Santander

262 EuroWeek Financing financial institutions

Santander

Covered bonds Subordinated debt Senior unsecured Securitisation

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2005 2006 2007 2008 2009 2010

Source: Dealogic. Data to August 20 2010

$m

Debt issuance

Debt issuance

Pricing date: July29,2010

Value: €1.5bn

Maturity date: August12,2014

coupon: 3.5%

spread to swaps: 160bp

bookrunners: HSBC,Natixis,BancoSantanderSA

Pricing date: April12,2010

Value: €1bn

Maturity date: April26,2012

coupon: 3mEuribor+55bp

bookrunners: BarclaysCapital,HSBC,Natixis,BancoSantanderSA

Pricing date: March23,2010

Value: $1.5bn

Maturity date: March30,2012

coupon: 3mLibor+80bp

spread to benchmark:80bpoverUSTs

bookrunners: DeutscheBank,BancoSantanderSA

Source: Dealogic:

Recent Deals

Rank lead Manager amount $m no of issues

% share

1 Banco Santander SA

9,927 70 17.5

2 JPMorgan 9,666 25 17.04

3 Deutsche Bank 5,947 15 10.49

4 Natixis 5,594 12 9.86

5 Barclays Capital 5,542 18 9.77

6 Credit Suisse 4,803 16 8.47

7 HSBC 4,565 15 8.05

8 Bank of America Merrill Lynch

1,691 6 2.98

9 SG Corporate & Investment Banking

1,468 6 2.59

10 Credit Agricole CIB 1,314 7 2.32

subtotal 50,517 107 89.07

total 56,715 115 100

Source: Dealogic (Sep 20, 2009 to Sep 19, 2010)

toP bookRunneRs

0

1

2

3

4

5

6

7

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10

Net operating income Attributable profit

Source: Santander

Eu bn

incoMe stateMent

0

1

2

3

4

5

6

7

8

9

10

Dec 2007 Dec 2008 Dec 2009 June 2010

%

Source: Santander

coRe caPital

Mar 31

, 200

9

Jun 3

0, 20

09

Sep 3

0, 20

09

Dec 3

1, 20

09

Mar 31

, 201

0

Jun 3

0, 20

10510

520

530

540

550

560

570

580

590

600

610

Source: Santander

Eu bn

Risk-weighteD assets

0

200

400

600

800

1000

1200

1400

1600

1H09 1H10

Total assets Net customerloans

Source: Santander

Eu bn

balance sheet

Actual t

ier one

(2009)

Benchmark sc

enario

Adverse

scenario

Additional

sovereig

n shock

Source: Committee of European Banking Supervisors

%10

11

10.2

10

9.4

9.6

9.8

10

10.2

10.4

10.6

10.8

11

11.2

cebs stRess tests

Santander

Financing financial institutions EuroWeek 263

bp

Five year senior CDS prices. Source: Markit

24-Au

g-2009

24-Se

p-2009

24-O

ct-20

09

24-N

ov-20

09

24-D

ec-20

09

24-Ja

n-201

0

24-Fe

b-201

0

24-M

ar-20

10

24-Ap

r-201

0

24-M

ay-20

10

24-Ju

n-201

0

24-Ju

l-201

0

24-Au

g-201

0 0

50

100

150

200

250

300

350 Banco SantanderHSBC Bank

JPMorganBBVA

cDs PRicing

2.5

2.6

2.7

2.8

2.9

3

3.1

3.2

3.3

3.4

3.5

2Q09 3Q09 4Q09 1Q10 2Q10

%

Source: Santander

nPl Ratio

40

40.5

41

41.5

42

42.5

43

43.5

44

44.5

1H08 1H09 1H10

%

Source: Santander

efficiency Ratio

0

5

10

15

20

25

Dec 2007 Dec 2008 Dec 2009 Mar 2010 June 2010

Specific Generic

Source: Santander

Eu bn

loan-loss PRoVisions

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

ROA RoRWA

1H09 1H10

%

Source: Santander

RetuRn on assets

2Q09 3Q09 4Q09 1Q10 2Q10

70.5

71

71.5

72

72.5

73

73.5

74

74.5

75

75.5 %

Source: Santander

nPl coVeRage

banco santander sa

long term iDR aashort term iDR f1+individual Rating a/bsupport Rating 1support Rating floor a

summary:Banco Santander’s (Santander) ratings reflect the group’s strong retail banking franchises in its core markets of Spain, Portugal, the UK, Brazil, Chile and Mexico; its sound management approach and a coherent and focused strategy, with acquisitions centred in retail banking; its robust profitability; a diversified and well structured business mix; good risk management systems; and adequate capital. They also factor in Latin American exposure and declining asset quality. Santander has withstood well the stresses produced by the financial crisis given its strong focus in retail banking and very limited exposure to structured products and complex instruments. The group has been able to carry out its business plan and its acquisition policy has given it greater critical mass, particularly in Brazil and the UK. The operating environment will remain complex, but in Fitch’s view Santander is well positioned to meet challenging times due to its well diversified franchise and business mix, and recurrent retail banking earnings, together with its strict cost control policy, should enable it to absorb higher loan impairment charges. Fitch also takes comfort from the depth and experience of Santander’s management team and a proven track record of integrating banks.

fitch Ratings uPDate

cfoJose Antonio Alvarez

head of capital markets fundingAntonio Torio

investor relationsJulian Brown+44 20 7756 4275

key contacts