A. (Continental Bolsa),BBVA Asset Management Continental S.A. Sociedad Administradora de Fondos (Continental Fondos),Continental Sociedad Titulizadora S.A. (Continental Titulizadora) and Inmuebles y Recuperaciones ContinentalS.A. (IRCSA). The Bank believes that the information from these sources is reliable, but it cannot assure you as tothe accuracy and completeness of such information. Similarly, internal reports and studies, estimates and marketresearch, while believed to be reliable and accurately extracted by the Bank for the purposes of this offering circular,have not been independently verified.


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OFFERING CIRCULAR SUMMARY

The Bank

The following summary is qualified in its entirety by the detailed information appearing elsewhere in this

offering circular. For a more complete understanding of the Bank and the offering made herein, you should read

the entire offering circular, including the risk factors and the Financial Statements appearing elsewhere in thisoffering circular.

The Bank is the second largest bank in Peru in terms of assets, loans, deposits and branches and the third interms of shareholders equity. As of June 30, 2014, the Bank had total assets of S/.56,925 million(US$20,359 million), loan portfolio net of S/.40,438 million (US$14,463 million), total deposits 1ofS/.38,695 million (US$13,839 million) and total shareholders equity of S/.4,865 million (US$1,740 million). Ascompared to its peers, the Bank ranked first in terms of profitability (as measured by return on average shareholdersequity, or ROE) with a higher quality loan portfolio than the Peruvian banking industrys average, according tothe SBS. The Bank had a consolidated efficiency ratio of 42.33%, an ROE of 25.53%, a default rate (calculated asthe ratio of non-performing loans2to total gross direct loans) of 1.96% and a coverage ratio (calculated as theprovision for loan losses divided by non-performing loans) of 232.27%, as of June 30, 2014. Through theBanks 361 branches, the Bank reaches more than 3.7 million customers and operates in almost every region ofPeru. As of June 30, 2014, the Banks performing loans and total deposits represented 23.3% and 21.3%,

respectively, of the Peruvian banking industry, as calculated by the SBS. The banking industry in Peru remainsheavily concentrated among four dominant banks that have a collective market share of approximately 84% ofperforming loans and 83% of deposits.

The Bank is a full service financial institution providing a wide variety of banking and financial productsand services to individual and commercial customers in Peru. In addition to operating through the Banksnationwide network of 361 branches (the second largest branch network in the country), the Bank serves itscustomers through 1,583 wholly-owned automated teller machines (ATMs) and provides them access toover 2,000 ATMs owned by a third-party provider. As of June 30, 2014, the Bank had double-digit annual growth interms of its distribution network, including branches and ATMs, according to the SBS and Asociacin de Bancos delPer (ASBANC).

The Bank places significant focus on distributing its banking services efficiently, including the use of

telephone and online banking services. Through the Banks wholly-owned subsidiaries, it offers specializedfinancial services to complement its commercial banking activities, including brokerage services offered throughContinental Bolsa, asset management services offered through Continental Fondos and securitization servicesoffered through Continental Titulizadora.

For the six months ended June 30, 2014, the Banks net profit was S/.622 million, compared toS/.604 million for the six months ended June 30, 2013. The 3.1% increase from the previous year is due to a positiveperformance in the gross financial margin (due to a 9.7% reduction in interest expenses) and income from financialservices, partially offset by a lower non-interest income and an increase in administrative expenses, in the context ofthe implementation of measures aligned with the Banks medium term goals.

The Banks main funding source is deposits from the public, which is a cost effective source of funding.As of June 30, 2014, total deposits represented 74.33% of the Banks total liabilities. The Bank has been able to

complement funding from deposits with diversified funding from multilateral institutions and other foreignfinancing sources as well as through the issuance of debt instruments in the domestic and international capitalmarkets. The Banks capital adequacy ratio as of June 30, 2014 was 13.23%, above the legal requirement of 11.16%for such period.

1Obligations to the public and deposits from financial institutions.2Past-due loans and loans in legal collection.


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Certain measurements of the Banks consolidated financial performance as of and for the years endedDecember 31, 2013 and 2012 and as of and for the six months ended June 30, 2014 and 2013 are set forth in thetable below. Since 2010, the Bank has achieved consistent growth and profitability while maintaining healthy assetquality ratios.

Consolidated Financial Indicators

As of and for the year ended

December 31,(6)

As of and for the six months

ended June 30,

2013 2012 2014 2013

Return on average assets(1) 2.46% 2.71% 2.19% 2.37%

Return on average shareholders equity(2) 28.61% 31.40% 25.53% 28.64%

Net interest margin(3) 6.53% 7.00% 6.16% 6.52%

Efficiency ratio(4) 42.22% 40.64% 42.33% 43.08%

Total non-performing loans over total gross direct loans 1.74% 1.21% 1.96% 1.62%

Provisions for loan losses as a percentage of total grossdirect loans(5)

4.49% 4.44%4.56% 4.56%

Provisions for loan losses as a percentage of non-performingloans(5)

258.87% 366.93%232.27% 282.23%

__________________(1) Return on average assets was calculated as net profit for the period over average total assets. Average total assets were calculated as the

average of total assets at December 31, 2013 and 2012; December 31, 2012 and 2011; December 31, 2013 and June 30, 2014; andDecember 31, 2012 and June 30, 2013, as applicable. Net profit for the six months ended June 30, 2014 and 2013 was annualized.

(2) Return on average shareholders equity was calculated as net profit for the period over average net equity. Average net equity wascalculated as the average of net equity at December 31, 2013; 2012 and December 31, 2012 and 2011; December 31, 2013 and June 30,2014; and December 31, 2012 and June 30, 2013, as applicable. Net profit for the six months ended June 30, 2014 was annualized.

(3) Net interest margin was calculated as gross financial margin over average interest earnings assets (interbank funds, investments securities,and loan portfolio, net). Average interest earning assets were calculated as the average of interest earning assets at December 31, 2013and 2012; December 31, 2012 and 2011; December 31, 2013 and June 30, 2014; and December 31, 2012 and June 30, 2013, as applicable.Gross financial margin for the six months ended June 30, 2014 and 2013 was annualized. Investments securities include available for sale,held to maturity and at fair value through profit and loss investments.

(4) The efficiency ratio was calculated as administrative expenses plus depreciation and amortization expenses, over the sum of gross financialmargin and income and expenses from financial services.

(5) Allowance for loan losses includes reserves with respect to direct loans only. Non-performing loans include past-due loans and loans inlegal collection.

(6) Through Resolution SBS No. 7036-2012, dated September 19, 2012, the SBS modified the Accounting Manual for financial entities tomake a partial adoption of SBS accounting principles to IFRS, effective since 2013. One of the main changes is the presentation of thefinancial statements; therefore, comparative figures and some ratios have been reclassified and modified.

The Banks Corporate Structure

The Banks subsidiaries include:

Continental Bolsa, a wholly-owned subsidiary engaged in portfolio advisory and brokerage serviceson the BVL;

Continental Fondos, a wholly-owned subsidiary dedicated to the administration of mutual funds;

Continental Titulizadora, a wholly-owned subsidiary which provides trustee services for assetsecuritizations structured by BBVA Continental; and

IRCSA, a wholly-owned subsidiary which manages troubled assets and foreclosed property andequipment.


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The following table depicts the Banks position in various categories and business lines:

As of June 30, 2014 As of December 31, 2013,

Market

Share (%) RankMarket

Share (%) Rank

Commercial loans(1) 24.6 2 24.8 2

Consumer loans(1) 11.3 4 11.7 4

Residential mortgage loans(1) 30.0 2 29.9 2

Total loans(1) 23.3 2 23.4 2

Deposits(2) 21.3 2 21.3 2

Demand 25.4 2 23.9 2

Savings 24.3 2 23.7 2

Time 16.8 2 18.4 2

Mutual funds (assets managed) 24.9 2 25.1 2

Credit card accounts 9.9 4 10.2 4

Shareholders equity 18.3 3 19.3 3Net income 25.8 2 26.3 2

Branches 17.2 2 16.6 2

ATM locations 21.5 3 20.7 3

________________(1) This information is based on performing loans.(2) This information includes demand deposits, savings deposits, time deposits and other deposits.

Source: SBS and Asociacin deBancos del Per (ASBANC)

Operating in a Stable Economic Environment within Latin America

The Bank conducts substantially all of its business in Peru. The Peruvian economy has been recognized asone of the most stable in Latin America, as evidenced by its investment grade ratings from Standard & PoorsFinancial Services LLC (Standard & Poors), Fitch Ratings, Inc. (Fitch) and Moodys Investors Service, Inc.(Moodys).

In August 2013, Standard & Poors upgraded Perus long term foreign currency sovereign credit rating toBBB+, highlighting its strong output growth and a positive outlook for the portfolio of energy and mining projectsuntil 2016. In October 2013, Fitch upgraded Perus sovereign rating by one notch to BBB+. The main drivers forthis decision were a positive view on the fiscal balance sheet, good output growth prospects, and Perus capability tocope with external shocks. The agency also noted that, under the current administration, the risk of a markeddeparture of economic policies has reduced. Finally, on July 2014, Moodys upgraded Perus sovereign rating bytwo notches, from Baa2 to A3, with a stable outlook. The key drivers were the continued strengthening of thegovernments balance sheet and fiscal framework, the ongoing momentum in structural reforms to boost potentialoutput growth, and the agencys expectation that economic activity will accelerate through 2016.

In recent years, Peru has consistently demonstrated high rates of gross domestic product (GDP) growth andexpectations for the future remain positive. During the global financial crisis, Peru was one of the few countries thatmanaged to grow and to keep unemployment under control, supported by both monetary and fiscal stimuli. Therebound in 2010 was, according to the Central Bank, strong with an 8.5% year on year growth rate that wasprimarily driven by private spending. The Peruvian economys performance was also strong in the period 2011-2013, with an average annual increase of 6.1%. President Humalas administration has emphasized social policies,but has also maintained the prior basic macroeconomic policies that have supported Perus economic growth overthe past ten years. Currently, output has transitorily slowed down, but the Bank expects it to recover in the secondhalf of the year and more clearly in 2015 as mining projects gradually reach their full operational capacity and


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The Bank is focused on remaining at the forefront of product innovation and continues to develop newways to reach and retain customers. During 2013, the Bank consolidated its coverage model to reach out to businessclients nationwide, emphasizing that the Banks management is oriented towards the provision of quality servicesand serving in a permanent advisory role. In this regard, the Bank has achieved high levels of recognition by itscustomers, by attaining high indexes of net recommendations (IRENE). Additionally, according to Ipsos Apoyo,recent studies have shown an increase, from 65% in 2010 to 77% in 2013, of customers satisfied with the Banksservice, which the Bank believes is a result of its initiative to improve customer service.

The Bank also seeks to continue to improve the variety of consumer and corporate products to differentiateitself from its competitors. The Bank continues its effort to identify the needs of its customers and tailor its productsand services to those needs, develop new business ideas, seek out new business opportunities and expand itsbusiness activities.

To enhance customer product use, the Bank intends to continue to:

Utilize its extensive branch network, which the Bank considers its key distribution channel, to marketits products and services to its entire customer base. The Bank utilizes a personalized approach toattract new customers by providing convenient and personalized banking services close to their homesand workplaces.

Offer medium- and long-term credit, capitalizing on the increased demand for long-term credit that theBank believes will accompany the expected continued economic growth in Peru. The Bank intends touse its strong liquidity and its capital base to offer a more readily available range of medium- and long-term credit products than its competitors.

Offer personalized service through a menu of products and personalized face-to-face advice to helpthem select the banking services that best respond to their needs.

Promoting Synergies Among the Banks Businesses

The Bank intends to increase its market share and profitability by cross-selling services and products to itscustomers and customers of its subsidiaries. The Bank has introduced processes that facilitate its ability to offeradditional financial services to its customers, with an emphasis on service and innovation. These processes involvenot only more points of sale throughout Peru but also the introduction of self-service transactional operations thatallow the Banks customers to access new products without using the traditional branch channel. The Bank cross-sells consumer loan products, credit cards and mortgages to its checking and savings account customers, through itsbranch personnel as well as through its sales force as part of its strategy is to increase the transactional flows of itsbusiness clients. The Bank focuses on building links among its transactional products and service in this regard.

In addition, the Bank continues to seek opportunities to promote and expand different channels of access toits customers to give them a broad set of options for all of their banking and finance needs. For example, in 2012,the Bank launched BBVA Contigo, an application for smartphones and the iPad, which allows customers toidentify the nearest locations in the Banks distribution network, including branches, ATMs and express agents,using global positioning technology. This application also allows the Bank to inform its customers about promotionsfor the Banks various products, such as discounts at restaurants, hotels and other establishments. Moreover, theBank offers banking services through text messages (SMS) for certain mobile devices.

Enhancing Customer Loyalty

The Bank views customer service as a top priority, as the Bank considers it to be one element thatdifferentiates the Bank from its peers and provides the Bank with a market advantage in a highly competitivefinancial services industry. As part of the Banks commitment to customer loyalty, it expects to continue tointroduce new services and products and to achieve greater efficiency in the Banks processes at the branch level soas to increase the time available for sales and service activities. The Bank is also working to increase its traditionaland non-traditional points of contact with its customers and to continue to improve their level of satisfaction and


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recommendation of the Banks services. The Bank believes it has made significant innovations in recent yearsthrough the continuous improvements in its products offering and the means to reach its clients, through bothcommunications and banking channels. The Bank aims to apply strategies different from those traditionallyemployed in the banking system with a view to thinking first in terms of customer satisfaction.

The Bank pursues a customer-driven business model, based on distribution networks that focus on thebanking needs of the customers and as a result, serve to build and enhance customer loyalty. The Bank strives toenhance customer loyalty by offering the specialized services and expert knowledge of the Banks account officersand managers. By utilizing detailed credit and other information concerning the Banks customers and theiractivities, as well as information concerning the Banks products and services, the Banks personnel are able toidentify customers needs and offer them more suitable products and services.

Main Offices

The Banks main offices are located at Avenida Repblica de Panam 3055, San Isidro, Lima 27, Peru.The Banks telephone number at that address is (51) (1) 211-1000.


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THE OFFERING

The following is a brief summary of certain terms of the offering. Some of the terms and conditions described below are

subject to important limitations and exceptions. For a more complete description of the terms of the Notes, see

Description of the Notes in this offering circular.

Issuer .................................................................................. BBVA Continental.

Notes .................................................................................. U.S. $ aggregate principal amount of Subordinated Notes due

2029

Issue Price .......................................................................... % of the principal amount, plus accrued interest, if any,

from , 2014.

Issue Date .......................................................................... , 2014.

Interest Commencement Date ........................................... , 2014.

Interest Payment Dates ...................................................... Interest on the Notes will be payable semi-annually in arrears

on and of each year (each, an Interest Payment Date),commencing on .

Reset Date .......................................................................... , 2024.

Maturity Date .................................................................... , 2029.

Interest ............................................................................... The Notes will bear interest on their principal amount from andincluding the Issue Date, to but excluding, the Reset Date, at therate of % per year. During the period from and including theReset Date to, but excluding, the date of maturity or earlierredemption date of the Notes, the Notes will bear interest ontheir principal amount at a rate per year that will be equal to the

sum of (i) the Benchmark Reset Rate (as defined inDescription of the Notes), on the Reset Date and (b) basispoints.

Ranking and Outstanding Indebtedness ........................... The Notes will be direct, unsecured subordinated obligations ofBBVA Continental. In the event of BBVA Continentalsdissolution and liquidation or equivalent proceedings underPeruvian law and regulations thereunder, the Notes will rank:

junior in right of payment to all of BBVAContinentals existing and future Senior Obligations;

pari passuin right of payment with all of BBVA

Continentals existing and future Parity Obligations;and

senior in right of payment to all of BBVAContinentals existing and future Junior Obligations.

As of June 30, 2014, BBVA Continental had total SeniorObligations of S/. 49,847 million (U.S. $17,828 million); ParityObligations of S/. 836.1 million (U.S. $299.0 million) andJunior Obligations of S/. 559.2 million (U.S. $200.0 million).


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Senior Obligations means (i) all claims of BBVAContinentals unsubordinated creditors and other claims andobligations that rank senior in right of payment undermandatory provisions of Peruvian law, including all laborclaims of BBVA Continentals employees, all claims of BBVAContinentals depositors, all claims of the Peruvian socialsecurity administration (Seguro Social de Salud) for BBVAContinentals healthcare obligations and all claims for taxes,and (ii) all claims of all of BBVA Continentals other creditors,except claims in respect of Parity Obligations and JuniorObligations.)

Parity Obligations means (i) all securities or othersubordinated obligations of BBVA Continental, which qualifyas Tier II Regulatory Capital of BBVA Continental other thanthose that constitute Junior Obligations and (ii) any othersecurities or obligations of BBVA Continental which rank(pursuant to mandatory provisions of law or otherwise), or areexpressed to rank,pari passuwith BBVA Continentals

obligations under the Notes.

Junior Obligations means (i) all instrumentos hbridos(hybrid instruments) of BBVA Continental under the PeruvianReglamento de Deuda Subordinada, or successor regulation, ofBBVA Continental which qualify as Tier I and Tier IIRegulatory Capital, as applicable, (ii) all classes of BBVAContinentals share capital, and (iii) any other securities orobligations or instruments of BBVA Continental which, byoperation of law or otherwise, rank or are expressed to rank,pari passu with any class of BBVA Continentals share capitalwith respect to the payment of dividends and distributions ofassets upon dissolution and liquidation or equivalent

proceedings under Peruvian law.

Additional Amounts ......................................................... All payments in respect of the Notes will be made without anywithholding or deduction for any Peruvian taxes unless suchwithholding or deduction is required by law. In that event, wewill pay such Additional Amounts (as defined in Descriptionof the Notes) as will result in receipt by the holders of theNotes of such amounts as would have been received by themhad no such withholding or deduction for Peruvian taxes beenrequired, subject to certain exceptions set forth underDescription of the Notes Payment of Additional Amounts.

Optional Redemption ........................................................ BBVA Continental may (with the prior approval of the SBS, or

any other then-applicable Peruvian Governmental Authority, ifthen required) redeem the Notes, in whole or in part, on theReset Date, at a redemption price equal to 100% of the principalamount of the Notes being redeemed plus any accrued andunpaid interest on the principal amount of the Notes beingredeemed up to, but not including, the date of redemption, plusAdditional Amounts, if any. See Description of theNotesRedemption Prior to MaturityOptional Redemption.

Optional Redemption for Taxation or


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Regulatory Reasons ........................................................... BBVA Continental may (with the prior approval of the SBS, or

any other then-applicable Peruvian Governmental Authority, if

then required) redeem the Notes, in whole, but not in part,

following the occurrence of a Tax Event or Regulatory Event.

In the case of redemption following a Tax Event, BBVA

Continental will redeem the Notes at a redemption price equal

to 100% of the aggregate principal amount of the Notes beingredeemed,plusany accrued and unpaid interest on the principal

amount of such Notes, up to, but not including, the date of

redemption,plusAdditional Amounts, if any. In the case of

redemption following a Regulatory Event, BBVA Continental

will redeem the Notes at a redemption price equal to the Make-

Whole Amount (as defined in Description of the Notes),plus

any accrued and unpaid interest on the principal amount of the

Notes, up to, but not including, the date of redemption,plus

Additional Amounts, if any. See Description of the

NotesRedemption Prior to MaturityRedemption upon Tax

Event or Regulatory Event.

Non- Payment of Principal and Interest andAcceleration Event ........................................................

There is no right of acceleration in the case of a default in anypayment on the Notes (whether when due upon stated maturity,

upon redemption or otherwise) or the performance of any of

BBVA Continentals other obligations under the Indenture or

the Notes. However, if BBVA Continental fails to make

payment of principal or of interest or Additional Amounts, if

any, on the Notes (and, in the case of payment of interest or

Additional Amounts, such failure to pay continues for 30 days),

each holder of the Notes has the right to demand and collect

under the Indenture, and BBVA Continental will pay to the

holders of the Notes the applicable amount of such due and

payable principal, accrued interest and Additional Amounts, if

any, on the Notes.

Acceleration of any payments due under the Notes will occur

only upon the occurrence and continuation of an Acceleration

Event. If an Acceleration Event occurs and is continuing, the

rate at which interest will accrue on the Notes (to the extent the

Notes have not been used to absorb losses) during the

dissolution and liquidation or equivalent proceedings under

Peruvian Law will be limited to the legal interest rate for dollar-

denominated indebtedness determined by the Peruvian Central

Bank and notified to the trustee in writing.

Acceleration Event means that the SBS has entered a decreeor order for Intervention of BBVA Continental or for theappointment of a custodian, conservator, receiver, liquidator,assignee, trustee, sequestrator or other similar official in anydissolution and liquidation or similar proceeding with respect toBBVA Continental or all or substantially all of its property, ineach case pursuant to the Peruvian Banking Law; and suchdecree or order has been communicated by the SBS to BBVAContinental.

Loss Absorption ................................................................ Pursuant to the Peruvian Banking Law, as amended, and


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regulations promulgated thereunder, the SBS shall, when

applicable, in the case of an Intervention (as defined in

Description of the Notes) by the SBS or the dissolution and

liquidation of BBVA Continental, use accrued and unpaid

interest and principal amounts of the Notes, in that order, to

absorb losses of BBVA Continental. If the SBS were to do so,

any losses of BBVA Continental would be absorbed first bycurrent and retained earnings, donations, equity premiums and

legal and voluntary reserves, then by common and preferred

shares, followed by accrued and unpaid interest and principal,

in that order, of junior subordinated debt constituting

instrumentos hibridos(hybrid instruments) under the Peruvian

Reglamento de Deuda Subordinadawhich qualify as Tier I and

Tier II Regulatory Capital (as applicable). See Description of

the NotesLoss Absorption.

Limited Covenants ............................................................ The indenture governing the Notes will contain covenants that,among other things:

limit BBVA Continentals ability to consolidate with ormerge into any other corporation or convey or transferBBVA Continentals properties and assets substantially asan entirety to any person; and

require BBVA Continental to furnish to the Trustee certainsupplementary and periodic information, documents andreports.

These covenants are subject to a number of importantlimitations and exceptions. See Description of the Notes.

Use of Proceeds ................................................................. The net proceeds from the offering will be available for general

corporate purposes.

Further Issuances ............................................................... We may from time to time, without notice to or consent of the

holders of the Notes, create and issue an unlimited principal

amount of additional Notes of the same series as the Notes

offered hereby.

Listing ................................................................................ Application is expected to be made to list the Notes on theLuxembourg Stock Exchange (and to trade on the Euro MTFMarket). The approval for such listing is not a condition to theconsummation of this offering.

Eligibility of Notes for Peruvian Private Pension

Funds Investment.. BBVA Continental will submit to all the currently existingPeruvian private pension funds (Fondos Privados de Pensiones)the documentation required in order to allow such entities toanalyze the eligibility of the Notes as investment securities

No Established Trading Market ........................................ The Notes are a new issue of securities with no establishedtrading market. BBVA Continental cannot assure you that anactive or liquid trading market for the Notes will develop. If anactive or liquid trading market for the Notes does not develop,


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SUMMARY FINANCIAL INFORMATION

The following tables present the Banks selected historical financial data as of and for the years endedDecember 31, 2013 and 2012 which were derived from the 2013/2012 Audited Financial Statements prepared underCurrent Peruvian GAAP, and selected historical financial data as of and for the years ended December 31, 2012and 2011 were derived from the 2012/2011 Audited Financial Statements prepared under Prior Peruvian GAAP, andselected historical financial data as of June 30, 2014 and for the six-month periods ended June 30, 2014 and June 30,2013, which were derived from the Interim Unaudited Financial Statements prepared in accordance with CurrentPeruvian GAAP.

Resolution SBS N 7036-2012, dated September 19, 2012, modified the Accounting Manual for financialentities, to make a partial adoption of IFRS, effective since January 1, 2013. Note 2(a) to the 2013/2012 AuditedFinancial Statements contains the numerical reclassification of certain financial statement line items as of and for theyear ended December 31, 2012 from Prior Peruvian GAAP to Current Peruvian GAAP. The principal differencesbetween Current Peruvian GAAP and Prior Peruvian GAAP include reclassification of assets from Other assets tomore specific line items, reclassification of Securities, bonds and other financial obligations to Due to banks andother obligations, presentation of a Statement of comprehensive income that includes a Statement income anda Statement of comprehensive income, reclassification of some items of Gross financial margin to Gain/lossfrom financial operations, reclassification of the reversals of provisions for indirect loans from Provisions for loanlosses to Provision for indirect loans and inclusion of financial intermediation operations as operating activities

in the statement of cash flows. Financial information contained in or derived from the 2012/2011 Audited FinancialStatement may not be fully comparable with financial information for other periods presented herein. For adiscussion of the principal differences between Current Peruvian GAAP and Prior Peruvian GAAP, seeManagement Discussion and Analysis of Financial Condition and Results of OperationsCurrent Peruvian GAAPand Prior Peruvian GAAP and Note 2(a) to the 2013/2012 Audited Financial Statements.

This information should be read in conjunction with the Financial Statements and the Notes thereto as wellas the sections entitled Capitalization and Managements Discussion and Analysis of Financial Condition andResults of Operations. As indicated above, the Financial Statements have been prepared in accordance withPeruvian GAAP, which differs in certain significant respects from IFRS. For a description of highlights of certaindifferences between Peruvian GAAP and IFRS, see Annex APrincipal Differences between Peruvian GAAP andIFRS (as adopted by the IASB).

For the year ended December 31, For the six months ended June 30,

2013(1) 2013 2012 2012 2011 2014(2) 2014 2013

Statement of Income Data:(U.S. Dollars

in thousands)(Nuevos soles in thousands)

(U.S.

Dollars in

thousands)

(Nuevos soles in

thousands)

(Current Peruvian GAAP) (Prior Peruvian GAAP) (Current Peruvian GAAP)

Interest income 1,299,733 3,632,755 3,319,759 3,744,174 3,097,670 656,665 1,836,036 1,776,181

Interest expenses (399,591) (1,116,858) (994,403) (1,043,844) (835,225) (181,501) (507,477) (562,046)

Gross financial margin 900,142 2,515,897 2,325,356 2,700,330 2,262,445 475,164 1,328,559 1,214,135

Provisions for loan losses, (3) (186,450) (521,128) (485,792) (445,294) (276,664) (103,216) (288,592) (269,067)

Net financial margin 713,692 1,994,769 1,839,564 2,255,036 1,985,781 371,948 1,039,967 945,068

Income and expenses from financial

services, net

(5)

237,922 664,993 633,778 677,144 631,999 125,265 350,240 313,756

Gain / loss from financial operations(ROF)

177,246 495,403 436,964 - - 71,253 199,224 237,760

Administrative expenses (4) (451,709) (1,262,527) (1,129,379) (1,181,100) (1,044,660) (238,486) (666,806) (619,366)

Valuation of assets and provision (36,628) (102,375) (73,713) - - (21,953) (61,381) (39,480)

Other income and expense (2,577) (7,204) (21,928) (65,794) (63,962) (2,506) (7,008) (9,852)

Profit before income tax 637,946 1,783,059 1,685,286 1,685,286 1,509,158 305,521 854,236 827,886

Income taxes (171,291) (478,757) (439,741) (439,741) (380,170) (82,843) (231,628) (224,290)

Net profit for the period 466,655 1,304,302 1,245,545 1,245,545 1,128,988 222,678 622,608 603,596


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(1) Data expressed in U.S. Dollars for the year ended December 31, 2013 has been translated at the rate of S/. 2.795 per US$1.00, based on theexchange rate reported by the SBS on December 31, 2013.

(2) Data expressed in U.S. Dollars for the six months ended June 30, 2014 has been translated at the rate of S/. 2.796 per US$ 1.00, based onthe exchange rate reported by the SBS on June 30, 2014.

(3) Provisions for loan losses include provisions with respect to total direct loans. Direct loans represent outstanding loans while indirect loansinclude guarantees and standby letters of credit, import and export letters of credit and bank acceptances.

(4) Administrative expenses include personnel, taxes and general expenses.(5) Represents the amount of income from financial services lessexpenses from financial services during a period.

Consolidated Statements of Financial Position

As of December 31, As of June 30,

2013 (1) 2013 2012 2012 2011 2014 (2) 2014

Consolidated statements offinancial position

(U.S. Dollars

in thousands)(Nuevos soles in thousands)

(U.S. Dollars

in thousands)(Nuevos soles

in thousands)

(Current Peruvian GAAP) (Prior Peruvian GAAP) (Current Peruvian GAAP)

Cash and due from banks 4,230,484 11,824,204 12,641,028 12,641,377 8,534,853 3,785,410 10,584,006

Interbank funds 9,000 25,156 32,408 32,408 241,459 4,661 13,032Investment at fair value through

profit or loss, available for saleand held to maturity 1,461,417 4,084,660 2,886,773 2,886,773 2,587,154 1,255,591 3,510,632

Loan Portfolio, net (3) 13,683,480 38,245,327 31,770,125 31,770,570 28,922,025 14,462,737 40,437,813

Investments in associates 992 2,774 2,462 2,461 2,231 809 2,261Property, furniture andequipment, net 292,669 818,010 685,044 685,044 603,600 297,013 830,447

Other assets (4) 550,378 1,538,306 1,672,935 1,670,569 1,351,085 553,096 1,546,458

Total assets 20,228,421 56,538,437 49,690,775 49,689,202 42,242,407 20,359,317 56,924,649

Obligations to the public 13,051,844 36,479,904 31,956,803 32,054,519 30,185,437 13,269,248 37,100,818

Demand deposits 4,371,951 12,219,603 9,237,771 9,237,771 8,888,960 4,680,775 13,087,447

Saving deposits 3,335,718 9,323,333 8,005,309 8,005,259 7,115,244 3,620,690 10,123,450

Time deposits 5,327,681 14,890,868 14,652,278 14,535,134 13,999,076 4,951,242 13,843,672

Other Obligations 16,494 46,100 61,445 276,355 182,157 16,541 46,249Deposits from financial system

companies 336,179 939,620 764,991 764,991 307,034 570,175 1,594,208

Interbank funds 220,799 617,134 234,964 234,964 125,515 124,477 348,038Due to banks and other

financial obligations 4,322,902 12,082,512 10,956,815 7,156,782 4,770,203 4,196,397 11,733,126

Securities, bonds andoutstanding obligations

- - - 3,800,033 1,985,859 - -

Other liabilities (5) 546,854 1,528,456 1,548,865 1,449,576 1,163,296 458,937 1,283,188

Total liabilities 18,478,578 51,647,626 45,462,438 45,460,865 38,537,344 18,619,234 52,059,378

Net equity 1,749,843 4,890,811 4,228,337 4,228,337 3,705,063 1,740,083 4,865,271

Total liabilities and net equity 20,228,421 56,538,437 49,690,775 49,689,202 42,242,407 20,359,317 56,924,649

_____________________(1) Data expressed in U.S. Dollars for the year ended December 31, 2013 has been translated at the rate of S/. 2.795 per US$1.00, based on the

exchange rate reported by the SBS on December 31, 2013.(2) Data expressed in U.S. Dollars for the period ended June 30, 2014 has been translated at the rate of S/. 2.796 per US$ 1.00, based on the

exchange rate reported by the SBS on June 30, 2014.(3) Net of deferred interest on discounted notes and leasing receivables plus accrued interest from performing loans, and after deducting

allowance for loan losses.(4) Represents the amount of trading derivatives, hedging derivatives, Receivables, Assets seized and recovered through legal actions, net,

current tax, deferred tax and other assets.(5) Represents the amount of trading derivatives, hedging derivatives, payables, current tax, deferred tax and other liabilities.


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RISK FACTORS

Prospective purchasers of the Notes should carefully read this entire offering circular, and should

consider, among other things, risk factors with respect to Peruvian banks and other corporations not normally

associated with investments in other countries and other issuers, including those set forth below. In general,

investing in securities of issuers in emerging market countries, such as Peru, involves risks not typically associated

with investing in the securities of U.S. companies.Additional risks and uncertainties that the Bank does not knowabout or that it currently considers are immaterial may also impair the Banks business operations. Any of the

following risks, if they actually occur, could materially and adversely affect the Banks business, results of

operations, prospects and financial condition. In that event, the market price of the Notes could decline, and the

prospective purchasers could lose all or part of their investment.

Risks Relating to the Banks Business

The retail banking market is exposed to macroeconomic changes that may negatively impact household

income and a downturn in the economy could result in increased loan losses.

One of the key elements of the Banks strategy is to focus on the retail banking sector and to grow its retailloan portfolio. As a result, its loan portfolio will become increasingly vulnerable to macroeconomic changes, suchas a more pronounced growth deceleration in China and an economic recovery slower than expected in the U.S. andEurope, which could negatively impact the household income of its retail customers and result in increased loanlosses. For example, the 2009 slowdown in Peru resulted in an increase in past due loans of the Banks customers.Furthermore, because the penetration of bank lending products in the Peruvian retail sector, especially outside of thecapital Lima, has been historically low, there is little basis on which to evaluate how the retail sector will perform inthe event of an economic crisis, such as a recession or a significant devaluation. Consequently, historical loan lossexperience may not be indicative of the performance of the Banks loan portfolio in the future.

The corporate banking sector is exposed to macroeconomic changes that may be negatively affected by

current global economic conditions.

Part of the Banks strategy is to increase its focus in the corporate banking sector. This sector may benegatively impacted by macroeconomic changes. For example, the 2009 global economic recession resulted inlower commodity prices, which caused decreased export earnings and a slight deterioration in external and fiscal

accounts in Peru, generating at the same time a slower economic growth in 2009. Given its client base, the Banksbusiness is particularly sensitive to economic and market conditions which affect products of various exportindustries, including textile, fishing and agriculture. In addition, the Bank is active in the real estate sector, whichcan also be highly sensitive to macroeconomic developments. Any increase in the number of delinquencies ordefaults would result in higher levels of non-performing assets and provisions for loan losses, which wouldadversely affect the Banks results of operations and financial condition.

As a provider of corporate financial services, the Banks business and earnings are affected by generalbusiness and economic conditions. Accordingly, the Banks business earnings could be harmed in the event of aslowdown in global economic activity. The Banks parent company, the BBVA Group, is a Spanish bank. TheBBVA Group has a 50% ownership stake in Holding Continental, the controlling shareholder of the Bank. Amoderate risk exists that macroeconomic and geopolitical conditions could cause an economic slowdown orvolatility in the capital markets. Adverse changes affecting the European economy and the Spanish economy more

specifically could adversely affect the BBVA Group. Such events could affect the perception of the Banks brandamong clients, which could, in turn, have an impact on its results of operations.

Intensifying competition may put pressure on margins and adversely affect the Banks business,

financial condition and results of operations.

The Bank faces significant competition from local and foreign banks in providing financial services to thePeruvian retail and corporate banking sectors, which could put pressure on its margins. The Banks maincompetitors are Banco de Crdito del Per S.A. (BCP), Scotiabank Per S.A.A., a subsidiary of Scotiabank


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(Scotiabank), Banco Internacional del Per S.A.A. (Interbank), and Citibank del Per S.A., a subsidiary ofCitigroup (Citibank). The Bank has also experienced an increase in competition from non-banking financialinstitutions. In addition, larger Peruvian companies have gained access to new sources of capital, through local andinternational capital markets, and the Banks traditional and new competitors have increasingly made inroads intothe higher-margin middle-market and retail banking sectors.

This increased competition affects the Banks loan growth and reduces the average interest rates that theBank charges its customers. The Bank may not be able to maintain its market share if it is not able to match itscompetitors loan pricing or keep pace with their development of new products and services.

In addition, competition is also likely to increase as a result of the entrance of new participants into thebanking sector, including foreign banks and non-bank financial institutions. The entry of new competitors into themarket over the past five years, such as Banco Falabella Per S.A., Banco Ripley Per S.A., Banco Azteca del PerS.A., Deutsche Bank Per S.A., Banco Santander Per S.A., Banco Cencosud S.A, GNB Bank and Banco ICBCcould adversely affect the Banks market share.

Liquidity risks may adversely affect the Banks business.

Historically, one of the Banks principal sources of funds has been customer deposits. Since the Bankrelies heavily on deposits and other short-term liabilities for its funding, there can be no assurance that in the eventof a sudden or unexpected shortage of funds in the banking system or otherwise the Bank will be able to maintain itslevels of funding without adversely affecting its liquidity or increasing its cost of funding.

Despite recent improvements in the global economy, investors still experience substantial risk aversion andsensitivity to negative developments. Since assets prices globally could still reflect speculative factors more thanfundamentals and market valuations could be in some cases stretched, markets may still be considered unstable, withmany investors buying U.S. Treasuries despite their relatively low yields. Should this situation continue, it couldlead to a deteriorating market for higher risk bonds. Therefore, funds that the Bank anticipates raising through suchchannels may have to be raised in the short-term money market, reducing the Banks ability to diversify fundingsources and adversely affecting the lengthening of its funding profile. The increased reliance on shorter-term fundsmay adversely impact the Banks liquidity profile, financial condition and results of operations. There can be noassurance that the Bank will be successful in obtaining additional sources of funds on acceptable terms or at all.

The Bank may need additional capital in the future and given recent market volatility generated bydistortions in the international financial markets, which may impact the Peruvian capital markets and the

Peruvian banking system, the Bank may not be able to obtain such capital on acceptable terms, or at all.

In order for the Bank to grow, remain competitive, enter into new businesses and meet regulatory capitaladequacy requirements, it may require new capital in the future. Moreover, the Bank may need to raise additionalcapital in the event of large losses in connection with any of its activities that result in a reduction of itsshareholders equity. The Banks ability to obtain additional capital in the future is subject to a variety ofuncertainties, including:

general market conditions for capital-raising activities by commercial banks and other financialinstitutions;

the decrease in liquidity in the international markets, which could influence the behavior of localinvestors, who react rapidly to international market trends;

the Banks future financial condition, results of operations and cash flows;

any necessary government regulatory approvals; and

economic, political and other conditions in Peru and elsewhere.


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loans. Increased credit default on the part of the Banks customers would have a negative effect on its revenues.Devaluation risk is a systemic risk in the Peruvian banking system. As of June 30, 2014 and December 31, 2013,45.5% and 46.4%, respectively, of the total loans in the Peruvian banking system were denominated in U.S. Dollars,according to the SBS.

Although the level of dollarization in the Peruvian economy has shown a declining trend, the practice stillremains common. As of June 30, 2014 and December 31, 2013, 45.5% and 45.8% respectively, of the Banksdeposits were denominated in U.S. Dollars and, according to the SBS, 48.0% and 47.6% respectively, of thedeposits in the Peruvian banking system were denominated in U.S. Dollars. The risk to the Bank and to thePeruvian banking system of this dollarization of deposits generally derives from the banking systems potentialneed for U.S. Dollars to honor deposits and the possibility of higher costs and unavailability of U.S. Dollars.

As of June 30, 2014, the Banks Dollar-denominated assets exceeded its Dollar-denominated liabilities.However, there can be no assurance that this asset-liability position will be maintained or that an appreciation of theNuevo Sol will have a direct or indirect negative effect on the Bank, on its equity and/or on the quality of its assets.

The Central Bank maintains reserves to decrease the impact of these exchange rate fluctuations, which as ofJune 30, 2014 amounted to US$64,581 million. The Central Bank has intervened in the currency market in anattempt to smooth out its volatility. However, given the continued volatility in the global financial markets, theBank cannot provide any assurances that the exchange rate will not be subject to fluctuations that could adversely

affect its revenues.

The adoption of new international banking guidelines may have an adverse effect on the Banks

business, financial condition and results of operations.

In June 2004, the Basel Committee on Banking Supervision (the Basel Committee), consisting of thecentral bank Governors of the Group of Ten Nations, published a report entitled International Convergence ofCapital Measurement and Capital Standards: A Revised Framework, which sets out a new capital adequacyframework (the Basel II Framework). The Bank is in compliance with current Peruvian Banking Law capitaladequacy requirements which reflect the Basel II Framework and require a capital ratio of 10%.

After the 2008 financial crisis, the Basel Committee adopted new reforms to improve the strength offinancial institutions (the Basel III Framework). Under this new framework, the capital requirements under the

Basel II Framework were insufficient. The Basel III Framework has a greater focus on common equity and raisesconcerns regarding both the quality and level of capital. These new guidelines also include additional capital bufferssuch as a capital conservation buffer and a counter-cyclical buffer.

In July 2011, the SBS published a new resolution (SBS Resolution No. 8425-2011) that set out additionalcapital requirements. The new requirements are focused on covering the economic cycle, concentration risk, marketconcentration risk, interest rate risk and other risks. These requirements began to take effect in July 2012 with aninitial 40% new capital requirement, and will increase by 15% each year until reaching an additional capitalrequirement of 100% in July 2016.

The Bank does not expect that the adoption of the Basel III Framework will have a material impact on itsoperations. Specifically, the Bank does not expect these recent amendments to result in significant additional capitalrequirements to allow the Bank to maintain its asset base or to increase its cost of funds. However, there can be no

assurance that implementation of current or additional regulations will not have an adverse effect on the Banksfinancial condition and/or results of operations.

The Banks operations require the maintenance of its banking and other licenses and any

noncompliance with its license and reporting obligations could have an adverse effect on its business, financial

condition and results of operations.

All banking operations in Peru require licensing by the SBS. The Bank currently has the necessary licensesto conduct all of its banking and other operations in Peru. Although the Bank believes it is currently in compliance


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with its existing material license and reporting obligations to the SBS and other Peruvian banking governmentalauthorities, there can be no assurance that the Bank will be able to maintain the necessary licenses in the future. Theloss of a license, a breach of the terms of the Banks licenses, or a failure to obtain any further required licenses inthe future could have an adverse effect on its business, financial condition and results of operations.

The Bank relies heavily on its information technology systems to conduct its business and a failure,

interruption in or breach of its information technology systems could have an adverse effect on its business,

financial condition and results of operations.

The Bank relies heavily on its information technolo

BBVA Continental-Preliminary Offering Circular.pdf

Documents

Transcript of BBVA Continental-Preliminary Offering Circular.pdf