Santander acquires Popular, becoming the leading bank in Spain

• The acquisition takes place following an auction conducted by the Single Resolution Board and FROB in which Santander was selected as the successful bidder. As a result the resolution of Banco Popular will be concluded without any taxpayer support.
• The combination of Santander and Popular creates Spain's largest bank by lending and deposits, with 17 million customers. In Portugal, the combined bank will serve over 4 million customers.
• To strengthen Popular’s balance sheet, Santander will complete a rights issue to raise €7 billion. Existing shareholders will have preferential rights.
• The transaction is expected to generate return on investment of 13-14% in 2020 and be EPS accretive by 2019.
• Santander expects to continue to meet all its commercial and financial commitments for 2017-18, including growth in Earnings Per Share, Dividend Per Share, TNAV per share and capital. We believe that the transaction will accelerate growth across all of the Group’s key performance indicators for 2019 and beyond.

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Banco Santander Group Executive Chairman, Ana Botín, said: “We welcome Banco Popular customers as part of the Santander Group and will work hard to continue serving them at the highest standards through the transition and beyond. The combination of Santander and Popular strengthens the Group's geographic diversification at a time of improving economic conditions in both Spain and Portugal, and will allow us to continue to deliver for customers and shareholders on all our commitments.”

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Madrid, 7 June 2017 - PRESS RELEASE

Banco Santander today announces that it has acquired Banco Popular. The acquisition takes place following an auction conducted by the Single Resolution Board and FROB in which Santander was selected as the successful bidder, paying a notional consideration of €1.

As part of the transaction Santander will complete a rights issue for a total amount of €7 billion. This will cover the capital and provisions required to strengthen Popular’s balance sheet. Existing shareholders will be given preferential subscription rights. The rights issue is underwritten.

The integration of Santander and Popular will significantly enhance Santander’s franchises in both Spain and Portugal. In Spain the bank will become the leading bank by both lending and deposits, serving over 17 million customers with a credit market share of c.20%. The combined business, which will operate under the Santander brand, will have a 25% market share in SME lending in Spain - a key driver of economic growth for the country.

Growing the SME franchise in Spain is a key strategic priority for the Group. The transaction will improve the diversification of business lines in the country and increase exposure to more profitable business segments at a positive stage in the economic cycle.

In Portugal, the integration of Popular with Santander Totta will accelerate growth and strengthen market shares in both lending and deposits, enhancing Totta’s position as the leading privately owned bank in the country, with over 4 million customers.

The acquisition is expected to generate a return on investment of 13-14% in 2020, and an increase in Earnings Per Share (EPS) in 2019. The combined business will benefit from increased profitability with strong potential for further revenue growth. The expected cost synergies of close to €500 million per year from 2020 will lead to efficiency ratios that are among the best in both Spain and Portugal.

The acquisition meets Santander’s strategic and financial investment criteria, with future enhancements expected in all key financial performance metrics for the Group. It is also consistent with our ongoing commitment to consider add-on acquisitions within our core markets where they add value to customers and shareholders.

To bring Popular’s provisions and capital in line with the rest of the Group, Santander will make additional provisions for non-performing assets of €7.9 billion, including €7.2 billion for real estate. This will increase coverage for real estate assets and real estate non-performing loans from 45% to 69%, significantly above peer average (52%). The Group expects to reduce Popular’s real estate exposure significantly as it has done at Banco Santander in recent years.

Following completion of these actions, the impact on the Group’s CET1 capital ratio is expected to be neutral, while the transaction will significantly enhance Santander’s capacity to generate capital organically going forward. Santander maintains its commitment to increase its CET1 capital ratio to above 11% in 2018.

The combined entity will be led by the current management team of Santander Spain with Rami Aboukhair as CEO.

IMPORTANT INFORMATION
This announcement is not a prospectus but an advertisement and investors should not subscribe for any new shares of Banco Santander, S.A. (“Banco Santander” or the “Bank”) or purchase any pre-emptive subscription rights for new shares of the Bank referred to in this announcement except on the basis of the information contained in the prospectus of the rights issue to be registered by Banco Santander with the Comisión Nacional del Mercado de Valores (“CNMV”). Once registered with the CNMV, the prospectus shall be publicly available at the Bank’s registered address and, in electronic format, in the web pages of the Bank (www.santander.com) and the CNMV (www.cnmv.es). The Bank expects to request the CNMV to passport the prospectus of the rights issue, once approved and registered, for the purposes of it being effective in the the United Kingdom, Italy, Portugal and Poland.

This announcement does not constitute an offer to sell, or a solicitation of an offer to subscribe for, the pre-emptive subscription rights or the new shares being issued in connection with the share capital increase, in any jurisdiction in which such offer or solicitation is unlawful or, as the case may be, until the applicable requirements for those purposes have been met. The distribution of this announcement and/or the prospectus and/or the transfer of pre-emptive subscription rights and/or new shares into jurisdictions other than Spain, the United Kingdom, Italy, Portugal and Poland may be restricted by law. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The securities referred to herein may not be and will not be offered or sold in the United States unless in a transaction registered under the U.S. Securities Act of 1933 (the “Securities Act”) or in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. If any public offering of securities is made in the United States it will be made by means of a prospectus that may at the time of any such offering be obtained from Banco Santander and that will contain or incorporate by reference detailed information about Banco Santander and its management, as well as financial statements.

Santander concludes €7.072 billion rights issue with investor demand amounting to more than eight times the number of new shares offered

Madrid, 26 July 2017 - PRESS RELEASE

Banco Santander announced today that it has concluded the €7.072 billion rights issues initiated on 3 July 2017 following the acquisition of Banco Popular. The transaction, the largest M&A financing rights issue globally since 2010, was subscribed more than eight times over with the value of total demand for subscriptions equivalent to more than €58 billion.

Requests to subscribe a total of 12,081,854,169 shares were received during the transaction, representing 829% of the 1,458,232,745 new shares issued. The new shares are expected to start trading on Spanish stock exchanges on July 31^st.

The transaction achieved the tightest discount to TERP (17.75%) seen in any M&A financing rights issue globally above €3bn in the last 10 years.

Since the announcement of the rights issue, which will increase the number of Santander shares by 10%, the bank’s share price has increased by 1.78%, making Santander the only bank to achieve a positive share price performance from the date of announcement to the end of subscription period among recent rights issues.

During 2017 Santander’s share price has increased by 19% (at 26 July 2017), with a total shareholder return (‘TSR’), including dividends paid in 2017, of 21.4%, well above the total return of the Eurostoxx Banks Index of 14%.

Feedback from analysts and investors has been positive with number of ‘buy’ ratings for Banco Santander S.A. increasing by 11 percentage points from 32% of analysts to 43% since the transaction was announced.

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Banco Santander Chief Financial Officer, José García Cantera, said: “The acquisition of Popular is a unique opportunity to accelerate our strategy in Spain and Portugal and we are delighted with the success of this rights issue and the support we have received from investors. It is a testament to the strength of the strategic and financial rationale supporting the deal, as well as a strong vote of confidence in Banco Santander, in Spain and in Europe.”

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The integration of Santander and Popular will significantly enhance Santander’s franchises in both Spain and Portugal. In Spain, the Bank will become market leader in both lending and deposits, serving over 17 million customers with a credit market share of c.20%. The combined business will have a 25% market share in SME lending in Spain - a key driver of economic growth for the country.

IMPORTANT INFORMATION
The present announcement is not an informative prospectus but an informative communication and investors should not subscribe any new shares of Banco Santander, S.A. (“Banco Santander” or the “Bank”) or purchase any pre-emptive subscription rights for new shares of the Bank’s Capital Increase referred to herein except on the basis of the information contained in the prospectus in connection with the capital increase which has been registered with the Comisión Nacional del Mercado de Valores (“CNMV”) on 4 July 2017 and is publicly available at the Bank’s registered address and, in electronic format, in the web pages of the Bank (www.santander.com) and the CNMV (www.cnmv.es). Likewise, the Bank obtained on 5 July 2017 the community passport of the informative prospectus for the purposes of it being cross-border effective in the United Kingdom, Italy, Portugal and Poland.

This communication does not constitute an offer to sell, or a solicitation of offers to subscribe, the preemptive subscription rights or the new shares of the share capital increase in any jurisdiction in which such offer or solicitation is unlawful or, as the case may be, until the applicable requirements for those purposes have been met. The distribution of this communication and/or the prospectus and/or the transfer of pre-emptive subscription rights and/or new shares into jurisdictions other than Spain, the United Kingdom, Italy, Portugal and Poland may be restricted by law. Persons who gain access to the information set out herein should be aware of and comply with any such restrictions. Any failure to comply with them may constitute a breach of the securities laws of any such jurisdiction.

This communication (i) must not be construed in any way to be a request to buy or to sell securities or any related financial instruments in Brazil, and (ii) must not be construed in any way to be a public offering of securities in Brazil. The Brazilian Securities Commission (Comissão de Valores Mobiliários) has not authorised the public offering of shares to which this communication refers nor of any securities related to such shares. Hence, the said shares cannot be offered to the public in Brazil.

The Bank has filed a registration statement (including a prospectus) with the SEC for the capital increase and the offering of new shares and subscription rights to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the prospectus supplement and any other documents the Bank has filed, or may file, with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, you may obtain a copy of the prospectus from Citigroup by calling toll free 1-800-831-9146 or UBS by calling toll free 1-877-387-2275.

The public offering of the new Banco Santander shares has been authorised by the Argentine National Securities Commission, and the Subscription Announcement (Aviso de Suscripción) setting forth the procedure and term for the subscription for new shares in Argentina has already been published in such jurisdiction. The capital increase to which this announcement refers and the Argentine offering will have the same terms and conditions, save as otherwise provided in the relevant Subscription Announcement. The Bank envisages to request the admission to trading of the new shares in the Buenos Aires stock exchange.

Santander celebrates 30 years of trading on the NYSE

New York, June 1^st 2017. Banco Santander’s CEO, José Antonio Álvarez, today held a meeting with investors in New York to celebrate the 30^th anniversary of Santander’s listing on the New York Stock Exchange. Following the event, which was also attended by Santander US’ management and the Group’s Investor Relations team, Álvarez rang the traditional closing bell on the trading floor to mark the end of trading for the day.

During the event, Santander's CEO said: “2017 is a year of important milestones for Banco Santander. It marks the 160^th anniversary of the Bank's foundation, as well as 30 years of trading on the New York Stock Exchange, one of the most important stock markets in the world. The anniversary is a testament to the robustness of our bank and the strength of our business model. During these 30 years, our goal has been to help communities prosper and generate value for our shareholders, leveraging on a diversified business model that is focused on retail and commercial banking and that has made Santander one of the most profitable institutions in the world.”

Banco Santander has one of the largest shareholder bases in the world with four million in 100 countries. The share has been trading on the New York Stock Exchange for more time than any other Spanish company. It was listed on the NYSE on July 29, 1987.

Openbank becomes first 100% digital Spanish bank

16 June 2017. Openbank becomes the first full-service digital bank in Spain. The subsidiary of Grupo Santander will now offer customers a full suite of banking products and services through an entirely redesigned mobile app and website.

The new Openbank platform has been developed over the past 15 months in Spain using some of the most advanced technologies. It is one of the first banks in the world to use a cloud-based IT infrastructure. This allows the Bank to offer a 100% digital proposition with novel features and the most advanced security.

Ana Botin, Banco Santander Executive Chairman said: “We want to offer personalized financial services, accessible from anywhere, at anytime. For people who prefer an exclusively digital service that is simple, agile and available via smartphone, with the guarantee of the Santander Group, Openbank is the answer”.

Ezequiel Szafir, CEO of Openbank said, “Openbank offers one of the best digital banking platforms in the world. We have built the bank from scratch using some of the most advanced technologies available, allowing us to provide customized products and services for customers who want a digital only banking proposition.”

Openbank will also become one of the first banks to make extensive use of artificial intelligence and machine learning, allowing the bank to tailor product offerings to individual customers, increase security and fraud protection and continuously improve the speed and quality of credit decisions, such as mortgage approval. In fact, all the commercial activity and the risk algorithms for loans and credit cards are fully based on this technology. The digital marketing is also partly based on programmatic purchasing, which enables the Bank to deliver more customized and relevant advertising.

Openbank is now one of the first fully fledged digital banks in the world, with its software, application programming interfaces (APIs) and client transactions in the cloud. It offers the highest security and has replicas in different locations across Europe.

As part of the re-launch, Openbank’s mobile banking app and website have undergone a complete overhaul in order to improve customer experience, making it easier to use. The new features include:

- Completely digital customer onboarding process with videoconference identification or, if the customer prefers, via messenger or using the IBAN of any bank.
- Customers can see their account status at-a-glance and personalize and configure according to their needs. They can also include their own photograph or avatar, increasing security.
- Access to a 24/7 virtual branch where each customer has his own, dedicated team of account managers which will not vary.
- Expenditure categorization that can be compared with the previous month.
- Cards can be blocked or unblocked from a smartphone if lost.
- Information about investment trends among other clients or access to consumer credit in just a few steps.

All of this via the website, or from a single smartphone application.

Along with these features, Openbank has expanded its range of products to offer a complete suite of banking products to all of its customers: from current accounts and deposits, to loans and mortgages and an entire range of investment products (funds, pensions, shares, ETFs…):

- The new investment platform uses an open architecture system that incorporates around 500 domestic and international funds and pension plans from five of the main asset managers operating in Spain.
- A new range of personal loans and mortgages (variable, fixed and mixed) available through quick, 100% digital contracting, with guidance from a personal account manager throughout the whole process.
- A catalog of savings and payroll accounts that includes the Open Young card with its own application designed to help children save while facilitating parental supervision.

With a 22 year history, Openbank is the digital bank of the Santander Group. It serves more than one million customers and has deposits of over six billion euros.

189,733 professionals

We made progress in implementing MyContribution, the new corporate model of performance management that strengthens the Bank’s culture as the driver of transformation. MyContribution balances the objectives on corporate behaviour (40%) and business and performance (60%) for the Corporate Centre.

The We are Santander Week was held. This is a global initiative which aims to transmit our culture and foster pride in belonging to Grupo Santander. This year the challenge was to recognise those employees who best represent the Group’s eight corporate behaviours, as well as an event to recognise SPF Ambassadors.

The second BeHealthy challenge was launched to unite via the miles walked by employees the countries in which we operate and contribute to a solidarity project launched by the Action against Hunger NGO to combat childhood anaemia in Peru.

131 million customers

The commercial transformation programme started in 2015 continues to drive growth in the number of customers (+1.9 million loyal ones and +4.0 million digital ones in the last 12 months).

In loyalty and customer satisfaction enhancement, the Bank’s products and proposals continued to be well received. Of note was the launch of Select Me in Mexico, which seeks to support women, including solutions that help their day-to-day professional development.

Openbank becomes Spain’s first fully digital bank, with one of the sector’s most complete, flexible and agile platforms. It has a full range of products and a 24×7 tailored service.

In order to speed up our digital transformation, the new Santander Digital division was strengthened in order to drive innovation and digitalisation throughout the Group, cooperation and teamwork with all countries, and foster the exchange of the best commercial practices.

4 million shareholders

Santander celebrated 30 years of being listed on the New York Stock Exchange, the world’s largest stock exchange by trading volume and the number of companies quoted.

Following the acquisition of Banco Popular, we created in our corporate website santander.com a dedicated section with all the information on this operation. This strengthens communication of this purchase with the aim of increasing the creation of shareholder value.

The IR Magazine Awards 2017 recognised Banco Santander’s Investor Relations team as the second best of a European bank and the best in Spain, according to the Extel 2017 survey. On October 10, Banco Santander will hold a Group Strategy Update in New York at which senior management will explain the Group’s strategy to investors and analysts.

1.7 million people helped in 2016

Santander joined the Climate Leadership Council as a founder member, with Ana Botín representing the Bank. This Council comprises global leaders and combats climate change with market solutions.

Universia Spain held its AGM and was attended by Santander’s chairman, representatives of all Spanish universities, close to 100 businessmen and 230 entrepreneurs and university students.

Santander turned off for the eighth year running the lights in its most emblematic buildings in its 10 core countries and in its branch network, as part of the WWF’s Earth Hour.

Thanks to Santander scholarships, 5,000 young Spaniards carried out paid work experience in SMEs. In 2016 alone, more than 10,000 such scholarships were awarded in nine countries.