GLOBAL BANKING AND MARKETS-SANTANDER INVESTOR DAY 2011

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GBM. Santander INVESTOR DAY 2011. Presentación por Adolfo Lagos, head of Global Wholesale Banking

Text of GLOBAL BANKING AND MARKETS-SANTANDER INVESTOR DAY 2011

  • 1. Adolfo Lagos Espinosa Global Banking & Markets

2. DisclaimerBanco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements. These forward-lookingstatements are found in various places throughout this presentation and include, without limitation, statements concerning our futurebusiness development and economic performance. While these forward-looking statements represent our judgment and futureexpectations concerning the development of our business, a number of risks, uncertainties and other important factors could causeactual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) generalmarket, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currencyexchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financialposition or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past andfuture filings and reports, including those with the Securities and Exchange Commission of the United States of America (the SEC)could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results todiffer materially from those in the forward-looking statements.Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, informationavailable and views taken on the date on which they are made; such knowledge, information and views may change at any time.Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of newinformation, future events or otherwise.The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly availableinformation, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiringsecurities must do so only on the basis of such persons own judgment as to the merits or the suitability of the securities for itspurpose and only on such information as is contained in such public information having taken all such professional or other adviceas it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. Inmaking this presentation available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal inshares in Santander or in any other securities or investments whatsoever.Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buyany securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. SecuritiesAct of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation orinducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Servicesand Markets Act 2000.Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price orfuture earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in thispresentation should be construed as a profit forecast. 2 3. Index1 Santander GB&Ms Business ModelTrack record3 GB&Ms strategy 3 4. Index1 Santander GB&Ms Business ModelTrack record3 GB&Ms strategy 4 5. Santander GB&M global network based onGroups local strengths Integrated client coverage across Groupsgeographies (one-stop shop, cross-border origin.)Global product and distribution capabilities (e.g.global books)GB&M leveraging Shared infrastructurelocal banksLocal banksGB&Ms global network modelleveraging GB&MLocal currency funding Product providerCash managementGB&MGB&M GB&M GB&Mfor retail / mid-corpplatformsSpainUKBrazil...clients InvestmentsRetail distribution (e.g. RSP)through local networks Capital MarketsIssues (e.g. DCM,Local insightSpain UK Brazil ...ECM) Structured FinanceLocal infrastructure /(e.g. Project Fin.)systems Hedging solutionsto mid-corps(e.g. IRS)Local banks with strong positioning in our core markets5 6. Santander GB&Ms strategic positioning Global Net Profit GB&M Investment Banks32%GlobalCapabilities68%Cross-border executionIntegrated riskmanagementCommon platformsLeading Local Global TotalLocal ~900M revenuesBanks flowing into LatAmfrom other geographies Local Insight Funding in local currency Local execution (client proximity, cash mgmt., etc.) Knowledge of local markets 6 7. GB&M: Commercial Banking approach1 Client focus +2 Plain vanilla products +3 Conservative risk management7 8. 1 Client focusRevenues, 201086% ClientRevenuesInstitutionals MRG19%57% Corporates10% Retail 8%6%Earnings on Capitalallocated toProp.the businessTrading** Includes Prop. Trading & ACPM 8 9. 1 Client focus Closed list of global clients Focus on Groups core markets# clientsRevenues, 2010100% OtherCorporates~780MexicoBrazilInstitutionals~165EuropeTotal ~950 9 10. 2 Portfolio of plain vanilla productsClient Revenues,2010 (Bn) GB&MGTBCreditF.I. Sales F.I. FlowFX Equity Cash Mgmt.SyndicatedInterestBond ForeignCash Loans Rates & distribution exchange Lending Inflation ECM Structured Hedging Market Trade Finance Derivatives Making FI finance DCM SecuritiesAsset & servicescapital structuring10 11. 3 Conservative Risk ManagementGlobal Risk Management function is independentand reports directly to the BoardSystematic monitoring of exposuresGovernanceTaken mainly as a Deep knowledge of our Operational Riskconsequence of client clients: risk appetite perControl Departmentbusiness activity client established upfrontmanages operationaland reviewed yearly risk along the wholeLow VaR* exposureoperation life cycle 2010: $37.1 M 80% of total limitsInvestment Grade 1H11:$34.5 M* Average VaR 99%11 12. Index1 Santander GB&Ms Business ModelTrack record3 GB&Ms strategy 12 13. Sustained double digit growth RevenuesCAGR04-10 Bn +23%CustomerLoansClientRevenues 65% 70%69% 77%87% 88% 86%Note: public data at period end except 2008. In 2008, pro forma figures from consolidation of Banco Real (12 months)13 14. Sustained double digit growth RevenuesCAGR04-10 Bn Two thirds of revenuesflow into the bottom lineSAN GB&M5.5 5.1+23%Market*4.22.9 2.5+9% 1.61.7 20042005 2006 2007 2008 20092010CustomerLoans24 3045 53 6663 69Cost /Income34%35%30% 33%31%24%27%* Market = comparable net revenues of 22 major competitors wholesale banking units; Banks included: BARC, BBVA, BNPP,BofA, CAL, CITI, CS, DB, GS, HSBC, INT, ITAU, JPM, MS, NAX, RBC, RBS, SAN, SG, StCh, UBS, UNI; Source: Annual Reports 15. Leadership position in our core markets(e.g. LatAm Corporates.)VolumeTrade Finance LatAm (ECAs)Syndicated Loans LatAmProject Finance LatAm 2004 2010200420102004 2010 SAN 1stSAN2ndSAN3rd SAN 3rd SAN 7th SAN 14thDCM HY LatAm M&A LatAm ECM LatAm2004 2010 200420102004 2010SAN 1st SAN 2ndSAN3rdSAN6th SAN 6th Source: Dealogic (SL, DCM HY, PF, TF ECAS); Bloomberg (ECM); Thomson (M&A)15 16. Index1 Santander GB&Ms Business Model2 Track record3 GB&Ms strategy 16 17. Our growth strategy1Grow share of liquidity / capital light products 17 18. Shift towards capital / liquidity light products New regulatory frameworkCapital LiquidityProduct InitiativesIntensityCostCash Mgmt.: capture our fair share in UK, Brazil and Mexico,initiate business in US (NE), and leverage BZ WBKs platformGTB Low FavourableTrade: increase the value added of our offering (e.g. SupplyChain Finance) and expand coverage in US and EuropeLatAm: consolidate strong position in High Yield and gain fair Bondsshare in High Grade and local issuesorigination & LowLow distribution Europe: leverage corporate relationships, increase share inFIG and expand our base of sovereign issuersUpgrade product portfolio (e.g. options, currencies pairs)Fully exploit our corporate clients flows and Groups mid- FX corps/retail franchise potential (e.g. UK)LowLowUpgrade technology platforms to capture more institutionalflows (in process)Maintain leadership position in ECM in LatAm and Iberia Equity Regain fair share in LatAm Equity Flow, monetizing theLowLowrecently deployed e-commerce platform 18 19. Upgrade transactional capabilities Voice Market /SalesTrading Back Office Investors Electronic platforms Direct access to all European, US, and Augmented processing capabilities LatAm markets (Equities, ETDs, & Bonds) (x50 daily tickets)Improved efficiency 24x7 FX (G10 and LatAm currencies)Zero error goal Improve competitiveness in pricing Improved client service (e.g. single pointof contact relationship manager) 400M Investment in 3-4 years19 20. Our growth strategy1Grow share of liquidity / capital light products2Continue following the Group in its internationalfootprint20 21. Following the Groups stepsSantanders footprintCreate GB&M unit in Sovereign Clients: 138 existing US clients withrelevant presence in LatAm and Europeand 226 non-US clients with activity in US Platform/ product upgrade21 22. Following the Groups stepsSantanders footprint Create GB&M unit in BZ WBK Clients: 190 Santander clients with operations in Poland (30 of which were already operating with BZ WBK) and focus on 20 large Polish corporates Products: Leverage on BZ WBKs state-of-the- art cash management platform and on Poland as a gateway into Eastern Europe 22 23. Our ambition Our ambition 23 24. GB&Ms ambition GTBFI FlowToday10 2014 GS 9 C DBK JPM HSBA5 BNPDBHSBA3BNPGLE2UCG STAN1 ITUB0 LocalRegionalGlobalLocalRegion