Bond Santander Bank 2% ( XS0418135041 ) in EUR

Santander Bank

100 % ⇌

Spain

XS0418135041 ( in EUR )

2% per year ( payment 1 time a year)

Perpetual - Bond has expired

Prospectus brochure of the bond Banco Santander XS0418135041 in EUR 2%, expired

50 000 EUR

153 700 000 EUR

Banco Santander is a Spanish multinational banking and financial services company with significant operations in Europe, North America, and South America.

Banco Santander, a prominent Spanish multinational financial services company, issued the bond identified by ISIN XS0418135041, an EUR-denominated instrument with an initial total issuance size of ?153,700,000, featuring an annual interest rate of 2% and a minimum purchase size of ?50,000. Although originally characterized by a perpetual maturity, this bond, issued from Spain, has since reached its final term and was successfully redeemed at 100% of its face value, after offering annual interest payments.

PROSPECTUS DATED 19 March 2009
11JUL200603145894
SANTANDER FINANCE CAPITAL, S.A. UNIPERSONAL
(incorporated with limited liability under the laws of Spain)
12,122 Fixed Rate Non-cumulative Perpetual Guaranteed
U.S. Dollar Preferred Securities of USD 1,500 each, Series VI
333 Fixed Rate Non-cumulative Perpetual Guaranteed
U.S. Dollar Preferred Securities of USD 75,000 each, Series VII
313,745 Fixed Rate Non-cumulative Perpetual Guaranteed
Euro Preferred Securities of EUR 1,000 each, Series VIII
3,074 Fixed Rate Non-cumulative Perpetual Guaranteed
Euro Preferred Securities of EUR 50,000 each, Series IX
irrevocably and unconditionally guaranteed to the extent set forth herein by
BANCO SANTANDER, S.A.
(incorporated with limited liability under the laws of Spain)
Issue price: 100.00 per cent
USD 18,183,000 Series VI Fixed Rate Non-cumulative Perpetual Guaranteed U.S. Dollar Preferred Securities (the ``Series VI
Dollar Preferred Securities'') of USD 1,500 liquidation preference (the ``Series VI Dollar Liquidation Preference'');
USD 24,975,000 Series VII Fixed Rate Non-cumulative Perpetual Guaranteed U.S. Dollar Preferred Securities (the ``Series VII
Dollar Preferred Securities'') of USD 75,000 liquidation preference (the ``Series VII Dollar Liquidation Preference'');
EUR 313,745,000 Series VIII Fixed Rate Non-cumulative Perpetual Guaranteed Preferred Securities (the ``Series VIII Euro
Preferred Securities'') of EUR 1,000 liquidation preference (the ``Series VIII Euro Liquidation Preference''); and
EUR 153,700,000 Series IX Fixed Rate Non-cumulative Perpetual Guaranteed Preferred Securities (the ``Series IX Euro
Preferred Securities'') of EUR 50,000 liquidation preference (the ``Series IX Euro Liquidation Preference''), together the
``Preferred Securities'', are being issued by Santander Finance Capital, S.A. Unipersonal (the ``Issuer'') on 18 March 2009 (the
``Closing Date'').
Each Preferred Security will entitle its holder to receive (subject to the limitations described under Part 4 (Conditions of the
Preferred Securities)) non-cumulative cash distributions (``Distributions''). From (and including) the Closing Date Distributions will
accrue at a rate of 2 per cent per annum and, subject as aforesaid, will be payable on each 18 March commencing 18 March 2010.
In each case Distributions accrue on the Liquidation Preference of each Series. The Preferred Securities are redeemable, at the
option of the Issuer (subject to the prior consent of the Bank of Spain), in whole but not in part, on any Distribution Payment
Date (as defined in Part 4, Conditions of the Preferred Securities--definitions) (falling on or after 18 March 2019 (the ``First Call
Date'')), at the Redemption Price (as defined in Part 4 (Conditions of the Preferred Securities--definitions)) per Preferred Security.
The payment of Distributions and payments upon liquidation or redemption with respect to the Preferred Securities are
irrevocably and unconditionally guaranteed by Banco Santander, S.A. (the ``Bank'' or the ``Guarantor'') to the extent described
under Part 5 (Guarantee).
The Preferred Securities are expected, upon issue, to be assigned an Aa3 rating by Moody's Investors Services, Inc. (``Moody's''),
an A+ rating by Fitch Ratings Limited (``Fitch'') and an A+ rating by Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies, Inc. (``Standard & Poor's''). A rating is not a recommendation to buy, sell or hold securities and may be
subject to suspension, change or withdrawal at any time by the assigning rating agency.
There will be no public offering of the Preferred Securities all of which are wholly owned, directly or indirectly, by the Bank on the
Issue Date.
An investment in the Preferred Securities involves certain risks. For a discussion of these risks see Part 3 (Risk Factors).
Potential holders are alerted to the information in Part 13 (Taxation) regarding the tax treatment in Spain of income in respect of
Preferred Securities and to the disclosure requirements imposed on the Guarantor relating to the identity of all holders of
Preferred Securities. Income in respect of the Preferred Securities will be subject to withholding tax if holders fail to provide tax
certificates on time as described herein and neither the Issuer nor the Guarantor will gross up payments in respect of such
withholding tax.
Application has been made to the Financial Services Authority (the ``FSA'') in its capacity as competent authority under the
Financial Services and Markets Act 2000 (the ``UK Listing Authority'') for the Preferred Securities to be admitted to the official
list of the UK Listing Authority (the ``Official List'') and to the London Stock Exchange plc (the ``London Stock Exchange'') for
such Preferred Securities to be admitted to trading on the Regulated Market of the London Stock Exchange. References in this
Prospectus to Preferred Securities being ``listed'' (and all related references) shall mean that such Preferred Securities have been
admitted to the Official List and have been admitted to trading on the Regulated Market of the London Stock Exchange.
This Prospectus constitutes a prospectus for the purposes of Directive 2003/71/EC (the ``Prospectus Directive'').
The Regulated Market of the London Stock Exchange is a regulated market for the purpose of Directive 2004/39/EC (the
``Markets in Financial Instruments Directive'').
The Preferred Securities have not been, and will not be, registered under the securities laws of any jurisdiction. The Preferred
Securities may not be offered, sold or delivered within any jurisdiction except in compliance with the applicable securities laws of
any such jurisdiction.
The Preferred Securities will be issued in bearer form and will be represented by four global Preferred Securities (one for each
Series) deposited on or about the Closing Date with a common depositary for Euroclear Bank S.A./N.V. (``Euroclear'') and
Clearstream Banking, soci´
et´
e anonyme (``Clearstream, Luxembourg'' and, together with Euroclear, the ``Clearing Systems'').

RESPONSIBILITY STATEMENT
Each of the Issuer and the Guarantor accepts responsibility for the information contained in this
Prospectus and declares that, having taken all reasonable care to ensure that such is the case, the
information contained in this Prospectus is, to the best of its knowledge, in accordance with the facts and
contains no omission likely to affect its import.
Each of the Issuer and the Guarantor confirms that any information contained in this Prospectus and
sourced from a third party has been accurately reproduced and, as far as the Issuer and the Guarantor are
aware and is able to ascertain from information published by those third parties, no facts have been
omitted which would render the reproduced information inaccurate or misleading.
Neither the Issuer nor the Guarantor has authorised the making or provision of any representation or
information regarding the Issuer, the Guarantor or the Preferred Securities other than as contained in this
Prospectus or as approved for such purpose by the Issuer and the Guarantor. Any such representation or
information should not be relied upon as having been authorised by the Issuer or the Guarantor.
Neither the delivery of this Prospectus nor the offering, sale or delivery of any Preferred Security shall in
any circumstances create any implication that there has been no adverse change, or any event reasonably
likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer or the
Guarantor since the date of this Prospectus.
This Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, any Preferred
Securities.
The distribution of this Prospectus and the offering, sale and delivery of Preferred Securities in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by
the Issuer and the Guarantor to inform themselves about and to observe any such restrictions. For a
description of certain restrictions on offers, sales and deliveries of Preferred Securities and on distribution
of this Prospectus and other offering material relating to the Preferred Securities, see ``Subscription and
Sale''.
In particular, the Preferred Securities have not been and will not be registered under the United States
Securities Act of 1933 and are subject to United States tax law requirements. Subject to certain exceptions,
Preferred Securities may not be offered, sold or delivered in the United States or to U.S. persons.
In this Prospectus, unless otherwise specified, references to ``$'', ``USD'' or ``U.S. Dollars'' are to the lawful
currency of the United States for the time being and references to ``A'', ``EUR'' or ``Euro'' are to the single
currency introduced at the start of the Third Stage of European Economic and Monetary Union pursuant
to the Treaty establishing the European Community, as amended.
In this Prospectus, the words ``Santander,'' ``Banco Santander,'' ``Guarantor,'' ``Bank,'' ``we,'' ``our,'' ``ours''
and ``us'' refer to Banco Santander, S.A. The words ``Group'' and ``Santander Group'' refer to Banco
Santander, S.A. and its consolidated subsidiaries. The word ``Issuer'' refers to Santander Finance
Capital, S.A. Unipersonal.
ii

CONTENTS
PART 1 DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . .
1
PART 2 SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
PART 3 RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
PART 4 CONDITIONS OF THE PREFERRED SECURITIES . . . . . . . . . . . . . . . . . . . . . . .
17
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
2. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
3. Liquidation Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
4. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
5. Exercise of Rights by Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
6. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
8. Form and Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
9. Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
10. Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
11. Prescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
12. Purchases of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
13. Governing law and jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
PART 5 THE GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
2. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
3. Characteristics of the Guarantor's Obligations under the Guarantee . . . . . . . . . . . . . . . . . . .
30
4. Other Obligations of the Guarantor under the Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . .
31
5. Termination of the Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
6. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
7. Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
PART 6 THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
PART 7 BANCO SANTANDER, S.A. AS GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
PART 8 PRINCIPAL ACTIVITIES OUTSIDE THE GUARANTOR . . . . . . . . . . . . . . . . . . . .
57
PART 9 LITIGATION AND GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
Tax Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
Legal Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
PART 10 RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
PART 11 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
PART 12 SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . .
72
PART 13 TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
1. Individuals with Tax Residence in Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76
2. Legal Entities with Tax Residence in Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76
3. Individuals and Legal Entities with no tax residence in Spain . . . . . . . . . . . . . . . . . . . . . . . .
77
4. Disclosure of Holder Information in Connection with Payments of Distributions . . . . . . . . . .
78
PART 14 SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
PART 15 GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83
iii

(This page has been left blank intentionally.)

PART 1
DOCUMENTS INCORPORATED BY REFERENCE
Direct English translations of the following documents shall be deemed incorporated by reference:
1.
the Guarantor's audited consolidated financial statements, together with the notes thereto as well
as the management report and the auditor's report on the consolidated financial statements, and
the audited non-consolidated balance sheet and income statement for the year ended 31 December
2007;
2.
the Guarantor's audited consolidated financial statements, together with the notes thereto as well
as the management report and the auditor's report on the consolidated financial statements, and
the audited non-consolidated balance sheet and income statement for the year ended 31 December
2006;
3.
the Guarantor's unaudited financial report for the period January to December 2008, which
includes the unaudited consolidated financial statements for the year ended 31 December 2008;
4.
the Issuer's audited financial statements, together with the notes thereto as well as the management
report and the auditor's report on the financial statements for the year ended 31 December 2007;
5.
the Issuer's audited financial statements, together with the notes thereto as well as the management
report and the auditor's report on the financial statements for the year ended 31 December 2006;
and
6.
the Issuer's unaudited interim financial statements for the six months ended 30 June 2008,
provided that any statement contained herein or in a document which is incorporated by reference herein
shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a
statement contained in any subsequent document all or the relative portion of which is also incorporated
by reference herein by way of a supplement prepared in accordance with the Prospectus Directive modifies
or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so
modified or superseded shall not, except as so modified or superseded, constitute part of this Prospectus.
Any information or other documents themselves incorporated by reference, either expressly or implicitly,
in the documents incorporated by reference in this Prospectus shall not form part of this Prospectus,
except where such information or other documents are specifically, incorporated by reference into this
Prospectus.
From the date hereof and throughout the period that the Preferred Securities remain listed on the
Regulated Market of the London Stock Exchange, the Issuer and the Guarantor will, at the specified
offices of the Paying Agent (as defined below) provide, free of charge, upon oral or written request, a copy
of this Prospectus (and any documents incorporated by reference in this Prospectus). Written or oral
requests for such documents should be directed to the specified office of the Guarantor or the Paying
Agent (as defined below).
1

PART 2
SUMMARY
The following summary must be read as an introduction to this Prospectus. Any investment decision
relating to the Preferred Securities should be based on consideration of this Prospectus as a whole,
including the documents incorporated by reference. Following the implementation of the relevant
provisions of the Prospectus Directive in each Member State of the European Economic Area (each an
``EEA State''), the Issuer and Guarantor may have civil liability in respect of this summary if it is
misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. Where a
claim relating to information contained in this Prospectus is brought before a court in an EEA State, the
plaintiff may, under the national legislation of the EEA State where the claim is brought, be required to
bear the costs of translating the Prospectus before the legal proceedings are initiated.
Issuer:
Santander Finance Capital, S.A. Unipersonal
Guarantor:
Banco Santander, S.A.
Issue Size:
USD 18,183,000 (Series VI)
USD 24,975,000 (Series VII)
EUR 313,745,000 (Series VIII)
EUR 153,700,000 (Series IX)
Issue Details:
(i)
12,122 USD 1,500 Series VI Fixed Rate Non-cumulative Perpetual
Guaranteed Preferred Securities;
(ii)
333 USD 75,000 Series VII Fixed Rate Non-cumulative Perpetual
Guaranteed Preferred Securities;
(iii)
313,745 EUR 1,000 Series VIII Fixed Rate Non-cumulative
Perpetual Guaranteed Preferred Securities; and
(iv)
3,074 EUR 50,000 Series IX Fixed Rate Non-cumulative Perpetual
Guaranteed Preferred Securities.
Liquidation Preference:
(i)
USD 1,500 per Series VI Dollar Preferred Security. This will be the
subscription price per Series VI Dollar Preferred Security;
(ii)
USD 75,000 per Series VII Dollar Preferred Security. This will be
the subscription price per Series VII Dollar Preferred Security;
(iii)
EUR 1,000 per Series VIII Euro Preferred Security. This will be the
subscription price per Series VIII Euro Preferred Security;
(iv)
EUR 50,000 per Series IX Euro Preferred Security. This will be the
subscription price per Series IX Euro Preferred Security.
Ranking of the Preferred
The Preferred Securities will rank (a) junior to all liabilities of the Issuer
Securities:
including subordinated liabilities; (b) pari passu with each other and with
any Parity Securities of the Issuer; and (c) senior to the Issuer's ordinary
shares.
Distributions:
The Preferred Securities will entitle holders to receive non-cumulative cash
distributions (``Distributions''), subject to the Limitations on Distributions
described below, out of the Issuer's own legally available resources and
distributable items.
Distributions will accrue from (and including) the Closing Date at the fixed
Distribution rate of 2 per cent per annum (the ``Distribution Rate'').
Distributions are payable on each 18 March (the ``Distribution Payment
Date'') commencing on 18 March 2010 and, thereafter, on each anniversary
of the Closing Date.
2

Limitations on
Distributions shall not be payable to the extent that:
Distributions:
(a)
the aggregate of such Distributions, together with (i) any other
distributions previously paid during the then current Fiscal Year; and
(ii) any distributions proposed to be paid during the then current
Distribution Period, in each case on or in respect of Parity Securities
(including the Preferred Securities) would exceed the Distributable
Profits of the immediately preceding Fiscal Year; or
(b)
even if Distributable Profits are sufficient, if under applicable
Spanish banking regulations relating to capital adequacy
requirements affecting financial institutions which fail to meet their
required capital ratios on a parent company only basis or on a
consolidated basis, the Bank would be prevented at such time from
making payments on its ordinary shares or on Parity Securities issued
by the Bank.
Guarantee:
The payment of accrued but unpaid Distributions for the most recent
Distribution Period, the Liquidation Distribution and the Redemption Price
shall be irrevocably and unconditionally guaranteed by the Guarantor.
The Bank will not be obliged to make payment of any Distribution
(including in the event of liquidation of the Issuer or redemption of the
Preferred Securities, accrued and unpaid Distributions relating,
respectively, to the current Distribution Period to the date of payment of
the Liquidation Distribution or to the date fixed for redemption) on the
Preferred Securities to the extent that:
(a)
the aggregate of such Distributions, together with any other
distributions previously paid during the then current Fiscal Year and
any distributions proposed to be paid during the then current
Distribution Period, in each case on or in respect of Parity Securities
(including Preferred Securities), would exceed the Distributable
Profits of the immediately preceding Fiscal Year; or
(b)
even if Distributable Profits are sufficient, to the extent that under
applicable Spanish banking regulations relating to capital adequacy
requirements affecting financial institutions which fail to meet their
required capital ratios on a parent company only basis or on a
consolidated basis, the Bank would be prevented at such time
from making payments on its ordinary shares or Parity Securities
issued by it.
Ranking of the Guarantee:
The Bank's obligations under the Guarantee will rank (a) junior to all
liabilities of the Bank including subordinated liabilities (other than any
guarantee or contractual right expressed to rank equally with or junior to
the Guarantee); (b) pari passu with any Parity Securities issued by the Bank
and any obligation assumed by the Bank under any guarantee in favour of
holders of any Parity Securities issued by any Subsidiary; and (c) senior to
the Bank's ordinary shares.
Optional Redemption:
The Preferred Securities may be redeemed at the option of the Issuer
subject to the prior consent of the Bank of Spain at the Redemption Price
(as defined herein) per Preferred Security on any Distribution Payment
Date falling on or after the First Call Date. The Series VI and Series VII
Dollar Preferred Securities may be redeemed in whole but not in part
independently of the Euro Preferred Securities and the Series VIII and
Series IX Euro Preferred Securities may be redeemed in whole but not in
part independently from the Dollar Preferred Securities.
3

Liquidation Distribution:
The Liquidation Distribution payable in relation to each Preferred Security
shall be its Liquidation Preference per Preferred Security plus, if applicable,
an amount equal to accrued and unpaid Distributions for the then current
Distribution Period to (but excluding) the date of payment of the
Liquidation Distribution.
Liquidation Rights:
In the event that proceedings for the liquidation, dissolution or winding up
of the Bank are commenced or there is a reduction in the shareholder's
equity of the Bank pursuant to Article 169 of the Spanish Corporations Law
(Ley de Sociedades An´
onimas), the Issuer shall be liquidated by the Bank
and the holders of Preferred Securities at the time outstanding will be
entitled to receive only the Liquidation Distribution in respect of each
Preferred Security held by them. In such an event, the Liquidation
Distribution per Preferred Security shall not exceed that which would have
been paid from the assets of the Bank had the Preferred Securities and all
Parity Securities been issued by the Bank.
Except as described in the previous paragraph, the Bank will undertake not
to cause a liquidation of the Issuer.
Pre-emptive rights:
The Preferred Securities do not grant their holders preferential subscription
rights in respect of any possible future issues of preferred securities.
Special General Meetings:
Holders of Preferred Securities of the Issuer shall be entitled to attend and
vote at Special General Meetings as described in Part 4 (Conditions of the
Preferred Securities), Clause 5.2.
Withholding Tax:
Save as set out below, the payment of Distributions and other amounts in
respect of the Preferred Securities and payments under the Guarantee will
be made without deduction for or on account of Spanish withholding taxes,
unless such taxes are required by law to be withheld. In such case, the Issuer
or the Bank, as the case may be, will, save as described below, gross-up for
such withheld amounts.
The payment of Distributions and other amounts in respect of the Preferred
Securities and payments under the Guarantee will be subject to Spanish
withholding tax as described in the next paragraph. In such circumstances,
neither the Issuer nor the Bank will pay additional amounts in respect of
such withholding tax.
Under Spanish law, income in respect of the Preferred Securities will be
subject to withholding tax in Spain, currently at the rate of 18 per cent in
the case of (a) individual or corporate holders who are resident in Spain for
tax purposes; and (b) holders who fail to provide information regarding
their identity and tax residence.
Form:
It is intended that the Series VI and Series VII Dollar Preferred Securities
and the Series VIII and Series IX Euro Preferred Securities will be
represented by four global Preferred Securities in bearer form, one for the
total number of the Preferred Securities of each Series. Each global
Preferred Security will be delivered by the Issuer to a common depositary
for the Clearing Systems.
Ratings:
The Preferred Securities are expected, on issue, to be assigned an Aa3
rating by Moody's, an A+ rating by Standard & Poor's and an A+ rating by
Fitch. A rating is not a recommendation to buy, sell or hold securities and
may be subject to suspension, change or withdrawal at any time by the
assigning rating agency.
Governing Law:
The Preferred Securities and the Guarantee will be governed by the laws of
Spain.
4

Listing and Admission to
Application has been made to the UK Listing Authority for the Preferred
Trading:
Securities to be admitted to the Official List of the UK Listing Authority
and to the London Stock Exchange for the Preferred Securities to be
admitted to trading on the London Stock Exchange's Regulated Market.
Clearing Systems:
Euroclear and Clearstream, Luxembourg.
Risk Factors
There are certain factors which affect the Company's ability to fulfil its obligations under the Preference
Securities. The risks include certain market risks associated with the Issuer's and the Santander Group's
business and certain risks associated with the terms of the Preferred Securities.
Key risks relating to the Issuer and the Santander Group:
Since the Group's loan portfolio is concentrated in Continental Europe, the United Kingdom and
Latin America, adverse changes affecting the Continental European, the United Kingdom or
certain Latin American economies could adversely affect the Group's financial condition.
Some of the Group's business is cyclical and the Group's income may decrease when demand for
certain products or services is in a down cycle.
A sudden shortage of funds could increase the Group's cost of funding and have an adverse effect
on the Group's liquidity and funding.
The Group is vulnerable to the current disruptions and volatility in the global financial markets as
well as to government action intended to alleviate the effects of the current financial crisis.
Risks concerning borrower credit quality and general economic conditions are inherent in the
Group's business.
The financial problems which may face the Group's customers could adversely affect the Group.
The Group is exposed to risks faced by other financial institutions.
The Group's exposure to Spanish and UK real estate markets makes it more vulnerable to adverse
developments in these markets.
The Group may generate lower revenues from brokerage and other commission and fee-based
businesses.
Market risks associated with fluctuations in bond and equity prices and other market factors are
inherent in the Group's business. Protracted market declines can reduce liquidity in the markets,
making it harder to sell assets and leading to material losses.
Despite the Group's risk management policies, procedures and methods, the Group may
nonetheless be exposed to unidentified or unanticipated risks.
The Group's recent and future acquisitions may not be successful and may be disruptive to the
Group's business.
Proposals for the restructuring of the businesses the Group acquired from ABN AMRO are
complex and may not realise the anticipated benefits for the Group.
Increased competition in the countries where the Group operates may adversely affect the Group's
growth prospects and operations.
Volatility in interest rates may negatively affect the Group's net interest income and increase the
Group's non-performing loan portfolio.
Foreign exchange rate fluctuations may negatively affect the Group's earnings and the value of its
assets and shares.
Changes in the regulatory framework, including increased regulation of the financial services
industry in the jurisdictions where the Group operates, could adversely affect its business.
Operational risks are inherent in the Group's business.
The Group is exposed to risk of loss from legal and regulatory proceedings.
5

Credit, market and liquidity risks may have an adverse effect on the Group's credit ratings. Any
reduction in the Group's credit rating could increase the Group's cost of funding and adversely
affect the Group's interest margins.
The Group's Latin American subsidiaries' growth, asset quality and profitability may be adversely
affected by volatile macroeconomic conditions.
Significant competition in some Latin American countries could intensify price competition and
limit the Group's ability to increase its market share in those markets.
Latin American economies can be directly and negatively affected by adverse developments in other
countries.
Risks relating to the Preferred Securities
Spanish tax rules in relation to potential withholding tax for Spanish tax residents who receive
distributions in respect of the Preferred Securities.
The transferability of the Preferred Securities may be limited by the absence of an active trading
market. Trading prices may be substantially lower than the Liquidation Preference of the Preferred
Securities.
Distributions on the Preferred Securities are not cumulative.
The Preferred Securities have no fixed redemption date and investors have no rights to call for
redemption of the Preferred Securities.
Banco Santander's obligations under the Guarantee are limited to the amounts of the payments due
under the Preferred Securities.
Banco Santander is not required to pay investors under the Guarantee unless it first makes other
required payments.
The right to receive Distributions under the Preferred Securities and the Guarantee is junior to
certain other obligations of the Issuer and the Guarantor.
Non-payment of Distributions may adversely affect the trading price of the Preferred Securities.
6