Santander Consumer Finance – Company ProfileAugust 2008 1 Santander Consumer Finance Company profile August 2008

1Santander Consumer Finance – Company Profile August 2008

Santander Consumer Finance

Company profile

August 2008


Purpose and methodology

This company profile is an example of Global Insight’s ability to collect and structure information on companies and markets.

It was written in August 2008. It is based on secondary research (annual reports, newspapers) backed by Global Insight’s expertise on European consumer finance markets.

The purpose of this report is to draw a marketing profile of the company, i.e.:

a/ to describe and analyze its marketing mix strategy:- breadth and depth of the product spectrum - nature and reach of the distribution channels- product characteristics- branding

b/ to quantify key aspects of its activity:

- breakdown of the loan portfolio by product type - breakdown of the loan portfolio by sales channels- market share

Global Insight has the ability to carry out this analysis both at corporate and at country level.


SummaryI. The Santander Consumer Finance Group 3

1.1 Overview 4

1.2 International presence 5

1.3 Geographical breakdown of the loan portfolio 6

1.4 Product range 7

1.5 Breakdown of the loan portfolio by product type 8

1.6 Breakdown of the loan portfolio by sales channel 9

1.7 Market share 10

II. Santander Consumer Finance in Germany 11

2.1 Overview 12

2.2 Product spectrum 13

2.3 Product characteristics 162.3.1 Car loans and Personal loans 162.3.2 Revolving loans, Insurance products 17

2.4 Distribution 182.4.1 Description of the distribution networks 182.4.2 Breakdown of the loan portfolio by sales channel 19

2.5 Branding strategy 20

2.6 Main competitors 21


Founded in 1972 (as Bansafina) and further developed in 1978 (as Hispamer). Management Committee:

• Magda Salarich Fernández de Valderrama - Chief Executive Officer (CEO)• Pedro Guijarro - Business Area I• Javier San Félix - Business Area II• Andreas Finkenberg - Business Area Germany• Tom Dundon - Business Area U.S.A.

Key figures:• Net Interest Income for 2007: €1 350 Mio. • Consolidated profit for 2007: €511 Mio. (-30.8% in a year)• Employees: 7.200 • Customers: 9.9 Mio.

Parent company: Banco Santander, S.A. (Spain)

International presence: 18 countries. Main focus on Western-Europe. Current development in emerging markets (Latin America, Russia).

Product portfolio centered on car finance, with extensions towards other type of loans, retail banking and insurance.

1.1 Santander Consumer Finance Group

Overview

Source: Global Insight, Annual Reports of Santander Consumer Finance

0

10 000

20 000

30 000

40 000

50 000

60 000

2005 2006 2007 2008 (mid year)

Total outstanding loans (€Mio)


1.2 International presence

Main developments outside Spain


Before 2002 2002-2006 Since 2007

Germany (1987):Acquisition of CC Bank.

Portugal (2006)Acquisition of Interbanco.

France (2007-2008)Joint-venture with Banque Accord.

United Kingdom (2005)Brownfield development

Russia (2006)Acquisition of Extrobank.

Poland (2004)Acquisition of Polskie Towarzystowo Finansowe

Czech Republic (1997)

Hungary (1998)

The Netherlands (2004)Acquisition of Abfin.

Finland (2008)Acquisition of GE Money Bank Finland.

Austria (2008)Acquisition of GE Money Bank Austria.

Sweden (2004)Acquisition of Elcon.

Mexico (2007)Acquisition of Alcanza.

Chile (2007-2008)Joint-venture with SKBergé Financimiento.

USA (2006)Acquisition of Drive Financial.

Germany (2002)Acquisition of AKB.

Germany (2008):Acquisition of GE Money Bank Germany.

Italy (2004)Acquisition of Finconsumo.

Austria (2001)

UK, Ireland (2008)Acquisition of GE Money Bank credit card business.

WESTERN EUROPE

EASTERN EUROPE

THE AMERICAS

Norway (2005)Acquisition of Bankia Bank.


Global Insight’s assessment of the Group’s outstanding loans: breakdown by geographical area (at 31.12.2007)

Global Insight’s assessment of the Group’s outstanding loans: breakdown by geographical area (at 31.12.2007)

31%

13%

41%

8%

7%

Spain and Portugal

Italy

Germany

Scandinavia

Rest of Europe

Mexico (less than 0,5% )

Since 2002, Santander Consumer Finance implements a strong geographical expansion strategy. This is carried out mainly through

acquisitions. In 2008 as part of an asset swap deal, the group will take over GE Money’s businesses in Germany, Finland and Austria

and its card and auto financing business in the UK. This move will have a strong impact on the geographical balance of Santander

Consumer Finance’s loan portfolio. The acquired GE Money companies have €9bn assets. Hence, the weight of Spain and Portugal in

the loan portfolio will shrink to approximately 25%. On the other hand, the German speaking markets could well represent 45% or

more of total outstanding loans. Since 2006, the Group has undertaken selected investments in emerging countries (Russia, Chile,

Mexico). As of today, this is far from balancing the weight of mature Western-European markets in the loan portfolio.

Since 2002, Santander Consumer Finance implements a strong geographical expansion strategy. This is carried out mainly through

acquisitions. In 2008 as part of an asset swap deal, the group will take over GE Money’s businesses in Germany, Finland and Austria

and its card and auto financing business in the UK. This move will have a strong impact on the geographical balance of Santander

Consumer Finance’s loan portfolio. The acquired GE Money companies have €9bn assets. Hence, the weight of Spain and Portugal in

the loan portfolio will shrink to approximately 25%. On the other hand, the German speaking markets could well represent 45% or

more of total outstanding loans. Since 2006, the Group has undertaken selected investments in emerging countries (Russia, Chile,

Mexico). As of today, this is far from balancing the weight of mature Western-European markets in the loan portfolio.


1.3 Geographical breakdown of the loan portfolio

Total outstanding loans (at 31.12.2007): €45 196 Mio.


Range of BtoC products across some of the Group’s locationsRange of BtoC products across some of the Group’s locations

1.4 Product range

Car finance

Personal loans

Revolving loans

Mortgage

Retail banking

Accident, death, & health insur.

P & C insurance

Savings & Investments

Spain

Car finance

Personal loans

Revolving loans

Mortgage

Retail banking

P & C insurance

Germany

Car finance

Personal loans

Revolving loans

Retail banking

Italy

Car finance

Personal loans

Revolving loans

Mortgage

Poland

Car finance

Personal loans

P & C insurance

Hungary The UK

Car finance

P & C insurance

Life Insurance & Retiremt savings

Accident, death, & health insur.

Portugal

Car finance

Personal loans

Revolving loans

Life Insurance & Retiremt savings

Source: Global Insight, Santander Consumer Bank website

As this chart indicates, car finance (and personal loans) are at the core of Santander Consumer Finance’s portfolio. They are

leveraged as ‘Trojan horses’ to build up the customer base when the Group settles in a new country. Once the customer base I set up

(e.g. in Spain, Germany, where the company has years of presence), the product portfolio diversifies to other types of loans and to

financial services with higher margins (insurance, savings, investments).

As this chart indicates, car finance (and personal loans) are at the core of Santander Consumer Finance’s portfolio. They are

leveraged as ‘Trojan horses’ to build up the customer base when the Group settles in a new country. Once the customer base I set up

(e.g. in Spain, Germany, where the company has years of presence), the product portfolio diversifies to other types of loans and to

financial services with higher margins (insurance, savings, investments).




Global Insight’s assessment of the Group’s outstanding loans: breakdown by type of product (at 31.12.2007)


Car finance is by far Santander Consumer Finance’s main business line. It is mainly geared towards new vehicles financing which

account for approximately 60% of all car loans. (However, in Germany, the UK, and Norway, used vehicles form the major part of the

business). This of course means that the company is exposed to the ebbs and flows of the new car market.

Product diversification aims at mitigating this kind of risk. In the first quarter of 2008, the most profitable products (cards and direct

lending) accounted for 33% of total new business.

Car finance is by far Santander Consumer Finance’s main business line. It is mainly geared towards new vehicles financing which

account for approximately 60% of all car loans. (However, in Germany, the UK, and Norway, used vehicles form the major part of the

business). This of course means that the company is exposed to the ebbs and flows of the new car market.

Product diversification aims at mitigating this kind of risk. In the first quarter of 2008, the most profitable products (cards and direct

lending) accounted for 33% of total new business.


Car loans

Personal loans

Credit cards

Mortgage55% to 60%20% to 25%

5% to 10%

5% to 10%

1.5 Breakdown of the loan portfolio by product type



Global Insight’s assessment of the Group’s outstanding loans: breakdown by sales channels (at 31.12.2007)

Global Insight’s assessment of the Group’s outstanding loans: breakdown by sales channels (at 31.12.2007)

Indirect sales channels (car dealers and other points of sale) account for at least three quarters of the group’s outstanding loans. This

is a result of the product spectrum of the company. Car loans are mainly channeled through car dealers. (In Germany alone, the

company works together with more than 23.000 dealers). Besides, the company also works together with numerous points of sales for

the distribution of credit cards and personal loans (in the form of POS loans). In Spain, the number of affiliated outlets for consumer

and card finance is over 40.000. In Germany, it is close to 14.000.

Indirect sales channels (car dealers and other points of sale) account for at least three quarters of the group’s outstanding loans. This

is a result of the product spectrum of the company. Car loans are mainly channeled through car dealers. (In Germany alone, the

company works together with more than 23.000 dealers). Besides, the company also works together with numerous points of sales for

the distribution of credit cards and personal loans (in the form of POS loans). In Spain, the number of affiliated outlets for consumer

and card finance is over 40.000. In Germany, it is close to 14.000.


Direct

Indirect

75% to 85%

15% to 25%

1.6 Breakdown of the loan portfolio by sales channel



Global Insight’s assessment of the Group’s market share in 2007as a proportion of total consumer loans outstanding

Global Insight’s assessment of the Group’s market share in 2007as a proportion of total consumer loans outstanding

0,00% 2,00% 4,00% 6,00% 8,00% 10,00% 12,00% 14,00%

Germany & Austria

Spain

Hungary

Czech Republic

Italy

The Nethelands

Portugal

Sweden

the UK

Norway

Poland


Overall, the company has its strongest positions in Spain (its home market), as well as in Poland, Norway and the Czech Republic. Its

weight on the German market will be further enhanced by the integration of GE Money Bank. In the car finance industry more

specifically, Santander Consumer Finance’s positions are very strong: 16% to 20% market share in Spain (market leader) 8% to 12% market share in Germany 10% to 15% market share in Poland

Overall, the company has its strongest positions in Spain (its home market), as well as in Poland, Norway and the Czech Republic. Its

weight on the German market will be further enhanced by the integration of GE Money Bank. In the car finance industry more

specifically, Santander Consumer Finance’s positions are very strong: 16% to 20% market share in Spain (market leader) 8% to 12% market share in Germany 10% to 15% market share in Poland

1.7 Market share


2. Santander Consumer Bank AG2. Santander Consumer Bank AG

The Group’s German subsidiaryThe Group’s German subsidiary

2. Santander Consumer Bank AG2. Santander Consumer Bank AG

The Group’s German subsidiaryThe Group’s German subsidiary


2.1 Santander Consumer Finance local subsidiary

Santander Consumer Bank AG Founded in 1957, taken over by Santander in 1987, renamed Santander Consumer Bank AG in 2003. Managing director: Andreas Finkenberg Outstanding loans to customers: €15 254 Mio (at 31.12.2007), i.e. 33% of the Group’s outstanding loans. Profits, end 2007: €385 Mio. (+4.6% year-on-year), i.e. 28% of the Group’s profits. 1, 200 employees 3.8 million clients

Santander Consumer Bank AG Founded in 1957, taken over by Santander in 1987, renamed Santander Consumer Bank AG in 2003. Managing director: Andreas Finkenberg Outstanding loans to customers: €15 254 Mio (at 31.12.2007), i.e. 33% of the Group’s outstanding loans. Profits, end 2007: €385 Mio. (+4.6% year-on-year), i.e. 28% of the Group’s profits. 1, 200 employees 3.8 million clients

Online distribution of car finance products

100%

100%

Private and corporate leasing in Germany, Austria, Czech Republic and

Hungary

German subsidiary of Santander Consumer Finance

100%

Austrian, Dutch, Hungarian and Czech branches of Santander

Consumer Finance

Organization chart

Source: Global Insight, Santander Consumer Bank website, Annual Reports


B2C product range of Santander Consumer BankB2C product range of Santander Consumer Bank

2.2 Product spectrum

Car finance

Personal loan

Revolving loans

POS loans

CompleteCompleteEasy

Available on the www.carcredit.de:Classic CreditBudget Credit

Available via car dealers:BudgetfinanzierungLeichtkauffinanzierungRepararturfinanzierungAutoflexStandard FinanzierungLeasing (Complete and CompleteEasy)

“Stand-alone Products”:VerfügungskontoModernisierungsCreditCredit Cards:AutoDispoPlusSantander Visa-KarteSantander SunnyCardHarley-Davidson Visa Chrome CardHein Gericke Visa Card1Plus CardHymerCard-VisaD.A.S.-Visa-KarteZürich Visa-KarteCleverCard

Personal loans (free-purpose)6 month-deferred payment

Mortgage

Mortgage Unsecured home loans

Retail banking

Current Accounts Saving Accounts (x2) Debit Cards

BestCredit

Accident, Death, & Health insurance

Payment protection insurance: Working inability cover Accident insurance Death insurance Complementary health insuranceTravel insurance

P & C insurance

Auto Insurance:CompleteCompleteEasyProtectPlus (payment protection insurance)Santander Safe (“new car replacement” insurance) Home Insurance:Content coverageBuilding coverage Legal and third-party Liability Insurance:Legal insuranceCivil liability

Life Insurance & Retirement savings

Retirement savings Life insurance Complementary state-regulated pension

Investment products

Bonds Investment funds, or accounts:BestInvest (1 account and 3 funds)Savings accountHome savings accountSantander retirement funds (x3)Santander mutual stock funds (x5)Other investment funds (x2)


CONSUMER FINANCE INSURANCE SAVINGS, INVESTMENTS RETAIL BANKING


Depth of the product range(number of different products in each category)

Depth of the product range(number of different products in each category)

This chart enables us to see the product categories on which Santander Consumer Bank puts a special emphasis. The company offers

13 different credit cards: this is the product family that has the largest spectrum. Car finance ranks second with 10 different products. On

the other hand, personal loans and POS loans have a tight product range. The depth of the product range is not correlated to the

volume of business generated by each product. Credit card generate less outstanding loans than each of the three other types of

consumer loans (See next slide).

This chart enables us to see the product categories on which Santander Consumer Bank puts a special emphasis. The company offers

13 different credit cards: this is the product family that has the largest spectrum. Car finance ranks second with 10 different products. On

the other hand, personal loans and POS loans have a tight product range. The depth of the product range is not correlated to the

volume of business generated by each product. Credit card generate less outstanding loans than each of the three other types of

consumer loans (See next slide).



0 2 4 6 8 10 12 14

Investments

Life insurance & Retirementsavings

P&C insurance

Accident, Death & Healthinsurance

Current & Saving Account

Services

Home-related loan

POS loan

Revolving loan

Personal loans

Car Finance

²



2%

18%

7%

73%

Credit cards

Personal loans

POS loans (excl. car finance)

Car finance

Car finance is by far Santander Consumer Bank’s main business line. It is mainly geared towards second hand cars which account for

approximately 60% of all car loans. The assessed market share of the company on the German market is: 8% to 10% in car finance less than 2% in credit cards Between 5% and 10% in the two other business lines taken together

Car finance is by far Santander Consumer Bank’s main business line. It is mainly geared towards second hand cars which account for

approximately 60% of all car loans. The assessed market share of the company on the German market is: 8% to 10% in car finance less than 2% in credit cards Between 5% and 10% in the two other business lines taken together





Classic Credit

Minimum rate: 4.90% APR Maximum rate: 6.89% APR

Maximum amount: € 511, 291. 00 Minimum amount: € 511. 29

Interest Rate Amount Duration

Minimum duration: 12 months Maximum duration: 96 months

Specific characteristics

Product displayed on the carcredit.de website

2.3 Product characteristics 2.3.1 Car loans and personal loans

Budget Credit

Minimum rate: 4.90% APR Maximum rate: 6.89% APR

Minimum duration: 12 months Maximum duration: 60 months

Product displayed on the carcredit.de website

Maximum amount: € 511, 291. 00 Minimum amount: € 511. 29

Minimum balloon payment: 33% of borrowed amount Maximum balloon payment: 60% of borrowed amount

BestCredit

Minimum rate: 5.89% APR for borrowed amount up to € 3, 000

Maximum rate: 7.89% for borrowed amount over € 3, 000

Maximum amount: € 59, 999.99

Minimum amount: € 750

Minimum duration: 12 months

Maximum duration: 84 months

Product only available through internet

Car loans: product characteristics Car loans: product characteristics

Personal loans: product characteristics Personal loans: product characteristics



Revolving loans: product characteristicsRevolving loans: product characteristics

VerfügungsKonto

Annual rate: 9.85% APR Maximum amount: € 30, 000 Minimum amount: € 3, 000

Interest Rate Amount Repayment

Minimum repayment: 2.5% of the balance each month (min. € 100)

Specific characteristics

Moderniesie- rungsKonto

Revolving loan dedicated to home-improvement expenses (need to present an extract from the cadastral register when applying)

Maximum amount: € 50, 000 Minimum amount: € 10, 000

Annual rate: 5.98% APR Minimum repayment: 1.35% of the balance each month (min. € 150)

2.3 Product characteristics 2.3.2 Revolving loans, Insurance products

AutoDispo-Plus

Available at car dealers No interest rate for the first 6 months Co-branded card with distributing dealers

Minimum repayment: 2.5% of the balance each month (min. € 50)

Maximum amount: € 5, 000 Displayed base rate: 8.99% APR

Characteristics of insurance productsCharacteristics of insurance products

Triggering events Amounts covered Premiums Specific characteristics

Home contentinsurance

The insurance contract can optionally cover bicycles, damages occurred as a consequence of acts of God (e.g. earthquakes).

Monthly premiums of €6, for €50 000 insured goods in a 70m2 –apartment.

Replacement at purchase value Fire, storm, explosion, hail Water pipe Robbery Vandalism

Goods are also insured if located in the ceiling and garage.

Car insurance Vollkaso

Civil liability Damage inflicted to the vehicle through external events (fire, explosion storm, robbery, etc.) Damage inflicted to the vehicle by the owner

Insurance premiums are bundled with the loan repayment

Civil liability: up to €8Mio per victim Replacement at purchase value during 12 months

Vehicle power Premium

Up to 46 kw € 58,50

Up to 66 kw € 69,80

Up to 85 kw € 78,00

Up to 110 kw € 92,30

Up to 142 kw € 119,00


Car retail Other Outlets

2.4 Distribution strategy2.4.1 Description of the different distribution networks

POS loans Number of car dealers: 23, 300.

On-linedistribution

local branches

Direct distribution(excluding

on-line distribution)

Number of local branches: 95 dedicated to private customer services against 85 in 2006. 9 branches dedicated to vehicles dealers 11 branches dedicated to other corporate clients

The number of branches will double thanks to the acquisition of GE Money in Germany.

The company has set up a website especially dedicated to car finance www.carcredit.de Customers can calculate the rate online Customers can fill in the subscription form and send it online

Customers can calculate the rate online Customers can fill in the subscription form but have to print it and send it per post

Car finance Personal loan Revolving loans

Customers can calculate the rate online Customers can fill in the subscription form but have to print it and send it per post

Number of retailers: 13, 700.

Santander Consumer Bank has set up two specific website to extend car loans to private customers: on www.carcredit.de, customers can compute the rates for each car loans. on www.autoboerse.de/, customers can look for buyers or sellers of second-hand cars. The website is linked to CarCredit.de as far as car

financing is concerned. A similar strategy is being implemented by the German savings banks through their website

www.gebrauchtwagen.de dedicated to peer-to-peer car sales.

Santander Consumer Bank has set up two specific website to extend car loans to private customers: on www.carcredit.de, customers can compute the rates for each car loans. on www.autoboerse.de/, customers can look for buyers or sellers of second-hand cars. The website is linked to CarCredit.de as far as car

financing is concerned. A similar strategy is being implemented by the German savings banks through their website

www.gebrauchtwagen.de dedicated to peer-to-peer car sales.



Global Insight’s assessment of the Group’s outstanding loans: breakdown by distribution channel (at 31.12.2007)

2.4 Distribution strategy2.4.2 Breakdown of the loan portfolio by sales channel

18%

82%

Direct channels

Indirect channels

Indirect sales channels (car dealers and other points of sale) account for more than 80% of the company’s outstanding loans.

Santander Consumer Bank has partnership agreements with more than 23.000 car dealers and more than 13.000 retailers. On the

other hand, the company has a proprietary network of 95 branches. The network has been extended in the past years (10 new

branches were opened in 2007) and will double in size thanks to the merger with GE Money Bank. With 190 branches, the company

will then have a proprietary distribution channel twice as big as its direct competitors (e.g. Norisbank).

Indirect sales channels (car dealers and other points of sale) account for more than 80% of the company’s outstanding loans.

Santander Consumer Bank has partnership agreements with more than 23.000 car dealers and more than 13.000 retailers. On the

other hand, the company has a proprietary network of 95 branches. The network has been extended in the past years (10 new

branches were opened in 2007) and will double in size thanks to the merger with GE Money Bank. With 190 branches, the company

will then have a proprietary distribution channel twice as big as its direct competitors (e.g. Norisbank).




2.5 Branding strategy

Double-branded products (product name distinct from the company’s brand)

Santander Consumer Banks devotes significant efforts to the branding of its loans. A small number of loans (6) have a distinctive naming which acts as a brand alongside the corporate brand. The naming is designed to reflect the main benefits of the loan. For instance: Among credit cards: ‘SunnyCard’, ‘1plus’ (credit card for travelers), ‘Clever’ (credit card with no interests in the first six months) Among car loans: ‘AutoFlex’ (Variable car loan), ‘ProtectPlus’ (Car loan including a payment protection insurance). Among personal loans ‘BestCredit’:

The most heavily leveraged brand is ‘CarCredit’, i.e. the website entirely dedicated to car finance

Umbrella brands (same brand for different type of products)

On the other hand, 12 loans (i.e. more than half of the bank’s consumer loan portfolio) has no distinctive branding. Their name is a mere description of their purpose and or characteristics. For instance: Among personal loans: ‘Credit for home renovation’ Among car loans: ‘Loan for car repairs’, ‘Standard Loan’, ‘Complete Loan’ Among POS loans: ‘Loan with fixed installments’

Co-Branding (for credit cards)

Santander Consumer Bank is active in the field of co-branding, through the following products: D.A.S. Visa – Card. D.A.S is a leader for legal liability insurance in Germany. This card is exclusively offered to people holding a legal liability insurance from D.A.S. Zürich Visa – Card. Zürich is a Swiss Insurance company. HymerCard– Visa Hymer is a motor home manufacture. Owners of a Hymer trailer or motorhome can get this card without any annual fee. Hein Gericke Visa – Card. Hein Gericke is a motorcycle equipment retailer. Harley Davidson Visa Chrome Card AutoDispoPlus. Co-branded card with a car dealer



Santander Consumer Bank AG

Personal loan, car finance, revolving loans, home-related loans Car insurance, home and content insurance Payment protection insurance, death insurance, working inability insurance Retirement savings and investment products Current and saving accounts, internet banking

Product range Product depth Distribution Size

2.6 Main competitors

Number of car finance products: 8 Number of personal loans: 1 Number of revolving products: 12

Number of branches: 100 Number of partner car dealers: 23, 300 Number of partner retailers: 13, 700

Number of employees: 1, 200 Net profit: € 385 Mio.


Number of branches: 340 Number of employees: 6, 800 Net profit: €643 Mio.

Personal loan, revolving loans, home-related loans. death insurance, accident insurance, working inability insurance Retirement savings, investment products. Current and saving accounts, internet banking

Citibank

Volkswagen Financial

Services & Bank


Number of branches: 340 Number of car dealers: 2 500

Personal loan, revolving loans, home-related loans, car finance Car insurance and car-related insurance (payment protection, legal liability) Investment products Current and saving accounts, internet banking

Number of employees: 3, 856 One million new private indirect car financing contracts Outstanding amount of non-vehicle credit: € 504 Mio.


Documents

Santander Consumer Finance – Company ProfileAugust 2008 1 Santander Consumer Finance Company profile August 2008